http://www.nation.com.pk/daily/june-2006/27/bnews2.php


Machinery import breaches $7b mark

BY JAVED MAHMOOD

LAHORE - Setting a new precedent the import of machinery in 11 months of the current financial year has exceeded seven billion dollars mark.

From July 2005 to May 2006 the total import of machinery has expanded to 7.026 billion dollars, 1.823 billion dollars higher than 5.203 billion dollars import of machinery during the same period of last financial year.
In foreign exchange the import of machinery has improved by 35 per cent from July 2005 to May 2006 over the same period of last financial year.

In local currency the country has spent 420.44 billion rupees on the import of machinery during the said period.

Details obtained by The Nation showed that the machinery group continued to exhibit robust growth in its imports during ongoing financial year and it has consumed the highest amount of foreign exchange as compared to the other major traditional groups like petroleum, agriculture, metal and food group.

According to details, except textile, the imports of all the other major categories of machinery have shown a significant increase during the said period of this financial year.

In foreign exchange the power generating machinery import has increased by 26.30 per cent, vehicles import depicted 53 per cent increase, 33.7 per cent increase was recorded in the import of construction/mining machinery, electrical apparatus 39 per cent while 107 per cent growth was recorded in the import of agricultural machinery, implements in 11 months of this fiscal.

Within the machinery group, the power generating machinery import has consumed 450 million dollars, office machinery 255 million, construction/mining 173 million dollars, agricultural machinery/implements 127.57 million dollars while a hefty foreign exchange of 3.957 billion dollars was spent on the import of various types of machinery falling in the category of others.

The import of vehicles also set a new record as their imports increased to 1.435 billion dollars highest level in this fiscal as against 940 million dollars in last fiscal during July-May period.

However, textile machinery import showed 18 per cent decline and it fell to 712 million dollars from July 2005 to May 2006, from 866 million dollars in the corresponding period of previous fiscal year. In last three financial years the import of textile machinery continued to show a modest increase, but in 2005-06 the trend has reversed because of two major factors _ rising mark up rate and heavy investment in three years.

we are observing an increase in machinery import every year for the last 5-6 years. However there is no significant increase in export products except for things we already exported (due to higher quotas there was increase of export in textile and fruit exports). We also do not see a corresponding increase in efficiency (which should lead to cheaper products inside pak).

So what is this machinery? cars? tractors? busses? if its that, than its not that much helpful for our industry!

The breakup says out of 7 billion 4 billion was 'other'. What is that? Moreover the breakup accounts for about 5 billion out of 7. What are the other 2?

Its sad to see that agriculture machinery was only 127 million! Construction and mining combined was only 173 million (probably cranes and caterpillers for the high rise building being built).

I have the feeling that paks are spending mostly on cars, tvs, cd players, and computers etc. than on any meaningful machinery.

127 million dollars for imported agriculture machinery may not necessarily be a bad thing, it could mean Pakistan's local agricultural-mechanical industry is able to provide most of the need.

The breakup does account for 7 billion, although you are right about importation, Pakistan should be focused on those that add value to local industry rather than stuff to support entertainment and leisure consumerism that more advanced economies naturally produce and sustain.

from japan they are sending cars i agreed with that all top specially pradoz yeah but also other machines too plastic molding for industry /modern eqiupment for hospitals etc.thats what i knew from japan.no doubt there are cars and other luxury goods but now Pakis are gerring logic...and start thinking for their development in Pakistan.

could put higher tax on leisure and luxury imported items, but then it also opens the field to smugglers and official corruption which then requires enforcement agencies and more bureaucracies. The better option is political awareness and will.

should invite german companies to setup machinery plants in pakistan so we can localy produce

given the figures..can we say its a healthy trend even though balance of payments is not favorable?

cars are not classedas machinary. they do come under a separate heading. Farm vehicles are classed as machinary though as are specialist transport vehicles.

AoA

I think you are wrong there....cars do come under machinery. They fall within the 'other' category. There was a detailed report in Business recorder which showed a huge increase in cars. Also do take a lot of these figures with a pinch of salt as most importers are very 'creative' in their description of the item. A lot depends on the import duties.

There is an increase in real machinery imports - which should help productivity over time. However these figures are mis-leading by international standards.

Baaz:

That deception was something to do with taxi cabs.

However, a link to backup your claims would be appreciated.

as far as i know cars are put under the heading of vehicles not machinary. anyway, this year the import of cars was $1.5 billion so if you take that off $7 billion you are still left with $5.5 billion.

Capital imports are never purchased for no reason & in third world countries productivity is hurt because of tarrifs & quotas. Put another way, how many sacks of wheat are needed for one piece of machinary? Until Arab and Islamic countries can develop capital & have an R&D base, it is quite impossible to simply consider making a government buck through tarriffing such imports, particularly as they would (in the long run) reflect a rising pool of know-how in the country (afterall capital requires training & a minimum level of education in its employment) & in turn its use enhanced productivity considerably.

That Pakistan's machinary imports (I'm presuming mostly capital) is rising isn't surprising but its impact on RGDP should be measured. Remember, its use can also enhance producers to increase exports. For instance, if you buy a Swedish factory design (for heavy metal, iron, steel etc) that is efficient & effective you have to potential to export iron/steel products all over the world. Demand for such commodities is quite high & efficiency/effectiveness is everything. Furthermore, exports are desired to ensure economies of scale.

The 'other' catagory also have vehicle...including cars, buses etc. It is this that is a problem. Basically most of the stastics are not good quality as one would expect in the industrialised world. Statistics may say one thing, however ground reality is another. Anyone who has been to Pakistan recently or has any dealings with any Government department will know the quality of the information - this makes economics planning/policy very difficult. Even our GDP figures do not reflect ground reality!!!!!! Having said this we have to start somewhere.