Sunday, September 27, 2020

UNIDO 2020: Pakistan Industrial Output Lags Behind Peers in South Asia

Manufacturing in Pakistan lags behind Bangladesh, India and Sri Lanka in terms of manufacturing value added per capita as well as per capita exports of manufactured products, according to Competitive Industrial Performance Report 2020 released by United Nations Industrial Development Organization (UNIDO). 


Pakistan's Competitive Industrial Performance. Source: UNIDO



On the competitive Industrial Performance (CIP) Index, Pakistan ranks 82 among 152 countries, well behind India at 42, Bangladesh at 70 and Sri Lanka at 75. Only Maldives (144) and Nepal (135) rank lower than Pakistan. Bangladesh has built a very successful garments manufacturing and export business that rivals China's. The country is now focusing on building mobile phones and consumer electronics industry.  

India's Competitive Industrial Performance. Source: UNIDO


Only 1.3% of Pakistan's manufacturing is high-tech and 9% medium tech, better than Bangladesh's 0.4% high-tech and 1.5% medium tech, but considerably worse than India's 9.4% high tech and 25.4% medium tech. 

Bangladesh's Competitive Industrial Performance. Source: UNIDO

Nearly 40% of India's manufacturing output is based on locally extracted natural resources like iron ore and coal, much higher than Pakistan's 9.7% and Bangladesh's 1.9%. Pakistan's per capita manufactured exports add up to only $87 per capita, well behind Bangladesh $198 and India $208. Per capita manufactured output in Pakistan is $178 versus Bangladesh's $281 and India's $299. 

China's Competitive Industrial Performance. Source: UNIDO


The most successful example of a manufactured exports-driven economy in Asia is China, ranked number 2 in the world, just behind top-ranked Germany. China's per capita manufacturing value added is $2,726 and its per capita manufactured exports add up to $1,685. High-tech manufactured products account for 30.6% of Chinese manufacturing output while its resource-based manufacturing is just 9.3% of its output.

Pakistan's Manufacturing Output Trend Since 2000. Source: World Bank


Manufacturing industries are defined by the International Standard Industrial Classification (ISIC).  Value added is the net output of a sector after adding up all outputs and subtracting intermediate inputs. 

Here's Pakistan's manufacturing output in current U.S. dollars:

Pakistan manufacturing output for 2019 was $34.66B, a 9.57% decline from 2018. In 2018, it was $38.33B, a 4.88% increase from 2017. Pakistan manufacturing output for 2017 was $36.54B, a 8.56% increase from 2016. It was $33.66B in 2016, a 2.73% decline from 2015.

 
Pakistan Manufacturing Output Peer Ranking 2019. Source: World Bank

Pakistan’s overall exports have continued to lag behind those of its South Asian counterparts since the early 1990s. Bangladesh’s exports have increased by 6.2 times compared to Pakistan’s, measured in terms of exports per capita, and that of India by 6.8 times, according to Princeton's Pakistani-American economist Atif Mian. 


Pakistan's average economic growth of 5% a year has been faster than the global average since the 1960s, it has been slower than that that of its peers in East Asia. It has essentially been constrained by Pakistan recurring balance of payment (BOP) crises as explained by Thrilwal's Law. Pakistan has been forced to seek IMF bailouts 13 times in the last 70 years to deal with its BOP crises. This has happened in spite of the fact that remittances from overseas Pakistanis have grown 24X since year 2000. The best way for Pakistan to accelerate its growth beyond 5% is to boost its exports by investing in export-oriented manufacturing industries, and by incentivizing higher savings and investments.


19 comments:

Anonymous said...

Now you are worrying me.
Facing facts!!! Tabiyat theek?

I hope this is a one off and you'll be back to your favorite retirement pass time of posting negative news on India and positive news on Pakistan.

Get well soon.

Asghar A. said...

Why is Pakistan worse than Bangladesh? Pre-1971. Bangladesh's GDP per capita was much lower than West. Only major export from there was jute. I was in Dhaka in 1963. it was no match for Karachi as far as business environment and development.

Riaz Haq said...

Asghar: "Why is Pakistan worse than Bangladesh?"

Over the last decade, Bangladesh has built a very successful garment manufacturing and export industry that rivals China. Now they’re focusing on mobile phones and electronics products. Shaikh Hasina’s governance in Bangladesh definitely beats Zardari’s and Sharifs’ in Pakistan

Mayraj F. said...

Pakistan’s GDP growth has slowed to a barely 3 percent rate that is economically and
politically unacceptable. The country’s technological backwardness, its low-level of
industrialization, the scale of its domestic market and the youth bulge all suggest that it
is punching much below its weight. There is economic potential that is not being
exploited if a virtuous growth spiral could be catalyzed through policy action that
attracts much needed foreign direct investment into industry and infrastructure that
promotes the diversification and technological upgrading of exports and helps integrate
Pakistani firms more closely with global supply chains. Although the flow of FDI from
China has been modest to date, once China begins offshoring more of its labor-intensive
manufacturing activities, Pakistan’s textile, leather, white goods and auto industries
could stand to benefit. During the medium term, China’s FDI can indirectly assist
Pakistan’s industrialization by helping to ease transport and energy constraints.
However, by the second half of the decade, increased Chinese FDI in light manufacturing
could be induced if much needed policies are implemented.
https://www.theigc.org/wp-content/uploads/2014/09/Yusuf-2013-Working-Paper1.pdf
Can Chinese FDI Accelerate Pakistan’s Growth?

Riaz Haq said...

#Motorcycle production boom in #Pakistan as #COVID19 #lockdown ends. 2.8 million motor vehicles were produced locally during fiscal year 2016-17, which increased to 3.22 million in 2017-18 with a little bit of decline recorded in 2018-19 to 2.86 million.
https://tribune.com.pk/story/2265823/motorcycle-production-booms-as-economy-recovers

Industry players expect production to increase around 800,000 units

The first quarter of the fiscal year 2021 is witnessing higher production of motorcycles as the economy recovers from the lockdown that had been imposed to contain the spread of Covid-19 pandemic.

“There is a boom in motorcycle industry of Pakistan,” said Association of Pakistan Motorcycle Assemblers (APMA) Chairman Muhammad Sabir Shaikh.

He added production of motorcycles will hopefully increase around 800,000 units after the current month ends.

Looking at the growing demand for the two-wheeler vehicle, Emerging Innovation - a bike manufacturing company - has set up a new production line for bikes called Revolt.

“We have set up the production plant with 99% deletion program; ie the company will use locally produced auto parts in the making of two-wheelers,” said the company’s country head Anwar Anees, adding, “The locally produced motorcycle will be 33% less costly with an increased fuel efficiency of 62-kilometre mileage.”

“Locally held research and development (R&D) for over two million markets with the aid of engineers from different local universities helped us achieve this efficiency,” said Anees.

Besides two-wheelers, demand for three-wheeler rickshaws and loaders has also increased due to which the company has applied for permission from the government to produce three-wheelers and hybrid electric bikes.

“It is commendable that new production lines are being set up,” said Provincial Minister for Industries and Trade Jam Ikramullah Dharijo. “New factories mean more jobs, which Pakistan is in dire need of at the moment.”

Bikes production in this venture may be the highest ever in the history of Pakistan, said Shaikh. “Sales of motorcycles are also breaking records.”

“However, motorcycles data reported by the media is not complete,” he highlighted.

He said that the data is mostly taken from Pakistan Automotive Manufacturers Association (PAMA), which has only five motorcycle producing members while around 40 companies are producing bikes in the country. Those companies are registered with the Engineering Development Board (EDB).

According to a report by EDB Electric Vehicle Policy 2020-25, two-wheelers and three-wheelers vehicles constitute a significant portion of Pakistan’s overall auto manufacturing.

A total of 2.8 million motor vehicles were produced locally during the fiscal year 2016-17, which increased to 3.22 million in 2017-18 with a little bit of decline recorded in 2018-19 to 2.86 million.

Out of 2.86 million vehicles manufactured in Pakistan, more than 2.4 million motorcycles were manufactured during the same period, said the report.

Rks said...

Asghar: "Why is Pakistan worse than Bangladesh?"


Bangladesh does not have the "Hate India " narrative. Many Indian CEOs work in Bangladesh. Since Bangladesh's GDP is galloping ahead (very close to India also), they are able to hire technical talent from India cheaply. This is helping their high-tech industry. Bangladesh has no historical problems with India, like Kashmir etc. India is its only neighbor. They hardly spend anything on defense. They no longer allow anti-India generals to come to power (like Zia-Ur-Rehman, Ershad etc). I am sure, they will overtake India's GDP in no time.

Anonymous said...

Yes Sheikh Hasina is a development dictator much in the form of Mahatir Mohammad.

Very good for Bangladesh.

Also for Hindu nationalists as Bangladesh will overtake Eastern India in GDP per capita very soon. So higher per capita income + pressure on illegals and Muslims in bordering areas should start a reverse flow of immigrants this decade.

A win win.





Anonymous said...

Rks, hate to bust you bubble, but universe does not revolve around India, nor does the world, South Asia or even Pakistan. As far as hating India is concerned, no one in South Asia is in love with it (other than Indians). Only time will tell if BD's not having a strong military is a good policy or bad.

BD is benefitting from the policies that were laid down decades ago, some even as early as 1930s.

Pakistan's failure is due to it's bad economic policies and bad leadership, nothing more nothing less. India is not even a factor in this.

Ahmed said...

Sir Asghar

This is most probably because former governments of Pakistan eg before the war of 1971, Bangladesh was East Pakistan and it was part of Main Pakistan ,mostly the federal government at that time focused more on the prosperity and development of West Pakistan as compared to East Pakistan (Present day Bangladesh ). But after the war of 1971,when East Pakistan became Bangladesh ,it got its own government which managed the country efficiently and honestly . After 1970s,all these politicians of Pakistan who came into power were mostly power and wealth hungry and cared about their own personal interest rather than national interest .

Ahmed said...

RKS

Than on what basis do you Indians insult and underestimate Pakistan and it's performance if you know that their are Indian investors and businessmen who have invested their money in Bangladesh which has helped Bangladesh improve its economy at such level ? What is the contribution of local Bangladeshis in the economic uplift and what is their contribution in the
increase of their economic output ?

How many goods are produced in Bangladesh ?

Ahmed said...

RKS

Even Nepal ,Sri Lanka and Burma has problems with India ,now does it mean that these countries have India ? Now does it mean that they are enemies of India ?

When General Musharraf was President of Pakistan, Pakistan was making lot of progress . Was their any good relations between India and Pakistan at that time ?

Anonymous said...

This does not happen in Bangladesh.

https://youtu.be/SDJGcJNXv5A

1. Bangladeshis don't consider themselves descended from Arabs,Turks etc.

2. They have retained the Bengali script and culture.

3.Hindus have not declined post 1971.They are present in all walks of life business,sports military,bureaucracy, government. There is some discrimination but it is Malaysia tier there is no official blasphemy law,Hindu religious festivals happen in Dhaka every year which are attended by Sheikh Hasina herself.

4. Hasina is completely economic development focused dictator much like Mahatir in the 1980s.Focus is just on the economy no pan Islam or mullahs making fiery speeches in Dhaka.

I won't be surprised if Bangladesh overtakes India proper in per capita income.That is Hasina's stated goal earlier this year she said we will overtake Eastern India in per capita income by end of the year by end of the decade we must overtake India proper.That is our only goal to be the richest among the three largest countries of S Asia.

My consultant friend actually met her in Dhaka came back very impressed.

samir sardana said...

For those worried about the manufacturing demise,in Pakistan.These troubled souls,can note the REAL cost of Manufacturing - excluding Polultion etc.

It is the DESTRUCTON OF THE BANKING SYSTEM.The NPAs in the Banking system (excluding the destruction,of the unorganised finance sector)

Pakistan Had Rs 82000 Crores NPA,in March,2020 (https://www.sbp.org.pk/ecodata/NPL/2020/NPL-Jun-2020.pdf)
Pakistan Had USD 530 Crores NPA,in March,2020
Bangladesh Had Taka 111.000 Crores NPA,in March,2019 (Page 6 of file:///C:/Users/admin/ Desktop/Non-PerformingLoansinBankingSectorofBangladesh-AnEvaluation.pdf)
Bangladesh Had USD 1200 Crores NPA,in March,2019
India had Rs 20,00,000 Crores NPA pre Covid (Including MUDRA etc),as of September 2019
India had USD 15,000 Crores NPA,pre Covid,as of September 2019

KINDLY CALCULATE THE NPAs,PER CAPITA.dindooohindoo

There is no loss to the Tycoons and the Politicans, as they have pocketed, between 10-30% of the NPAs.

The criminal loss, is for the poor people, farmers and SMEs - as they are off the credit grid - and so ,they have to rely on unorganised financing and usury.

Pakistan has been saved,by the lack of manufacturing.It has no economies of scale or backward integration, or market,to justify a viable capacity,except for a few sectors. Imagine the NPA,PKR,GDP in Pakistan - if Pakistan had to ride,the Sub Prime Crisis and COVID - which has doomed India's economy and banking sector.

Some angel has saved Pakistan.

COVID will change Manufacturing,Work Practices and Labour Practices forever. Hence, manufacturing will be destroyed in several parts of Asia,EXCEPT PRC.

This is is time for Pakistan TO START UP Manufacturing,in SPECIFIC SECTORS,and SPECIFIC COMPONENTS,OF THE VALUE CHAIN,THEREIN.

Regarding Mr Anonymous on per capita income of Bangla overtaking India.What is Per Capita ? The Per Capita of Angola,Kenya and Ghana is more than that of India,and that of South Africa and Libya,is 4 to 3 times,that of India

Pick the nation of choice !

Riaz Haq said...

‘Tis the season for business

https://www.dawn.com/news/1586960

On the front of global trade, the pandemic-related disruptions and trade barriers such as higher tariffs on key suppliers (China and India) opened up a window of opportunity for Pakistani exporters. The changing market dynamics in the West, where economic stress increased the share of low-end products in the market, also worked for the advantage of Pakistan. The fact that the country dealt with the health crisis better and succeeded in containing the number of cases and the mortality rate also encouraged overseas importers to mark Pakistan as a safe and viable source for imports.

“I have been in the business of industrial chemicals and dyes for years, but had just been catering to local demand. But with over 20pc tariff on Chinese products in the United States, my produce entered the gigantic US market. I started exports to the West this year for the first time and the month-on-month increase has given me confidence to look at the possibility of scaling up the capacity to realise the full potential of exports,” a former president of a chamber of commerce and industry said.

“Pakistan’s industry is bouncing back on the strength of sound fundamentals. Cheaper credit and supportive fiscal measures helped, but it’s the rising demand that has energised businesses. We hope that the government and the opposition will realise the gravity of the economic situation and ensure stability if it cares about the country and its hard-pressed people,” said Shariq Vohra, newly elected president of the Karachi Chamber of Commerce and Industry (KCCI). He said there are 2,700 industrial units in the city, 90ppc of them being small with 10-20 employees.

Riaz Haq said...

Pakistan Lubricants Market Size Forecast to Reach $1.91 Billion by 2025. #Pakistan, world’s 4th-largest producer & 3rd-largest user of #cotton, has been a focus area for industrialization and growing lubricant use in #textile #industry. #exports #economy https://reportedtimes.com/pakistan-lubricants-market-size-forecast-to-reach-1-91-billion-by-2025/

Pakistan Lubricants Market size is forecast to reach $1.91 billion by 2025, after growing at a CAGR of 5% during 2020-2025. Lubricants create a thin film between the moving parts for enhancing the transfer of heat and reducing tension during the contact of parts. Due to which they are used for applications such as wear reduction, corrosion protection, and smooth operation of engine internals. Owing to the increasing use of lubricants in textile and automotive, the growth of the Pakistan Lubricants Market is expected to accelerate in the forecast era.


Engine Oil is extensively used in Pakistan Lubricants Market. Engine oil is crucial in the smooth running of engines, reducing fuel emissions, and increasing engine efficiency. Engine oils provide better lubrication, cleaner engine, effective cooling, protects from corrosion, and acts as a seal owing to which it is vastly preferred for various transportation modes. Engine oil helps to cut expensive maintenance for vehicle owners and also gives longer engine lifespan. Since, engine oils clean, cooling, and prevent corrosion of the engine, they save the engine from being clogged and damaged. Because of this, mechanical components last longer and corrode less, and engines, in turn, have a longer and safer lifespan. Also, by using good engine oil, there is a reduction in emissions and fuel consumption which anticipates enhancing the market in the forecast era.


Key sectors of lubricant growth: Engine oil, textile mills & wind turbines. Electric vehicles pose a challenge to lubricant growth.

Automotive Industry held the largest share in the Pakistan Lubricants Market in 2019and is projected to grow at a CAGR of 7% during the forecast period 2020-2025.

The textile industry uses lubricants such as greases, heat transfer fluids, gear oils, engine oils, transmission, and hydraulic fluids, and anti-static oils.

Wind-turbine lubricants play a critical role in equipment operation, maintenance, and reliability of a wind farm. New installations of a wind farm will drive up lubricant consumption for the initial fill of the wind farm.

Riaz Haq said...


‘Exports to increase up to $28 bn by end of current fiscal’, says Razzak Dawood. “Though we need to do a lot on various conventions, but the progress on many issues mentioned in the detailed report will help continue the GSP Plus facility for Pakistan.” https://www.thenews.com.pk/print/728019-exports-to-increase-up-to-28-bn-by-end-of-current-fiscal


Razzak Dawood Tweet:I happy to share the good news that more and more brands are shifting to Pakistan. We just heard that Hanes, Guess, Hugo Boss & Target have shifted orders from China to Pakistan.

https://twitter.com/razak_dawood/status/1321838253788532736?s=20

Riaz Haq said...

#China Radio on #CPEC: Improvements in #energy & #transportation infrastructure have laid the foundation for the #industrial development of #Pakistan. The next phase of the CPEC project focuses on industrial cooperation. #industries #Manufacturing https://tribune.com.pk/story/2271510/cpecs-rapid-progress-laying-foundation-for-pakistans-industrial-development-cri-urdu

The projects implemented under the China-Pakistan Economic Corridor (CPEC), a flagship project of the Belt and Road Initiative, will not only benefit certain areas but also development in Pakistan, commented China Radio International (CRI) Urdu on Sunday.

“The way in which the CPEC projects have been implemented over the past five years and the results that have emerged show that the purpose of building up CPEC is not to benefit certain areas, but to promote development in Pakistan,” the CRI Urdu said of the progress made in the construction of CPEC projects.

The Urdu service stated that the infrastructure, construction of industries and the elimination of energy shortages will provide an environment for Pakistan according to its resources, which will also benefit the people of Pakistan and guarantee a bright future.

The Orange Line Metro train in Lahore is the first electric public transport project, the introduction of which not only increased travel facilities for the people but also created new jobs.

In the past five years, CPEC projects have created 55,000 direct jobs in the road infrastructure sector, of which 48,000 have been created specifically for local Pakistanis.

According to a spokesman for the Chinese Ministry of Foreign Affairs, major projects with a direct investment of US $25 billion have been completed since the inception of CPEC. The projects completed under it are are part of The Belt and Road Initiative.

As for the shipping of cargo, the trade began at the Gwadar port during the first six months of this year, through which up to 20,000 tons of goods were shipped to Afghanistan; the initiative also created jobs in the shipping sector. There was no doubt that these projects entailed infrastructure as well as energy supply, and job opportunities, the CRI maintained.

According to the proposed two-gap model of economist Hollis B Channery, developing countries should introduce foreign investment and stimulate exports to boost their national economies. In this regard, CPEC has played an important role in the development of Pakistan.

The initiative has also addressed the issue of limited investment potential, insufficient foreign exchange savings and deficits in Pakistan, and has provided excellent quality for Pakistan’s economic growth.

Pakistan’s GDP growth rate is significant and it has created 70,000 jobs in Pakistan, the China-based Urdu service added.

Since its inception, CPEC has considered the elimination of energy shortages in Pakistan as an important sector for construction. Over a period of five years, energy projects under the CPEC framework added 3,340 MW of electricity to Pakistan in early April 2019, accounting for 11% of the installed capacity in the country.

The shortage of electricity has been significantly reduced and in addition to power generation projects, China has built the Matiari-Lahore (an 878 km long, 660 kV) HVDC transmission line project in Pakistan – the second HVDC transmission line in the world to extend the life of the country's power grid.

The construction of the corridor is progressing rapidly, significantly reducing Pakistan's energy problem in the process. Improvement in the transportation infrastructure has laid the foundation for the industrial development of Pakistan. The next phase of the project focuses on industrial cooperation.

Given the pace of the projects, their completion and results, it can be said that CPEC is undoubtedly a new impetus for the sustainable development of Pakistan, the CRI added.

Riaz Haq said...

#Pakistan on brink of inking #industrial accord with #China for industrial cooperation to develop B2B joint ventures, build Special Economic Zones (SEZs) and industrialization under the second phase of #CPEC. #economy #industry #business #manufacturing https://www.thenews.com.pk/print/759243-pakistan-on-brink-of-inking-industrial-accord-with-china

“Prime Minister Imran Khan has already given approval to it. After consultation, both the countries will formally sign this framework agreement,” a senior official said.

On Tuesday, representatives from both the countries held the fifth meeting of Joint Working Group (JWG) on industrial cooperation under CPEC through video conference.

The Chinese side appreciated the efforts undertaken by Pakistan to elevate the MoU (Memorandum of Understanding) on industrial cooperation into a Framework for an increased cooperation under CPEC and agreed to continue consultation for its signing at the earliest. They also hailed the idea of joint industrial diagnostic studies followed by an action plan.

Khashih-ur-Rehman, Additional Secretary/Executive Director General, Board of Investment (BOI) and Ying Xiong, Director General, National Development & Reform Commission (NDRC), China co-chaired the meeting. Representatives from line ministries, provincial governments, and embassies attended the meeting.

Rehman remarked that elevation of the MoU on IC (Industrial Cooperation) between Pakistan and China into a comprehensive framework would create new avenues for strengthening industrial cooperation under CPEC which is also open to third party participation.

Cooperation would likely enhance B2B and project to project (P2P) ties, balance and modernise existing industry, expedite SEZs development and promotion, seek technical and financial assistance from China, increase production capacity, and facilitate businesses with support of financial institutions from both sides, etc, he added.

Asim Ayub, Project Director of Project Management Unit (PMUC-CPEC-ICDP) on Industrial Cooperation of BoI, appreciated the Chinese side for accepting the Draft Framework Agreement shared by the Pakistani side in early November 2020.

Early signing of the Framework Agreement on IC would help both sides achieve maximum objectives of CPEC in line with its long-term Plan, Ayub said, adding that immense efforts had been ensured by Pakistani to devise the Draft Framework, taking all the provinces and other stakeholders on board and final approval of the Honorable Prime Minister was also obtained accordingly.

He stressed a Framework Agreement was the need of the hour for a measurable impact with regards to Industrial Cooperation, SEZs, Business to Business (B2B) and People to People (P2P) collaboration.

Ayub said Pakistan highly regarded the idea of Industrial Diagnosis by the Chinese side and extended its highest support to the group of experts from CIECC for the Textile Industrial Diagnosis last year. However, he was of the view that the Industrial Diagnosis needed to be carried out in a joint manner involving experts from both sides who might submit the Diagnosis Report to the JWG along with an Action Plan that would be imperative for the respective industrial sector.

The meeting also discussed progress made on Rashakai, Dhabeji, Alama Iqbal Industrial City, and Bostan SEZs under the CPEC, the revival project of Pakistan Steel Mill, China Pakistan Young Workers Exchange and Cooperation, and Karachi Coastal Comprehensive Development Zone.

Riaz Haq said...

Engro to establish petrochemical plant
Unit will help slash country’s chemical imports, boost exports

https://tribune.com.pk/story/2293972/engro-to-establish-petrochemical-plant


Engro Corporation, a diversified group of companies, has announced that it will undertake advance studies for setting up a manufacturing plant in the petrochemical sector at an estimated cost of over $1 billion, which will slash Pakistan’s chemical imports and give a push to exports.

The conglomerate intends to establish a plant for the manufacturing of polypropylene resin, which is used in making plastic bags for carrying and supplying fertiliser and sugar to the market, confectionery wrappers, plastic pipes and other construction fitting material, film and sheet.

“We are pleased to announce that the board, in its meeting held on April 8, 2021, has approved an amount of up to $31.4 million (approximately Rs4.8 billion) towards conducting engineering, design and technical studies including a front-end engineering design (FEED) study in relation to the PDH-PP (propane dehydrogenation-based polypropylene) project,” Company Secretary Shomaila Loan said in a notification to the Pakistan Stock Exchange (PSX) on Friday.

“At present, Pakistan meets local requirement for the chemical by importing approximately 500,000 tons a year,” Engro Corporation President and CEO Ghias Khan told The Express Tribune in an interview in December 2020.

The company was considering setting up a global-scale plant with installed capacity of 550,000-750,000 tons a year, he said and added that the estimated cost of the project could be around $1-1.2 billion.

The demand for the chemical is growing at 7.5% per annum. Keeping in view the project studies, arrangement of financing, potential investment partners (if considered) and construction, the plant would consume six to seven years for development and start of commercial production, he said.

“We may arrange financing for the project in two years from the time the board gives its go-ahead for the plant,” he said.

“The company will seek investment opportunities in this area, which creates avenues for both substituting imports and enhancing the export potential, which will help in building foreign currency reserves of the country,” said a company notification issued in April 2019. Khan said that the company would import raw material (propane gas) to produce polypropylene resin locally.

“The project will save Pakistan a net $250-300 million annually,” he said. Besides, the company might consider exporting the surplus production. Neighbouring country China was a big importer of resin globally, he added.

“Results of these studies, when completed, are expected to lead towards the final investment decision in relation to this project,” Loan said in the notification.

“The decision will also be based on a conducive policy environment and arranging the right mix of debt and equity partners at such time.”

The corporation’s share price dropped 3.08%, or Rs9.44, to close at Rs297.49 with trading in 1.3 million shares at the PSX.

----------------------

KBR, Inc. KBR announced that it has entered into an agreement with JS Energy Limited. Per the agreement, KBR’s K-PRO™ Propane Dehydrogenation (“PDH”) technology will help JS Energy to convert propane into propylene for a PDH project in Pakistan, which is anticipated to be commissioned in 2024. However, financial terms of the agreement have been kept under wraps.

In 2019, KBR introduced K-PRO that offers propylene selectivity and conversion. K-PRO is a revolutionary step for the PDH industry that furnishes innovative designs at a very low cost of capital. Also, K-PRO's proprietary catalyst doesn’t require high-cost metals and pollutants, consequently resulting in an ideal environment and lower business overhead.

https://finance.yahoo.com/news/kbr-inks-license-deal-js-141402146.html