Farzana Rubab

The rapid increase in the cost of production has been hampering the efforts of Pakistani industrialists to compete with their rivals in the international market, WealthPK reports.

The government needs to take immediate steps for reducing the cost of production to promote the industrial sector and enable local exporters to compete with their rivals in the global market.

Yousuf Shafiq, vice-chairman of Pakistan Tannery Association (South Zone), told WealthPK that the cost of production in the leather industry is being compromised due to high inflation, political instability in the country, increase in power tariff, hike in the cost of fuel, shortage of energy and lack of research and development.

“Pakistan’s leather industry is facing difficulties in the international market owing to the high cost of production,” he said.

Dr Zubair, the operation manager at Pakistan Dairy Association (PDA), said lack of research and development is one of the major reasons for the increase in the cost of production in any industry. “Sometimes we have the resources, but we make poor decisions. The poor decision means poor practices of work execution,” he added.

He said that research and development could help in the provision of valuable technologies, business models and designs for industry. “Implementation of modern techniques or work practices can increase the production and also reduce its cost,” he added.

Tariq Tayyab, the additional secretary of the Pakistan Textile Exporters Association (PTEA), told WealthPK that the cost of production is increasing very rapidly. “It is not good for our export. Because the cost of production is the major factor, which makes you stand out among your competitors in the world market,” he added.

He said that high energy tariffs, shortage of fuel for machines, high rate of taxes and lack of skilled labour are the main causes of the increase in the cost of production. “Due to these issues, our textile industry is unable to compete with our neighbouring countries like Bangladesh,” he added.

The reduction in the contribution to Pakistan's Gross Domestic Product by industries is a worrying sign. The manufacturing or production industry can contribute significantly to economic growth by reducing the ratio of unemployment in the country. The government needs to take solid steps to make doing business easier.

An effective strategy is needed to improve the performance of the industrial sector. The government should facilitate exporters by providing a level playing field to them in terms of business costs, particularly in utility pricing.

The productivity of the industry is also affected by external factors. Both external and internal issues lead to an increase in the cost of production. Cost of production is the main standard for the survival of any industry in the market.

The cost of production is usually entertained as the key performance indicator (KPI) for the company. The KPI determines the position of that specific sector in the international market. Pakistan is lagging behind its neighbouring countries like India and Bangladesh in exports mainly owing to the high cost of production, according to WealthPK.

Credit : Independent News Pakistan-WealthPk