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Usaid/Pakistan Non- Agricultural Value Chain Assessment

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Usaid/Pakistan Non- Agricultural Value Chain Assessment Z Grant Completion Report Integrated Rural Development and Nature Conservation (IRDNC) Improving Financial Governance in Caprivi Conservancies Grant July 1, 2012 – June 30, 2013 USAID/ PAKISTAN NON- AGRICULTURAL VALUE CHAIN ASSESSMENT ASIA AND THE MIDDLE EAST ECONOMIC GROWTH BEST PRACTICES PROJECT [Insert Date of report] This publication was produced for review by the United States Agency for International Development. It was prepared by [Insert grantee] for Chemonics International for activities completed under Contract No. 674-C- 00-10-00030-00. MAY 2013 This publication was produced for review by the United States Agency for International Development. It was prepared by Chemonics International Inc. USAID/PAKISTAN NON- AGRICULTURAL VALUE CHAIN ASSESSMENT ASIA AND THE MIDDLE EAST ECONOMIC GROWTH BEST PRACTICES PROJECT Contract No. GS-23F-0127P Task Order No. AID-OAA-12-00008 The authors’ views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States government. CONTENTS Acronyms ......................................................................................................................... vii Executive Summary ............................................................................................................ 1 Section I. Introduction and Methodology .......................................................................... 12 Section II. Value Chain Summaries .................................................................................. 23 A. Garments Value Chain ................................................................................................ 23 B. Leather Value Chain .................................................................................................... 48 C. Marble Value Chain ..................................................................................................... 67 D. Herbs and Botanical Medicines Value Chain .............................................................. 84 E. Surgical and Medical Instruments Value Chain ........................................................ 102 F. Information Technology Value Chain ....................................................................... 120 Section III. Crosscutting Issues ...................................................................................... 139 A. Business Enabling Environment ................................................................................ 139 B. Financial Sector Services ........................................................................................... 145 C. Energy Summary ....................................................................................................... 156 D. Logistics Summary .................................................................................................... 159 Annexes Annex A. Scope of Work ................................................................................................ 164 Annex B. Survey Guidelines ........................................................................................... 172 Annex C. Mini-Survey Questionnaire ............................................................................. 175 Annex D. Pakistan’s Trade Prospects With India ........................................................... 190 Annex E. PPPs and U.S. Investment Opportunities: Energy and Infrastructure ............ 194 Annex F. Workforce Development Strategy .................................................................. 216 Annex G. Contact List .................................................................................................... 231 USAID/PAKISTAN NON-AGRICULTURAL VALUE CHAIN ASSESSMENT v ACRONYMS 3G Third generation ADB Asian Development Bank AHAN Aik Hunar Aik Nagar AMEG Asia and the Middle East Economic Growth Best Practices Project APMIA All Pakistan Marble Industry Association ASTM American Society for Testing and Materials BDS Business development services BRIC Brazil, Russia, India, and China CAD Computer-aided design CAMS Consumer asset management system CEO Chief executive officer CFCs Common Facility Centers CFTC Karachi Common Facility Training Center CFTCs Common Facility Training Centers CMM Capability Maturity Model CMMI Capability Maturity Model Integration CNC Computer numerical control CPI Centre for Promotion of Imports from Developing Countries DCA Development Credit Authority DISCO Power distribution company DRAP Drug and Regulatory Authority of Pakistan DSEC Dimensions Stone Evaluation Center EOBI Employees Old-Age Benefits Institution EPA Environmental Protection Agency ERP Enterprise resource planning EU European Union GBI Global business intelligence GDA Global Development Alliance GDP Gross domestic product GMP Good manufacturing practice GTAP Global Trade Analysis Project USAID/PAKISTAN NON-AGRICULTURAL VALUE CHAIN ASSESSMENT vii HS Harmonized system ICT Information and communication technology IFC International Finance Corporation ILO International Labor Organization IP Intellectual property ISO International Organization for Standardization IT Information technology KPK Khyber Pakthunkwah KTDMC Karachi Tools, Dies, and Molds Centre LPDI Leather Product Development Institute and Development Program LTE Long-term evolution (fourth generation) M&G Marble and granite MEDA Mennonite Economic Development Associates MFI Microfinance institution MIDC Metal Industry Development Center MSME Micro-/small/medium enterprise MT Metric ton NADRA National Database and Registration Authority NCNPR U.S. National Center for Natural Product Research NIH National Institutes of Health NILT National Institute of Leather Technology OEM Original equipment manufacturer PASDEC Pakistan Stone Development Company PBS Pakistan Bureau of Statistics PCISR or PCSIR Pakistan Council of Scientific and Industrial Research PEDRA Pakistan Electronic Media Regulatory Authority PHMA Pakistan Hosiery Manufacturers Association PIFF Pakistan Infrastructure Financing Facility PISDAC Pakistan Initiative for Strategic Development and Competitiveness PITB Punjab Information Technology Board PITMAEM Pakistan Institute of Technology for Minerals and Advanced Engineering Materials PKR Pakistan rupee viii USAID/PAKISTAN NON-AGRICULTURAL VALUE CHAIN ASSESSMENT PLGMEA Pakistan Leather Garments Manufacturers and Exporters Association PNAC Pakistan National Accreditation Council PPP Public-private partnership PRGMEA Pakistan Readymade Garments Manufacturers and Exporters Association PRGTTI Pakistan Readymade Garments Technical Training Institute PSEB Pakistan Software Export Board PSQCA Pakistan Standard and Quality Control Authority PTPMA Pakistan Tibbi Pharmaceutical Manufacturers Association R&D Research and development RCA Revealed comparative advantage REACH Registration, evaluation, authorization, and restriction of chemicals SECP Security and Exchange Commission of Pakistan Sedex Supplier Ethical Data Exchange SIMAP Surgical Instrument Manufacturers Association of Pakistan SMART Self-Monitoring and Reporting Tool SME Small/medium enterprise SMEDA Small and Medium Enterprises Development Authority SMI Surgical and medical instruments SMTEL Sialkot Material Testing Laboratory SWOG Marble and Granite Strategy Working Group TDAP Trade Development Authority of Pakistan TEVTA Technical Education & Vocational Training Authority TUSDEC Technology Up-gradation and Skills Development Company UNCTAD/ITC United Nations Conference on Trade and Development / International Trade Centre UNIDO United Nations Industrial Development Organization WHO World Health Organization WITS World integrated trade solution WRAP Worldwide responsible accredited production WTO World Trade Organization USAID/PAKISTAN NON-AGRICULTURAL VALUE CHAIN ASSESSMENT ix EXECUTIVE SUMMARY A. INTRODUCTION AND BACKGROUND Deterioration in the global economy in the past few years has created difficult external conditions for Pakistan to transform, strengthen, and diversify its economy through export-led strategies. In addition, external shocks, internal policy inaction, political disorder, and structural issues have placed Pakistan in a dire economic condition. The country’s per-worker manufacturing output has grown by a mere 1.5 percent each year during the past decade. Trade indicators reflect low outward orientation, concentration on low value-added activities (low sophistication), and an undiversified product mix. Pakistan’s export share of gross domestic product (GDP) has remained low and falling—from 13 percent to 11 percent in 2010, according to statistics from the State Bank of Pakistan. The Punjab and Sindh regions, which are the hub of Pakistan’s manufacturing industry, have borne the brunt of adverse developments, resulting in rising unemployment — especially among youth and women. Systemic structural issues such as energy and infrastructure have further complicated the economic situation. In light of these systemic constraints, USAID/Pakistan requested a value chain assessment of 10 to 20 non-agricultural sectors to provide strategic input for future programming efforts and to strengthen Pakistan’s economy. The objectives of the assessment are to summarize: (1) value chain-specific systemic constraints; (2) trade and competitiveness potential; (3) time, cost, and difficulty of improving the business enabling environment; (4) multiplier effects; and (5) impact on environment and gender. The 10-week study was funded through the USAID Asia and the Middle East
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