Doeument of The World Bank FOR OFFICIAL USE ONLY CONFIDENTIAL Report No. 7095-PAK PAKISTAN INDUSTRIAL REGULATORY POLICY REPORT VOLUME II (Market Scructure, Firm Behavior and Performance - Subsector Evidence) January 15, 1988 Industry, Trade and Finance Division Country Department I Europe, Middle East and North Africa Regional Office and Industry Development Division Industry and Energy Department Policy, Planning and Research Office O SSR TABLE OF CONTENTS Introduction ....................... .. I A. Internal Market Structure ..................... 1 Size Distribution of Firms ........................ 1 Firm and Plant Size ................................... 3 Market Concentration ............................... . 5 Firms and Industry Specialization ..................... 6 Exit Policies and Market Structure .................... 7 B. The Impact of Regulatory Policies on Firm Behavior ........ 9 Pricing and Competitive Behavior....................... 9 Marketing Behavior .................................... 9 Technology Acquisition and Innovation ................ 10 Rent Seeking Behavior ................................. 11 C. Industrial Performance ................................ 12 Growth and Structural Change .......................... 12 Export Performance .................................... 15 Capacity Utilization .................................. 15 Product Price and Qua'ity ............................. 17 Conclusions ........ ............... ....... 20 LIST OF ANNEXES Annex II.1 Shares of Different Manufacturing Industries in Value Added Annex 11.2 Average Firm Size Annex 11.3 Sectoral Pattern of Registered Public Limited Companies Annex 11.4 Average Polyester Plant Sizes in Pakistan and the Far East Annex 11.5 Index of Investment and Production Cost of Polyester Fiber Production with Increasing Capacity Annex 11.6 Production of Cottong Yarn and Cloth - Categorywize Annex 11.7 Variety Wise Production of Cottong Fabrics in Pakistan Annex 11.8 Installed and Working Capacity Annex 11.9 List of Closed Textile Mills, December 1986 Annex II.10 Economic Classification of Exports Annex II.11 Export Shares by Commodity Annex 11.12 Destination of Exports and Origin of Imports Annex 11.13 Cotton Yarn: Production and Domestic Requirement - Mill Sector Annex 11.14 Capacity Utilization Annex 11.15 Table 1: Domestic and World Prices of Selected Commodities Table 2: Extent of Divergence Between World Price, Landed Cost and Domestic Price of Imported Consumer Durables Annex 11.16 Labor Laws Applicable to Registered Firms Annex 11.17 Comparatije Costs for Polyester Production Annex 11.18 Selected Manufacturing Indicators Annex 11.19 Size, Distribution of Manufacturing Firms and Value Added Aea F zR MARKET STRUCTURE, FIRM BEHAVIOR AND PERFORMANCE: SUBSECTOR EVIDENCE I.1 This report examines the structure of industrial markets and firm behavior, and the influence that the policies described in the previous chapter have had on structure and behavior. The chapter concludes with an evaluation of the extent to which domestic regulatory policies have affected industrial performance, both directly and through their impact on market structure and firm behavior. 11.2 Most of the following discussion is based on evidence from seven subsector studies.- These products together account for 27% of industrial output (based on the 1980/81 CMI, see Annex II.1). The evidence shows that investment sanctioning and protective trade policies have been jointly instrumental in shaping market structure and performance. Although it is difficult to separate the effects of trade, fiscal and regulatory policies on industrial performance in quantitative terms, or to know what market structure and performance would have been in the absence of these policies, we have tried where possible to make some judgment about the relative importance of different policies in explaining performance in the subsectors studied. A. Internal Market Structure 11,3 The barriers to mobility and growth described in the main report have influenced the internal structure of markets, including characteristics related to firm and plant sizes and changes over t:me, the extent of market concentration, and the degree vertical and horizontal integration. These are described in the following sections. Size Distribution of Firms 11.4 The only data available for analyzing the size distribution of firms are from the Census of Manufacturing Industries (CMI). CMI coverage is incomplete; in 1980/81 (the most recent year available) it covered only 3,818 firms, whereas the number of registered limited companies was on the order of 12,000 (Annexes 11.2 and 11.3). Although the number of operating firms is much lesii than the number registered (perhaps on the order of a half), a far gzeater rumber of firms in operation go unregistered in order to avoid taxation and administrative requirements (probably many tens of thousands, mainly small and "micro" enterprises). Furthermore, the CMI has not been ~-' Brief studies were prepared on the following products as a background to this report: cement, fertilizers, polyester fibers, cotton textiles, vegetable ghee, automotive products, and bicycles. These studies were prepared to assess the impact that regulatory policies have had on investment, output, pricing and other firm-level indicators. In view of time and resource constraints, the studies were not meant to provide a complete description or analysis of all issues in these subsectors. 02 14P. -2- carried out in all years, and coverage varies, making comparisons between years difficult (especially prior to the creation of Bangladesh in 1970, when the figures include East Pakistan). The data is analyzed here with the understanding that they represent only a portion of the industrial sector. 11.5 Table 11.1 shows the distribution of firm sizes in terms of number of workers per establishment. Since 1970/71 size structure has remained roughly constant, with a slight decline in the proportion of medium-sized firms (in terms of number of workers per firm), ano slight increases in the shares of small and large firms. In 1970/71, 72.0% of firms had 50 or fewer workers and in 1980/81, 73.1%. The share of firms with more than 250 workers increased from 8.4% in 1970/71 to 9.4% by 1980/81. Table II.1 Size Distribution of Firms No. of Employees Total No. of Firms (in percent) Up to 9 12.3 18.7 10 - 49 59.7 54.4 50 - 249 19.5 17.4 over 250 8.4 9.4 100.0 100.0 11.6 The importance of large-scale firms in industrial output,. investment and employment has risen steadily since 1949 (with the exception of the period 1970-77),-' and this sector has played an important role in the rapid rate of growth of the manufacturing sector. Table 11.2 shows that the share of large-scale manufacturing firms in GDP increased from 2.2% in 1949/50 to 14.5% in 1985/86, while the contribution of small-scale manufacturing remained at 5.5%. Table 11.2 Manufacturing Share in GDP at Constant 1959/60 Factor Cost (Percentage) Year Small Scale Large Scale Total a/ 1949/50 5.5 2.2 7.8 1959/60 5.1 6.9 12.0 1976/77 4.4 11.4 15.8 1980/81 4.9 13.0 17.8 1985/86 5.5 14.5 19.9 a/ Detailfe may fail to add to total because of rounding. Source: Economic Survey of Pakistan, 1985/86 -' This was a period of nationalization and severe restrictions on large-scale private investment. 02 14R -3- 11.7 The relatively faster growth of large firms has meant corresponding increases in average firm size, capital intensity, and productivity of labor. The value of output per worker increased by 5.2% between 1970 and 1986, in constant 1959/60 rupees.- However, the share of total recorded employment (of persons 10 years old and above) accounted for by the mining and manufacturing sector dropped from 17% in 1969 to 13% in 1985.1' If manufacturing is to generate an increasing share of employment opportunities as agricultural employment declines, continued output growth will be needed in mostly unregistered small and medium firms, which have been a major source of employment in the past. Firm and Plant Size 11.8 While the medium- and large-scale sector has grown rapidly, in some subsectors individual firm size and growth have been limited by investment sanctioning policies, including, in particular, restrictions on imported capital goods. In some cases, these policies have led to the construction of plants below minimum efficient size (MES)l'. The following examples illustrate these policies, their intent, and their impact on the scale and cost of operation. 11.9 In cement, for instance, roughly a third of plants have installed capacity of 330,000 tons per year, and average plant size in Pakistan is 450,000 tpy, whereas the international average is about 900,000 tpy. Unit production costs for dry-process plants within Pakistan indicate that the minimum efficient size (at which returns to scale become unimportant) is at least 660,000 tpy.!' Financial incentives, investment sanctioning and price control policies have contributed to the small firm size. Incentives such as a low interest rate are provided for selecting domestic machinery and equipment, and investors consider it to be easier to obtain a sanction for a small (1000 tpy, or 330,000 tpy) plant which can be supplied by the domestic machinery manufacturers. II.10 Price controls, which provided cement firms with a guaranteed 15-20 percent return on investment regardless of plant size or unit costs, meant that investors could invest in small production scales without fear of losses or reduced profits as a result of competition with lower-cost output The value of output per worker in constant 1959/60 rupees in manufacturing and mining was Rs 1,933 in 1969/70, and increased to Rs 4,336 in 1985/86. Source: 1986/87 Economic Survey, p.16. Economic Survey, 1985/86, Annex p.11. The concept of minimum efficient size is subject to some difficulties and arbitrariness in application. It is used here to represent a technical judgement of the size at which economies of scale become r1latively unimportant. Minimum economic size may differ significantly from minimum efficient (technical) size because of local market conditions. Some of Pakistan's small cement plants can compete because they are able to keep operating fully written-off machinery. The small size of Pakistan's plants is partly because they are old by world standards and were built when MES was smaller. Recent plant sizes, however, have lagged behind standard world scale. 0214R from larger plants. Assured of the ability to pass on production costs through higher retention prices, smaller plants were built, which were easier to finance. II.11 In cotton spinning, the average number of working spindles per mill is 15,500, while an estimate of the optimum size of an integrated mill in * Pakistan is 25,000 spindles.-' In the 1970s, each spinning "unit" was restricted to 12,500 spindles and each unit had to be housed in a separate shed (to minimiza labor disturbances). Several firms indicated that, informally, it is still easier to obtain a sanction for a 12,500 spindle unit than a larger one. 11.12 Location policies have strictly limited on-site expansion of output in the textile sector, which is concentrated in Karachi, because of the lack of water and electricity supplies. Even investment in balancing, modernization and replacement (BMR), which could increase output through productivity improvement is not easily approved. In many cases, firms have been required to replace or expand existing operations in new locations outside Karachi, even though this has entailed losses in economies of scope and scale. One integrated textile mill which sought to modernize a dyeing and finishing unit took two years to process. Approval by the provincial authorities was slow because the new, more efficient machinery would have increased output, even though material consumption and water usage would not have increased. Firms such as these would gain from price rationing of scarce infrastructure because their cost savings would enable them to pay the increased charges. Conversely, rationing through location policies is likely to benefit favored firms that do not realize significant cost savings from urban location. 11.13 In the polyester yarn and fiber industry, domestic firms operate at scales well below current world standards (see Annex 11.2). The two largest firms have planned capacity of only 25,000 tons per year, about half of what is needed to realize significant scale economies in integrated plants that include polymerization. In fiber production, a four-fold increase from 15 to 60 tons per day requires only twice the investment and reduces unit production costs by nearly half (Annex 11.5). 11.14 The situation is somewhat different for polyester yarn producers without polymer plants, since scale economies do not dictate such large plants for producing yarn from chips. Nevertheless, Pakistan's plants are well below a reasonable minimum efficient scale of 12,000 tons per annum, and thus incur relatively high operating and administrative costs per unit of output. Internationally, yarn is produced in much larger firms because it is integrated with the polymerization process. 11.15 Investment sanctioning policy has been a significant determinant of plant size in this industry. The maximum sanctioned production levels have been 6,300 tons for polyester yarn and 12,000 tons for fibre, even though these are well below international standards. The motivation apparently has been to avoid concentration of production and potential monopolistic price -' Source: Gherzi Textile Organization, Zurich, in World Bank, Pakistan: The Textile Industry, 1982. 02 14R behavior, even though the latter is unlikely in view of the availability of domestic imported and smuggled substitutes. Furthermore, underestimation of the growth in demand far polyester blends has led to sanctions lagging behind demand for fiber. 11.16 Government policy against expanding state investment in most industries is likely to prevent the incumbent state plant from expanding its capacity, even if this would achieve greater economies of scale. This, in turn, is likely to create informal pressures not to allow private incumbents to expand significantly, to protect the state firm's competitive position within the existing market structure. 11.17 Capacity is fragmented, and firm sizes are small relative to international norms, in the automotive sector. Highly automated mass production assembly techniques impose a high unit cost penalty on low output volumes; some estimates of MES are on the order of 200,000-300,000 units per year for cars and light commercial vehicles. Nevertheless, Pakistan has at least three manufacturers of each type of vehicle except cars. In light cormnercial vehicles (lcvs), for example, there are four assemblers, with total lcv output of only 12,392 units in 1984/85. 11.18 The trade regime provides significant protection from import competition, which creates potential quasi-rents for domestic producers, stimulates excessive entry, and permits inefficient small firms to operate profitably. In such situations, regulatory policies can be used to control the size and number of entrants. In Pakistan, however, there is no evidence of such coordination between trade and regulatory policies. In fact, investment sanctioning policies, rather than limiting entry or requiring some minimum scale of operation, have reinforced the tendency toward excessive entry and inefficient scale by placing limits on firm size. Market Concentration 11.19 In several industrial markets, in spite of a policy of reducing individual firm size and allocating production among several firms, the degree of market concentration remains fairly high-'. Table 11.3 shows that four-firm concentration ratios--that is, the share of total output produced by the four largest firms--exceeds 70% in most of the subsectors studied. In bicycles, two firms control 80% of the industry's output, and the remaining firms act as a competitive fringe. Similarly, in vegetable ghee the large public sector Ghee Corporation, comprising 25 individual units or "plants," dominates the market, and small private firms account for small shares of the market. The high levels of concentration are not unusual in an economy of Pakistan's size, where scale requirements are large relative to the small size of the domestic market. In cement, fertilizer, automotive products, and polyester fiber and yarn, returns to scale are substantial, and the concentrated market structure observed would be expected, given domestic ' demand levels. While industrial regulations have kept firm sizes somewhat below optimal scale this has apparently not served to reduce concentration in a major way. .' Industry-wide data are not available. 0214R -6- Table II.3 Four Firm Cot.centration Ratios-a (Percentage) 1968 1974/75 1985 (CR4) (CR3) (CR4) Spinning 14 na 8 Weaving 20 na 22 Cement 86 69 na Polyester yarn na na 77 Polyester Fiber na 100 80 Fertilizers (Urea) 100 na 81 Automotive Products 100 Bicycles 92 88 Tractors 90 " Sources: 1985: subsector reports. 1974/75: Ahmed, M.A., "Productivity, Prices and Relative Income Shares in Pakistan's Large Scale Manufacturing Sector," 1938-70, unpublished D. Phil. thesis. 1968: White, Lawrence J., "Pakistan's Industrial Families: The Extent, Car;es and Effects of Their Economic Power," Journal of Development Studies, 1974. 4b There are fewer than four firms in each automotive segment--cars, lcvs, buses, trucks--except tractors. In the latter, four firms account for about 90 percent of market share. Firms and Industry Specialization 11.20 Some problems of specialization are evident at the product level. In the automotive sector, for instance, there is a proliferation of models and firms, and consequent small scales of output per model. There are four two- and three-wheel vehicle manufacturers, and one firm produces six product lines even though its total 1984/85 output was less than 10,000 units. The lack of specialization has delayed the planned indigenization of component manufacture in the automotive sector. The small scales of output and large number of product models have meant short production runs and frequent retoolings in supplier industries such as componerts and industrial castings, adding to product cost. Given the size of domestic demand and fragmentation of output among different models, Pakistan may never be in a position to support a highly indigenized, efficient, automotive component industry, unless substantial exports emerge. For example, Korean firms make 1.5 million brake systems per year; in Pakistan, domestic demand is about 30,000 units per year, which effectively preempts the possibility .o develop a competitive domestic brake industry. 11.21 In the spinning industry, the failure to shift specialization into higher yarn counts and treated yarns has been costly. Annex 11.6 shows that, while the share of coarse yarn fell from 53% to 38%, and that of medium counts rose from 34% to 44%, between 1978 and 1985, the share of fine and superfine counts has risen only from 4% to 8%. Greater specialization in the production 021 4R of waxed, cone-wound and higher count yarns would allow downstream users to raise the quality and diversity of fabrics. (Annex 11.7 shows that, although the share of coarse fabrics has fallen, the share of fine varieties also has declined.) Greater availability of waxed yarns, for instance, would allow increased knitting production. Greater fabric diversity also would allow readymade garment manufacturers to move into new, higher value-added garment categories which are less restricted in terms of export quotas. 11.22 In the textile industry, declining vertical integration at the firm level has led to a lack of flexibility in export diversification. Annex 11.8 shows that, while spindle capacity increased from 1.6 million to 4.4 million as the number of mills rose from 71 to 223 between 1962 and 1986, the number of looms in the mill sector declined from 28,000 to 19,000 in the same period. This weaving capacity was taken up by small, decentralized power loom units, which had cost advantages due to their low overhead, cheap labor, and avoidance of taxes and labor benefits. Tax advantages for small units of no more than four looms encouraged this shift, but were not the primary cause. These small units produce cheap, low quality grey cloth which is marketed by middlemen who also provide the yarns on a contract basis, but do not sort either the yarns or the fabric for quality, sizing, number of start-marks per meter, etc. The decentralization of weaving has reduced the industry's ability to control quality and differentiate the product according to client's requirements. This has weakened the ability of export clients to obtain satisfactory product quality and diversity. 11.23 In the polyester industry, the problem is inefficient vertical integration resulting from the highly cascaded tariff structure. Tmport duties of 60 percent on polyester chips, which are used to produce polyester fiber and yarn, have encouraged several firms to install polymer plants to produce the chips from imported chemicals, which come in duty-free. But Pakistan's firms are too small to purchase chemicals at the discounts available in Europe and the far east, whereas the oversupply of chips on world markets makes them available at low prices. In addition, scale economies are particularly high in polymerization; a 60-ton-per-day plant costs only two-and-a-half times as much as a ten-ton-per-day plant. Since Pakistan's plants cannot produce chips at a cost competitive with international prices, high-cost domestic chip production impairs the ability of polyester fiber and yarn production to compete with imports without high protection. Exit Polcies and Market Structure 11.24 As indicated in the main report, labor policies constrain firms' ability to shed labor and banking policies tend to inhibit smooth exit of uncompetitive firms. These barriers to restructuring, however, have evidently affected some industries more than others. Table 11.4 shows that in most industries the recorded number of.firm closures has been small despite a steady increase in the number of new firms each year in most subsectors. This is partly a reflection of rapid industrial growth, supporting opportunities for many new firms. It also reflects the fact that many firms become "dormant" rathcr than formally exiting. 02 Z 4R~ -8- Table 11.4 Number of Firm Closures, by Sector 1983/84 1984/85 1985/86 Insurance 3 0 1 Cotton Textile 8 -3 5 Woollen 3 2 3 Synthetic & .ayon 0 5 -5 Financial Institutions 4 -5 1 Jute -1 4 2 Sugar & Allied Industries -21 -8 -18 Cement 3 0 0 Tobacco 0 1 0 Fuel & Energy 4 21 0 Engineering 85 -5 -48 Auto & Allied Engineering 38 -8 60 Cables & Electrical Goods 13 -3 13 Transport & Communications -2 5 5 Chemical & Pharmaceutical 2 -16 -59 Paper & Board 9 6 28 Vanaspati & Allied Industries 11 19 13 Construction 29 8 -88 Leather & Tannerie,; -1 3 97 Miscellaneous -55 246 150 Note: Figures represent the number of firms at the beginning of the year plus new registrations minus the number of firms at the beginning of the next year. Negative numbers represent additions to the recorded number of firms that do not appear in the statistics on new registrations. 11.25 The most dynamic sector (in terms of the rate of entry and exit) has been engineering, with an average of 83 new companies entering each year during the period 1981 to 1986, and up to 85 companies exiting. The leather and tanneries and auto and allied engineering industries have also experienced relatively high volumes of entry and exit.-High rates of entry and exit in these industries may reflect low barriers to mobility and the potential to shift resources from slowly growing or declining industries to rapidly growing areas. 11.26 In cotton textiles, however, exit has been incomplete, despite widespread financial problems in the industry. Annex 11.9 shows that, out of a total of 223 textile mills, 89 (or 40%) were out of production at the end of 1986. Many of these mills have been closed for years and would require * complete replacement of plant and equipment to resume. Yet, they have not been liquidated, and loan arrears continue to mount, as well as liabilities in the form of required wage payments. If these units had been quickly liquidated or * taken over by healthy units, their assets might not have deteriorated to the point of only scrap value. At the same time, the perceived existence of excess capacity, counting the capacity in closed mills, led to restrictions on new entry and growth of operating incumbents. As a result, market structure in the textile industry has stagnated, and efforts to modernize production and diversify product lines have been thwarted. 02 14P B. The Impact of Regudatory Policies on Firm Behavior Pricing and fompetitive Behavior 11.27 Pricing behavior of private firms is constrained mostly where important public firms use their market power and where explicit price controls exist. In industries such as ghee, automotive products, fertilizers and cement, public sector units, in fact, account for the major share of production and use their market power to influence pricing behavior. Despite liberalization of the price of ghee and the rising cost of inputs, the Ghee Corporation of Pakistan has used its dominant market position to forestall price increases by the private sector. The State Cement Corporation of Pakistan has been slow to allow prices to vary at the plant level, and its 80% share means that full market-responsive pricing has not yet been achieved. 11.28 In some industries, price controls historically have reduced the extent of direct price competition, minimized incentives for cost reduction, and induced black market activities. The price of vegetable ghee in Pakistan has been maintained (first by GOP directly, now by GCP) well below inte-national prices. Both ghee and edible oils are smuggled into Afghanistan and India, where domestic price levels are higher. In the cement industry, shortages in the 1970s and 1980s as a result of sanctioning constraints and price controls, led to a black market within the country. This has been eliminated, however, through more flexible pricing and transport charges by region, which has encouraged shipment of cement from surplus to deficit areas. 11.29 Past price controls on products in highly oligopolistic industries such as cement and fertilizer may have eliminated collusive pricing behavior, but it is not clear that government set prices were successful in eliminating monopoly profits in these industries. At the same time, price controls precluded price competition. At the individual plant level in fertilizer and cement, for instance, taxes and subsidies kept retail prices fixed while maintaining set profit margins through differences in ex-factory prices. In 1984-85 the ex-factory cost of urea ranged from Rs 1,746 to Rs 3,320 per ton while the retail price was the same. In this situation, firms have competed through marketing but not through pricing. Price decontrol has led to more adjustment of prices to market conditions, but the effect has been limited by price restraint exercised by large public firms (ghee, cement) and through government guidelines (fertilizer). Marketing Behavior 11.30 Some subsectors show little evidence of non-price competition, e.g., through improvements in product quality or product differentiation. Some firms have evidently taken advantage of their market power by maintaining poor product quality rather than raising prices. In -he bicycle industry, market power (and price leadership) by the leading firm, combined with informal price controls, have contributed to the production of an inferior product. In the ghee sector, producers have resorted to substandard specifications of edible oil when international oil prices have risen without being reflected in the price set by GOP or GCP. Some ghee producers, nowever, have been able to command a premium through product differentiation and reputation for quality. 021'R - to - 11.31 In polyester yarn and fiber, producers appear to behave competitively in marketing their products despite high market concentration. While ex-factory yarn prices are higher than international (c.i.f.) prices, they are below the landed cost of equivalent imports, even though there is excess domestic demand: domestic production does not fill the gap between powerloom requirements and permitted imports. Several yarn producers have shown sensitivity to market trends by shifting their production toward finer counts (50 denier) than they anticipated when building their plants. Some are also considering adding machinery to produce twisted and flat yarns (which have higher value than texturized). The two fiber producers compete in each others' markets, rather than dividing up the market according to their respective locations in Karachi and Punjab. Competition between firms in both yarn and fiber is on the basis of both quality and price. One reason for this competitive behavior may be the availability of imports both legal and smuggled (in the case of yarn) and substitutes. Imported viscose and polyester fiber still meet the bulk of fiber requirements, and other synthetic yarns account for nearly a third of total domestic production of yarns other than cotton. 11.32 In fertilizers, large increases in urea production combined with stagnant domestic demand in the early 1980s led to excess supply, resulting in exports and market prices below the official controlled price. As noted, there is also evidence of competition in distribution networks, despite price controls. Prices were de-controlled in May 1986, but an informal price ceiling has been maintained through a ministerial guideline that prices should not rise above Rs 125 per bag. GOP's threat to import fertilizer if necessary to maintain the price provides some competitive pressure. The industry has reacted by limiting the extent of price increases, even though demand conditions might support higher prices. In both polyester and fertilizer, then, the threat of imports has evidently worked to enforce competitive pricing behavior. Technology Acquisition and Innovation 11.33 The evidence regarding technological behavior is mixed. A number of industries have notably lagged in updating technology. The public sector cement plants have neglected to improve efficiency by modernizing equipment, switching over from wet to dry process technology, or cutting labor costs. In the past, cost-plus pricing allowed all such inefficiencies to be passed on to consumers in the form of higher prices.-I 11.34 There is strong evidcnce of conservative technological behavior in the textile sector. Protection from competing imports and, in the case of spinning, from new entry during the period that sanctions were restricted, slowed the process of modernization and restructuring, reducing firms' speed in responding to changes in demand patterns. It also weakened the ability of Pricing policies also affected location decisions in the cement industry. The cost-plus pricing system, combined with freight equalization, made ;- immaterial where entrepreneurs established plants as far as profitivility was concerned. Firms overlooked demand and raw material supply patterns in locating plants, aggravating the concentration of capacity in Southern Pakistan and cement shortages in the North. 0Z14R downstream users to pressure spinners and weavers to invest in modernization and balancing equipment which would enable them to improve and diversify yarn and fabric quality. The widespread financial sickness in the mill sector diminished the availability of investable reserves to finance upgrading programs. Location policies that preclude output expansions have also dampened the incentive for modernization. 11.35 Textile firms have been slow to specialize in differentiated, narrowly defined market segments. An engineering team studying the textile sector (under the IMG project) observed that, where modern equipment has been installed, corollary improvements in.plant layout, quality control and process flow have not been made. Firms' ability to make the necessary capital investments have been constrained by the weak financial health of the sector, which has been aggravated by the difficulty of shedding labor and of exiting so as to free up financial resources. 11.36 Import restrictions on raw materials sometimes induce firms to seek ways to raise productivity and profit per ton of inputs. As explained in the main report, sanction limits determine how much raw material can be imported, not how much can actually be produced. One staple fiber producer has been able to produce above sanctioned outputs by raising technical efficiency. Some yarn producers have shifted their production toward finer counts to obtain a higher-priced output. This initially reduces the quantity of raw materials that can be used because winder capacity is fixed in terms of length rather than weight. This situation provides firms with a case to obtain additional winder capacity under the Balancing, Modernization and Replacement (BMR) policy. They can then rest.re production to the originally specified quantity of raw materials consumed, but at a higher value product mix. This approach is especially attractive because BMR equipment is eligible for concessional rates of duty. The delays involved in obtaining permission under BMR, however, mean that this process of adjustment to restore full-capacity production takes longer than it would in thc absence of restrictions and concessions on capital imports. Rent-Seeking Behavior 11.37 As a result of frequent, unpredictable policy shifts, and the widespread practice of granting ad hoc temporary exemptions (through Standing Regulatory Orders, or SROs), firms have perceived that there are high returns to lobbying for modifications in policies as opposed to planning and executing projects in accordance with market signals. For example, exemptions from duties on capital goods imported under BMR or for non-industrial locations have led firms to postpone investments while trying to get the necessary approvals. Incumbent integrated polyester firms have to lobby the Government not to issue sanctions for new firms, since they cannot expand freely in order to achieve economies of scale that would make it difficult for new entrants to compete. 11.38 Arbitrariness and variability in government regulatory decisions account for the substantial amount of time devoted by polyester and other producers to lobbying the government. Applications are subject to lengthy delays and queries for additional information. Restrictions on contracts with foreign technicians make negotiation difficult, especially as they are subject to interpretation and change. In an industry, tax advantages to compensate for the high costs of locating investment in an undeveloped area were 0 ZI4R - 12 - reportedly withdrawn after investment had begun. These issues require attention by top-level managers. C. Industrial Performance Growth and Structural Change 11.39 Industrial performance in Pakistan has generally been quite good. Manufacturing output growth has been impressive. Table 11.5 shows that during the 1950's manufacturing output grew at an average annual rate of 7.7% p.a. followed by 9.9% p.a. in the 1960's. From 1970 to 1977, output growth slowed to 3.7%, but it picked up in the latter part of the decade, so that the average growth rate for the 1970's was 5.5%. With reduced regulation and renewed encouragement of private investment since 1977, the growth rate has again accelerated, to 9.6% p.a. between 1977 and 1986. Table 11.5 Manufacturing Output Growth (average annual rates of growth) Fiscal years Small Large Ending June 30 Scale Scale Total 1950-60 2.30 15.39 7.70 1960-70 2.91 13.31 9.90 1970-77 7.30 2.59 3.74 1970-80 7.93 4.73 5.51 1977-86 9.40 9.67 9.59 1950-86 5.20 10.80 8.00 1960-86 6.30 9.10 8.10 1985-86 9.40 7.82 8.24 Source: Ministry of Production, in Economic Survey of Pakistan, 1985/86. 11.40 Due to the slow rate of growth between 1970 and 1977, the rate of industrial growth in Pakistan from 1972-1984 was roughly comparable to that of other developing countries. Table 11.6 shows that between 1972 and 1984, the average annual growth in manufacturing GDP in Pakistan was 12.7% p.a., which was higher than about half the developing countries in the sample. Table 11.6 Average Annual Growth Manufacturing GDP, 1972-84 (percent per annum) Brazil 11.1 India 9.8 Mexico 11.1 Chile 3.2 Indonesia 20.0 Pakistan 12.7 China 7.9 Korea 21.0 Philippines 12.4 Colombia 13.0 Malaysia 19.9 Thailand 16.8 Egypt 14.9 Turkey 13.0 Source: Annex 11.18 0 '_i4R - 13 - 11.41 The share of manufacturing in GDP has grown steadily from 7.8% in 1950 (Table 11.2) to 20.7% in 1983 (Table 11.7). Pakistan has reduced its dependence on agriculture and diversified its economic base. The share of manufacturing in GDP is now roughly the same as for developing countries as a whole, though manufacturing is less important in Pakistan than in some rapidly growing NICs such as Korea and Brazil. Table 11.7: STRUCTURAL CHANGES IN GDP, 1966-83 Developing Pakistan India China Brazil S. Korva Countries World Agriculture 1966 37.1 47.8 37.5 15.9 34.9 28.6 9.4 1978 17.8 38.6 29.8 14.0 20.2 21.4 7.2 1983 28.1 36.1 35.3 13.4 13.9 20.8 6.4 Mining 1966 0.5 1.0 4.4 0.8 1.9 4.7 2.5 1978 0.5 1.4 5.5 0.7 1.4 6.2 3.5 1983 0.5 3.3 6.7 1.2 1.4 7.8 4.6 Manufacturing 1966 15.2 14.3 30.3 27.2 18.6 21.1 27.9 1978 16.2 17.0 37.5 27.5 27.8 22.2 25.6 1983 20.7 14.9 32.5 27.2 27.4 20.,6 23.0 Construction 1966 4.3 5.1 3.2 5.4 3.7 4.5 5.8 1978 4.9 5.3 3.7 5.8 7.9 5.9 6.4 1983 5.1 5.7 4.6 4.4 8.4 5.7 5.6 Services 1966 42.9 31.7 24.5 50.8 41.0 41.1 54.4 1978 60.6 37.7 23.6 52.0 42.7 44.3 57.3 1983 45.6 40.0 20.9 53.8 48.9 45.1 60.3 Source: Industry Development Division database. Pakistan: Economic Survey. 11.42 The growth of private investment in industry also has been strongly positive since 1977/78, recuperating from the three-year slack period of 1974-1977. Between 1977/78 and 1984/85, private industrial gross fixed capital formation grew at an average annual rate of 15.6% (Table 11.8). Most of this was accounted for by investment in medium-and large-scale industry, which grew at an average of 18.2% p.a. during this period. 021 4 R S14 Table 11.8 Gross Fixed Capital Formation in Industry, 1974/75-1984:85 a/ Item In Current Prices 1974/75 1977/78 1980/81 1984/85 Private Large and Medium Scale Industries 990.4 1,485.7 3,291.0 7,294.5 Small-Scale Industry 446.5 634.4 1,068.5 1,592.1 Public Industry 1,064.9 6,143.5 4,835.6 3,709.1 (of which Steel Mill) 194.6 (2,845.4) (2,294.6) (1,123.8 Total 2501.8 8,263.6 9,195.1 12,595.1 In Constant 1970 Prices Private Large and Medium- Scale Industries 449.1 465.1 759.3 1,503.2 Small Scale Industry 202.1 196.3 242.4 321.4. Public Industry 482.9 1,925.3 1,115.6 764.2 Total 1,134.1 2,587.2 2,117.3 2,588.8 Share of Medium- and Large-Scale Industries In Total Investment, Constant Prices % 40 18 36 58 Share of Private Industry in total % 57 26 47 71 a/ Figures for 1983/84 are revised and for 1984/85 are provisional. Source: Federal Bureau of Statistics, Pakistan: Economic and Social Development Prospects, February 1986. 11.43 To gain some perspective on Pakistan's growth performance comparison with that of Korea is of interest. In 1972 the size of GDP and manufacturing GDP in Korea and Pakistan was not dissimilar. Korea had a GDP of $10.6 billion, Pakistan $9.3 billion; Korea's manufacturing GDP was $2.3 billion, Pakistan's was $1.5 billion. Consequently, the importance of manufacturing in GDP was higher in Korea (manufacturing value-added was 22% of GDP in Korea 1972, compared to 16% in Pakistan). GDP per capita was roughly double in Korea in 1972 ($312 vs. $143 in Pakistan). 11.44 By 1984 the differences have become much more pronounced. Korea's GDP in 1984 had grown to $83.2 billion, while Pakistan's was $31.1 billion. Manufacturing GDP rose to $23.7 billion in Korea in 1984, or roughly 12 times the 1972 level, as against $6.3 billion, or about four times the 1972 level, in Pakistan. However, under the liberalized industrial policy environment of the 80s Pakistan's manufacturing GDP, actually grew faster than Korea's. This comparison suggests that Pakistan's potential performance might have been much better in the 70s, although it does not indicate to what extent the differences 02 14R - Is are attributable to the countries' different strategies and policies and to what extent they derive from different resource endowments or other factors. Export Performance 11.45 Despite strong output growth, manufactured export performance has been mixed. The real rate of total export growth in rupee terms has fluctuated widely si.ce 1960, without a significant directional trend (see Figure II.1). The contribution of manufactured goods to total exports has increased gradually trom 44% to 49% between 1970 and 1986, in line with the growing importance of manufacturing in GDP. The share of semi-manufactured exports has fallen as the share of manufactured exports has risen indicating a shift toward greater comestic value-added. The share of primary commodities (mainly raw cotton and rice) in exports has remained significant, rising from 33% in 1970 to 35% in 1986. (Annex II.10) 11.46 The compositicn of exports has become more diversified and the dependence on raw cotton and textile exports has declined in the last 15 years. In 1970, raw cotton and cotton manufactures exports accounted for 74% of total merchandise exports; by 1982/83, their combined share had dropped to 31%. However, in recent years (1982-1986) the diversification of the export base has again narrowed somewhat. By 1985/86, the importance of cotton fiber, yarn and textiles had risen to 36% of total exports, and the contribution of the top five and top ten export commodities to total exports has risen since 1982/83 (Annex II.11). 11.47 In terms of the destination of exports, Annex 11.12 shows that the exports are directed roughly equally to developed industrial markets and developing country markets. Until 1985/86, there was virtually no increase in the share of exports to large, rapidly growing industrial markets. 11.48 Textiles are one area of potential for more rapid export growth through diversification. Cotton manufactures are the most important source of export revenues. Pakistan has a natural comparative advantage in cotton textiles, as one of the lowest cost cotton producers in the world. However, due to its inability to imprcve product quality and diversify into new areas. Pakistan's share of world textile markets has declined. Annex 11.13 shows that Pakistan's share of world trade in cotton yarn declined from 28.2% in 1971 to 12% in 1984 while its share in cloth increased only slightly, from 7.1% to 9.5%. Although ready-made garment exports has grown rapidly at 14% p.a. between 1977 and 1986, the base was small and they still contribute only 24% of textile exports. In comparison with other developing countries such as Korea, Hong Kong, and most recently Bangladesh, Pakistan's textile export growth performance has been modest. Capacity Utilization 11.49 Capacity utilization may be used as one indicator of performance. Nevertheless, excess capacity does not necessarily imply inefficiency, if it is a temporary phenomenon in rapidly growing industries or in markets where dynamic competition leads to a high rate of entry and exit. Annex 11.14, shows the level of "actual capacity utilizati' .", defined as actual output as a percentage of rated capacity output, for 3. ;ectors. 02 14R - -R i 8 3 t2 9- are attributable to the countries' different strategies and policies and to what extent they derive from different resource endowments or other factors. Export Performance 11.45 Despite strong ontput growth, manufactured export performance has been mixed. The real rate of total export growth in rupee terms has fluctuated widely since 1960, without a significant directional trend (see Figure 11.1). The contribution of manufactured goods to total exports has increased gradually from 44% to 49% between 1970 and 1986, in line with the growing importance of manufacturing in GDP. The share of semi-manufactured exports has fallen as the share of manufactured exports has risen indicating a shift toward greater domestic value-added. The share of primary commodities (mainly raw cotton and rice) in exports has remained significant, rising from 33% in 1970 to 35% in 1986. (Ar:x II.10) 11.45 The composition of exports has become more diversified and the dependence on raw cotton and textile exports has declined in the last 15 years. In 1970, raw cotton and cotton manufactures exports accounted for 74% of total merchandise exports; by 1982/83, their combined share had dropped to 31%. However, in recent years (1982-1986) the diversification of the export base has again narrowed somewhat. By 1985/86, the importance of cotton fiber, yarn and textiles had risen to 36% of total exports, and the contribution of the top five and top ten export commodities to total e-yorts has risen since 1982/83 (Annex II.11). 11.46 In terms of the destination-of exports, Annex 11.12 shows that the exports are directed roughly equally to developed industrial markets and developing country markets. Until 1985/86, there was virtually no increase in the share of exports to large, rapidly growing industrial markets. 11.47 Textiles are one area of potential for more rapid export growth through diversification. Cotton manufactures are the most important source of export revenues. Pakistan has a natural comparative advantage in cotton textiles, as one of the lowest cost cotton producers in the.world. However, due to its inability to improve product quality and diversify into new areas. Pakistan's share of world textile markets has declined. Annex 11.13 shows that Pakistan's share of world trade in cotton yarn declined from 28.2% in 1971 to 12% in 1984 while its share in cloth increased only slightly, from 7.1% to 9.5%. Although ready-made garment exports has grown radpidly at 14% p.a. between 1977 and 1986, the base was small and they still contribute only 24% of textile exports. In comparison with other developing countries such as Korea, Hong Kong, and most recently Bangladesh, Pakistan's textile export growth performance has been modest. Capacity Utilization 11.48 Capacity utilization may be used as one indicator of performance. Nevertheless, excess capacity does not necessarily imply inefficiency, if it is a temporary phenomenon in rapidly growing industries or in markets where dynamic competition leads to a high rate of entry and exit. Annex 11.14, shows the level of "actual capacity utilization", defined as actual output as a percentage of rated capacity output, for 39 subsectors. 02 14R - 17 - 11.50 In these subsectors, the rate of capacity utilization ranges from a low of 33% for rice milling to a high of 112% of rated capacity for fertilizers. The average rate of capacity utilization (based on this measure) in the subsectors listed was 63%. The subsectors with the highest rates of capacity utilization were fertilizers, petroleum refining, cement, and sugar refining, all process industries and dominated by public sector firms. Investment restrictions have evidently avoided excess capacity in these industries, despite large minimum efficient plant scales relative to the domestic market. The products with the lowest levels of capacity utilization were rice milling, aluminum utensils, radio and television equipment, electric fans, and electrical appliances. These are industries in which entry has been relatively easier. Much of the idle capacity was found in individual plants which were "temporarily" closed -- for periods up to five years -- awaiting financial restructuring or new owner/managers. Thus, one explanation of low capacity utilization, and associated efficiency losses, may be exit policies that inhibit declining firms from transferring their assets. Another explanation may be deliberate installation of excess capacity in the first place, both for strategic reasons -- to discourage potential new entrants by threatening to expand output -- and as a precaution against the possibility of future sanctioning restrictions that would limit a firm's ability to expand. Continued easing of investment sanctioning would reduce the latter reason for building excess capacity, although this needs to be accompanied by policies to facilitate exit and asset transfer. Product Price and Quality 11.51 Domestic prices of many consumer durable and non-durable goods and capital goods exceed international prices. Annex 11.15, tables 1 and 2, compare domestic prices with international prices for a number of consumer products. Domestic prices exceed international prices (C&F Karachi) for most products. In table 1, on average the domestic price is about 35% higher than the international price; in table 2, the divergence on average is 25%. One factor explaining higher domestic prices is protection from competing imports afforded by the trade regime, which allows domestic sellers to maintain prices at a level above that of competing imports. However, in the products in Annex 11.15, the domestic prices are below the landed cost of the imported good, inclusive of relevant import duties and taxes. The difference between the domestic price and the landed cost of imported goods may reflect in part the superior quality of the imported product. There is also downward pressure on domestic prices from goods brought in without paying duties, under baggage allowances or through smuggling. 11.52 While duty-free imports provide some degree of price competition, the extent of downward price movement is limited by domestic cost structures which often exceed international production costs. In comparing domestic and international prices, a trade-off exists between product price and quality. For example, in bicycles, the domestic price is only about 60% of the price of a standard light roadster (SLR) sold in the US. However, there is a significant quality difference: the international SLR is lighter, of stronger materials, is more durable and has higher quality fit and finish. Pakistan-made bicycles are roughly comparable in quality with Indian cycles, and ex-factory prices are similar. However, for imported Chinese cycles--which are smuggled, and thus duty-free--customers are willing to pay an extra Rs 600 ($36), almost double the domestic price. The Chinese cycles have superior fit and finish (e.g. they are available in colors other than 021 4P - 18 - black, and have more durable chains, spokes and tires and tubes).-' 11.53 The quality of vegetable ghee has deteriorated in recent years as firms have substituted inferior quality oils as inputs in response to rising input prices and regulated prices on output. With manufacturers unable to recuperate fully their higher costs through higher prices, capacity utilization and output growth have declined.!' Capacity utilization fell from 117% in 1978-79 to 81% by 1985-86, and output, which grew at an average annual rate of 10.5% in the 1970s, grew more slowly--at 5% p.a.--from 1980 to 1986. 11.54 In cement, domestic ex-factory prices (net of excise taxes) are about Rs 900/ton compared with Rs 744/ton for imported cement.- When shadow prices are used to approximate the comparable international cost of domestic inputs, however, the ex-factory price of domestic cement compares favorably with the imported price. This is especially true in inland markets where imported cement incurs high transport costs. Although Pakistan's small plants are technically inefficient and involve high unit operating costs, many remain economic in terms of their low opportunity cost of capital and transport cost savings over time. 11.55 In some automotive components and the powerloom weaving sector, small firm sizes have resulted in significant problems in terms of product quality. One reason for the preponderance of small firms in engineering industries and textile weaving is that tax policies discourage growth and formalization of small-scale units. The Factories Act requires firms with more than ten workers to register with the Directorate of Industries, which in turn requires- them to pay applicable excise duties and sales taxes on their output and a host of labor taxes and employment benefits. Annex 11.16 shows the applicable labor taxes and regulations for registered firms. To avoid these taxes and payments, as well as general day-to-day factory inspections and regulations, many firms remain smaller than the registration limits./ The similarity in cost and quality between Indian and Pakistani cycles may explain why few cycles are smuggled from India, even through the transport cost is less than from China. Small production scales, which were enforced through sanctioning restrictions on plant size after 1977, may also be partly responsible for rising production costs. A study by U.S. AID estimiated a savings of Rs 1 per kilo--or 8%--for plant sizes over 30,00 tons p.a.; average plant sizes in Pakistan are 9,500 and 20,000 tons p.a. for private and public sector plants, respectively. Source: World Bank, Pakistan Cement Industry Modernization Project, May 1987. Industry Department, Report No.6707-PAK. Imported cement price is CIF Karachi. In practice, firms are able to employ up to about 50 workers without registering by avoiding (or anticipating) factory inspections. Since the registration limit is based on employment size, workers can be sent away during factory inspections and inspectors can be induced to under-report the number of wcrkers. In contrast to India, there is not a system of product reservation based on asset size, so firms are not prohibited from investing in capital equipment which would prevent them from expanding beyond these asset limits. Small scale technical and marketing assistance promotion programs and preferential credit policies in Pakistan define small firms as having asset sizes up to Rs 10 mi:lion. However, these programs are not considered to be effective enough to deter firm growth. 0 21 4R -19 - 11.56 Small firms in Pakistan are characterized by low product costs but poor product quality. Low unit costs are possible because of lower wage costs and tax payments. But small firms do not have sufficient output volume to be able to amortize investment in testing and quality control equipment. Nevertheless, the cost advantage of small firms may have discouraged entry by larger firms that would be more capable of technical innovation and quality control. In the automotive sector for example, replacement parts are generally manufactured by small scale firms, but product quality is inferior. Unacceptable product quality and lack of technological progress in small units may have discouraged vehicle assemblies from developing subcontracting relationships. In textile weaving, small powerloom firms have captured the major share of the fabric market, but have lacked the financial and technical resources to improve product quality and reliability and move into high quality blends and synthetic fabrics. This has prevented the garment export sector from diversifying into specialty garments that are not subject to quota limits in export markets. 11.57 The evidence is mixed regarding the polyester industry's cost performance. On the one hand, it exists as an import substitution industry only because of protection, and no firm manager saw any prospects for direct exports of yarn or fiber. On the other hand, it is an input into successful export industries and there is little evidence of scarcity rents. 11.58 The most clearly over-protected and inefficient part of the polyester industry is the initial stage of production of polyester chips from imported chemicals. The chemicals come in at zero duty, the chips at 60%. But Pakistan cannot obtain those chemicals at the bulk rates available to very large plants in Japan and Europe, and some foreign firms produce chips using ethylene glycol as a by-product of other chemical manufacturing. By creating strong incentives to avoid high tariffs by producing chips domestically, Pakistan is imposing a high cost on the downstream industry and foregoing the opportunity to benefit from the availability of chips on world markets at dumping prices. 11.59 The prevailing ex-factory price of filament yarn is below the total landed cost of equivalent imports, implying that the theoretically available effective protection is not fully utilized. Possible explanations include domestic competition, competition from smuggled imports, and quality differences (including different average deniers) between the domestic product and the imported product used for reference. But the evidence also suggests that production in Pakistan could not compete with imports without protection f3r some time. At the current exchange rate, production costs are significantly above those in Indonesia, a comparable country whose costs in turn are not internationally competitive (Annex II.17). Part of the gap is attributable to high depreciation and financial charges, which can be expected to decline over time. Even so, competitiveness with imports is unlikely to be achieved without further exchange rate depreciation to reduce the high cost of nontradables and enhance Pakistan's labor cost advantage. 11.60 In the automotive sector, while product costs are currently roughly comparable to international costs, most car and light commercial vehicle firms are primarily assemblers. As the domestic content rises under the deletion program, the cost of assembly will likely rise, since domestic component manufacturers are too small to realize potential economies of scale. The cost of most components exceeds the cost of imported components by about 20 percent. 02 14R -20 - Conclusions 11.61 In general, while growth performance has been good, products are often not able to compete internationally in terms of price and performance. When prices are controlled, firms appear to sell poor quality products and avoid investing in quality improvements. As Pakistan's industrial base widens, a gradual increase in the sources of competition will be needed to stimulate technological innovation and aggressive marketing behavior. Continued liberalization of investment restrictions, as well as market growth, should increase domestic competition in most industries. In these industries where MES remains large relative to the domestic market, trade liberalization will play a key role in providing the threat of competition from imports. Improved product quality and cost reduction are needed to ensure sustained growth of efficient import substituting and export industries. 02 4R ANNEX 11.1 Shares of Different Manufacturing Industries in Value Added (Percent Share) Changes in share SI.NO. Industry 1954 1959-70 1969-70 1980-81 1954-81 1. Food Manufacturing 8.5 7.6 10.0 25.9 +17.4 2. Manufacturing of Beverages 0.4 0.3 0.1 0.8 +.4 3. Tobacco Manufacturing 5.5 5.3 6.1 3.4 - 2.1 4. Manufacturing of Textiles 46.7 39.1 28.5 23.3 -23.4 5. Manufacturing of Footwear and other Wearing Apparel 3.5 2.4 3.8 3.0 -.5 6. Manufacturing of Paper and Paper Board - 1.6 1.2 1.6 +1.6 7. Printing and Publishing Industries 2.7 2.4 5.4 2.3 -.4 8. Manufacturing of Leather and Leather Products & Others 2.4 0.7 2.2 1.7 -.7 9. Rubber and Rubber Products 0.9 0.5 0.7 1.6 +.7 10. Chmical and Chmical Products 9.5 8.3 7.9 13.5 +4.0 11. Non-Metullic Products 4.0 6.1 2.5 2.0 -2.0 12. Basic Metal Industries 2.1 3.1 2.0 7.0 +4.9 13. ManufactVing of Metal Products 2.1 3.9 3.7 1.3 -.7 14. Non-glectrical Machinery 0.9 2.1 3.9 2.3 +1.4 15. Electrical Machinery 0.8 2.7 2.6 4.5 +3.7 16. Transport Equipnt 1.1 3.4 1.6 2.3 +1.2 17. Other Industries 8.9 10.5 18.1 6.2 -2.7 Share of top five industry 79.1 71.6 70.6 75.9 -3.2 groups in total Source: Based on Census of Manufacturing Industries, in Economic Survey of Pakistan, 1984-85 0135R/~.L1987 ANNEX I1. 2 Average Firm Size ---------------------------------------- Gross Output Per Fire Emaloyees Number of Year Constant Per Firm Firms ------------------------------------------------------- 195S-56 1187.3 102.7 1314 1957-58 1097.4 102.8 1544 1959-59 1420.4 112.0 1703 1959-60 -506.= 112.2 1851 1962-63 2099.6 139.9 2699 196=-64 2064.4 111.1 2974 1964-65 2146.2 120.6 3132 1965-66 2230.3 109.8 3136 1966-67 2462.9 115.9 3509 1969-70 3381.9 116.6 3587 1970-71 7541.7 120.4 3549 095-76 4214.1 156.0 3248 1976-77 4631.3 135.4 3373 177-79 4954.5 125.0 3676 19S0-91 6407.8 118.3. 3818. Source: Census of Manufacturina Industries, various years. ANNEX 11.3 1962/83 1903/84 1994/85 1995/96 Insurance 43 45 47 50 atton Textile 593 633 69 743 1 ,en 66 6 74 75 ynthetic & Rayon 34 36 36 43 inanczal Institutions 62 61 69 69 ute Is 23 23 23 ugar & allied industries 93 116 127 147 ement 26 27 29 29 Tobacco 39 40 41 42 Fuel & Energy 43 49 54 56 Engineering 572 612 701 777 Auto & allied engineering 293 313 349 365 Cables & electrical goods 236 242 252 257 Transport & Communications 243 253 263 265 Chemical & Pharmaceutical 313 :51 401 472 Paper & Board 74 84 95 114 Vanaspati & allied industries 71 74 96 92 Construction 475 541 623 7-9 Leather & tanneries 152 177 21o - 26 Miscellaneous 8744 9682 10'717 112-:05 TOTAL: 12194 13427 14496 157B4 Source: Corporate Law Antherity Includes only public and private 1taited companies; does not include ' e * companies withi unlimited liability, United by guarantee, aseociations not for profit or foreign companies. ANNEX 11.4 ae # tywtør Pæt sIam In Pakistan ad he fr tat ...............................................-........ I Pakista I zore Tei~ iheild lNtwle I ttIøinnl Jman r ................... I ICurrent PIw~dI I I I I I I .................... ........ .. ...... ....................l.......... I I I I I I I I i I I I I I I I I I % tester tapte I I I I I I I I ao.fprouers I 2 5I I 91 2i I 1 I I I I I I I I I Totat c^acity I wI 2401 554 il25 193 15I 59 95 23 I I I I I I I I I Plyeeter fit nt I I I I I I I I I .................. I I I I I I I I I bo.ofprouers I 91 9, 101 121 41 11 10 tota eecity I 1001 1221 644 ¶1UI 71 . I 45im 11272 Ctrs/day> I I I I I I I I I Av.panslz I si lel 141 1321 201 . I 65 113j 3 4000 $q Melsi Grey 246.682 72.49 291.063 17.47 194.285 13.10 196.434 60.44 176.820 52.40 162.460 61 41 148.473 54 69 Seched 38.719 1141 44.1580 1280 35.323 1147 43.490 10.61 63.804 15.98 47.774 16.11 39.424 14 0 Oyed 6 Peaneed 43.422 12.00 48.975 14.31 49.995 16.14 63.185 18.3 67.717 20.18 18.733 2013 54.875 20.19 Ølended 10.529 3 10 18.149 5.30 28.279 919 40.812 12.65 30.396 11.44 38.832 12.36 26.851 1062 TOTAL 339.362 342.335 307.812 325.021 .36.537 218.619 271.827 %Oange ove# pcedsng vea. 1-11329 01 4-110.06 5.67 3.23 1-1 It 10 1-18.36 Sso TEXTILE Commisioner ICS.O. 탭 ! -.-&[ AKNLX I 1. 9 Pakistan: List of Closed Textile Mills December 1986 A. Units which cannot be revived without complete replacement. B. Units which can be revived with new machinery but closed due to financial problems. C. Units which are partially closed. Category No.Firms Number Number Number Spindles Rotors Looms A. Sind Province 25 411,016 1,252 Punjab Province 1Z 19 2, 17 2 I26 NWFP '3 -307, 580 621 Total A. 51 640,768 1,999 S. Sind Province 9 IZI.643 :2,400 498 Punjab Province 5 909616 126 --) 4-14-)o Baluchistan 99.980 A. A. Total 9. 16 722.=9 =.400 =.S'A'4 C. Sind Province 14 801112 11391 Punjab Province e 45,832 100 '228 Total C. 2'"' 125.944 1,491 Grand Total 89 1088951 3,891 59051 Source: Twmile Camissioner's Organization AlliX 11.10 ECONOMIC CLASSIFICATION OF EXPORTS Pnftv aset 9 would g ve-- --- -- - -- - -------- .- -- ** Vw Pop*"P V segp Vauoe poap vee igg5le 632 33 371 23 10 44 I.M 190.71 6g 33 472 24 S 4 1,aM 1971-72 t,It 46 914 27 947 28 3.371 1972*73 2.306 39 2.683 30 202 30 .Us 1973.74 4.007 3* 2,294 23 3.60 38 10.161 1974.7s 4.32 48 1.30 13 4.047 36 10.2W 1SM76 4.902 44 2.068 18 4.20 38 11.253 1976.77 4A22 41 18w 17 4.783 42 112f4 1977.8 44 38 1.912 Is 6.435 50 12.M0 178.78 6.474 32 2.49 21 7.M63 47 16.925 19740 S3W 42 3.519 i5 10.063 43 23.410 1160.1 12.824 44 3.320 11 13.136 41 29.20 165142 9.112 3 3,107 13 1355I 12 26.270 1M8243 10326 30 4At1 13 1.4M 67 34.442 19344 10.7S 29 1.172 14 21.378 17 37,339 19644 tO.MUt 29 6A64 17 2034 54 37.979 1tgs-i 17.139 36 7.892 Is 24.581 40 49.592 1964 12.233 39 SA2 is 17.306 4 35.281 1ag867 II.JS 27 S.986 20 2302 13 44.345 Source: 1985-86 Economic Survey, Statistical Appendix. ANNEX II.11 Export Shares by Commodity (Percentage of Total Export Value) 1982/1983 1985/1986 Cotton, raw and waste 11.5 16.6 Rice (all varieties) 10.6 11.0 Readymade garments 6.6 10.9 Cotton fabrics 10.3 10.1 Cotton yard and thread 9.5 9.1 Leather and leather products 3.8 5.9 Carpets and rugs 5.5 5.3 Bed sheet/covers and pillow covers 2.5 3.2 Towels, napkins and bar mops 1.6 3.0 Fish and fish products 2.6 2.7 Crude and chemical fertilizers 0.6 1.9 Medical, dental and surgical instruments 0.8 1.7 Silk, artsilk and synthetic fabrics 9.7 1.6 Sports goods and toys 1.3 1.6 Fruits and vegetables (incl. prepared) 1.9 1.5 Motor vehicles, launches, ships, aircrafts & railway coaches 1.0 1.1 Machinery, equipment and parts 1.7 1.0 Petroleum products 2.8 1.0 Sugar, molasses, confectionery & honey 0.8 1.0 Tents, tarpaulins & canvas goods 3.4 1.0 Gowar gum & protein extracts 0.7 0.7 Iron & Steel products (ncl. pig iron) 0.7 0.6 Wool & animal hair (incl. wool tops) 0.6 0.6 Cutlery, hardware, tool and metal products 0.6 0.5 Footwear of leather, canvas & rubber 0.4 0.5 Onyx/marbles & their products and precious stones 0.3 0.4 Handicrafts & small manufactured articles 0.8 0.4 Tobacco, raw and manufactured 0.4 0.4 Spices, tea and chocolate 0.5 0.4 Animal bones, casings & waste materials 0.3 0.3 Cotton bags 0.7 0.3 All other items 5.5 3.6 TOTAL 100.00 100.0 Source: Federal Bureau of Statistics a OL SIR DESIINATION OF EXPORIS AND ORIGIN OF IMPORTS REGION 1975-76 1976-77 1911-78 1978-79 1979-80 1980-81 1981-82 1982-83 1983-84 1984-85 1985-86 DEVELOPED ECONOMIES Exports 41.0 43.5 39.3 47.6 39.7 32.9 38.6 35 5 40.3 42.3 S.i Imports 60.4 61.7 58.0 60.5 54.0 48.9 47.9 50.3 53.5 52.6 60.6 a. OECD Exports 40.2 42.7 39.0 47.2 39.2 32.5 36.5 35.2 40.0 41.9 S1.4 Inports 59.9 ' 60.9 57.2 59.8 53.4 48.3 47.3 49.7 52.7 S1.9 59.7 b. Other European Countries Exports 0.8 0.8 0.3 0.4 0.5 0.4 0 I 0.3I 0.3 0.4 0.3 Imports 0.5 0.8 0.8 0.7 0.6 0.6 0.6 0.6 0.6 0.7 0.9 CMEA Exports 4.4 4.0 4.3 3.7 3.9 3.9 4.1 4.2 4.5 5.7 5.9 Imports 4.5 3.7 3.0 3.1 2.9 3.2 3.0 2.3 3.0 1.6 I.6 DEVELOPING COUNTRIES Exports 54.6 52.5 56.4 48.7 56.4 63.2 57.4 60.3 55.2 42.1 42.4 Imports 35.3 34.6 39.2 36.4 43.1 47.9 49.1 47.5 43.5 45.9 37.6 a. OIC Exports 28.0 33.3 28.9 25.3 20.3 30.7 31.9 40.3 41.7 22.9 20.1 Imports 19.A 19.6 20.7 18.5 26.5 33.4 32.7 31.9 21.2 26.5 20.6 b. SAARC Exports 6.5 4.6 6.5 5.4 6.2 6.5 6.1 3.0 3.2 4.2 4.9 Imports 3.0 4.1 5.8 3.0 2.4 2.2 1.9 2.1 1.9 3.9 1.7 c. ASEAN Exports 2.9 3.3 5.1 2.5 2.4 2.5 3.7 3.1 3.t 2.3 3.2 Imports 5.0 4.6 5.3 6.4 6.2 5.0 5.8 5.4 6.3 6.4 6.6 d. CENTRAL AMERICA Exports 0.5 0.5 0.4 0.' 0.5 1.3 0.9 0.9 0.2 0.1 0 1 Imports 0.2 0.3 0.1 0.2 - 0.1 - 0.1 0.2 - 0.1 a. SOUTH AMERICA Emports 0.3 0.1 0 6 0.2 3.8 0.8 03 0.3 0.2 0.3 1.3 Imports 0.2 0.4 0.3 I.6 1.5 2.0 0.9 0.8 1.3 1.5 1.3 f. OTHER ASIAN COUNTRIES Exports 13.6 7.9 30.0 10.3 14.6 17.5 13.5 10.7 5.1 6.9 6.9 Imports 4.5 4.0 5.3 5.4 5.7 5.7 6.9 6.0 5.3 5.4 5.4 g. OTHER AFRICAN COUNTRIES Exports 3.0 2.8 4.7 4.9 2.6 3.9 3.2 2.2 1.7 3.6 3.9 Imports 2.4 T.0 A.6 1.1 0. 3.5 0.9 1.2 3.5 2.2 3.7 GRAND TOTAL 100.0 300.0 100.-0 i300.0 too.O 3000 10 00. O0 300.0 300.OW- Sources Federpl Bureau of Statistics Notes: OECD = Organization for Economic Cooperation and Development. CMEA = Council of Mutual Economic Association (USSR and Eastern European Countries). OIC = Organization of Islanic Countries. SAARC= Includes Banwlades. India. Maldives. Nepal and Sri Lanka. Cotton Yarn: Production and Domestic Requirement-Mill Sector Period Production Mi Cwnumption Export Available for Local Market (% of Production) (% of Production) (S of Production) 1971-72 335.702 98.785 (29A) 130.1568 (38.8) . 106.769 (31.8) 1972-73 37.122 89.860 (23.9) 184.404 (49.0) 101.838 (27.1) 1973-74 379.460 96.066 (25.3) 100.ft 4 (26.5) 12.840 (48.2) 1974-75 351,200 8103 (25.1) 75,840 (21.6) 187.257 (53.3) 1975-76 349,63 83.943 (24.0) 110.490 (31.6) 155.220 (44.4) 1976-77 262.640 65,452 (23.2) 61.742 (21.8) 155.446 (55.0) 1977-78 297.895 55165 (18.5) 59.965 (20.1) 182.775 (61.4) 1978-79 327.79 51.215 (15.6) 97.929 (29.9) 178,652 (54.5) 1979-80 362.862 47,910 (13.2) 99.836 (27.5) 215.117 (59.3) 1980-81 374.947 43.277 (11.5) 96,232 (25.4) 236.438 (63.1) 1981-82 430.154 42.824 ( 9.9) 95.621 (22.2) 291.909 (67.9) 1982-83 448.430 50.563 (11.3) 134.100 (29.9) 263.767 (58.8) 1983-84 431.580 34,972 ( 8.1) 101.805 (23.6) 294.803 (68.3) 1984-85 431.731 53.548 (12.4) 125.855 (29.1) 252.330 (58.5) 1985-86 (July- March) 369.788 36.640 (10.2) 113.938 (31.7) 209.210 (58.1) Fig. in (000 Kg) Source: Pakistan Share In World Trade In Textile COTTON YARN COTTON CLOTH Pakistan's Pakistan's Period World Pakistan Share in World Pakistan Share in ExpM Exports world Exports Exports World Export Export 1971 *. 386,423 109.557 28.2 680.793 48397 7.1 1972.. , 510.096 160.703 31.5 774.393 48.06 6.2 1973 536.175 146.920 27.4 778.300 73.813 9.5 1974 497.025 74.567 15.0 760.075 77.460 10.2 1975 545,918 162.972 28.0 741,774 56.199 7.6 1976 622.180 95.914 15.4 873.469 48.812 5.6 1977 547.506 46.716 8.5 819.043 36,986 4.5 1978 630.040 74.883 11.9 856.968 51.646 6.0 1979 673.424 88,759 13.2 939.004 568.707 6.2 1980 707.767 97.212 13.7 884.453 66,560 7.5 1981 677.720 84.625 12.5 746,890 75,075 10.1 1982 697.010 112.534 16.1 830.920 84.020 10.1 1983 783.770 141.600 18.1 913.520 104.10 11.4 1984 779.860 93.930 12.0 995.560 94.910 9.5 Figures in Metric Tons Source: APTMA Capacity Utilization /t tPercentage) 1.Vegetable Oil Except 62 19.6lass & Products 73 Hydrogenated Oil ad Cotton Seed oil 20.Electric Bulbs 5o 2.Rm0ined Sugar B 21.Steel Foundaries, Re-felling gills 3.Rice Milling 33 =.Fabricated metal 58 4.Cigarettes 62 23.Plushing Equipment 46 5.Spinning, Weaving and 76 Finishing of Cotton 24.Agricultural Machinery 56 Textiles 25.Utensils-Aluminue 14 6.Spinninq, Weaving and 5 Finisning of doolen 2b.Textl1e Machinery Textiles 27.Electrical Appliances 42 7.Spinning, Weaving and 79 Finishing of Jute 2B.Batteries 68 Textiles 29.Electrical Industrial 43 B.Spinn!ng, Weaving and 57 Machinery F!nishin; of Synthetic Textiles 3O.Electr-c Fans :9 9.0ool Carpets 59 31.Electr-cal Acaratus 44 10.Paper Board 70 32.Insulated Wires 54 1I.Pulp k Paper 46 33.Radio, Television 36 Equipment 12.Tyres and Tubes 63 34.Motor Vehicles 75 13.Alkalies 93 35.Shipbuilding 14.Fertil:zers 112 36.Cycles 79 15.Pesticides 63 37.Petroleus Refining 107 16.Paints, Varnished 58 38.Bricks, Tiles 71 17.Synthetic Resins, 63 Plastics 39."atches 59 18.Cement 95 All 39 Industries 63 Source: Study by Robert Nathan and Associates and United Consultants (Pvt.) Ltd for the Bovernaent of Pakistan, * Capacity Utilization in Pakistan's Manufacturing Sector 8, March 1997. Twenty alternative definitions of capacity utilization were estimaced in this study; this table uses the common definition of actual output as a percentage of rated capacity. ―一一一－-－一－-~---－一 奮 汗一”汗日召’一三一”于一～痲””必一汗；汗一汗于審汗審一”于于一于于審于～～三必汗于‘萬 j當！亂，【”禺一之必，’鳥．鳥鳥鳥亂g，亂審，『『二【： ；邑三基日薇。鑒奉號禹鳥認藝莖聖藝聖；邑鳥。邑邑鵝。徑蔥乞乞星I 臼一汙藝f．震號藝喜怔平三。1．二二二。乞日蘇響悲三二必：召二二要認三。 韋露：盒雲露乏＿巒•＿一，「曾留口一于言戶戶豐二緣言r尸二才寫必一必一甲呂， 于日各－一濺’：。濺生〞一華蘊三二：“養甚二．,t蒲．=,t，可，r『．發， 一i萬靈騙藝日丰三么註：三：二二薇藝．賽莖，賽號名名i痲，露熙 ；二眾一日：：實無：一三三三丰二憂二t：露奮，,，乞‘莖日 寥一三婪盔三震邑二一鳥荒藝藝互藝徑藝呈騙一韋－ ’蓬一”一‘一’華耀”i :, ：一認：- .－一•一忠二．-．緣二奮他：認：念：續響當認亡響：•斗：& g留他︰豐二）g鵠念二奮騙讓二念豐S；•鳥忠二忽擴二日一”丰 .&&&&-.,－一”一－一’.&&&&&&-－一一’.”一”－一，一“&,&&”一”－一“一，&,&&’實一～騙” ,～二，牌二－-.，二馮露二鰓寫二。：，鑰鑒。。萬：邊乞； &”••j，•‘•一，,－一••－－一•”一”，一•：思 二二，，一于．－汗于，,，于于于汗P二二二I，縴二 日革藝邊露蓬露藝奮辟奮驢露號！！蔥藝蓬露！藝藝悲號號鑿‘二禹‘, •一••••一•”&--.--.--.－一••一•：”遝 &&&&.&&&&&’一一”&&&‘驕”&&’一“’一”－一”一’一’”計”一”&&&&－一－一’&’一－一～～萬’竺二一奮 －一•鳥•一•斗一，:,.,. •一•＿望•誠一，_＿二鷥響，:，寫，，必 .．…＿＿二＿二＿•．＿雙二＿__＿二＿____＿丑乞竺豐亡甚二＿__-------－一亡喜一二一籐 二二二禺禺二二二二二二：,，一禺 一二一亡一亡．…亡一亡一亡一亡－－一亡一亡．．一：.．一矓亡日一’此」 :．。，;- ：豐B呂，J ：亡萬二二喜― 。二二二二。二二二二二二二•••斗二二寫萬讓；常寧；:，屆•寫― 一神仲胛計斤胛戶馴馴廾尸戶州斤斤計斤r rr斤戶尸戶戶：禺．一― ‘緣•緣，誠，二緣響‘〞忠。：雲誠誠誠誠，該；二二二三二．- &&&&----－一”&&&&&----－一”-----------－一”·－－一”一竺竺一了一：華”豐― 一，,,，戶，r戶汗于弟戶汗汗多汗汗戶夢汗于于戶藝，楓．騙屆― 日一巒一豐一豐一豐一三一興一孼雙一號一巒豐一變豐一】〕〕乞一11 _,！煙韋。”弄― 二。．‘•‘一萬話認響零二，他‘二‘認：響。認，二二藝實目蘊I ··“&---．一－·－·－--－一－-－·“---.-－·－·····－.----，·－．··－.--－·一二二，爭‘.&! ！于i蠶＿I ！騙一三l 一二滷，&‘豐＿豐，•寫二留蠶，&::.t：豐＿．豐‘巒雙註登一l “諍’&&”一響一一牙””斤”一f一一諍一－一”妒－一”&～一簪’”一～簪－－一－一華一一一一一．面亡一一－-.1 露．登警哥登警，露．辭遺露要，- 藝三三黑三藝華朧騷二― 一”&&&&’一〕’&‘一””一’一’一’一’”一’”一！’一‘- T•方？d- 1 aTq彎1 ••．•••••••－．•••‘.-－一－一＿ 价 一 斗．; ANNEX 11. 15 Table 2 Of DIVER== 89=0 MOM FUCS 9 LANDED CUT AND 550fic PRICE or IW61125 cNamm RMIL117s- (February 1986) Extent of Extent of Divergence Divergence Between Between 0 ons: $tic Landed Cost Domestic Price. (PA) Pw(l+t), Current Price and world MW Domestic Tariff Commodity (Pd) Price, (Pw) b/ Price (Pd) /c &&to as z "iL z Refrigerator (9.3 cft) 10"500 34 21 70 Air-Conditioner (I ton) 7,200 a 72 390 Dish washer 5,200 0 70 340 Washing Kachine 4,750 12 66 340 Cooking Range 51600 8 36 68 Hair Appliance 450 56 5 238 Iron 410 35 60 238 Gas Cooker 790 30 51 -164 TV (Color) 10,LOO- 17 43 103 VCR 129000 so 26 103 VCR (Camera) 14 0 "0 25 122 VCER Cassette 160 -17 57 92 Radio Recorder -21,600 -23 74 200 Car Cassette Player 11200 21 54 164 Vacuum Cleaner 1,530 26 63 238 pan 10050 15 66 238 Heater 1,200 27 62 157 Slander/Juicer 425 11 65 212 Toaster 580 13 66 238 Nicrowave Oven 49750 21 28 68 Kitchen weighing SCSI* 190 32 35 103 Hostess Trolly 39400 7 47 104 Vacuum Flask 225 41 37 122 Personal Weighing Scale 210 87 a 104 Camers 29200 7 60 164 Clock 320 100 24 164 B41;7 Cots/cwt 320 43 30 104 Pressure CAeft" 635 7 59 164 AVERACE 01F ADM 25 49 172 [a a In Karachi markets. r a Given by I-Pd/Pw re a Given by 1-Pd/Pw(l # 0 7-4 a Import duty + sales tax SOURCE: Review of Industrial Policy Study for the National TAX Reform Commissior Esesjay Consultants (Pvt.) Ltd. 1986. p-80-81- from The Trade Regime in Pakistano op. cit, p.132 ANNEX 11.16 Labor Laws Applicable to Registered Firms 1/ Overtime: double rate for over 8 hours/day; cannot exceed 10 hours. If overtime continues beyond 4 days or so, firm mast seek permission of ispector. Night Shift: no extra pay (shifts are usually rotated). Holiday: double pay and substitute holiday. Children: minimum 14 years; women and children 14-17 to work only 6:00 6:00 a.m. to 6:00 p.m. and no more than 6 hours. Contract Labor: has same benefits under law, but: contractor (i.e. direct employer) is not always visible. Inspections: Labor officials are supposed to inspect at least 10 factories a muth, and each factory once a year. Joint Labor Directors make super-inspections of five percent of firms (i.e., 5 percent of firms are visited twice). Inspectors check working conditions, safety, cleanliness, maintenance of records, permanent (more than three months) versus temporary workers, etc.. 1/ Most LabLr 'aws are Federal. VL3S3/L& es I ANNEX 11.16 Labor Laws Applicable to Registered Firms 1/ Overtime: double rate for over 8 hours/day; cannot exceed 10 hours. If overtime continues beyond 4 days or so, firm must seek permission of inspector. Night Shift: no extra pay (shifts are usually rotated). Holiday: double pay and substitute holiday. Children: minimum 14 years; women and children 14-17 to work only 6:00 6:00 a.m. to 6:00 p.m. and no more than 6 hours. Contract Labor: haa same benefits under law, but: contractor (i.e. direct employer) is not always visible. Inspections: Labor officials are supposed to inspect at least 10 factories a moth, and each factory once a year. Joint Labor Directors make super-inspections of five percent of firms (i.e., 5 percent of firms are visited twice). Inspectors check working conditions, safety, cleanliness, maintenance of records, permanent (more than three months) versus temporary workers, etc.. 1/ Most LabLr 'aws are Federal. T13SM/1& q' * --.―き―-------------．「 _---(----:(((---&--―「 ANNE[ 11. 19 Size, Distribution of Manufacturing 'Firms and Value Added, 1970-81 (percentage) ----------- - ------- - ---------- - -------- - --- - -- ----- - -------------- Establishwts Vain Adm Emploveent Category 1970-71 1975-76 1"0-01 1970-71 1975-76 1"0-81 ---------------------------------------------- - - ------ --------- ------ - ---------- --- Up to 9 per- - s 12.3 17.4 19.7 0.4 0.7 0.6 From 10 to 19 144.3 30.6 29.7 2.3 1.9 1.9 From 40 to 49 35.4 414.9 24.7 6.6 5.2 5.9 From 50 to 99 11.2 9.5 10.1 6.9 5.2 6.7 From 100 to 249 9.3 7.5 7.3 6.6 9.9 11.8 From 250 to 499 3.5 4.0 4.0 13.5 16.7 16.3 From 500 to 999 2.6 3.0 3.1 21.2 19.2 23.9 From 1000 to 1999 1.2 2.0 1.5 21.4 22. 1 24.2 From 2006 to 4999 1.0 0.9 0.7 15.7 14.0 7.3 From 5000 and above 0.1 0.4 0.1 5.2 5.1 1.2 - - ------ ------------ - - - --- - -- - - - --- - --------- TOTAL 00.0 100.0 100.0 100.0 100.0 100.0 --------- w -------------------------------------------- - ---------------- Value of Fixed Assets (Rs.'0001 I/ ------------------------ up to 1450 64.7 43.2 43.3 7.2 4.7 2.0 Above 250 to '500 11.3 11.3 14.0 4.3 2.4 1.8 Above 500 to 1000 9.1 8.4 12.5 5.9 3.1 3.6 Above 1000 to 2000 1k.a. 6.0 6.7 ) n.a. S.-O 4.6 Above 2000 to 2500 9.6 14.1 14.3 ) 20.8 5.3 2.4 Above 2500 to 5W n.a. 4.6 6.1 ) n.a. 9.9 6.7 Above 5000 5.3 8.5 12.4 61.7 65.4 78.3 Rented or Leased ft.&. 15.7 0.7 P.m. 5.2 0.5 Not Rpoorted ft.a. 0.3 0.1 neg. 0.5 0.1 -- - ---- - --- TOTAL 100.0 100.0 100.0 100.0 100.0 100.0 ---- - -- - -------- - -------- - - ----------- --- - - ----------- I/ Fixed asset ranges are not comparable betueen Years because they do not take into account inflation and because they represent the book value of assets Purchased over a number of years rather than a consistent estimate of capital stock.