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Analysis Business

Pakistan Chemical Industry: Challenges

And Prospects – Analysis
July 19, 2011 Rida Zeenat 0 Comments
By Rida Zeenat
Pakistan is a state which is highly committed to adopt efficient export control guidelines, policies and
procedures. It aspires to increase trade with other countries keeping in mind to mitigate uncertainties
of exporters. Pakistan is determined to pursue its effective export control under various international
instruments and it controls and monitors all exports that can contribute to the proliferation of
weapons of mass destruction. Pakistan is a responsible state and being a signatory to a large number
of international treaties on non-proliferation it is committed to fulfill its international obligations

International agreements are instruments to limit trade of certain types of goods and information that
may add into terrorism and proliferation of weapons of mass destruction. Moreover they also have
effective mechanism to make sure that the states abide by to what they have agreed to while signing
the treaty.

Pakistan has signed a number of international agreement and conventions like Nuclear Safety
Convention of 1994, Early Notification in case of a Nuclear Accident, Assistance in case of Nuclear
or Radiological Accident, Convention on Physical Protection of Nuclear Material (CPPNM),
Biological and Toxins Weapons Convention (BTWC) in 1972 and ratified it in 1974, Chemical
Weapons Convention (CWC) in 1993 and ratified it in 1997 and is a member of Organization for the
Prohibition of Chemical Weapons (OPCW) in good standing.

Following this, in October 2000, the government promulgated a law to prohibit the development,
production, and use of chemical weapons. The laws were made in pursuance of the Chemical
Weapon Convention, which Pakistan ratified in 1997.1 In 2008, Pakistan was re-elected to the
Organization for the Prohibition of Chemical Weapons (OPCW)’s Executive Council, a seat which it
has continuously held since 1999.2

Pakistan also has domestic strict export control procedures to keep a check on trade. The Trade
Development Authority of Pakistan (TDAP) is a regulatory body in Pakistan, formerly known as
Export Promotion Bureau (EPB) which is an apex agency of the Government affianced in promotion,
augmentation and development of exports.

Trade Development Authority of Pakistan (TDAP) is dedicated for promotion of goods and services
being exported. The administrative ministry of Trade Development Authority of Pakistan (TDAP) is
the Ministry of Commerce.3

Its main objective is to explore new market and to introduce Pakistan made products in international
markets. And it does so by promoting exporters to participate in exhibitions abroad and also
collaborates with international delegates coming to Pakistan for the enhancement of Pakistan market
and sends delegates abroad to explore new markets.

It is working towards the development of trade policies which would improve conditions of Pakistan
market which will ultimately contribute into the international economy.

Its role in Textile quota management is especially significant. More than 20,000 exporters have been
facilitated to exhibit their exports. This strategy differentiated between strategic thrusts, directly
impacting achievement of Volume and Value in export and concentrated on areas which could create
an environment for the private sector to realize their aspirations.

Pakistan’s market for industrial chemicals is expanding gradually though it has a less-well developed
commercial chemical industry than India. As was stated in the Pakistan trade policy 2010, “In order
to address our strategic objective of product diversification for Pakistan’s exports our government
aims to provide a clear policy framework on the development of chemical sector.”4

Chemical industry in Pakistan is widespread, in organized & unorganized sector. It has

approximation of investment in chemical sectors between Rs.550-600 billion. The chemical related
imports constitute about 17% of the total import bill.5

Pakistan has a well organized system for imports and exports of chemical materials which are then
converted into more than 70,000 various products, for industry as well as the goods of consumers
that people depend on in their daily life.6 But unfortunately the imports are much higher than the
exports. Pakistan needs to enhance its chemical exports which would really help in the growth of
Pakistan’s economy. If not then it must not rely on the imports and must adopt the policy of self
reliance on its own resources.
Below is the chart which depicts the difference between the imports and exports of the chemical
material, in which it is clear that the difference is large.

Figure 1: Import and Export of chemical

material.7
According to the Chemical Industry Vision – 2030 the chemical industry in Pakistan has been
classified into two categories which are as follows:

1. The Primary Chemical Industry: Primary chemical industries are refineries, petrochemicals,
natural gas, metallurgical and mineral based projects. They also provide feedstock for the secondary
chemical industry.
2. The Secondary Chemical Industry: Secondary chemical industries are based on feedstock either
derived from primary industries or other alternative sources of raw material like coal, limestone,
gypsum, rock salt, silica and sulphur.
The principal objective of Secondary sector industries is to maintain connectivity between products
and materials produced by the Primary industries and are of practical use for the national economy.
The chemical industry comprises of companies that produce industrial chemicals which are important
for the economy, as it converts raw material into more than 70,000 different products.

This implies that the secondary industries rely on the primary industries for feedstock and raw
material to be used in manufacturing, processing, blending, fabricating plants for petrochemical
intermediates, polymers, plastics, steel, non-ferrous metals, minerals, agricultural and other
miscellaneous products.

These industries use medium- to highly sophisticated technology and have a range from light to
medium categories. The chemical industry is more varied than any other industry because its
products are universal.

Chemicals are important as they play the role of a building block to produce products in order to
fulfill the basic needs like, shelter, food and health.8 They also are central to the world of technology,
telecommunications and ofcource biotechnology. These are used to make a large variety of consumer
goods and have inputs in agriculture, manufacturing, construction and services industries.

Chemicals in particular, are a keystone of world manufacturing, as they are an integral component of
all the manufacturing sub-sectors, including pharmaceuticals, automobiles, textiles, furniture,
electronics, construction and appliances.9

Economically the market of chemicals is divided into four main categories.

 Basic Chemicals which are the commodity materials including flexible material, Polymers,
Petrochemicals and other derivatives and inorganic chemicals which makes.10 35-37% of the
chemical market.
 Life Sciences Include differentiated chemical and biological substances, pharmaceuticals, health
products, and crop protection chemicals makes 30% of the chemical market.
 Specialty Chemicals These are high value-added chemicals with diverse end-product market.
Products include electronic chemicals, industrial gases, adhesives, sealants and catalysts.
Specialty Chemicals are sometimes referred to as “fine chemicals” make 11 20-25% of the
chemical market.
 Consumer Products include soap, detergents, and cosmetics are only 10% of the chemical
market.
Chemical industry in Pakistan is widespread. The chemical imports constitute about 17% of the total
import bill. Pakistan has made considerable progress in basic inorganic chemicals like Soda Ash,
Caustic Soda, Sulphuric Acid and Chlorine and has acquired sufficient production capacity of these
chemicals to cater for the needs of the local industry, while surplus is being exported. 12

Even then there are some challenges to be countered. The chemical industry of Pakistan is lagging
behind due to some challenges. The main challenge is that it has to rely on its imports and foreign
materials. It does not benefit the economy and results in production of expensive products.

Secondly lack of industrial infrastructure and technology in Pakistan results in low quality products
which do not mark the standard. Moreover the discriminatory approach of international community
does not integrate the Pakistan market into the international economy and Pakistani products are not
given access to the international market. Moreover the lack of resources and weak trade policies of
the ministries also result in the weakening of chemical industry.

In order to enhance the chemical industry Pakistan must adopt the policy of “self-reliance”. Instead
of relying on foreign designs and engineering it must improve its own production and ensure high
quality of chemical products.

Pakistan must work towards integrated approach. It must bring four worlds of a society together
which are traders, universities, research and development and production partners. This will bring
innovation and must utilize its youth which has fresh minds and great ideas to enhance the chemical
industry resulting in qualitative and quantitative perfection in the chemical products.

Pakistan is capable of producing high technological products all it needs is a little bit of effort in
improvement of administrative capabilities and induction of new technology and support from
government to put things in order.

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Rida Zeenat
Rida Zeenat is working as a Research Fellow at the South Asian Strategic Stability Institute (SASSI).
She holds M.Sc. degree in Defence and Diplomatic Studies from Fatima Jinnah Women University,
Pakistan. Her M.Sc. dissertation was based on “Pakistan’s Nuclear Doctrine of Credible Minimum
Deterrence”. She has also participated at various current affairs television programs.

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