Final Report

Sponsored By

ENGINEERING DEVELOPMENT BOARD

Ministry of Industries & Production
SEDC Building (STP) 5-A, Constitution Avenue Islamabad Tele: (051) 9205595, 9223734 Fax: (051) 9206161

Government of Pakistan

Prepared By

Technology Management International (Pvt) Ltd

(TECHMA)
2010
31/11-A, Abu Bakr Block New Garden Town, Lahore Tele: (042) 5881460 Fax-Cum-Tel: (042) 5881718 E-Mail: techma@Brain.net.pk

TABLE OF CONTENTS

Description Acknowledgement Team of Experts Executive Summary. CHAPTER 1 Scope Of The Worlds Chemical Industry 1.1 Scope of the chemical industry. 1.2 Category wise breakdown of the chemical industry. 1.3 Research and development in the chemical industry. 1.4 Classification of the chemical industry development of Pakistan Vision 2030. CHAPTER 2 Potential for the development of secondary chemical industries based on feedstocks derived from primary industries. 2.1 Feedstocks derived from primary industries for the potential development of secondary chemical industries. Crude oil based petroleum and petrochemical refineries. Olefin petrochemical complex. Aromatic petrochemical complex. 2.2 Natural gas based chemicals. 2.3 Alternative feedstocks for the production of commodity chemicals. 2.4. Feedstocks derived from metallurgical plants and polymers, materials technology and metallurgical processes. 2.5 Other mineral based projects consisting of acid and alkali industries, cement and glass plants based on limestone, gypsum, rock salt, sulphur and silica. 2.6 Agro based feed stocks. 2.7 Sources of raw materials and process technologies for chemical industry development in Pakistan. 2.8 Categorization of secondary chemical industries in Pakistan. CHAPTER 3 The present status of the chemical industry in Pakistan. 3.1 General 3.2 The structure of Pakistans imports and exports. 3.3 The role of government in industrial development. 3.4 Limitations of Pakistans industrial policies for chemical industry development.

Page Nos.

i-vii 1 1 1 4 5

1 1 1 3 5 7 10 13 17

17 20 21 1 1 3 8 12

Continued.

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CHAPTER 4 4.1 Modernization of the national innovation system for chemical industry development in Pakistan. Limitations of Pakistans N.I.S. The scope of Engineering Development Board with additional responsibility for technology development and proposed structure of Technology Development Board. 4.2 The role of the national committee in research and technology development. 4.2.1 The current status of R&D in Pakistan. 4.2.2 National committee for research and technology development. 4.3 National committee for the development of software and hardware for the commercialization of technologies. 4.4 National committee for the development of technology policy and investment planning. 4.5 Human resource development. 4.6 Integrated plan for the development of a national innovation system. 4.7 Industrial master plan. CHAPTER 5 Profiles of Present Secondary Chemical Industries of Pakistan. (Section 1) Caustic soda (Section 2) Soda ash & sodium bicarbonate Section -3) Petrochemicals

1 2 4&5

5 6 7 10 13 15 16 20

1-11 12-19 20-37 1-5

CHAPTER 6
Proposal For The Future Development Of Secondary Industries In Pakistan

CHAPTER 7
Industrial Trade Policies 7.1 Imports, tariff and custom duties. 7.2 Tariff escalation, description and peaks. 7.3 Other imports duties/taxes. 7.4 Competitiveness of exports from Pakistan. CHAPTER 8 Conclusions and Recommendations. Attachments Annexure A References 1 2 3 4 1-5 1-3

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ACKNOWLEDGEMENTS

I am grateful to Mr Asad Ilahi, Chief Executive Officer of the Engineering Development Board, and his dedicated staff, Mr. M. Farooq Khan, General Manager (Policy); and Mr Yasir Qurban, Project Engineer. They gave their full support in the conception of the project for Chemical Industry Development Vision 2030 and provided invaluable information and data, which were essential for the successful development of the project. My thanks to my colleagues and associated consultants: Mr Muhammad Sadiq Chaudhry, Dr M. Khalid Farooq and Mr Pervaiz A. Khan. They were a source of inspiration and played an active role in discussions for the development of the strategy. Thank you to my daughter, Leila Butt, for editing this report. Dr Waheed M. Butt

EXECUTIVE SUMMARY
The global chemical industry forms the fabric of the modern world. It converts basic raw materials into more than 70,000 different products, not only for industry, but also for all the consumer goods that people rely on in their daily life. The modern chemical industry is divided into four broad categories, comprising basic chemicals, life sciences, specialty chemicals and consumer products. Its outstanding success is largely due to unceasing scientific and technological breakthroughs and advances, which have led to the development of new products and processes. Chemical industry development in Pakistan has been classified into (i) the primary sector chemical industry and (ii) the secondary sector chemical industry. Primary sector industries are large-scale, capital intensive industries comprising refineries,

petrochemicals, natural gas, metallurgical and mineral based projects. They also provide feedstocks for the secondary chemical industry. Secondary industries are based on feedstocks either derived from primary sector industries, or other alternative sources of raw materials. These are less capital intensive and are based on high, medium or less sophisticated technologies. The secondary sector industries form the basis for the proposed Chemical Industry Development - Vision 2030. Primary sector industries which provide feedstocks for the development of secondary sector chemical industries, as well as other alternative sources of feedstocks consist of: (i) Petroleum and petrochemical refineries. These provide petrochemical intermediate chemicals, which form the building blocks for the production of a very large number of secondary chemicals, such as polymers, fibers, pharmaceuticals, drugs, dyes and colours, insecticides, pesticides, resins, paints, pigments, specialty chemicals, and a very large number of consumer and construction materials and products. Natural gas based chemicals, which consist of methanol and ammonia. These can also be used for the production of a large number of secondary chemicals. Metallurgical metals and non-metals based secondary chemicals and products.

(ii) (iii)

Executive Summary

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(iv)

Alternative renewable feedstocks for the production of secondary chemicals consist of bio-mass, agricultural wastes, oils and fats, molasses and power alcohol. Unconventional natural gas. Mineral based secondary chemical industries derived from coal, limestone, gypsum, rocksalt, silica sand and sulphur. Vegetable and herbal plants used in the production of secondary chemicals, such as dyes, medicines, drugs, cosmetics and associated products.

(v) (vi) (vii)

The development of secondary chemical industries are divided between projects based on sophisticated technologies, and those based on medium and less sophisticated technologies. Development of the chemical industry in Pakistan is lagging behind those of other emerging markets. The various factors which have hampered the development of this industry in Pakistan are: (i) (ii) (iii) (iv) An underdeveloped industrial infrastructure. Reliance on foreign engineering and construction companies for the commercialization of locally developed or imported technologies. Imports of second-hand highly energy intensive plants based on antiquated technologies. Reliance on the development of resource based, low technology, labour intensive products for export.

The objective of Chemical Industry Development - Vision 2030 is for: (i) Pakistan to create its own capability and achieve self-reliance in project design, engineering and the construction management required for the commercialization of technologies. To develop capability in the production of medium and high technology based chemicals for export, alongside to the present industrial structure based on low technology resource based products. To provide suitable incentives to entrepreneurs for the development of an exportoriented chemical industry.

(ii)

(iii)

Executive Summary

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The development of the chemical industry in Pakistan started in the 1950s and is based on five year plans, with the first plan covering the 1955-60 period. Economic growth was based on a policy of import substitution, resulting in varying rates of growth of between 3.1-6.8% over 1950-70. However, this masks a highly variable performance: the rate of growth slowed in the early 1970s to an annual average of 4.4%, but the economy was revitalized in the late 1970s and 1980s, before weakening again. However, in view of the inconsistencies in the development of trade policies geared towards export-led growth, Pakistan has failed to boost exports of its manufactured goods. By comparison, economic growth in Southeast Asian countries from the 1960s onwards, and in India, China and other late comers from the 1980s, was driven by their exportoriented industrialization policies. All these countries introduced market reforms and provided various incentives and subsidies in order to enhance their exports of manufactured goods. In addition, these countries also developed their own technology and engineering infrastructure by virtue of which they achieved self-sufficiency in the utilization and commercialization of their technologies. As a result, they have achieved strong annual average growth rates of between 8-11% over the past three decades. Traditionally, exports from Pakistan have been dominated by goods produced with low technology, resource based feed stocks, such as textiles, cotton, readymade garments and leather. These comprise about 60% of total exports. The composition and share in exports of medium and high technology based products, comprising chemicals, petrochemicals and other manufactured products is very small and has fluctuated between 8-10% of total exports from Pakistan. Conversely, Pakistan has a very high dependence of imports of high value-added goods, which are more expensive. Chemicals, drugs, medicines and dyes, as well as capital plant, equipment and machinery, together account for about 40% of total imports with an estimated value of US$16.3 billion for the year 2007/08. As a result, the trade balance has been continually increasing and stood at US$20.9 billion in 2007/08. Present trends in Pakistans exports of lower technology goods indicate that it is facing increasing competition from India, China and Bangladesh. In addition, global demand for

Executive Summary

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these products is declining, and the need for higher technology products is rapidly growing. This situation calls for a concerted effort towards the development of a chemical industry based on medium and highly sophisticated technologies. Pakistan has only developed its basic industries, consisting of refineries, fertilizers, cement, sugar, polyester fibers and some other petrochemical based polymer industries, to fulfill local demand. These industries have been predominantly developed by foreign engineering corporations, which were awarded contracts on turnkey basis. However, Pakistan has failed to assimilate these imported technologies, or use them either for the replication of these plants or in the development of associated chemical projects. This dependence on the production and exports of low-valued added goods has held back Pakistans economic performance and revenue-earning potential. By comparison, South and Southeast Asian countries put special emphasis on the development of high technology goods for export. They achieved this through trade liberalization, but their governments also introduced industrial policies that focused on the maintenance of macroeconomic stability, the provision of industrial and technology infrastructure, improvements to market institutions and high levels of public investment. These countries established public organizations which supported production activities, but they also relied on private firms for the success of their industrial policies. For example, China, which retains its socialist form of governance, introduced market reforms and advocated the so-called Open Door Policy. It also created two large public sector corporations: China National Petroleum Corporation (CNPC), for the production and exploration of oil and gas; and China Petrochemical Corporation (SINOPEC) for the development of its petrochemical industry. China also created Petro-China as a Holding Company, which offered its shares on international markets. The value of this company was estimated at US$100 billion in 1999, but has since risen to US$1.1 trillion in 2008. The salient features of Chinas public private partnerships (PPPs) is that the public sector is the major shareholder in the development of its capital intensive industries, whereas the private sector is the majority equity partner in the development of secondary projects.

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Rapid industrialization in Japan and South Korea was driven by multinational conglomeratesKeiretsus and Chaebolswhich created vertical and horizontal diversification of their businesses, with the active support of their respective governments. This pattern, in many cases has been followed by newly industrialized countries (NICs). Pakistans industrial infrastructure is limited and it relies primarily on foreign design and engineering companies for the commercialization of local and imported technologies. Therefore, there is immediate need for enhancing and modernizing its national innovation system (NIS). This is the framework by which a country brings about technological change, and consists of research and development (R&D) institutions, the infrastructure for commercialization of technologies, the structure of educational and technical institutions, regulatory agencies, information networks, financial institutions and marketing. Process science and engineering technology (PS&ET) is an important component of a NIS and is the foundation for the development of the chemical industry. It integrates various elements of the processes of commercialization, from R&D to process design, project engineering, construction, operations and marketing management. Taken together, these provide the basis for manufacturing excellence and sustainable competitive advantage. In order to meet the goals of Chemical Industry Development - Vision 2030, it is essential for Pakistan to enhance its PS&ET capability. We propose that the scope of the Engineering Development Board should be enhanced and given the additional responsibility to modernize and strengthen the NIS as the basis for technology development. In order to achieve this objective, three committees should be established under the direction of a Technology Development Board (which will be an enhanced Engineering Development Board): (i) (ii) A National Committee for research and technology development, A National Committee for the development of software and hardware for the commercialization of technologies.

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(iii)

A National Committee for the development of technology policy and investment planning.

The role of the National Committee for research and technology development will be to foster linkages between universities, R&D institutions and the chemical industry. Various tasks to be undertaken by this committee will include the formation of sub-committees for different sectors of the chemical industry; identification of problems of each sector; selection of R&D teams from universities, industry and R&D institutes for multidisciplinary research; continual appraisal and economic evaluation of laboratory and pilot scale work; and selection and adoption of technologies for commercialization. The processes of commercialization of local or imported technologies depends on the application of science, engineering, design, instrumentation and control, safety and environment, and many other aspects of capital plant manufacturing, construction, operations and marketing management. In order to develop local capability in various areas of project management, we propose the formation of a National Committee for the development of software and hardware as PPP projects. The functions of this Committee will be to support the development of existing or new engineering companies for various tasks. These include the identification of new projects; the preparation of investment studies on international criteria; the formation of financial packages; the development of software and hardware and its application in design and engineering; the development of engineering specifications for capital plant manufacturing; construction; management; and many other functions such as revamping and modernization of old plants, and facilities for reverse engineering. The successful utilization of various components of technology will depend on the ability of the government to foster PPPs with the involvement of industrial and venture capital institutions and a vibrant entrepreneurial class. We suggest that a National Committee for the development of technology policy and investment Planning should be established for: (i) The provision of suitable incentives to potential investors, in order to accelerate the processes of chemical industry development and the revision of industrial policies on continual basis. Page vi of vii

Executive Summary

(ii)

The development of investment policies and infrastructure for capital formation.

In order to facilitate the formation of investment, we recommend that a Holding Company should be established with the participation of the financial sector, international donors, friends of Pakistan, overseas Pakistanis and other investors, who would be invited to subscribe as share holders in this company. Profiles of various sectors of existing chemical industries in Pakistan have been prepared. These consist of Worlds present and projected production, World trade, local production in Pakistan, local market size, local demand, imports, future prospects for each sector of industry, SWOT analysis with special references to weaknesses, threats and opportunities as well as present tariff structure on Pakistan. Proposals for the future developments of Secondary Industries in Pakistan have been prepared and suggestions for the development of secondary chemical projects based on locally available as well as imported materials have been made. The proposed industries have been divided into various sectors consisting of minerals, metallurgical, agro-based

alternate sources of energy, oils and fats and petrochemicals based projects. A number of potential projects in each sector have been proposed and it is suggested that EDB initiate the development of feasibility studies on each of these projects for their future implementation.

An integrated plan for development of NIS has been proposed and various other requirements consisting of the application of computational technologies, human resource requirements, and the development of coherent industrial policy are also considered necessary. An Industrial Master Plan must be prepared for the implementation of various elements of the NIS, which should identify Pakistans capabilities and limitations in various priority sub-sectors of the chemical industry. It should develop policy measures and provide fiscal incentives in order to promote investment in various sectors of chemical industry. The development of a NIS on international standards will provide tens of thousands of job to Pakistans highly qualified manpower.

Executive Summary

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CHAPTER 1
1. 1.1 SCOPE OF THE WORLDS CHEMICAL INDUSTRY

Scope of the Chemical Industry The chemical industry comprises the companies that produce industrial chemicals. It is central to the modern world economy, as it converts raw materials into more than 70,000 different products. The chemical industry is more diverse than virtually any other industry in the world. Its products are omnipresent. Chemicals are the building blocks for products that meet our most fundamental needs for food, shelter and health, as well as products vital to the high technology world of computing, telecommunications and biotechnology. They are used to make a wide variety of consumer goods, and are also inputs in agriculture, manufacturing, construction and services industries. In particular, chemicals are a keystone of world manufacturing, as they are an integral component of all manufacturing sub-sectors, including pharmaceuticals, automobiles, textiles, furniture, paint, paper, electronics, construction and appliances. It is difficult to fully enumerate the uses of chemical products and processes, but the following nomenclature gives some indication of the level of diversity: Polymers and plastics--especially polyethylene, polypropylene, polyvinyl chloride, polyethylene terephthalate, polystyrene and polycarbonate--comprise about 80% of the chemical industrys output worldwide. The chemical industry itself consumes 26% of its own output. Major industrial products include rubber and plastics, textiles, apparel, polymers, pulp and paper, and primary metals. Chemicals are nearly a US$3 trillion global enterprise, with chemical companies in the EU, US and Japan being the worlds largest producers.

1.2

Category Breakdown of the Chemical Industry The marketing of the chemical business can be divided into a few broad categories, including basic chemicals (about 35-37% of US dollar output), life sciences (30%), specialty chemicals (20-25%) and consumer products (about 10%).

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BASIC CHEMICALS or commodity chemicals are a broad chemical category, which include polymers, bulk petrochemicals and intermediates, other derivatives and basic industrials, inorganic chemicals and fertilizers. Polymers--the largest revenue segment, at about 33% of the basic chemicals US dollar value--include all categories of plastics and man-made fibers. The major markets for plastics are packaging, followed by home construction, containers, appliances, pipe, transportation, toys and games. The largest volume polymer product, polyethylene (PE), is used mainly in packaging films and other products, such as milk bottles, containers and pipes. Polyvinyl chloride (PVC), another large volume product, is principally used to make pipes for construction markets, as well as siding and, to a much smaller extent, transport and packaging materials. Polypropylene (PP), which is similar in volume to PVC, is used in markets ranging from packaging, appliances and containers, to clothing and carpeting. Polystyrene (PS), another large-volume plastic, is used principally for appliances and packaging, as well as toys and recreation. The leading man-made fibers include polyester, nylon, polypropylene and acrylics, with applications including apparel, home furnishings, and other industrial and consumer use. The principal raw materials for polymers are bulk petrochemicals. Chemicals in the bulk petrochemicals and intermediates category are primarily made from liquefied petroleum gas (LPG), natural gas and naphtha. Their sales volume is close to 30% of total basic chemicals. Typical large-volume products include ethylene, propylene, benzene, toluene, xylenes, methanol, vinyl chloride monomer (VCM), styrene, butadiene and ethylene oxide. These chemicals are the starting materials for most polymers and other organic chemicals, as well as much of the specialty chemicals category. Other derivatives and basic industrials include synthetic rubber, surfactants, dyes and pigments, resins, carbon black, explosives and rubber products. They contribute about 20% to basic chemicals external sales.

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Inorganic chemicals (about 12% of revenue output) are the oldest of the chemical categories. Products include salt, chlorine, caustic soda, soda ash, acids (such as nitric, phosphoric and sulfuric), titanium dioxide and hydrogen peroxide. Fertilizers are the smallest category (about 6%) and include phosphates, ammonia, urea and potash chemicals. LIFE SCIENCES (about 30% of the dollar output of the chemical business), include differentiated chemical and biological substances, pharmaceuticals, diagnostics, animal health products, vitamins and crop protection chemicals. While much smaller in volume than other chemical sectors, their products tend to have very high prices--over US$10 per pound--with research and development (R&D) spending at 15-25% of sales. Life science products are usually produced to very high specifications and are closely scrutinized by government agencies such as the US Food and Drug Administration (FDA). Crop protection chemicals, about 10% of this category, include herbicides, insecticides and fungicides. SPECIALTY CHEMICALS are a category of relatively high value-added, rapidly growing, chemicals with diverse end-product markets. They are generally characterized by their innovative aspects--products are sold for what they can do rather than for what chemicals they contain. Products include electronic chemicals, industrial gases, adhesives and sealants, as well as coatings, industrial and institutional cleaning chemicals, and catalysts. Coatings comprise about 15% of specialty chemicals sales, with other products ranging from 10-13%. Specialty Chemicals are sometimes referred to as fine chemicals. CONSUMER PRODUCTS include direct product sales of chemicals such as soaps, detergents, and cosmetics. The chemical industry has shown rapid growth for more than fifty years. The fastest growing areas have been in the manufacture of synthetic organic polymers used as plastics, fibres and elastomers. Historically and currently the chemical industry has been concentrated in three areas of the world: Western Europe, North America and Japan (the so-called Triad). The EU remains the largest producer, followed by the US and Japan. ___________________________________________________________________________ Chapter 1 Page 3 of 3

The traditional dominance of chemical production by the Triad is now being challenged by changes in feedstock availability and price, labour and energy costs, differential rates of economic growth and environmental pressures. Instrumental in the changing structure of the global chemical industry has been recent rapid economic growth in China, India, Korea, the Middle East, Southeast Asia, Nigeria, Trinidad, Thailand, Brazil, Venezuela, and Indonesia. 1.3 Research and Development in the Chemical Industry The outstanding success of the global chemical industry is largely due to scientific and technological breakthroughs and advances, facilitating the development of new products and processes. The US chemical industry now spends about US$17.6 billion annually on R&D. In fact, according to study by the Institute for the Future (IFTF), the chemical industry is one of the eight most research-intensive industries. The scientific and technical research of these industries makes our lives safer, longer, easier and more productive. When one reviews the contributions of the chemical industry to our civilization, it becomes clear that rather than any single individual invention or technological breakthrough, it has been the industrys overall commitment to R&D that has been its most significant legacy. Investment in R&D is the single greatest driver of productivity increases, accounting for half or more of all increases in output per person. R&D is the source of new products that improve our quality of life, and new processes that enable firms to reduce costs and increase competitiveness. As we look to the future, it is apparent that continued investment in technology is necessary for industry to meet the needs and expectations of future generations. Reaching the goals of Chemical Industry Development - Vision 2030 will require Pakistan to build its technology infrastructure, consisting of investment in technology development, computer aided design, engineering, plant and equipment manufacturing, construction and marketing management. These areas of development have been grossly neglected in the past and are the major reasons for the present plight of the chemical industry in the country. ___________________________________________________________________________ Chapter 1 Page 4 of 4

The industrial sector drives the global economy, collectively transacting almost US$3 trillion per annum. An industry is a collection of companies that perform similar functions. Industry can be used to refer to all company groups, or as being a set of entities that utilize productive forces to convert a simple input into a processed final product. The size of various industries varies by country, level of development and external demand. 1.4 Classification of the Chemical Industry Development of Pakistan Vision 2030 For the purpose of the Chemical Industry Development Vision 2030, this industry is divided into: Primary sector industries and Secondary sector industries.

Primary Sector Industries The Primary sector industry generally involves the conversion of natural resources into primary products. These are large, highly sophisticated, technology-based, capital intensive projects consisting of:

(i)

Petroleum refining and petrochemical industries for the production of petrochemical intermediates, olefins (ethylene, propylene, butylenes) and BTX (benzene, toluene, xylene), all of which form the basis for the development of monomers, polymers and plastic industries. Natural gas based projects for the production of ammonia, methanol, fertilizers and associated products. Mineral based industries consisting of cement, limestone, gypsum, sand and salt. Smelting and refining of ferrous and non-ferrous metals. They also produce raw materials for Secondary industries.

(ii) (iii) (iv)

(v)

Agriculture and Farming Industries These constitute naturally occurring, renewable sources of raw materials, such as cotton, oils and fats, sugar, agricultural wastes (bio-mass) and raw materials for a large number of downstream industries.

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Secondary Sector Industries The principal objective of Secondary sector industries is to provide the connective link between products and materials produced by Primary industries, which are of practical use to the national economy. This implies that the Secondary industries rely on the Primary industries for feedstocks and raw materials for use in manufacturing, processing, blending, fabricating plants for petrochemical intermediates, polymers, plastics, steel, non-ferrous metals, minerals, agricultural and miscellaneous products. These industries use medium- to high-sophisticated technology, and range from light to medium categories. THE SECONDARY SECTOR INDUSTRIES WILL FORM THE BASIS FOR CHEMICAL INDUSTRY DEVELOPMENT IN PAKISTAN - VISION 2030.

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CHAPTER 2
2. POTENTIAL FOR THE DEVELOPMENT OF SECONDARY CHEMICAL INDUSTRIES BASED ON FEEDSTOCKS DERIVED FROM PRIMARY INDUSTRIES 2.1 Feedstocks Derived from Primary Industries for the Potential Development of Secondary Chemical Industries Primary chemical industries, which are manufactured through the utilization of various feedstocks, consist of large-scale, highly capital intensive plants, based on sophisticated technologies. These projects also provide raw materials for the development of secondary chemical industries and consist of: Crude oil based refineries and petrochemical complexes. Natural gas based chemicals and fertilizer projects. Alternative renewable feedstocks for the production of commodity chemicals Metallurgical plants for the production of iron, steel, and non-ferrous metals. Other mineral projects consisting of acid and alkali industries, and cement and glass plants based on limestone, gypsum, rock salt, sulphur and silica. Projects based on agro feedstocks.

Crude Oil Based Petroleum and Petrochemical Refineries Petroleum refineries are designed to produce a limited number of products, which are primarily used as a source of energy in road, rail and air transport; power plants; steam generation; and heating media in the chemical industry. They do not produce high value-added chemicals unless they are integrated with petrochemical plants--generally designated as Petrochemical Refineries--which are highly energy efficient and produce diversified feedstocks and raw materials for a large number of secondary chemicals. A petrochemical is any chemical compound obtained from petroleum or natural gas, or derived from petroleum or natural gas hydrocarbons and utilized in the production of a large variety of secondary chemicals and products. The definition has been broadened to include the whole range of aliphatic, aromatic and organic
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chemicals, as well as carbon black and such inorganic materials as sulphur and ammonia. In many instances, a specific chemical included among the petrochemicals may also be obtained from other sources, such as coal, coke or bio-mass. Petrochemical based secondary chemicals include such items as plastics, soaps and detergents, solvents, drugs, fertilizers, pesticides, explosives, synthetic fibers and rubbers, paints, epoxy resins, and flooring and insulating materials. Petrochemicals are found in products as diverse as aspirin, boats, automobiles, aircraft, polyester and acrylic fibers, recording discs and tapes. Natural gas and crude oil are referred to collectively as petroleum. Crude oil consists of the heavier constituents that naturally occur in liquid form. Natural gas refers to the lighter constituents of petroleum that naturally occur in gaseous form, either on its own as free gas, or in association with crude oil. The production of petrochemical based intermediate chemicals form the feedstocks for secondary industries as part of a two stage process. In the first stage, crude oil is distilled and fractionated to produce a number of products consisting of gasoline, naphthas, and light and heavy gas oils, which are used as a source of energy for road and air transport, and power generation. Simultaneously the off gases, light and heavy naphthas, and gas oils are predominantly used as the starting materials for petrochemical projects. This is illustrated in Fig 2.1. In the second stage the off gases and naphthas are further processed into two separate operations to produce Petrochemical intermediate chemicals or monomers as follows:

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Petrochemical Feedstocks
Crude Oil To Petroleum Refinery Atmospheric Distillation Gasoline And Motor Spirit Light and Heavy Naphtha

Methane & Off Gases

Light and Heavy Gas Oil

Residue

Petrochemical Feedstock Off Gases/Naphtha/Gas Oil

Catalyst Cracking

Steam Cracking Olefins

Aromatics

Fig 2.1 Olefin Petrochemical Complex Refinery off gases, naphthas or gas oils are reformed at high temperatures in the presence of steam to produce monomers (ethylene, propylene and butylenes). These are gases at ordinary temperatures and pressures and can only be transported at high pressures and low temperatures as liquids under refrigerated condition. These are preferably processed further at site to produce secondary petrochemical products or polymerized into polymers, such as polyethylene, polyvinylchloride, polystyrene, ethylene glycol and many other secondary chemicals as illustrated in Fig 2.2 and 2.3.

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STEAM CRACKING OF NAPHTHA / GAS OIL

NAPHTHA / ASSOCIATED GAS / GAS OIL

Ethylene REACTOR Steam to Feed ratio 0.25 to 0.9 Temperatures 820 to 840oC

Propylene

STEAM

Butylenes

Fig 2.2

OLEFINS AND PETROCHEMICAL INTERMEDIATES BASED SECONDARY CHEMICAL INDUSTRIES

ASSOCIATED GASES OR NAPHTHA
STAGE I THERMAL CRACKING OF NAPHTHA FOR THE PRODUCTION OF PRIMARY CHEMICALS (HIGHLY SOPHISTICATED, CAPITAL INTENSIVE PROCESS)

BACKWARD INTEGRATION

POLYETHYLENES LDPE,HDPE POLYPROPYLENE POLY VINYL CHLORIDE POLYSTYRENE SBR ETHYLENE GLYCOL POLY VINYL ACETATE

STAGE II POLYMERIZATION OF PRIMARY CHEMICALS FOR THE PRODUCTION OF SECONDARY CHEMICALS AND POLYMERS. (MEDIUM TECHNOLOGY BASED PROCESSES).

PLASTICS FILMS CONTAINERS PIPES,CABLES, BAGS SYNTHETIC RUBBER & LEATHER PRODUCTS TYRES TOYS ELECTRICAL EQUIPMENT RADIO, TV, AIR CONDITIONERS, REFRIGERATORS FURNITURE, TABLEWARE

STAGE III FABRICATION OF SECONDARY CHEMICALS FOR THE PRODUCTION OF CONSUMER PRODUCTS. (LOW/MEDIUM TECHNOLOGY BASED PRODUCTS)

Fig 2.3

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FORWARD CREATION

ETHYLENE PROPYLENE BUTYLENES

Other Olefins Based SecondaryChemicals

Naphtha Steam Cracker (Olefins)

Ethylene & Derivatives

Ethylene EDC Ethylene Glycol Ethylene Oxide HDPE LDPE LLDPE EPDM Ethanol Alpha Olefins Vinyl Acetate Ethyl Chloride / Ethyl Benzene

Propylene & Derivates

Propylene Acrylonitrile Cumene Polypropylene Acrylic Acid Butanol 2-Ethyl Hexanol Iso-Propanol Nonene Dodecene Propylene Oxide Acetone Acrylic Fiber

Butadiene & Derivatives

Butadiene ABS Adiponitrile /HMDA Nitrile Rubber Poly-Butadiene Poly chloroprene SB Latex SB Rubber

Fig- 2.3(a) Aromatic Petrochemical Complex Naphtha and gas oil is also catalytically reformed at high temperatures in the presence of catalysts to yield aromatic intermediate chemicals, such as benzene, toluene and xylenes (Fig 2.4). These are liquids at ordinary temperatures and pressures and can be easily transported to desired locations where they are used as raw materials in the production of a variety of secondary chemical products as shown in Fig. 2.5.

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CATALYTIC REFORMING OF NAPHTHA (AROMATIZATION REACTION)

NAPHTHA / ASSOCIATED GAS / GAS OIL CATALYTIC REACTOR STEAM

Benzene Toluene Xylenes

Fig-2.4

Aromatics Based Secondary Chemicals

Naphtha Catalytic Reformer (Aromatics)

Toluene & Derivatives

Benzene TDI Caprolactam Benzoic Acid TNT

Xylenes & Derivates

Orthoxylene Paraxylene Metaxylene DMT TPA Bottle Resin Polyester Fiber Fiber Chip Film Resin Phthalic Anhydride PET

Benzene & Derivatives

Benzene ) Cumene ) Phenol ) Cyclo Hexane ) Ethyl Benzene ) Adiplc Acid ) Alkyl Benzene ) Aniline ) Alkyl Phenol ) Chloro Benzene ) Maleic Anhydride ) Nylon Fiber/Resin )
Production of Primary/Intermediate Chemicals (Highly Sophisticated Capital Intensive)

Production of Secondary Chemicals Medium / High Technology Chemicals and Products

Fig 2.5

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2.2

Natural Gas Based Chemicals Natural gas is a very valuable resource, not only for use as energy, but also for the production of chemicals. It has been used commercially as a fuel for hundreds of years. The production, processing and distribution of natural gas has become an important segment of the world economy and is a major factor in the production of chemicals in global markets. The composition of natural gas depends on its source. It predominantly consists of methane, but in many cases contains higher hydrocarbons such as ethane and propane. Natural gas processing plants are designed to produce certain valuable products over and above those needed to make the gas marketable. Plants are also designed to recover elemental sulphur which is the starting raw material for the production of many secondary chemicals. Natural gas has created multifarious opportunities and challenges as it is now utilized in the production of fertilizers and petrochemicals, in addition to its earlier use as a source of energy. This is illustrated in Fig 2.6.

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Household Gas

Fig -2. 6

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FIG-2.7

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2.3

Alternative Feedstocks for the Production of Commodity Chemicals The uncertainties about the peaking of available reserves of fossil fuels, and rising prices of petroleum and natural gas, have spurred the chemical industry to examine alternative feedstocks for the production of commodity chemicals. Over the last two decades alternatives to conventional petroleum and natural gas feedstocks have been developed. These feedstocks include coal based gasification and liquefaction processes; and renewable resources such as bio-mass, stranded natural gas from unconventional reserves, heavy oil from Tar sands or oil shale. These sources of alternative feedstocks are in the process of development for highest volume production of commodity chemicals in Europe and the US. The technology for their utilization is in the process of development, in order to make these processes more efficient and economically compatible with petroleum based technologies. The status of various available feedstocks and the technological development for their exploitation for the production of secondary chemicals is as follows: Coal Substantial world coal reserves make it an attractive alternative to natural gas and petroleum. The technologies for large scale processing of coal are at present available in South Africa and China. However, a major concern about the utilization of these technologies is the variability in feedstock composition and the presence of impurities which poison the catalysts used in the processing of coal. Coal Gasification Commodity chemicals can be produced through the gasification of coal. Because of the large domestic reserves of coal in Pakistan, this feedstock option needs to be exploited. Coal gasification for application, including the production of chemical feedstocks, is already widely practiced worldwide. These plants generate feedstocks for chemical production, closely followed by the Fischer Tropsch process for the production of organic chemicals.

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The gasification process starts with the production of synthesis gas in a gasifier, followed by the production of a mixture of carbon oxides and hydrogen. Ammonia, methanol, alcohols and aldehydes are produced by Oxo Synthesis. The Fisher Tropsch process is used to produce a variety of secondary chemicals. Different coal types (lignite, bituminous, sub-bituminous) affect the efficiencies and economies of the gasification process, since gasification efficiencies are lower for sub-bituminous coals due to higher moisture and ash content. However, since essentially any organic material can be gasified, existing gasifier designs can be adopted to use different types of coal as gasifier feed. Coal Liquefaction Coal can also be liquefied directly, without going through a Syngas step. This process is called the Coal to Liquid or CTL process and is well proven. Liquefaction uses liquid distillation and hydrogenation, where hydrogen is added to coal and water slurry. The slurry increases the Hydrogen/Carbon (H/C) ratio to a crude oil level and removes impurities such as sulphur. Coal Liquefaction technology is of particular interest for the utilization of Thar Coal, which has a high moisture content. A full scale production facility is being built in China for the direct liquefaction of coal into transportation fuels to produce 50,000 bbl/day of fuel oil. A similar project could be developed for Thar Coal with the participation of Chinese Process Licensors. Bio-Refinery A major thrust towards the development of renewable feedstocks as a resource for energy and secondary chemicals is by a process called bio-refining. Bio-refining feedstocks consist of crops residues; waste plants or animal material and recycled fibers; municipal sewage sludge; agricultural and forest residues; household waste; agro-feed effluents; and residues of paper and wood working industry. These plants absorb solar energy from the sun through photosynthesis, and the energy stored within it is recovered by bio-refining processes.
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The bio-refining concept generally involves feeding bio-feedstocks into steam or catalyst crackers to produce chemicals. Some technologies are in the process of development for the processing of carbohydrates, oils, lignin and fuels. In addition to their utilization for energy production, some bio based chemicals that have potential for large scale manufacture include carboxylic acids and glycols. Other areas of development include fermentation of sugars, decomposition of cellulose, high temperature pyrolysis, and bio-refining of wood and waste materials. However widespread use of feedstocks will require sustained research and development(R&D) in a variety of fields such as plant science, microbiology, genomics and catalysis. In view of the impurities, variability of feedstock composition, distributed supply, scalability and pathways for the breakdown of cellulose, the development of process technology will have to be undertaken and / or adapted to local conditions by each country, in order to exploit the utilization of bio-mass feedstocks for economic advantage. Unconventional Natural Gas Methane from anaerobic fermentation can be generated from animal manure and sewage treatment, as well as from landfills. The potential for anaerobic fermentation as a source for useable methane, rather than a source of pollution, will require development work leading to improvements in process control, operating efficiencies and rate of digestion, targeting small scale technologies. Renewable energy sources are indigenous and can, therefore, contribute to reducing dependence on energy imports, such as crude oil, resulting in increasing security of supply as well as resources for the production of commodity chemicals. Developments in renewable energy resources can actively contribute to job creation, predominantly in small- and medium-sized industries which are so central to economic performance. The deployment of renewable resources can be a key feature in regional development, with the aim of achieving greater social and economic cohesion, largely for environmental reasons.

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2.4.

Feedstocks Derived from Metallurgical Plants and Polymers, Materials Technology and Metallurgical Processes Materials technology is one of the many areas targeted by the chemical industry. Materials play a critical role in the economic development and growth of chemical process industries. New materials technology is an essential part of the industrys strategy for achieving its vision. Materials contribute a large amount to industry revenue, and represent a high growth potential for industry. Ferrous and non-ferrous metallurgical processes consisting of iron, steel, copper, aluminium, magnesium and associated alloys have been used traditionally as feedstocks for the development of secondary chemical industries. Tremendous advances in the twentieth century in the development of new synthetic materials have also fueled the growth of the chemical industry. Replacement of traditional materials with synthetic polymers and composite materials has resulted in products with lower weight, better energy efficiency, higher performance and durability, and increased design and manufacturing flexibility. Metallurgical Industry The traditional iron, steel and non-ferrous metallurgical industries produce valuable primary products which are important starting materials for the production of secondary chemical products. They are used by almost every manufacturing industry for the fabrication of capital plants and equipment; the manufacture of automobiles, railways, agricultural and construction equipment; and components and spare parts for operating plants in the chemical and allied industries. The iron and steel industry is classified into three important primary products according to the order of processing from iron ore to the finished products. The iron ore is calcined and mixed with limestone and coke and introduced into a Blast furnace. The preheated air is fed to the bottom of the furnace. The ore is reduced to iron to produce Pig iron.

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Pig iron is refined by different processes to produce iron castings or billets, rolled wrought iron and rolled/forged steel by three different processes as illustrated in Fig 2.8.

Fig-2.8 The primary products of the iron and steel industry, which consist of iron castings, rolled wrought iron, and rolled and forged steel, are the feedstock for a very large number of downstream secondary industries.

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Non-Ferrous Metals Non-ferrous metals are produced through two basic operations. In the first operation, the ores are subjected to metallurgical processes to produce basic metals consisting of large blocs or bars. In the second operation, the metal is smelted and refined. The secondary smelting and refining of nonferrous metals lead to the production of aluminium, copper, lead, nickel, silver, gold, tin and zinc. These metals are used in wide variety of secondary chemical manufacturing industries, such as ammunition, beverage cans, coins, automobiles and household appliances. Copper possesses superior electrical conductivity, and is a strong, durable metal used in a variety of structural applications, as well as for power, lighting and communication transmissions. Domestically, the major markets for copper are construction, electronics, and industrial machinery and equipment. Aluminium, the most widely used nonferrous metal, possesses several positive attributes, such as a light weight, corrosion resistance, and high electrical and thermal conductivity, which makes the metal suitable for a variety of applications. Container and packaging manufacturers use aluminium, while other major enduse products include the transportation sector, the building and construction sector, and the electrical sector. Lead is primarily used for the manufacture of storage batteries, which in turn are incorporated into automobile ignition starters, un-interruptible power supplies for computer systems, and standby power supplies for emergency lighting systems and telephones. Other market sectors that purchase lead include paint and glass manufacturers, and building products manufacturers. Zinc is primarily used to galvanize products found in the automobile, steel and construction industries, but a greater percentage of secondary zinc is used to produce brass and bronze, as well as assorted chemicals. Additional applications include the blending of zinc-based die-cast and brass alloys.

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Composite Materials Over the past few years, advances in the production of composite materials, including mixtures of polymers, fibers, metals and ceramics, have extended the range, performance and applications of these materials. These are made up of individual materials referred to as constituent materials. There are two categories of constituent materials designated as matrix and reinforcement. The matrix surrounds and supports the reinforcement materials by maintaining their relative positions. The reinforcements impart their special mechanical and physical properties to enhance the matrix properties. A synergism produces material properties unavailable from the individual constituent materials. A wide variety of matrix and strengthening materials allows the designer of the product or structure to choose any optimum combination. Most commercially produced composites use a polymer matrix material often called a resin solution. There are many different polymers available depending upon the starting ingredients. The most common are known as polyesters, vinyl ester, epoxy, phenol, poly amides, amongst others. The reinforcement materials are often fibers and fiber glass, but also commonly ground materials. The average composition in a product contains 60% resin and 40% fiber. Various process technologies consisting of vacuum moulding, pressure moulding, autoclave moulding and resin transfer moulding are employed in order to give the required properties and strength to the relevant final product. Composite materials have gained popularity in high performance products that need to be lightweight, yet strong enough to take harsh loading conditions. Examples of these include aerospace components, boat and scull hulls, and car bodies. The new Boeing 787 aircraft, including its wings and fuselage, is composed largely of composite materials.

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2.5

Other Mineral Based Projects Consisting of Acid and Alkali Industries, Cement and Glass Plants Based on Limestone, Gypsum, Rock Salt, Sulphur and Silica The mineral potential of Pakistan, although considered excellent, is not adequately exploited as its contribution to GNP at present stands at only 2.4%. The main sources of locally available feedstocks for the production of the acid and alkali industry (soda ash, sodium bicarbonate, caustic soda, chlorine), sulphur and other inorganic acids, glass and cement, consist of rocksalt, sulphur, limestone, gypsum and silica sand. The manufactured products are predominantly marketed for local use, although there are some exports to Afghanistan and the Central Asian states. In view of the long history of development of industries in this sector, the process technologies are well-known locally. However, the design, engineering and procurement of critical plant and equipment are predominantly carried out by foreign engineering companies.

2.6.

Agro Based Feedstocks Cotton and Other Natural Fibers Agriculture is the largest sector of the economy and is the source of livelihood of almost 45% of the total employed labour force in the country. Cotton is the most important non-food crop and feedstock for the production of natural fiber for the manufacture of textile products. Cotton fiber is also blended with polyester and viscose fibers. The textile and clothing industry has been the main driver of Pakistani exports for the last sixty years, in terms of both foreign currency earnings and job creation. The textile industry flourished under official patronage, but lost its advantages in the post quota regime. Its share in exports has declined from 66% in 2005 to 53.7% in the current 2008-09 financial year. The textile industry is based on relatively low to medium technology, but in spite of this Pakistan has spent US$7.5 billion on the import of textile machinery over the past ten years (1999-2009). Pakistan did not make any effort to adopt

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imported technologies for the manufacture of textile machinery by reverse engineering. In view of these shortcomings, the textile industry has continuously suffered productivity losses due to machinery breakdowns and its inability to cope with operational problems. Pakistan is now facing competition from China, India and Bangladesh, in view of their better quality products, higher productivity and other economic advantages. Sugarcane, Molasses, Power Alcohol and Associated Industries Sugarcane is an important cash crop and is a valuable feedstock for the production of sugar and other downstream industries, such as industrial alcohol, chip board and paper. Molasses is a by product of the sugar industry and is the starting raw material for the production of industrial alcohol, which is used as a source of energy for automobiles, as well as the production of organic chemicals, such as aldehydes, acetone, acetic acid, acetic anhydride, isophoron, citric acid, glycerol, yeast and many other derivatives for pharmaceutical and plastic industries. Fruit and Vegetables The various varieties of fruit produced in Pakistan consist of citrus, mango, apples, banana, apricot, guava, grapes and tomatoes. Annual production is estimated at 5.6 million tons per year. The fruit industry is very diversified and consist of juices, soups and sauces, baby food, bakery products, confectionary and tomato products. The technology for the processing of fruit is becoming more sophisticated because of the high demand for quality products. The industry is required to produce food products both economically and profitably, and this depends upon efficient processes. At the same time, these processes must handle the material in such a way that the final product is attractive to the consumer. The fruit industry and its downstream products have considerable export potential.
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Natural Dyes Vegetable dyes are eco-friendly and their use is increasing, especially for dyeing wool, carpets, silk and cotton. The common sources of vegetable dyes are parts of plants, such as leaves, flowers, fruit, seeds, barks, and the roots of dye yielding plants. The cultivation of certain trees also yield dye material. Therefore, the utilization of dye yielding plants and trees will boost the agro-based industry especially in rural areas, leading to rural development and employment creation. Pakistan imports vegetable dyes from India despite the fact that the raw materials for their production are available in Pakistan. Dyes and pigments constitute the largest segment of the industry, with the worlds present value estimated at about US$16 billion per year. Herbal Medicines and Associated products The Indian / Pakistani system of medicines--generally known as the Ayurvedic System of Medicine--is considered a perfect science of life which has evolved from wisdom, experience and logic. Based on scientific observations, it has its origin in the Vedas--the oldest recorded wisdom circa 6000 BC. Ayurvedic herbal medicines are considered ideal treatments, as they cure the diseases without causing any side effects. Herbal medicines and products now include medicines, health supplements, herbal beauty and toiletry products. Major developments in herbal medicines and beauty products are now taking place in China, South Korea, Canada and the US, in addition to India. It is estimated that the global market for herbal products now stands at US$62 billion per annum. Pakistan has a vast variety of flora and fauna especially in the northern areas, Azad Kashmir and the foothills of the Himalayas, which need to be explored for beneficial exploitation of these resources.
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India has established a Technology Development Board which provides financial assistance to R&D establishments concerned with the development and commercialization of indigenous technology for herbal products for wider domestic applications. There is considerable potential for the development of this sector and collaboration with well known companies such as Hamdard and Qarshi can be sought for joint partnerships for the development of herbal projects. Oils and Fats Industry Conventional oils derived from cotton seed, rapeseed and corn are now processed and utilized for the production of bio-fuels in the US and other countries. An alternative source of vegetable oil called Jetropha is now widely cultivated in South and Southeast Asia, especially in Japan, Thailand, China and India. It is a woody and hardy plant, and grows to a height of 3-8 meters. It grows quickly even in poor soils and is not affected by drought and disease. The Macro engineering society of Pakistan, in collaboration with Big Bird (Pvt.) Ltd. has initiated a project for the plantation of Jatropha in Layyah, West Punjab. The Jetropha oil seed contains about 40% of vegetable fat/oil and some toxic materials, which makes it inedible for human and livestock consumption. The process technology for the conversion of Jetropha oil into bio-fuels is well proven and can be adopted in Pakistan. 2.7 Sources of Raw Materials and Process Technologies for Chemical Industry Development in Pakistan The sector wise classification of chemical industry in Pakistan is as follows: PRIMARY INDUSTRIES i) Petroleum Refineries ii) Fertilizers iii) iv) v) vi) Chapter 2 Cement Iron & Steel Copper Textiles SOURCES OF RAW MATERIAL Imported Crude Oil Local Natural Gas, Local Materials, Limestone, Clay Imported/Local Ore Locally available ore Local Agricultural Raw Material Page 20 of 23

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SECONDARY INDUSTRIES Petrochemical Intermediates Based Industries i) Synthetic Fibers ii) Polyvinyl chloride iii) Various Polymers iv) Pesticides v) Pure phthalic acid vi) Plastics and Resins vii) Paints and Varnishes viii) Organic Chemicals ix) Dyes and Pigments x) Textiles and Tannery Chemicals xi) Drugs, pharmaceutical chemicals, fine and specialty chemicals 2.2.3 OTHER SECONDARY INDSTRIES Acids and Alkali Industries. Soda Ash and Sodium Bicarbonate Caustic Soda and Chlorine Sulphuric and Other Inorganic Acids. Paper and Paper Board Glass and Ceramics

Sources of Raw Materials

Imported Petrochemical Intermediates, Locally available Coal, and Renewable Feedstocks consisting of Biomass and molasses.

Sources of Raw Materials Local Raw Materials.

Part local/part imported. Local Raw Materials

Crude Oil and Natural Gas are the feedstocks for the primary industries, consisting of petroleum refining; fertilizers; iron, steel, and other metallurgical projects; cement; and textile industries. The development of these industries is predominantly based on imported technologies. The design and detailed engineering, and supply of critical plant and equipment, is carried out by foreign engineering corporations, which also assist in the construction of facilities, training of operating staff, and the commissioning of process plant and equipment. 2.8 Categorization of Secondary Chemical Industries in Pakistan The secondary industries may be divided into two categories:

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Projects based on high / medium sophisticated technologies These consist of polyesters, polyvinylchloride, polymers, pure phthalic acid (PTA), plastics, organic chemicals, dyes and pigments etc. These projects are based on imported technologies and the process and engineering of these projects are predominantly carried out by foreign engineering corporations. The critical plant and equipment is mostly supplied by foreign plant manufacturing companies, which were also responsible for the commissioning and fulfillment of performance guarantees. Projects based on Medium and Less Sophisticated Technologies Projects based on medium or less sophisticated technologies consist of the acid and alkali industry, hydrogen peroxide, paper, board and packaging plants, glass and ceramics and many downstream small consumer projects based on polymers, ferrous, non-ferrous and allied fields. There have been some process technology inputs, as well as engineering support from foreign consulting and engineering companies, in the development of these projects. In many cases second-hand plant and equipment has been imported by industrialists. These plants were highly energy intensive and based on antiquated technologies. As a result, these plants were uneconomic to operate, and required government support in terms of subsidies and exemption from import duties and taxes. In spite of these facilities/concessions many of these plants failed to operate and were ultimately shut down, resulting in colossal losses to the country. Many plants have also been shut down because of competition from China and other countries, which have flooded the Pakistani market with cheap and better quality products, especially in the fields of construction materials and household consumer goods. Pakistan has not been able to create its own capability for technological and engineering infrastructure for the exploitation and commercialization of local or imported technologies.

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The face and scope of the worlds chemical industry is changing. There is continual emphasis on the development of new materials and processes based on cheap, renewable feedstocks, consisting of coal, bio-mass and composite materials, in addition to conventional feedstocks. The objective of the Development of Chemical Industry - Vision 2030 is for Pakistan to create its own technological and engineering capability in order to make itself selfsufficient by progressively reducing its dependence on foreign engineering corporations, which are at present involved in the commercialization of chemical and industrial projects. Such strategies were pursued by ASEAN, India and China during the initial stages of their development, by virtue of which these countries have already achieved the status of newly developed economies (NIC). It should also be acknowledged that the creation of these facilities will create employment opportunities for highly qualified manpower (engineers, scientists, technologists, economists etc.). Currently, the lack of such opportunities is responsible for the continual brain drain from Pakistan to other countries.

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CHAPTER 3
THE PRESENT STATUS OF THE CHEMICAL INDUSTRY 3.1 Pakistan Scenario Historical Background The development of the chemical industry in Pakistan started in the early 1950s. Since Pakistan did not have an industrial base, governments gave preference to import substitution over export-oriented policies in their strategic plans for future development. In spite of rather poor available resources, Pakistan made a significant start and was considered a promising developing country in 1960s. Pakistan continued to follow an inward-oriented import-substitution policy until the end of 1990s, which hampered the development of export-oriented industries. Pakistan did not appreciate the advantages associated with trade liberalization until late in 1990s and supported highly protectionist trade policies. It delayed trade liberalization and tariff rationalization until the end of 1990s. The chemical and the manufacturing sectors have also been adversely affected by various factors, such as acute energy shortages and poor structural policies. Their present share in 2008/09 GDP is estimated at 18.4%, compared with a contribution of 23% in 2006-07. Existing Status Chemical industry in Pakistan is widespread, in organized & unorganized sector. It is not possible to have an exact figure for investment in this sector; however a close approximation of investment in chemical sectors ranges between Rs. 550 600 billion. The chemical related imports constitute about 17% of the total import bill. There are three general classes of products in this Sector: Basic chemicals both inorganic and organic such as acids, alkalies, salts, ethylene, propylene, benzene, toluene, xylene etc.; Chapter 3 Page 1 of 1

Chemical products used in further manufacturing i.e. intermediates such as pure Terephthalic acid, phthalic anhydride, Finished chemical products for end use or ultimate consumption; synthetic fibers i.e. polyester, PVC, polyethylene, polypropylene, polystyrene etc. Pakistan made a considerable progress in basic inorganic chemicals like Soda Ash, Caustic Soda, Sulphuric Acid & Chlorine and sufficient production capacity of these chemicals is available not only to cater the needs of the local industry while surplus is being exported, imports of these products are negligible. However Pakistans organic chemical industry could not flourish due to unavailability of basic building blocks such as Ethylene, Propylene, Butylenes & BTX (Benzene, Toluene, Xylene) used for the production of most of the organic chemicals that are employed as a raw material for a number of chemical subsectors such as; Pharmaceuticals Pesticides Dyes & Pigments Soaps & Detergents Paints & Varnishes Synthetic Fiber Plastics & Resins Rubber Tyres & Tubes Textiles Auxiliaries Essential Oils & Perfumes These petrochemical building blocks can be derived from a Petrochemical complex, which generally consist of a Naphtha Cracker, whereas naphtha is a product of oil refineries and currently its production in the country is around 1,000, 000 M.Ton per annum which is being exported. The investors have remained shy away from this project due to the following reasons;

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Highly Cost Intensive project Sophisticated technology involved Export market limitations Insufficient current tariff spread

Pakistan Industrial Development Company (PIDC) has recently developed feasibility study of this mega project through an international firm of Singapore. However there are some alternate routes to produce basic petrochemical building blocks, these are; Gasification of Coal Dehydrogenation of Associated Gases Cracking of Natural Gas Each route has its own limitation, however recently some developments are taking place to produce synthesis gas and ethylene from natural gas cracking. This project surely opens the gateway for the development of Petrochemical industry in Pakistan, which will support the local chemical & allied products industries in meeting their raw materials requirements and to save the valuable foreign exchange. Besides the imports of most of the raw material & intermediate for these sectors, Pakistan succeeded to develop the downstream allied chemical industries to meet most of the local demands. The example of this development is obvious in synthetic fibres, soaps & detergent, dyes & pigments, Paints & Varnishes, while amongst intermediates Pakistan has sufficient capacity for Pure Terephathalic Acid (PTA) and Poly Vinyl Chloride (PVC). However still the imports of

chemicals and allied industries stood around 20%, which is significant for a small economy of Pakistan.

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3.2

Regional Scenario By comparison, economic growth in Southeast Asia started in Japan in the 1960s and was followed by newly developing countries, such as South Korea, Singapore, Hong Kong and Taiwan. The four little dragons grew rapidly, owing to their export-orientated industrialization policies. These countries provided export incentives, such as subsidized export credits, duty free imports for feedstocks of manufactured export products, encouraged foreign direct investment (FDI), and also developed their science, technology and engineering infrastructure to support their industrial base. Trailing behind the four little dragons are four ASEAN countries--Indonesia, Malaysia, Thailand and the Philippines. These four countries have also been successfully increased their exports of high value-added goods by following a policy of trade liberalization and technology development. However, the most spectacular developments in the production and export of manufactured products consisting of primary as well secondary chemicals have taken place in China and India. Chinas GDP has grown at an annual average rate of 9-11% over the past two decades. China simultaneously developed a technology and engineering infrastructure, by virtue of which it is now exporting its chemical and manufactured products to developed countries, as well as its process and project engineering systems to Asia and Africa. There is widespread understanding that economies with liberal trade policies and openness have higher economic growth rates. Trade liberalization, together with complimentary policies and structural reforms, results in substantial

improvements to the business environment, fosters market competition and helps technology improvement and upgrading. These strategies boost productivity and the optimum utilization of resources which are absolutely essential for increasing exports and supporting economic performance.

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3.3

The Structure of Pakistans Trade Import & export of chemicals of Pakistan is depicted below:
Chemicals Trade (Million US $)

6000 5000

5,718 5,166 4,133 4,362

4000 3000 2000 1000 0

3,599 2,788

768 118 253 400

472

367

538

411

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Imports

Exports

Above graph shows the consolidated figures for imports & exports such as chemicals, fertilizers, plastics, rubber, medicines, dyes & pigments, soaps & detergents, and specialty chemicals for the period from 2002-03 to 2008-09. Imports have increased from 768 Million US $ in 2002-03 to 5,166 Million US $ in 2008-09 and on the other hand our exports also showed an increase from 118 Million US $ in 2002-03 to 411 Million US $. Share of chemicals in our total imports is about 15% while its share in exports is about 2.3%. The total imports of plants and equipment used for the manufacture of chemicals contributes about 23% of overall imports of Pakistan. Collective share of these two categories i.e. plants/equipments and chemicals is about 38% of countrys overall imports and among major contributors of countrys imports. Pakistans trade deficit was about ---- Billion US $ which has been increased to 17 Billion US $ in the year 2008-09. Chapter 3 Page 5 of 5

The structure/composition of Pakistans exports of chemicals for the year 2008-09 is depicted below:

ChemicalExportsofPakistan200809 TotalExports=513MillionUS$
Perfumes&Cosmetics 2.6% OtherSpecialty Chemicals 10.7% Petrochemicals 4.0% Pharmaceuticals 28.3%

InorganicChemicals 4.5% Fertilizers 0.1% Dyes&Pigments 1.4% Coatings&Inks 3.5% Soaps&Detergents 3.4%

Plastics 41.6%

Plastics stand top export with a share of 41.6%. Second is pharmaceutical with a healthy share of 28.3%. Third largest one is of specialty chemicals contributes about 18.2% of which perfumes & cosmetics 2.6%, coatings & inks 3.5%, dyes & pigments 1.4% and other specialty chemicals share is around 10.7%. Inorganic chemicals have comparatively very low exports of 4.5% while Pakistan have significant surplus available for exports most promising products in this sub-sector are soda ash, caustic soda, chlorine, calcium chloride, bleaching powder etc. need be encouraged. Petrochemicals share is about 4% in which major contributors are phthalic anhydride, dioctyl orthophthalate etc. soap & detergents contributing about 3.4% while share of fertilizers is negligibly small i.e. 0.1%. Traditionally, exports from Pakistan have been dominated by textiles, cotton, ready-made garments and leather products. These comprise about 60% of total exports from Pakistan, and are predominantly manufactured by low technology and labour intensive processes. Chapter 3 Page 6 of 6

The share of medium- to-high value-added products--such as chemicals, petroleum, petrochemical intermediates and manufacturingin exports is very small. In terms of the composition by technology classification, the share of exports of raw materials, and resource-based as well as labour intensive and low technology products in 1985-2005 did not show any improvement. These products contributed about 90% to total exports in revenue terms from Pakistan. The share of exports of medium- to-high technology manufactured products over the same period has declined from about 10% in 1985 to about 8.3% in 2005. This indicates that despite following a policy of trade liberalization in the late 1990s and early 2000s, Pakistan has failed to make any headway in diversifying its exports, or enhancing its capability in the production of medium and high technology export based products. By comparison, the global share of exports of raw materials, and labour intensive and low technology products was estimated at about 37% in 2005, while the global share of medium and high technology products has risen to about 63%. These figures are recorded in Table 3.2. Table 3.2 Comparison of Pakistans exports by technology classification (1985 & 2005) Technology level Pakistans exports Share in 1985 33.06 4.09 52.98 8.57 0.30 0.99 Share in 2005 10.99 8.00 72.70 6.94 1.21 0.13 World exports Share in 2005 8.86 14.05 13.88 32.27 22.43 8.51

Raw Material (Primary Products) Resource-based (RB) Low-tech (LT) Medium-tech(MT) High-tech(HT) Others

Source of Data UN Comtrade Database 2008, definition of technological classification.

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Imports The structure/composition of Pakistans imports of chemicals for the year 2008-09 is given in the graph. Petrochemicals are among the top imports of Pakistan with a share of 29.2% major petrochemicals being imported are o- xylene, pure terephthalic acid, MEG, DEG, solvents etc. Second largest import is plastics have a contribution of about 19%.

ChemicalImportsofPakistan200809 6,436MillionUS$
Pharmaceuticals 8.5% OtherSpecialty Chemicals 10.2% Coatings&Inks 1.1% Dyes&Pigments 4.3% Pesticides 2.2% Petrochemicals 29.2% Fertilizers 10.4% SyntheticRubber 1.2% Perfumes&Cosmetics 1.4% Soaps&Detergents 1.7% InorganicChemicals 10.8%

Plastics 19.0%

The data for major imports in the period 2002-08 is recorded in Table 3.3. This table also gives the consolidated figures for imports, such as chemicals, drugs, medicines, dyes and colours for the same period. Their share of imports increased from US$1,921 million in 2002-03 to US$4,955 million in 2007/08, or about 12.3% of total imports. Similarly, the total imports of capital plants; agricultural, transportation and communication machinery and equipment; and manufactured products, increased from US$2,825 million in 2002/03 to US$11,283 million in 2007/08, or about 28.3% of total imports. These two categories of imports together add up to more than 40% of total imports.

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Table 3.3 MAJOR IMPORTS OF PAKISTAN US$ (Million) 2002-03 2003-04 2004-05 2005-06 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Chemicals & Related Product Drugs and Medicines Dyes & Colours Chemical Fertilizers Electrical goods Machinery Transport Equipments Iron and Steel Iron and Steel Scrap Manufacture of Metal Tea Synthetic & Artificial -Silk yarn Non-ferrous metal Crude Petroleum Petroleum Products Edible Oils Grains, Pulses & Flours Other Imports Total Imports Chemicals (1+2+3+4) Percentage of Chemicals Group to Total Imports Capital Plant & Equipment (6+10) Percentage of Machinery Group to Total Imports 1,555 222 144 240 217 2,224 501 402 48 100 173 92 30 1,367 1,700 539 116 2,551 12,221 2,161 17.7% 2,078 275 160 285 258 3,309 653 512 94 124 193 118 34 1,765 1,401 613 75 3,646 15,593 2,798 17.9% 2,709 292 187 417 356 4,494 1,069 890 222 175 223 130 2,990 331 223 652 502 6,245 1,602 1,373 424 223 225 546

2006-07 3,194 354 238 696 536 6,673 1,712 1,467 453 238 240 583

2007-08 4,181 463 311 912 702 8,732 2,240 1,920 593 311 315 763

40 123 131 172 2,149 3,804 4,065 5,320 1,851 2,848 3,043 3,982 703 746 797 1,043 123 164 175 229 4,569 5,560 5,941 7,775 20,599 28,581 30,536 39,964 Source : Export Promotion Bureau 3,605 4,196 4,482 5,867 17.5% 14.7% 14.7% 14.7%

2,324 19.0%

3,433 22.0%

4,669 22.7%

6,468 22.6%

6,911 22.6%

9,043 22.6%

There have been major increases in the imports of chemicals, pharmaceuticals, drugs, dyes and colors, as well as manufactured products, such as capital plants, equipment and associated machinery. These products have been responsible for the widening gap between imports and exports, indicating that Pakistan has not been able to diversify its production of consumer and industrial products in spite of the adoption of liberal policies by governments. Domestic production of consumer goods is based on labour intensive, low value-added products.

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In the past, medium and high intensive technology based chemical plants, such as petroleum, cement, sugar, polyester fibers and other petrochemical based polymer products were developed in Pakistan with the help of foreign engineering and construction companies. However, Pakistan has failed to assimilate these technologies, and use these either for the replication of these plants or in the development of associated projects. 3.4 The Role of the Government in Industrial Development

Rapid industrial development in Japan and the newly industrialized economics (NICs) of South and Southeast Asia has resulted in these countries recording very high economic growth rates since the 1960s. This was made facilitated by the development of industrial policies designed to shift the industrial structure away from primary economic activities, such as agriculture and textile manufacturing, to advanced chemical and manufacturing industries. Economists in the late 1970s and 1980s portrayed the industrial policies of NICs as a new perspective on development and defined the role of the state to maintain macroeconomic stability, provide industrial and technology infrastructure, improve market institutions to enhance development, and redistribute the generated wealth. One of the major reasons for the success of industrial policies in NICs was productive investment--which formed a large percentage of GDP--with much of this investment funding made by the public sector. The introduction of incentives and subsidies were also used as an effective tool for resource allocation. The governments of NICs established public organizations to support production activities, but relied primarily on private firms for the success of their industrial policies. These governments, however, realized that the industries whose development were deemed necessary for rapid industrialization could only be nurtured with the intervention of the public sector. This is because most of the industries they were developingsuch as chemicals, petrochemicals and polymers etc-required large scale investments which the private sector could not afford.

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In China, market reforms were introduced by Deng Xiaoping in 1978, along with its Open Door Policy. Deng stated that if capitalism had something positive to offer, then China should accept and exploit it to the best of its advantage.

T he structure of Chinas petroleum and petrochemical industry is shown in Fig 3.1. China created two Public Sector Corporations: China National Petroleum Corporation (CNPC) for the production and exploration of Oil and Gas; and the China Petrochemical Corporation (SINOPEC) for the development of its petrochemical industry. China created Petro-China as a Holding Company which offered shares on the international market, with its value estimated at US$100 million in 1999. Petro-Chinas value has now reached US$1.1 trillion over a ten-year period. CNPC is now ranked one of the top petroleum companies globally, as shown in Table 3.5.

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CNPC ranked as Worlds Top 50 Petroleum Companies

Total assets US Dollars 1.1 trillion. 13 Giant Oil and Gas Fields 16 Large Scale Refining and Petrochemical Companies 19 Marketing Companies. Large Group of R&D Units For Technical Services. Capital Plant Manufacturing Enterprises in Northeast, Northwest, North and Southwest China. 30 Oil and Gas exploration, development and production projects in Middle East, North Africa, Middle Asia, Russia and South America.

The salient feature of Chinas industrial policy is that the public sector has a large share holding, while the private sector is given a small share in the equity, when developing primary large-scale projects. Conversely, in the downstream secondary industries the public sector has a minor shareholding, while private companies have a large equity share. This is a good example of the importance and success of public-private partnerships (PPAs) in the successful industrialization of the country. This is illustrated in Table 3.6.

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Table 3.6

Production distribution of major petrochemicals in China -2003

Ethylene Total (mt/y) Sinopec CNPC Others 6.12 51.8% 29.7% 18.5% Synthetic resin 15.94 29.4% 16.5% 54.1% Synthetic fibre 10.69 11.97% 2.70% 85.33% Synthetic rubber 1.272 39.5% 23.4% 37.1% Other Products 15.1758 13.4% 23.6% 63.0%

3.2

Limitations of Pakistans Industrial Policies for Chemical Industry Development The industrialization of Japan and South Korea was facilitated by the development of multinational conglomerates, called Keiretsus and Chaebols. These corporate business groups played a decisive role in the economies of their countries. The major

contribution of these conglomerates relate to their ability to create powerful vertical and horizontal diversification of their respective governments. Vertical diversification relates to the expansion of businesses in related and unrelated fields of their operations, as either one corporate entity or by breaking down into loosely connected groups of separate companies sharing a common name. Even in the latter case, the same family group almost always owned, controlled and managed each smaller conglomerate. In horizontal diversification these conglomerates expanded their activities Chapter 3 Page 13 of 13 businesses with the active participation of their

into banking, investment and other related ventures. This pattern, in many cases, was also followed later by NICs. Under the present political climate in Pakistan, it is very difficult to attract foreign direct investment, from not only developed countries, such as the US, Japan and Europe, but also from the Middle-East. In view of these constraints, it is necessary for the government of Pakistan to devise suitable policies to develop PPPs, in order to spur the development of the chemical industry, which will cater to both domestic demand and exports. In this endeavour large industrial groups such as Fauji Foundation, Dawoods, Engro and other well known textile, cement and sugar groups should be invited to reinvest their proceeds for the vertical or horizontal diversification of their businesses.

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CHAPTER 4
4.1 Modernization of the National Innovation System for Chemical Industry Development in Pakistan Pakistans industry is facing pressures from globally competitive markets. It has become extremely difficult for Pakistans economy to sustain growth by continually relying on cheap labour, limited technological infrastructure and the high cost of imported technologies. In view of these limitations the challenges of enhancing, as well as modernizing, a National Innovation System (NIS) has become very important. The NIS of any country is defined as the framework by which a country brings about technological change. It includes many diversified elements and participants involved in the development of the chemical industry. These consist of research and development (R&D) and technology development institutions; the infrastructure responsible for the commercialization of locally developed and imported technologies; the structure of universities and educational and technical institutions for human resource development; the government and regulatory agencies; information networks; financial institutions; and domestic and international markets. It emphasizes the synergistic strategies and complex interactions between various stakeholders in an economic environment. The development and enhancement of a NIS is therefore critical for the formation of national technological policies and is also important for strategic technology planning in Pakistan. The past history of industrial development has shown that the highly industrialized countries of the UK, France, Germany and the US, achieved their status as industrialized nations after several centuries of continual endeavour. Successive countries have, however, achieved their development goals in shorter periods than those immediately preceding them. Japan took a shorter time than the Europeans to achieve its status as an industrialized country. But while Japans technological miracle spans over half a Chapter - 4 Page 1 of 21

century, South Korea, which followed the Japanese model, achieved its industrialized status in about 25-30 years, while other newly industrialized countries (NICs) of Southeast Asia, such as Singapore, Taiwan and Hong Kong, have also shown similarly remarkable progress in an even shorter time span. Other countries like Indonesia, Malaysia and Thailand, as well as China, India and Brazil, have exhibited what is termed as miracles. Their achievements have also been spectacular and unparalleled in history. Limitations of Pakistans N.I.S It would be appropriate to consider the limitations of Pakistans Innovation System and determine why it has lagged behind in its race towards the development of its chemical industry and whether it can replicate the experiences of its neighbouring countries--especially China and India--in order to achieve the desired goals. The leap-frogging experience of China and many other NICs was not the result of the so-called invisible hand. Their leaders took strategic decisions that were at the time at variance with their comparative advantages (given their then levels of economic development), but eventually led to the desired transformation. These countries paid special attention to the development of their NIS, which formed an important aspect of their economic structure and institutional setups, which had a positive impact on human resource development, and also enhanced and improved their systems of production, marketing and associated sub-systems. These factors formed the basis of these countries innovative technologies. The centerpiece of NIS is a countrys industrial organizations and it is their responsibility to co-ordinate with research and development institutions in the utilization of inventions for the commercialization of the results of this research. The process of commercialization depends on the integration of technology with prototyping, production, marketing and creating effective linkages with consumers. In Pakistan, R&D institutions, universities and industry work in Chapter - 4 Page 2 of 21

isolation and are completely divorced from each others activities. Unfortunately, no effort has so far been made by the public or private sector to develop publicprivate partnership in order to integrate the activities of various sectors of economy. Various models for the utilization of local or imported technologies for commercialization have been proposed. However, the diffusion model is considered the most appropriate first step for development, given the present situation in Pakistan. One aspect of this model is designed to facilitate learning, train the labour force to high technical standards, absorb locally developed or imported technology, and to solve production problems related to energy and productivity improvements in the chemical industry, by introducing reverse engineering techniques as a first step towards the development of a NIS. This is a well-known technique through which foreign technology may be acquired and assimilated by importing sophisticated capital equipment. Machinery and equipment that have been designed and manufactured by foreign engineering companies are based on modern technology and have technological information embedded in them. These technology imports have been used by NICs to produce high quality products through the application of reverse engineering. Unfortunately, Pakistan has not been able to develop this capability. The textile industry is a prime example of this shortcoming, since it has been importing textile machinery worth billions of US dollars every year without taking any initiative to enhance its capability for modernization, or revamping its textile machinery through the adoption of imported technologies by reverse engineering techniques. Large industrial companies, such as refineries, fertilizer and cement have also not taken any initiative to exploit these techniques. For an economy competing at the global frontiers, its innovation strategy requires a well developed infrastructure, a set of capability focused technology policies, as well as an industrial environment that stimulates innovation and entrepreneurship. Chapter - 4 Page 3 of 21

It is therefore, necessary to examine the role played by science and technology policies in a countrys transition to an innovation based growth strategy, and discuss the challenges Pakistan faces in restructuring its economic institutions in order to improve R&D capabilities so as to encourage technology creation. Process science and engineering technology (PS&ET) is the foundation for the development of the chemical industry. It embodies the integration of facilities for technology development, process design, detailed engineering, manufacturing of capital plants and equipment, chemical plant construction and management. Taken together, these provide the basis for manufacturing excellence and sustainable competitive advantage, as well as employment opportunities for highly qualified manpower. The development and application of PS&ET is rather fragmented in Pakistan at present. In order to meet the goals of Chemical Industry Development - Vision 2030, it is absolutely essential for Pakistan to enhance its PS&ET capabilities, as this is an important component of a NIS. The performance of various elements of this system in Pakistan have been critically examined, and a coherent strategy for the integration of available facilities has been proposed, in order to achieve the objectives of Chemical Industry Development - Vision 2030. Pakistans technological infrastructure is weak and is not suitably developed. Its scope to be widened, modernized and strengthened. The objective is to make Pakistan self-reliant, thereby limiting its dependence on foreign technology, licensing and engineering organizations for the acquisition of technology and process know-how. This will require collaborative efforts in the form of Public Private Partnerships (PPP) and considerable improvements in the present structure of R&D institutions, as these are the major components of process science and engineering technology systems. It is proposed that the scope of the Engineering Development Board should be widened, with an additional responsibility for Technology Development.

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The structure of the proposed Technology Development Board is illustrated in Fig 4.1

Structure of Technology Development Board

Strategy for the Development of National Innovation System

National Committee Counsil for Research and Technology Development

National Committee Counsil for the Development of Soft/Hardware for the Commercialization of Technologies.

National Committee Counsil for the Development of Technology Policy and Investment Planning

Fig 4.1

4.2

The Role of the National Committee in Research and Technology Development R&D institutions are an important part of the national innovation system of any country. These institutions make a vital contribution to technological transformation and enhance a countrys capacity to invent, absorb, adopt and deploy technology through laboratory and pilot plant development work. An interdisciplinary approach is invariably adopted and the work is carried out by scientists, engineers, technologists, economists and technicians, who are suitably trained and conversant with modern research and development methods and equipment. In many cases these institutions also provide consultative services and help to solve product and process problems of firms, such as the processes of

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decoding, trouble-shooting problems of transferred technology and improving productivity and energy efficiency. The extent to which R&D effort are involved in the productive sectors of an economy determines its contribution to technological transformation and development. In addition, performance is judged by the number of scientific publications in recognized international journals; the number of product and process inventions, whether patented or not; and other measures such as the utilization of their work for commercialization. 4.2.1 The Current Status of R&D in Pakistan Research and development is divided into (i) (ii) (iii) Basic research Applied research and Development

The objective of basic research is to gain more comprehensive knowledge and understanding of a problem, without specific application or immediate commercial application. The objective of applied research is to gain knowledge to meet specific needs resulting in invention. It is also called goal-oriented research. Development is the systematic application of knowledge gained from R&D and utilized towards the production of useful products, systems, and materials including design and system development, which lead to the commercialization of technology. R&D plays a decisive role for innovative solutions which are generated in dialogue between users and developers. This dialogue is the central concern for developing linkages between universities, industry and R&D institutions. Unfortunately, these linkages are not well developed in Pakistans scientific culture. Universities, R&D institutions and industry work in complete isolation and there is little concern about a multi-disciplinary approach to research, as practiced in NICs and scientific institutions in other countries. In addition, there

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is hardly any provision or facility for pilot plant work in Pakistans technological institutions. Expenditure on R&D is limited and these institutions get little funding from industry. 4.2.2 National Committee for Research And Technology Development In order to advance technology, universities, R&D institutions and industry must foster linkages as a first step towards the streamlining of available resources for development. The task of the National Committee for Research and Technology Development will be: (i) To establish subcommittees for each sector of chemical industry concerned with the utilization of available feedstocks. The members of the sub-committees will be drawn jointly from industry, universities and R&D institutes relevant to each sector. To appoint industrial liaison officers and research fellows to the conduct industrial surveys in order to identify and select industrial problems for R&D. To create research teams drawn jointly from universities, industry and R&D institutes for interdisciplinary technology development for the identified projects. To allocate resources for the execution of R&D and set targets for the completion of work. Continually appraise the project progress, with special reference to techno-economic evaluation of the results of R&D. To determine the suitability of the projects for pilot plant study after the completion of laboratory work. To allocate resources for pilot plant study for the selected projects.

(ii)

(iii)

(iv) (v) (vi) (vii)

(viii) To continually appraise the results of pilot plant studies and determine their techno-economic feasibility for commercialization, and (ix) To develop process design parameters for the commercialization of technology and make recommendations for the registration of patents.

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To execute this programme for technology development, the role of the public sector is absolutely essential and its responsibility should be clearly defined in order to obtain tangible results. The structure of the National Committee for Research and Technology Development is illustrated in Fig 4.2.

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Structure of National Committee For Research and Technology Development

National Committee for Research and Technology Development

Sub-committees for Various Sectors of the Chemical Industry Industrial Surveys for the Identification and Selection R&D Problems. Evaluation & Approval Selection of R&D Teams from Universities/R&D institutions/ Industry for R&D Work and the Allocation of Technoeconomic Evaluation

Approval and Evaluation

Selection of Projects for Pilot Plant Work and the Allocation of Resources

Technoeconomic Evaluation Design of Parameters

Marketing Evaluation

Selection and Adoption of Technology for Commercialization.

Registration of Patents

Fig 4.2

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4.3

National Committee for the Development of Software and Hardware for the Commercialization of Technologies The development of Industrial infrastructure consisting of the software and hardware required for the commercialization of locally developed or imported technologies, depends on the availability and continual development of local capability for process design, project engineering, design of instrumentation and control, safety and environment, construction and project management. It also requires the development of facilities for the manufacture of capital plant and equipment and associated hardware necessary for the construction and operation of the project. When integrated in the technological infrastructure, these resources permit the economic utilization of capital, improved application of human resources, reductions in the cost of production and help in building an industrial base for the effective development of the chemical industry. At present Pakistan has limited capacity for the development of the hardware and / or software necessary for the technology transfer processes. The development of industrial projects has been assigned in most cases to foreign engineering companies, which are given the responsibility for the design, engineering and supply of critical plants, and the construction of plants on an EPC basis (Engineering, procurement and construction). During the initial stages of industrial development, the government of newly developed countries (NICs), including India, China and Brazil, encouraged local companies to form joint ventures with foreign engineering corporations, whereby local resources were also used through a learning process in the technology transfer processes for the commercialization of technologies. These countries have now developed their own industrial infrastructure for software and hardware and are selfreliant. In many cases they also export their know-how and project management expertise to other countries. It is essential that Pakistan develop its own capability and technological infrastructure for providing hardware and software services for the implementation and construction

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management of chemical projects. This can be accomplished by the formation of engineering companies or by enhancing the capability of existing engineering companies either as PPPs or as joint ventures with Chinese/Malaysian companies or other foreign companies. It should be recognized that the development of facilities for the commercialization of technologies will require tens of thousands of highly qualified scientists, engineers, technologists, economists, social scientists and marketing experts. Unfortunately, these areas of manpower utilization have been completely neglected in the past, which has resulted in the brain drain of Pakistans highly qualified manpower to other countries. The functions of an engineering company will consist of: (i) Identification of new projects Identification of potential projects within the framework of the development plan and based on locally available and/or imported raw materials. (ii) Feasibility and Investment Studies Undertaking comprehensive feasibility and investment studies based on international standards for the establishment of chemical industries. (iii) Financial Packages Arrangement of local clients/investors/entrepreneurs. (iv) Design and Engineering To undertake the design and engineering of projects with a view to optimizing the use of indigenous resources and facilities, thereby reducing overall investment costs. (v) Local Fabrication of Equipment and Machinery Establishment of manufacturing companies for the fabrication of high pressure plants and equipment in collaboration with foreign engineering companies is considered desirable. and foreign financing for

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(vi)

Construction of Plants To provide planning and scheduling, supervision, monitoring and control of the construction of plants. In this area, local companies are available, which have the capability to undertake the construction of complete plants.

(vii)

Commissioning, operation and maintenance To undertake the commissioning of plants, and provide guarantees for quality assurance and production capacities. In addition it will be necessary to develop capability in operational and maintenance management and provide this facility to projects on a contractual basis. To arrange training of the clients managerial and operational personnel in Pakistan or abroad.

(viii)

Modernization and Revamping (BMR) of Existing Plants To undertake BMR studies with a view to improving the performance of existing plants and to bring them to the optimum level of productivity and efficiency. This will include technical and financial auditing; management reviews; the preparation of BMR proposals; design and detailed engineering; fabrication or upgrading of equipment for the replacement of old equipment; and the construction and integration of facilities with the main plant.

(ix)

Acquisition of Technology Packages The know-how and technology required for the development of projects will be acquired from local resources or imported as process packages.

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(x)

Reverse Technology Transfer In view of the high cost of manpower in the developed world, engineering companies in these countries are using available resources in emerging markets where software design and engineering facilities have already been developed, such as South Korea, China, India, Philippines, Thailand and Malaysia. There is immediate need for such facilities to be developed in Pakistan, which can form a source of foreign exchange earnings.

(xi)

Organizational Structure These companies may be conceived as joint ventures between foreign and local partners, with equity participation to be negotiated. The foreign partner will locate some experts in Pakistan to work with the local company to achieve the above mentioned objectives. The organization and structure of the proposed engineering companies is shown in Figure 4.3.

4.4

National Committee for the Development of Technology Policy and Investment Planning It is proposed that a National Committee for the Development of Technology Policy and Investment Planning should be created with equal representation from the public and private sectors. The objectives of this Committee will be: (i) To provide suitable incentives to entrepreneurs, in order to accelerate the processes of chemical industry development and the resolution of industrial problems and policies on a continual basis. (ii) To develop investment policies and infrastructure for capital formation.

The role of the government may be reviewed from several perspectives: enhancing the supply of science and technology; facilitating the transfer of foreign technology; diffusing foreign technology; and promoting in-house research through local Chapter - 4 Page 13 of 21

Proposal Structure of Engineering Companies for Commercialization of Technologies

Development of New Projects and Revamping of Old Plants Consultancy Services

Design, Engineering and Construction Management Services

Preliminary & Detailed Feasibility

Process Design

Detailed Engineering

Procurement Services

Construction Services

Commissioning Services

Modernization & Revamping of Old Plants *BMR Studies *Technical auditing *Preparation of proposals based on engineering fabrication of equipment *Construction Management

*Market
Research *Survey & Selection of Plant Location *Study of Raw Material & Utilities *Selection of Technology *Determination of Investment Costs *Preparation of Financial Plan and Means of Funding *Environmental Assessment *Planning of Plant Management *Implementation Plan

*Acquisition of Technology and know-how *Process design, utilities design *Establishment of Technical Requirements

*Checking of Process Design *Plant Layout *Mechanical Design *Piping Design *Instrumentation Design *Electrical Design *Civil and Structural Design *Environment Control *Preparation of Project Packages

*Preparation of tenders *P/Q of Contractors *Evaluation of Bids *Local Fabrication *Foreign Procurement *Selection of Companies *Inspection of Equipment *Shipments to Plant Site

*Preparation of tenders *P/Q of Contractors *Evaluation of Bids *Selection of Contractors *Supervision during erection *Plant schedule control *Project Cost Control *Quality Control *Safety Control

*Manpower training *Preparation of SOPs and operating Manuals *Start up Planning *Raw Materials and other inputs Control *Organization of commissioning team *Commissioning *Supervision of Guarantee Tests

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utilization of national R&D infrastructure; enhancing

the scope of industrial

infrastructure for commercialization by advocating and developing PPPs, keeping industrial peace; developing the scope and availability of various feedstocks; protecting the environment; and setting quality standards for manufactured products and systems. It is the integration of the various components of a NIS that determines its effectiveness in accelerating technological transformation, knowledge acquisition, generation, diffusion and application. The role of the government in the successful utilization of various components of technology will depend on its ability to foster PPPs with the involvement of industrial and venture capital institutions and a vibrant entrepreneurial class in the implementation of its policies for development. In order to attract investment capital, it is proposed that a Holding Company should be established with the participation of the financial sector, international donors, friends of Pakistan, overseas Pakistanis and other investors, who will be invited to participate as share holders in this company. 4.5 Human Resource Development The educational institutions of a country have the primary responsibility for producing highly skilled labour for the smooth and efficient functioning of an economy. High rates of enrolment at the tertiary level are crucial, in order to make education relevant for the technological transformation of an economy and to encourage R&D development. Other important factors are the relevance of curricula to the needs of a market economy; the extent to which curricula reflect the breadth and changes in different disciplines; emerging technologies such as new materials, biotechnology, renewable resources of energy, micro-electronics, computer and information technologies, and the technologies required in the development and application of software and hardware used in the commercialization of chemical processes. Unless the education system is geared towards equipping its graduates with this knowledge, the NIS will remain constrained.

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It should also be recognized that an educational system which emphasizes practical apprenticeship, and vocational and technological training, is far more relevant for rapid technological development than the more academic and theoretical orientation of other systems. The present trend in developed countries and NICs is to blend both systems. Another requirement is that the educational system should be geared to lifelong learning in view of the rapid and continuous technological changes taking place in globally. This can be accomplished if the industrial sector arranges company-level training in a productive environment and imparts specific competencies. In addition, the industrial sector and universities should be required to organize short-term training programmes for working personnel every 3-4 years of their professional careers, in order to keep their knowledge current and up-to-date. A NIS that organizes this type of human resource development will facilitate company level innovation. 4.6 Integrated Plan for the Development of a National Innovation System Technology is changing at a very fast rate and there is a renewal of technology in a 56 year cycle. There is continual development of process technologies especially those concerned with: (i) New materials of construction which can withstand high temperatures, pressures and a corrosive environment, as well as the production of composite materials for the aerospace, automobile and transport industries. (ii) New design methods in chemical, mechanical, electrical, instrumentation, safety and environment engineering. (iii) Production and manufacture of high reliability rotary equipment consisting of compressors, pumps, turbines, generators, gas engines and capital plant and equipment used in the chemical industry. (iv) New methodologies introduced for the training of the labour force for the operation and maintenance of plants utilized in the chemical industry. Chapter - 4 Page 16 of 21

(v)

Complete computerization of plant design and operation.

Computational technologies have a broad range of applications, from molecular modeling to process simulation and control. These technologies are embodied in almost every aspect of chemical research, development, design and manufacture. Those most critical to the development of the chemical industry include computational science, computational fluid dynamics, process modeling, simulation, operations optimization and control. In view of these developments, the chemical industry faces enormous challenges. Six major forces are shaping future developments in its business landscape. These are: (i) (ii) (iii) (iv) (v) (iv) Increasing globalization of markets. Societal demand for higher environmental performance. Financial markets demand for increased profitability and productivity. Higher customer expectations. Changing labour force requirements. Higher quality standards.

The achievement of these objectives will require improvements in the design, production and quality of chemical products, which will only be possible if Pakistan develops an integrated plan by creating linkages between industry, research institutions and universities. This will permit quantitative and qualitative improvements in the development of the chemical industry. An integrated plan for education, research and project management for the commercialization of chemical processes is illustrated in Fig 4.4 and 4.5.

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Development of Design and Engineering Infrastructure for Commercialization of Technologies

Project & Product Identification

Feedstock Study And Availability

Locally Developed and/or Imported Technology and know-how

Market Study. Supply / Demand

Tech-Economic Study And Project Approval

Source of Finance Debt/Equity Ratio

Local Fabrication of Plant and Equipment

Design, Detailed Engineering, Plant & Equipment Specs. Preparation of Workshop Drawings, Utility Plants & Material Specs..

Procurement of Plant and Equipment from Foreign Sources

Installation and Erection of Plant and Equipment Mechanical Completion

Training of Manpower

Plant Commissioning and Commencement of Commercial Production Marketing and Consumer Acceptance

Fig-4.4 Chapter - 4 Page 18 of 21

An Integrated Plan For Education, Research And Project Management For Commercialization Of Chemical Industry New Processes / Technology

Industrial Survey Identification And Management of R&D Projects Pilot Plant Studies at Universities, R&D Institutes and Industry

Licensing of Process Technologies (Local / Imported). Assessment of Needs Human Resources Development In Newly Emerging Technologies Selection and Adoption ofof Processes for Commercialization Technologies Engineering,Commercialization Services, Project Management Development of Project Packages

Commercialization of Techno Selection and Adoption of Processes logy for Engineering, Project Management Services, Commercialization. Development of Project Packages

Creation & Development of Linkages

Consultancy Services Revamping and Modernization, Optimization and Productivity Improvement

Process and Plant Management Plant Operation, Management and Marketing Management

Fig 4.5 Chapter - 4 Page 19 of 21

An important factor which is responsible for the development of the chemical industry is the expansion of domestic demand for consumer products. Various NICs and developed countries raised the income of low wage employees in the manufacturing sector and exerted upward pressures on agricultural wages. The minimum wage policy has been instrumental in increasing domestic purchasing power at the grass root level, and consequently in accelerating the pace industrial development. 4.7 Industrial Master Plan The past experience of NICs has shown that industrial policies based on a strategy of dynamic comparative advantage played an important role in sustaining and promoting their economic development. These countries offered a variety of incentives to accelerate the development of their industrial sector, such as tax exemptions, reduced corporate tax, the provision of cheap credit and tax benefits. They introduced outward-oriented trade and industrial policies, which boosted their exports of high value-added goods, resulting in strong economic performance. It is important for the government of Pakistan to devise an Industrial Masterplan, which outlines a strategy for the development and implementation of specific chemical industry manufacturing sub-sectors. The Industrial Masterplan should identify the countrys capabilities in various priority sub-sectors where it has particular advantages, define policy measures and provide fiscal incentives to promote investment. The pattern of incentives should include a variety of subsidies and tax exemptions, credits to encourage increased spending on R&D and manpower training. It should focus on factors such as investment in resources, industrial linkages, the promotion of exports, investment in industrial and technology infrastructure, human capital development and the efficient and relevant utilization of science and technology.

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Under the present political scenario it has become difficult to assemble capital investment packages. Therefore, the private sector in Pakistan needs to have increased access to external sources of funding, if it is to meet its investment needs. In the absence of any state participation in private sector initiatives, the commercial banking sector would be reluctant to participate in capital formation because of the industrial risks involved. Therefore, state participation is imperative for promoting economic development. In addition, other microeconomic and macroeconomic policies need to be explored, in order to accelerate the pace of chemical industry development. Pakistan is beset with the brain drain of its highly qualified manpower, primarily because of a lack of employment opportunities in the country. The development of a NIS will require the services of tens of thousands of scientists, engineers, technologists, economists and social scientists. Employment opportunities will arise if a NIS is introduced, which should help to reverse this brain drain.

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CHAPTER 5
STATUS OF EXISTING SECONDARY INDUSTRIES OF PAKISTAN (SECTION 1) CAUSTIC SODA World Scenario There are more than 500 Chlor-Alkali plants worldwide with manufacturing capacity over 65 Million M Tons. During 2001-06 overall world capacity increased by 6 Million M Tons with Northeast Asia increased by 7 Million Tons while rest of the world declined by 1 Million M Tons. Up till 2011 it is expected that the world capacity will increased by 9 Million M Tons in which Northeast Asias contribution would be about 90%. This Increment in capacity is solely due to the increased demand of chlorine in Northeast Asia and not due to the increase in consumption of caustic soda.

Global Caustic Soda Capacity 65 70 60

Million Tons

50 40 30 20 10 0 World China India Pakistan 3 0.435 28

World production & projections: Production: Worldwide caustic soda is being produced as a by-product of chlorine, used for the manufacture of poly vinyl chloride (PVC). World production of caustic soda was

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estimated to be 58.4 Million Tons in 2009 with an annual compound growth rate of 2.89%.
World Production
60 50

Million Tones

40 30 20 10 0 2002 2003 2004

47.5 48.5 50.7

52.7

55.1

55.1

56.7

58.4

2005

2006

2007

2008

2009

Year

Projections: Ever growing demand of PVC pushing caustic soda production and it is estimated that it will grow with an ACGR of 2.8%.
World Projections
90 80 70

Million Tones

60 50 40 30 20 10 0
62 63.9 65.8 67.8 69.8 71.9

74

76.3

78.5

80.9

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Year

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World Trade: Of the 56.7 Million M. Tons caustic soda produced in 2008, 28% i.e. about 16 Million M.Tons was traded, of which 90% was from China, Europe, USA, and Japan. About 93% of the trade was in liquid form i.e. 50% solid contents.
World Trade
16.6 16.4 16.2 16

Million Tones

15.8 15.6 15.4 15.2 15 14.8 14.6 2005

15.6

16.4

16.3

15.2

2006

Year

2007

2008

Prices
350 300 250
319

US $ / M.Tons

200 150 100 50 0 2005

190

231 209

2006

Year

2007

2008

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Liquid Caustic Soda Top 10 Exporters:

Total Exports = 13.5 Million Tons in 2008
'Qatar 3% 'Russian Federation 3% 'Romania 4% Other 15% 'Germany 18%

'United States of America 14%

'Belgium 5% 'Netherlands 5% 'China 12% 'Japan 10% 'Chinese Taipei 11%

Top 10 Importers:

Total Imports = 15.1 Million Tons in 2008

Others 38% 'Australia 14%

'Brazil 12%

'Sweden 3% 'Belgium 3% 'Austria 4% 'Jamaica 4% 'Canada 4%

'United States of America 6% 'Finland 6% 'Netherlands 6%

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Solid Caustic Soda Top 10 Exporters:

Total Exports = 1.02 Million Tons in 2008
'Germany 2% 'Saudi Arabia 3% 'Spain 3% 'India 4% 'Russian Federation 4% 'Thailand 4% 'United States of America 6% 'Poland 7% Other 11% 'China 42%

'Chinese Taipei 14%

Top 10 Importers:

Total Imports = 1.15 Million Tons in 2008

'Belgium 7% 'Bangladesh 5% 'United States of America 5% 'Nigeria 4% Others 61% 'Viet Nam 4% 'Italy 4% 'Brazil 3% 'Uzbekistan 3%

'Spain 2%

'Namibia 2%

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Sector wise Consumption: Chemical sector is accounting for about 50% of caustic soda consumption with propylene oxide 12%, Soap & detergents 5%, inorganic chemicals 5% and other organic chemicals 26%. Pulp & paper sector is consuming about 25% of the total caustic soda produced in the world.

Caustic Soda - Sector wise consumption

Alumina 2% Propylene oxide 12% Soap & Detergent 5% Petroleum 3% Water 2% Pulp & paper 25%

inorganics 5% Other organic 26% Others 20%

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Pakistan scenario Production Capacity Presently, there are four plants with production capacity around 435,000 MTPY of Caustic Soda. Engro Polymers has recently installed a new plant having name plat capacity of 100,000 MTPY and Sitara Chemicals has enhanced its capacity from 129,000 MTPY to 180,000 in last year.

Caustic Soda - Production Capacities (MTPY, %) - 2010 Total = 435,000 MTPY

Engro Polymaers, 100,000, 23% Nimir Chemicals, 10,000, 2%

Ittehad Chemicals, 145,000, 33%

Sitara Chemicals, 180,000, 42%

Source: Manufacturers

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Local Market Size of Caustic Soda Local consumption of the caustic soda was increased with a compound annual growth rate of 7% from 2000-01 to 2007-08 and then declined by 4.5% because of recession in
Production, Consumption and Trade of Caustic Soda
300 245.3 250 218 179.8 149.7 150 145.5 100 50 4.2 0 28.7 21.7 26 3.5 151.1 164.4 186 199 206.7 187.5 199.4 225.4 242.2 248.3 244.3

258.7

247.1

'000' M. Tons

200

11.5

11.3

10.6

0 0 0.1 0.1 0.1 0 0.4 0.2 0.2 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Production Consumption Imports Exports

the world market and decline in exports of textile sector. Electricity is a major cost component in the manufacturing of caustic soda, account for about 60% of overall cost of production. Existing energy (Electricity & Natural gas) crises are badly impacted the local production. Local production, consumption, imports and exports of caustic soda of last nine years are given below: Source: Federal Bureau of Statistics Local Sector wise
Pow er Plant, 7 Soap & Detergents, 19 Carpet Industry, 4 Vegetable Ghee & Oil, 5 Oil & Gas, 6 Fertilizer, 6

Others, 4

Textiles, 43

Pulp & Paper, 6

Consumption Alone textile sector of

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Pakistan is 43% of caustic soda consumption. Second major consumption is in the manufacturing of soap & detergent contributes about 19%. Future Prospects

Local demand of caustic soda was declined by 4.5% in 2008-09 because of decline in exports of textile sector, after recession in the international market. It is expected that in future conditions will improved and demand will grow at a rate of 7% demand of caustic soda is expected to be expand to 350,000 MTPY in the next 5 years. After Engros new investment Country have sufficient capacity to cater the local market and export surplus.

Capacity & Demand of Caustic Soda in Pakistan

0.5 0.45

Million Tons per Annum

0.4 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Capacity 0.335 0.335 0.435 0.435 0.435 0.435 0.435 0.435 0.435 0.435 0.435 0.435 0.435 Demand 0.252 0.264 0.278 0.292 0.306 0.322 0.338 0.355 0.372 0.391 0.411 0.431 0.453

Capacity

Demand

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SWOT Analysis Strengths 1. Abundantly available raw materials in the country at low rates Weaknesses 1. The Caustic Soda manufacturing produces chlorine as a by-product which has limited usage in the country only Engro Polymers utilizing chlorine for the manufacture of value added products i.e. PVC. While in the rest of the world chlorine is the main driver for the plant and caustic soda is considered as a byproduct. 2. High cost of energy 3. Availability of natural gas and electricity 4. High freight cost to export surplus capacity Threats 1. Dumping of Caustic Soda in the country

Opportunities 1. Surplus capacity of caustic soda available to export

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TARIFF STRUCTURE OF CHLOR-ALKALI INDUSTRY

Sodium Chloride 2501.0020 20% Locally Manufactured Imported

Electrolysis

Chlorine 2801.1000 10%

Caustic Soda 2815.1100 20% (5%, SRO 567)

Caustic Soda 2815.1200 Rs. 4000/MT (20%, SRO 565) Hydrochloric Acid 2806.1000 10% Calcium Chloride 2827.2000 5% Sodium Hypochlorite 2828.9000 5% Bleaching Powder 2828.1010 5% Ammonium Chloride 2827.1000 5% (0%, SRO 565) Magnesium Chloride 2827.3100 5% Ferric Chloride 2827.3900 5% Nickel Chloride 2827.3500 5% (0%, SRO 565)

Water
Chlorine

Absorption

Lime Stone 2521.000 10%

Hydrochloric Acid

Acid Treatment

Chlorine

Reaction

Lime Stone 2521.000 10% Ammonia 2814.1000 5% Magnesite 2519.1000 5% Iron Waste 7204.0000 0% Nickel Waste 7503.0000 5%

Chlorine

Reaction

Hydrochloric Acid

Reaction

Hydrochloric Acid

Reaction

Hydrochloric Acid

Reaction

Hydrochloric Acid

Reaction

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(SECTION 2)
SODA ASH & SODIUM BICARBONATE

Soda Ash, commonly known as dhobi soda or washing soda is used in the manufacture of glass, soaps, detergents, sodium silicate, paper, caustic soda, paint, petroleum refining, inorganic chemicals. Global Scenario: Capacity & Production: Worldwide soda ash is manufactured synthetically and is also available as a mineral (Trona) in some countries e.g. USA, Kenya etc. World production capacity is about 58.7 Million M.Tons while production is about 44 Million m.Tons. Leading producers of soda ash are China, USA, India etc.

Global Capacity Breakup of Soda Ash

China 44% Middle East 4% Africa 2% South East Asia 1% Eastern Europe 7% Western Europe 13%

USA 23%

India 6% S. America 0.47%

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Global Production Breakup of Soda Ash

China 48% Middle East 3%

USA 23%

Africa 2% South East Asia 1% Eastern Europe 6% S. America 0.18%

India 5% Western Europe 12%

Global Demand Breakup of Soda Ash

China 45% Middle East 4% USA 14%

Africa 2% South East Asia 5%

India 7% S. America 5.07% Eastern Europe 3% Western Europe 15%

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Top 10 Exporters:

Top 10 Importers:

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Consumption Pattern Globally, glass industry accounts for around 53% the total consumption of soda ash (see table) followed by detergents & soap 13%, chemicals 11%, metal & mining 5% and paper 1%.

Pakistan Scenario

Production Capacity

There are two Soda ash plants with production capacity of 470,000 MTPY. Both the plants producing soda ash are located in the Salt Range area.
Source: Manufacturers

The

Akzonobel

(former ICI) plant is the oldest and largest operating Pakistan. plant It in was

established in 1944

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with a capacity of 18,000 MTPY. The capacity has been progressively increased to 350,000 MTPY in 2009.

The Olympia Chemicals started operation in 2000 with a capacity of 40,000 MTPY which has been increased now to 120,000 MTPY.

Local Market Size of Soda Ash Production of soda ash in the country was about 218,000 M.Tons during 2000-01 which has been increased to 365,000 M.Tons during 2008-09. Production increased from 200001 to 2007-08 with an annual growth rate of 7.64% and stabilize there with a negligible growth rate during 2008-09 even not impacted by the world economic crises. Among the two local players Akzonobel has major share in the local market contributing about 70%, share of Olympia Chemicals is about 28% and rest of the share i.e. 2% is of imports. In 2005-06 imports of soda ash were about 54,000 M.Tons which has now been decreased to about 9,000 M.Tons. On the other hand exports are on the rise and reached about 11,000 M.Tons in 2008-09.

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Consumption Pattern Locally, glass & silicate industry accounts for around 43% of the total consumption of soda ash (see table) followed by Bazzar (Detergent & textiles) 28%, detergents & soap 7%, chemicals 2, baking powder 9% and paper 11%.

Future Prospects As mentioned earlier Pakistans existing production capacity of soda ash is about 470,000 MTPY while local market demand is about 364,000 and therefore has enough surplus capacity about 106,000 M.Tons to export in regional and international market. Sodium Bicarbonate (Baking Powder)

At Present, Akzonobel Pakistan and Olympia Chemicals has a combined capacity of about 40,000 MTPY to produce Sodium Bicarbonate. Sindh Alkalis Karachi had a capacity of 10,000 MTPY but the plant is not operating since 2000.

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Local Market Size: Sodium Bicarbonate is used in drugs manufacturing, bakery & food products and beverages. Besides local production imports were also made in the recent years but are on the decrease. Collective share of local manufacturers in the local market was about 79% and share of import was 21%.

Future Prospects Local manufacturers has sufficient capacity to cater all the local demand of sodium The imports can be substituted through revival of Sindh Alkalis Plant or setting up of an additional plant of same capacity.

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TARIFF STRUCTURE OF SODA ASH INDUSTRY

Locally Manufactured

Imported

Lime Stone 2521.0000 10%

Rock Salt 2501.0020 20%

Reaction

Sodium Bicarbonate (Raw form)

Calcium Chloride 2827.2000 5%

Sodium Bicarbonate (Food Grade) 2836.3000 20%(10%, SRO 567)

Soda Ash 2836.2000 10%

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SECTION -3) PETROCHEMICALS

Petrochemicals have played a key role especially in the development of industrialized economies e.g. USA, Canada, Japan, Saudi Arabia, Singapore, Malaysia, China, India etc. In this era where traditional materials are too much costly petrochemicals provide alternative and cheaper materials for the production of industrial and consumer products that is why polymers are increasingly replacing metals, wood and other traditional materials. Petrochemical industry is termed as one of the fastest growing industrial subsector and has very well contributed to the objective of rapid progress and balanced expansion of manufacturing sector.

Petrochemical products are broadly classified into two group i.e. basic and end-products. The basic product group includes ethylene, propylene, butadiene and aromatics, while the end-products include plastics, synthetic fibres and elastomers. The petrochemical products offer to a large extent an ideal substitute for conventional materials such as wood, metals, jute, natural rubber, etc. in which Pakistan is deficient. Therefore, there is substantial scope for development of petrochemical industry in Pakistan.

At present, the petrochemical industry of Pakistan is limited to production of polyvinyl chloride (backward integration to produce EDC and VCM is in process and will be completed by 2009), synthetic fibers, i.e. polyester, polyamide, aromatics (Benzene, Toluene, Xylene), Purified Terephthalic Acid (PTA), Phthalic Anhydride and carbon black.

During last three decades repeated efforts have been made to develop a project capable of producing basic petrochemicals. In this connection numerous studies have been carried out for production of basic petrochemicals i.e. ethylene, propylene, etc. utilizing the alternate feed stocks i.e. naphtha, associated gases (ethane, propane), natural gas and molasses (a by product of sugar industry). However, despite interest and efforts no

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significant development has taken place as far as production of basic petrochemicals are concerned.

The factors responsible for non-development of basic petrochemical industry include: High capacity of world scale basic petrochemical production facilities Complexity and high level of the technology involved High level of capital outlay required Market size limitations vis--vis world scale plants

Pakistan has no facility to produce basic petrochemicals like Ethylene, Propylene, Butadiene, Styrene, etc. and they are being imported in bulk. Out of long list of petrochemicals, only few are being produced locally. They include Pure Terephthalic Acid (PTA), BTX and carbon black.

Petrochemicals provide raw materials for plastics, detergents, dyes, paints & varnishes and pesticides etc. They are also used as additives in the lubricating oils. Most of the specialty and fine chemicals belong to the petrochemical group. Their production and marketing is monopolized by few global giants.

Historically, polyvinyl chloride and polyethylene are the only thermo plastic materials which have been produced in the country. These plants were setup in 1960s. The polyethylene plant was closed down in 1970s.

Apart from PVC, polystyrene is also being produced by Pak Petrochemical Industries (Private) Limited. The polystyrene plant uses imported styrene and is capable of producing around 40,000 metric tons of various grades of polystyrene.

Consumption Among the plastic materials the thermoplastics consumption of the country has reached a sizeable level. Thermoplastics are the family of plastics formed by addition of

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polymerization which can be reshaped by application of heat. The description and major end-uses of major thermo plastics being consumed in Pakistan are given below:

Material Polyethylene (PE) Polypropylene (PP)

Brief Description A semi crystalline thermoplastic. lightweight

Major End Uses

Polyvinyl Chloride (PVC) Polystyrene (PS)

Household articles, packaging, bottles, containers and pipes. Woven bags/cloth, A thermoplastic with low specific household articles, gravity, high stiffness and good furniture, industrial items tensile strength. and packaging. A colorless rigid material with limited heat stability with a tendency to Pipes & fittings, wire and adhere to metallic surface when cables, footwear. heated. A hard, rigid transparent Electronic, electrical items, thermoplastic with low specific household articles/ gravity. appliances and packaging.

Thermoplastics consumption of the country has reached a sizeable level as the consumption in 2006-07 was around 665,000 M.Tons which has been decreased to 500,000 M.Tons in 2008-09 due to hike in the prices of petroleum.

The trend of thermoplastics consumption during 2001 - 2009 is presented in the following diagram.

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Thermoplastic Consumption Trend

300 250 200

'000' M. Tons

150 100 50 0 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 200801 02 03 04 05 06 07 08 09 155 110 84 11 157 144 87 9 192 142 92 14 220 165 88 15 232 188 91 15 275 225 97 16 274 219 132 16 267 210 23.6 198.6 156.2 23.56

Polyethylene (P.E) Polypropylene (P.P) Polyvinyl Chloride (P.V.C) Polystyrene (P.S)

118.4 121.9

PE is the leading material being consumed with a share of 40% in countrys thermoplastics consumption. PP and PVC enjoyed shares of 31% and 24% respectively. The consumption of PS is relatively small i.e. 5% in countrys thermoplastics consumption.
Product wise share of Thermoplastics
500,000 M.Tons in 2008-09
Polyvinyl Chloride 24% Polyethylene 40%

Polystyrene 5%

Polypropylene 31%

Polyethylene (PE)

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Polyethylene is a semi crystalline lightweight thermoplastic manufactured by the polymerization of ethylene. It is used for packaging, household articles, Auto Parts, bottles, containers and pipes. It is the leading commodity polymer among others being consumed worldwide and also in Pakistan. There are two grades of PE: High Density Polyethylene (HDPE) Low Density Polyethylene (LDPE)

Share of HDPE in local consumption of polyethylene is about 56% while contribution of LDPE is 44%. In 1960 a facility for PE was setup but it was closed down in 1970. Now all the local demand of Pakistan of PE is being met through imports and there is no local facility available for PE. Imports of PE during last ten years are given below:
Imports of Polyethylene

300

250

200

'000' M. Tons 150

100

50

1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 200800 01 02 03 04 05 06 07 08 09 123 155 157 192 220 232 275 274 267 199

Polyethylene (P.E)

There is a fast growth in consumption of PE due to economic growth in the country and substitution of PE for costly materials like metals, wood and others. Demand of PE grew

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about 9% annually from 2002-03 to 2006-07 and after that it declined to about 198,640 M.Tons due to sharp rise in international prices.

The price trend of polyethylene is shown in the graph given below. During last six years the prices has been increased by 123% due to the hike in the crude oil prices.
Price Trend of Imported Polyethylene
160 140 120 100 Rs./ Kg 80 60 40 20 0 200102 35 200203 40 200304 40 200405 60 200506 64 200607 78 200708 95 200809 146

Polyethylene (P.E)

G lobal demand of polyethylene is growing at a rate of more than 4% per annum and it was about 50 Million Metric Tons in 2003. Per capita consumption in the world is given in graph:

Per Capita Consumption of Polyethylene

50 40 30

Kg Per Capita
20 10 0 N. W. Africa/ Japan China Ameri Europ M. 34 45 27 34 6 7 23 25 3.5 6 Indone Malay Pakist World sia sia an 3 2.5 21 22 0.75 1.51 8 10

India 0.8 1.5

1997 2003

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Transpolymer Pvt. Limited a foreign investor is interested in investing for the development of local facility for Polyethylene and Polypropylene. The project is at its initial stages.

Breakup of imports of different grades of Polyethylene i.e. HDPE and LDPE are given below:
Import of High and Low Density Polyethylene
160 140 120 100

'000' M. Tons

80 60 40 20 0 1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 200800 01 02 03 04 05 06 07 08 09 67 56 90 65 80 76 106 86 120 99 126 105 147 128 153 121 159 108 101 98

High Density P.E Low Density P.E

This graph shows that decline in import of PE after the year 2006-07 which was solely due to hike in the prices of crude oil in international market. Polypropylene (PP) PP is the second largest thermoplastics being consumed in the country. Its primary use is in Woven bags/cloth, household articles, furniture, industrial items and packaging like Chemicals, Fertilizers and Textile Industries. PP consumption was 65,169 M. Tons in 1996-97 which has been increased to 218,799 M. Tons with an annual growth rate of 15% in 2006-07 afterward it declines mainly due to sharp rise in prices of petroleum. The consumption of polypropylene during last ten years

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is given in the graph shown

Imports of Polypropylene
250 200 150 '000' M. Tons 100 50 0

1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 200800 01 02 03 04 05 06 07 08 09 102 110 144 142 165 188 225 219 210 156

Polypropylene (P.P)

: The price trend of imported polypropylene is given in the below.

Price Trend of Imported Polypropylene
140 120 100 Rs./ Kg 80 60 40 20 0 200102 33 200203 37 200304 42 200405 60 200506 64 200607 78 200708 94.5 200809 137.3

Polypropylene (P.P)

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Per capita consumption of polypropylene in the world was 4 kg in 1997 and increased to
Per Capita Consumption of Polypropylene in The World
30 25 20

Kg. Per Capita

15 10 5 0

Am eri W. Japan China India ca Europ 19 28 15.5 22 21 22.5 2 3.5 0.85 1.7

Indon Malay Thaila Pakist World esia sia nd an 2 2.5 12.5 13.2 7.1 8 0.66 1.14 4 5.5

1997 2003

5.5 kg in 2003. Per capita consumption was 22 to 28kg in the developed countries while it was 1.14 to 13.2 in the developing countries and shows potential for polypropylene in the region.

Polyvinyl Chloride (PVC)

PVC is a colorless rigid material with limited heat stability with a tendency to adhere to metallic surface when heated. Its major use is in the manufacturing of pipes, fittings, artificial leather, wire & cables, footwear, PVC sheets etc.

World Scenario World PVC production capacity stood 47.28 Million Tons in 2010 with an annual growth rate of over 6%. During 2005-10 world capacity enhanced by 10.5 million tons of which 81% capacity expanded in Asia and Chinese share was 73% accounting 4.1 million tons. At the moment China has the largest PVC capacity of the World after surpassing USA in 2006 and enjoying about 27% share of the world PVC capacity.

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World Capacities by Region

35 30 25
34

Million M. 20 Tons 15
10 5 0 2001
13 7.5

20

6.7 1

8 2.6 6.9 1.1 2.7

2 3

2005

2010

Asia

Europe

N. America

Middle East

Others

Asian PVC capacity is growing at a fast rate of over 14% per annum because of the fast economic growth in the region. It is estimated that the world PVC capacity will reach about 53.55 Million Tons in 2014 which was about 37 Million Tons in 2005. About 89% of this additional capacity will be installed in Asia. The graph representing the distribution future expansions in PVC capacities is given below:

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World PVC Capacity Expansion (2005-10)

Europe 4% Middle East 3% Other 6%

China 91%

Asia 89%
Other Asia India 4% 6%

In 2009 about 31.35 million tons of PVC was produced and the capacity utilization was about below.
PVC Production by Region
35.0 30.0
4.1 4.2 6.2

71%.

World

production

of

PVC

by

regions

is

given

25.0 20.0 Million M. Tons 15.0

3.9 5.6 7.0

3.9 6.0 6.9

3.9 6.1

4.0 6.1 6.0 7.6 7.8

7.2

7.2

10.0 5.0 0.0 2000 2001 2002 2003 2004 2005

9.3 9.4 9.9 10.8 12.2 12.9

Asia

North America

western Europe

others

In 2005 Asia was leading producer of PVC while North America and Western Europe are

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at second and third position respectively. Share of Asia in world production was about 35%.

Price trend of last 7 years of PVC in Asia is depicted in the graph which shows a cyclical trend like other plastics.
Price Trend of PVC in Asia 800 700 600 500 US $ per 400 M. Tons 300 200 100 0 Asia 1999 550 2000 680 2001 400 2002 500 2003 560 2004 800 2005 760

Production cost of PVC was lowest 200 $/M. ton in Middle East because of availability of cheaper raw material and highest in America i.e. 305 $/m. ton during 2005. Comparison of production cost in different countries is depicted below.

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Production Cost of PVC (2005)

350 300 250

US $ per M. 200 Tons 150

100 50 0 Middle East 200 W. Europe 270

Brazil 240

China 280

Japan 290

USA 305

Production Cost

The average on stream PVC plant sizes is given in the graph below:

Average PVC Plant Size in World

350 300 250

'000' M. Tons

200 150 100 50 0

N. W. Middle Latin E. World Americ Europe East Americ Europe 347 200 160 159 149 118 Asia 117 Africa 101

Plant Size

World average size of PVC plant was 149,000 m. tons in 2005. North America with 347,000 tons had the greatest average PVC plant size followed by Western Europe, Middle East, Latin America, Asia and Africa.

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Average PVC Plant Size in Asia

350 300 250 200

'000' M. Tons
150 100 50 0
Asia Plant Size 117 China 97

Asia Exc. China 160

Japan 135

Pakistan 100

India 118

Taiwan 285

South Korea 327

In Asia South Korea has the largest average PVC plant size while smallest average size is in China because in china about 60% capacity is based on acetylene route.

Pakistan Scenario Engro Asahi Polymers (EAPCL) the only facility available in Pakistan for PVC manufacturing was commissioned in 1999 at Port Qasim, Karachi. The plant capacity was enhanced to 150,000 metric tons in 2009 for the manufacture of various grades of PVC. They had also installed the facilities of Vinyl Chloride Monomer (VCM) / Ethylene dichloride (EDC) through backward integration based on ethylene as a feedstock.

PVC consumption has also increased at a reasonably high growth rate i.e. 8 % per annum much lower than the regional growth rate of 14%. During last 9 years, the total PVC consumption has been increased from 84,380 M. Tons, in 2000-01 to 121,900 M. Tons in 2008-09. And per capita consumption of PVC has reached 0.73 kg in 2008-09 from 0.61 kg in 2000-01.

Local production, import, export and local market size of PVC is given in the graph shown below.

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Local Market Size of PVC

140

'000' M. Tons

120 100 80 60 40 20 0 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 200801 02 03 04 05 06 07 08 09 19.3 0 65.1 84.4 18.7 0 68.6 87.3 20.3 11.5 83.6 92.4 19.7 22.2 90.3 87.8 18.1 13.9 87 91.3 27.3 20 90 97.3 37.2 0.2 95 18.7 1.4 9.8 6.6

Import Export Production Local Market Size

101.1 118.7

131.9 118.4 121.9

Sector Wise Consumption: Single major consumption of PVC in Pakistan is in pipes & fittings account for about 58%, second largest is in film 13%
Sector Wise Consumption of PVC - 2009

Shoes 4% Compounding 8% Garden Hose 8% Twist / Shrink / Film 13% Rigid sheet 5%

Others 3%

Pipes & Fittings 58%

Artificial Leather 1%

This project hopefully will come into production by the end of 2009.

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Sitara Chemicals (Pvt) Limited major producer of caustic soda in Pakistan was also planning for the installation of 45,000 TPA PVC plant based on calcium carbide route to utilize in house chlorine. After the completion of this project PVCs capacity of Pakistan will be about 195,000 TPA and surplus PVC will be available for export purposes.
Future PVC Production Capacities of Pakistan 195,000 MTPY Sitara 23%

Engro 77%

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PVC Industry Tariff Structure

Locally Manufactured Not Locally Manufactured

Under Process

Upstream

Ethylene
2901.2100 (5%)

Chlorine
2801.1000 (10%)

Ethylene Dichloride (EDC)

2903.1500 (5%, 0% SRO 565)

Midstream

Vinyl Chloride Monomer (VCM)

2903.2100 (5%, 0% SRO 565)

Poly Vinyl Chloride (PVC)

3904.1090 (10%)

PVC Pipes
3917.2390 (20%)

PVC Artificial Leather

5903.1000 (25%)

Downstream

PVC Sheets
3920.4300 (25%) 3920.4910 (25%) 3920.4990 (25%)

PVC Shoes
6402.2000 (25%) 6402.9900(25%)

PVC Compound
3904.2200 (20%)

PVC Flooring
5904.1000 (25%)

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Polystyrene (PS) PS is the most versatile product and is being consumed in variety of products ranging from electrical/electronics accessories, parts of sanitary wares and for packaging purposes.

There is only one company Pakpetro Chemicals in Pakistan manufacturing all grades of polystyrene and not only meeting the local demand but also exporting. Production capacity of all types of polystyrene (PS) is 39,000 M.Tons out of which 30,000 M.Tons is of expansible polystyrene (EPS) and 9,000 M.Tons of both general purpose polystyrene (GPPS) & high impact polystyrene (HIPS).

PS consumption on the average remains about 24,500 M.Tons during last six years. Local market size, Production, import and export of polystyrene is given in above graph.

Local Market Size of Polystyrene 30,000 25,000 20,000 M. Tons 15,000 10,000 5,000 0 200304 Production Imports Exports 200405 200506 200607 200708 200809

25,931 25,787 27,627 25,036 25,950 24,701 7,329 5,503 5,628 5,073 7,178 4,844 7,149 3,515 4,658 6,261 10,102 8,011

Local Market 26,999 21,188 25,244 22,931 23,645 23,558 Size

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(SECTION 1V) Inorganic Acids

Sulfuric Acid Sulfuric acid is an important basic chemical. Its demand is taken as a barometer of industrialization. It is a substance of great commercial importance and is used in manufacture of fertilizers, other acids, heavy chemicals, dyes & pigments, lacquers, plastics, explosives, textile, paints, leather tanning, oil refining, water treatment, treatment of cotton seeds and other chemicals. It is generally marketed with 98% concentration. The largest single use, about 65% of the sulfuric acid produced annually, is in the production of agricultural fertilizers, both phosphates and ammonium sulfate. Other uses include production of: Rayon Dyes Alcohols Plastics Rubber Ether Glue Film Explosives Drugs Paints Food containers Wood preservative Soaps and Detergents Pharmaceutical products Petroleum products Pulp and paper

In addition, sulfuric acid is used in: Metal processing and refining Electroplating baths Water treatment, to adjust pH and to control corrosion and scaling Petroleum refining (alkylation) of high-quality, high-octane gasoline components Pickling (cleaning) iron and steel before plating with tin or zinc

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Production Units & Capacity S.# 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Plant Name Acid Ind. Pvt. Ltd. Karachi Amber Chemicals, Hattar Ata Chemicals, Multan Attock Chemicals, Hattar Crescent Chemicals, Sukkur Exide Pakistan limited, Karachi Faras Combine Marketing Company (Pvt) Ltd. Bhai Pheru Fazal Chemicals, Lahore Hazara Phosphate, Haripur Ittehad Chemicals, Lahore Karsaz Chemicals, Lahore Al-Hamd Chemicals & Fertilizers, Jaranawala Margala Industries, Hattar PAEC, D. G. Khan Pak Chemicals, Karachi POF, Wah Cantt. Prime Chemicals, Sheikhupura Rawal Chemicals, Hattar Rawal Chemicals, Sheikhupura Raiwind Chemicals (Pvt.) Ltd., Karachi Riaz Aslam Chemicals, Chunian Shafiq Industrial Chemicals, Karachi Tufail Chemicals, Lahore Total: *Mainly for SSP Production Capacity MTPD MTPY 80 26,400 50 16,500 100 33,000 80 26,400 40 13,200 70 23,100 300 100 110 40 10 100 20 25 80 10 30 25 30 100 20 35 50 1,505 99,000 33,000 36,300 13,200 3,300 33,000 6,600 8,250 26,400 3,300 9,900 8,250 10,000 33,000 6,600 11,550 16,500 496,750

Total sulfuric acid production capacity is 496,750 ton per year. Presently, the installed capacity is surplus to the local demand.

Production from few sulfuric acid plants is reported to the Federal Bureau of Statistics. Thus it does not represent the actual total production in the country. It is always very

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important to know the actual production of sulfuric acid as it represents the health of the industry in the country.

The reported production of sulfuric acid by FBS and estimated production and market size is given below. Sulfuric Acid Market Size
Units Capaity Production FBS Source 20012002 222,300 20022003 222,300 20032004 333,650 200405 333,650 200506 396,000 200607 396,000 200708 396,000 200809 396,000

59,420 59,379

55,997 63,104

68,380 109,206

91,299 157,189

95,580 172,440

94,941 190,427

102,773 212,472

97,802 234,567

Production

Estimated

Imports

FBS

5.7

154

66.3

61.5

9.95

44.6

30.5

Exports Market size Market size

FBS

472

483

430

786.3

937.5

63

3535

FBS

59,426

55,679

67,963

90,931

94,804

94,048

102,713

94,298

Estimated

59,385

62,786

108,789

156,820

171,664

189,534

212,412

231,063

Source: Federal Bureau of Statistics Manufacturers

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Hydrochloric Acid It is used In the manufacture of phosphoric acid, chlorine dioxide, ammonium chloride, fertilizers, dyes, and artificial silk and pigments for paints. As a refining ore in the production of tin and tantalum, as a lab reagent, and as a metal treating agent. To remove scale and dust from boilers and heat exchange equipment, to clean membranes in desalination plants, to increase oil well output, to prepare synthetic rubber products by treating isoprene, and to clean and prepare other metals for coatings. In the neutralization of waste streams, the recovery of zinc from galvanized iron scrap. In production of chemicals, i.e. production of vinyl chloride from acetylene and alkyl chlorides from olefins, the manufacture of sodium glutamate and gelatin, the conversion of cornstarch to syrup, sugar refining, electroplating, soap refining, leather tanning, and the photographic, textile, brewing, and rubber industries. As an antiseptic in toilet bowls against animal pathogenic bacteria, and in food processing as a starch modifier.

Production Capacity Ittehad Chemicals and Sitara Chemicals produce hydrochloric acid on demand from the excess chlorine by-product available with them. The production capacities for both the plants are sufficient to meet the local demand and the imports are generally negligible.

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Nitric Acid Nitric Acid is very important for certain types of reactions and uses especially in the fertilizer and explosives industries. The principle use for nitric acid is the production of fertilizers, explosives, flares, and rocket propellants. In making explosives, Nitric Acids react with toluene in the presence of sulfuric acid to form trinitrotoluene (TNT). Raw Materials & Processes The raw materials are ammonia, air and fresh water. There are three stages in the production of nitric acid. o Oxidation of ammonia, o Oxidation of nitrogen monoxide o Absorption of nitrogen dioxide in water.

Production Capacity Nitric acid is produced by Pak-Arab Fertilizers, Multan for the production of Calcium Ammonium Nitrate (CAN) fertilizers and POF wah for explosives such as Nitroglycerine & Nitrotoluene production. The local demand is met through imports and surplus production of above two units. Unit Pak-Arab, Multan POF, Wah Cantt Total Production Capacity, MTPY 455,600 10,000 465,600

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(SECTION V) Dyes & Pigments Dyes are intensely colored substances used for the coloration of various substrates including paper, leather, fur, hair, foods, drugs, cosmetics, waxes, greases, petroleum products, plastics and textile materials. They are retained in these items by physical adsorption, salt or metal complex formation, solutions mechanical retentions or by the formation of covalent bonds.

Dyes are applied to textile fibers by two distinct processes, dyeing and printing, of which dyeing is much more extensively used. Dyes are classified in accordance with their chemical constitutions or their application method or coloring purposes.

Pigments, although both have the same purpose of imparting color to the article, are differentiated from the dyes. Pigments are finely ground, insoluble particles that disperse in the liquid portion of the paint. Dyes are generally fast which means they can maintain their color throughout exposure to weathering effects like rain, wind & snow, and normal wear & tear. Pigments are used to give desired color and gloss. Plus provide hiding ability and surface protection. They are selected by characteristics such as color, hardness, oil absorption, density, pH, refractive index, hiding efficiency and opacity.

Titanium dioxide (Tio2) is the most commonly used pigment worldwide. It has a high refractive index (second only to diamond) and when produced at the proper particle size, allows for a large opacity. For the record, magnesium oxide, MgO, is whiter than TiO2, but it does not have a high refractive index. This means that more MgO would be needed to achieve the same opacity as TiO2. Color pigments, on the other hand, have a large variety of ingredients. This is, of course, due to the fact that there are so many different colors available that can give different compositions of these, which can create the huge variety of colors possible.

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Raw Materials Raw materials for Dyes & Pigments are totally derived from petrochemical Building Blocks. Manufacturing of dyestuff can be done either by processing dye intermediates or by starting from basic chemicals (organic and inorganic chemicals). For instance manufacture of technology intensive vat dyes involves lengthy and distinct stages, which in many cases may run through ten or twelve intermediates. Therefore it follows that a good base of raw materials is critical to the success of the dyestuff unit. Hence a dyestuff manufacturing unit has to rely on a mix of local supplies as well as imports for its requirement of raw materials. World Scenario Traditionally Dyes & Pigments manufacturing was concentrated in Europe because of development and progress made by Germany in this field at the start of 20th century. This high-Tech industry was limited to 7 or 8 major producers like BASF, Hoechst, Sandoz, Bayer, ICI, Ciba-Geigy etc. up to the middle of 20th century. However in the later half of 20th century, major changes in the industry came up with the above multinational companies, opening production sites out side Europe like in India, in Far-East, Japan, USA etc. This opened the secret technology to rest of the World and the decades of 70s & 80s saw a mushroom growth in this industry, mainly in Far-East, India & China. The environmental hazards involved in dyestuff manufacturing also pushes world wide players to prefer import of dyes from developing countries. Another reason for this change was the shifting of Textile Processing Industry from Europe & USA to Far East and South East Asia.

Regional Scenario Today China, India, Pakistan, Taiwan, Korea, Indonesia, Japan contributing about 7075% of world production of Dyes & Pigment. About 85-90% of raw materials, required for Dyes & Pigments manufacturing, are produced by India & China.

A strong industrial base when formed for finished dyestuffs & pigments manufacturing in China & India, brought a huge backward integration for manufacturing of basic raw

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material called intermediates for this industry. Today India & China are top producers and exporters of Dyes & Pigments intermediates. Indias dye industry makes every type of dyes & Pigments. Production of dyestuff & Pigment in India is around 75,000 tonnes. Traditionally the industry exports the 50% of its production. The world market for dyes, intermediates and pigments is estimated to be around US$ 23 billion and is growing at a rate of about 2%. The current share of India in the global dyestuff market is around 2.5%. India is the second largest exporter of dyestuffs and intermediates amongst developing countries after China.

Per capita consumption of dyestuffs in India, like most of the developing countries, is as low as 50 grams against world average of 200 grams. Increasing middle class population will stimulate demand for textiles, which in turn will accelerate the growth of dyes.

Pakistan Scenario Pakistan although entered very late in this area and in early 60s with manufacturing of some Direct Dyes & Sulphur Dyes in the government owned corporation at Dawood Khel. However this facility could not flourished due to unavoidable reasons. Clariant Pakistan and Sandal Dyestuff are major manufacturers of dyes & pigments in Pakistan.

Dyestuffs Business and Textile Industry The Pakistan textile industry is traditionally based on the manufacture and export of spinning yarn and threads. Today around two hundred large and medium sized processing mills exist along with thousands of small dye houses. It is estimated that this industry consumes over 22,000 tons of dyestuff and pigments annually. The shares of different type of dyes consumed are given as follows: o Reactive dyes o Acid dyes o Basic dyes o Vat dyes 34.27 % 09.00 % 05.77 % 02.24 % o Disperse dyes o Sulfur dyes o Direct dyes o Pigments 15.00 % 07.65 % 03.07 % 23.00 %

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Production Capacity There are 9 units in organized sector and multiple units at cottage level involved in the production of dyestuff. The production capacity of main units is given below:
Pigment Powders & Prep. based thereof 32041700 6,000.00 2,635.75 2,636.79 2,849.35 2,458.05 2,000.00 500.00 409.00 604.00 680.00 665.00 10.00 2.00 -

Company

Year

Disperse Dyes & Prep. thereof 32041100

Acid Dyes 32041200 400.00 78.37 52.70 83.50 86.80 1,500.00 650.00 426.00 431.00 485.00 440.00 300.00 180.00 210.00

Direct Dyes 32041400 500.00 20.30 13.43 4.47 4.25 800.00 200.00 214.00 264.00 170.00 194.00 210.00 70.00 72.80

Reactive Dyes 32041600 3,000.00 1,567.30 1,367.60 1,033.90 969.43 3,000.00 2,000.00 2,209.00 2,272.00 2,348.00 2,679.00 50.00 26.00 68.42

Synthetic Organic Products 3204.2000 1,000.00 500.00 565.00 586.00 461.00 661.00 90.00 80.00 84.70

Total

HS Code Capacity Sandal Dyestuff Industries Limited. 2005~06 2006~07 2007~08 2008~09 Capacity 2005~06 Clariant Pakistan Limited. 2006~07 2007~08 2008~09 2009-10 Capacity Sardar Dyes (Pvt.) Limited. 2005~06 2006~07 2007~08 2008~09 Capacity Chemi Dyestuff Industries (Pvt.) Ltd. 2005~06 2006~07 2007~08 2008~09 Capacity Aqsa Dyestuff Industries (Pvt.) Ltd. 2005~06 2006~07 2007~08 2008~09 Capacity Descon Chemical s (Pvt.) Limited. 2005~06 2006~07 2007~08 2008~09

1,000.00 350.00 363.00 383.00 393.00 360.00 300.00 19.40 -

9,900.00 4,301.72 4,070.51 3,971.22 3,518.53 9,300.00 4,200.00 4,186.00 4,540.00 4,537.00 4,999.00 660.00 358.00 435.92 -

118.00 300.00 47.58 -

54.00 300.00 8.05 -

50.00 800.00 390.10 1,000.00 -

1.00 300.00 40.28 1,200.00 -

85.00 100.00 6.10 1,200.00 785.00 -

308.00 2,100.00 511.51 1,200.00 2,200.00 785.00 -

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Chemical Processin g Industries (Pvt.) Limited.

Capacity 2005~06 2006~07 2007~08 2008~09 Capacity

30.00 25.00 -

35.00 30.00 -

15.00 10.00 5,000.00 989.30 1,150.00 1,495.00 1,764.00

80.00 65.00 5,000.00 989.30 1,150.00 1,495.00 1,764.00 300.00 38.00 44.00

M.N. Chemical Industries (Pvt) Ltd.

2005~06 2006~07 2007~08 2008~09 Capacity 2007~08 2008~09 Capacity 2005~06 1,300.00 369.40 363.00 383.00 393.00

Shafi ResoChem

300.00 38.00 44.00 2,830.00 980.95 688.70 552.50 733.80 1,810.00 298.35 300.23 268.47 228.25 7,885.00 4,013.40 3,645.02 3,305.90 3,367.43 14525 4,177.33 4,195.79 4,948.35 4,903.05 2,390.00 1,371.10 649.70 586.00 546.00

30,740.00 11,210.53 9,842.43 10,044.22 10,171.53

TOTAL

2006~07 2007~08 2008~09

Source: Manufacturers

The local Dyes & Pigments manufacturing industry is producing almost all the basic Dyes & Pigments ranges required for the export oriented textile units in Pakistan, who are working for value addition and exports.

Environment Aspects of Dyes A major issue in the world today is the protection of environment. The environmental impact of dyestuff production is considerable. More than 10,000 different dyes are available for this process and much is known about the potential dangers. The ETAD (Ecological and Toxicological Association of the Dyestuff manufacturing Industry) tested more than 4,000 dyes for acute toxicity and found that approximately 1 % of the dyes were toxic.

The dyes involve certain chemicals that are hazardous to the human skin. Some Azo coloring agents have carcinogenic properties or may form amines (breakdown products), which have carcinogenic and mutagenic properties. Approximately 70% of all dyes used in the textile industry are Azo dyes. There are about 2000 different Azo dyes of which

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approximately 200-300 may be hazardous. As a result worldwide players are downing shutters and prefer imports of dyes from developing countries. This scenario is giving an opportunity to the developing countries to establish a strong manufacturing base.

The complete treatment of hazardous effluents of dyestuff manufacturing unit is uneconomical for individuals, therefore, a common secondary treatment plant, whereas the primary treatment of the effluent is the responsibility of individual units, can facilitate the individuals in meeting the environmental obligations.

Exports of Dyes & Pigments The export of Dyes & Pigments is around US$ 2.00 Million per year, which is a very encouraging sign for the local manufaureres. There is a strong need to encourage this High-Tech industry as it will not only help our overgrowing Textile Industry for strong value addition but can also fetch a very handsome amount of foreign exchange.

Future Prospects There is local manufacturing of dyes and pigments but large quantities are still being imported. Currently the total import of this group stood around Rs 5.0 billion. Additionally, about Rs 0.4 billion worth of printing ink and paints were also imported. Pakistan has a strong manufacturing base for Textile & Leather. The textile industry in Pakistan is the single most important manufacturing sector, accounting for an average of 40% of manufacturing employment, 64% of exports and 30% of manufacturing value added. Similarly Leather industry has also a strong base with the production of high value added products such as leather garments, leather gloves, leather footwear & other leather manufactures.

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Paints and Varnishes Paints and varnishes not only make our surroundings more attractive, they also protect and preserve environmental resources. Our domestic and workspaces are certainly more pleasant and more conducive to good work when the interior decor is attractive. Production Capacity There are around 22 units in organized and over 400 units in the unorganized sector, manufacturing paints and varnishes. There are three major producers of paint in the country and they together meet the 60% local requirement, remaining 35% demand is met by the unorganized sector and 5% through imports. Major local paint manufacturers include ICI Pakistan. Berger Paints. Kansai Paints Buxly Paints. The paint units reporting their production to the Federal Bureau of Statistics increased from 142 in 1997-98 to 306 in 2001-02, which represents about 75% of all units in the country. The historical production data for few years is given below:

Production of Paints & Varnishes

Product Paints & Varnishes (s) Paints & Varnishes (l) Units M.T Th. Litres 200203 3,899 200304 200405 200506 200607 200708 200809

5,406 15,023 17,148 23,935 26,308 29,830

46,535 38,115 41,093 46,638 53,298 57,103 62,756

Although capacity of plant is indeterminable as it is a multi-product plant involving varying processes of manufacturing, however the individual production of main player in paints & varnishes is given as:

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Six manufacturers of decorative paints are ICI Pakistan, Berger Paints, Buxly Paints, Master Paints, and Brighto & Gobbis. The industrial paints segment has also a large number of applications and uses. Major players in this segment are ICI Pakistan and Berger Paints. Some industrial paints are imported. The refinish segment caters the requirements for maintenance of vehicles. Major players in this segment are ICI Pakistan, Berger Paints and Champion Paints. Powder Coating Chemical The recent trend in the world is to apply powder coating instead of liquid paints and there are a lot of chemicals required for preparation of metal sheet before powder coating. These chemicals are basically known as pre-treatment or phosphating chemicals, which include degreasing, phosphating Anodizing chemicals etc. There are a number of small units producing above chemicals in Lahore and Karachi catering to the local manufacturers of home appliance like Dawlance, Waves and Multinationals including carmakers like Toyota, Honda, Suzuki, etc.

Oxyplast Karachi also has the facility to produce powder-coating paints. The raw materials are Polyester resin, Epoxy resin, Barium Sulphate, Titanium Oxide and curing agents.

FUTURE PROSPECTS: The current production is sufficient for local demand. However, the raw material used in this sector are being imported and comes from Petrochemical base, setting up of a Petrochemical base would help backward integration in this sector resulting in industrial growth.

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CHAPTER 6
PROPOSAL FOR THE FUTURE DEVELOPMENT OF SECONDARY INDUSTRIES IN PAKISTAN

The principal purpose of the Secondary Industries is to provide the connecting link between the products of the Primary Industries and materials which are of practical use to Pakistans national economy. This implies that they will rely upon the Primary Industries for Feedstocks and will consist of engineering, fabrication, construction and manufacturing plants for petrochemicals, plastics, steel, aluminium, minerals, agricultural and miscellaneous products. These industries will require medium and relatively high technology and range from medium to light categories. However, the Secondary Industries will not only be concerned with the manufacture of finished goods but will also become the principal suppliers of raw materials, particularly plastics for the development of downstream small and medium scale enterprisers.

The size of the secondary industries should be based on market analysis and projections of demand for intermediate products and consumer goods, as well as the projected availability and character of feedstocks from the Primary Industries and other sources. Their selection should also be based on the opportunities for regional and world export marketing of selected products. Criteria for Selection of Secondary Industries. The following criteria have been used for determining the suitability of secondary industries:i) Feedstock Relationship to Primary Industries: The secondary industries should where possible use feedstocks which will be available from the primary industries to produce materials with high added value.

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ii)

Use of other resources available in Pakistan The secondary industries will use Pakistans natural resources and produce materials related to demand by the various economic sectors within Pakistan butt should also consider the potential for exports of the finished products. Maximum use should be made of the availability of technical and managerial skills, the abundance of energy supplies and the suitably developed infrastructure.

iii)

Import Substitution: A clear objective is to reduce the Pakistanis dependence on imports by substituting locally produced goods.

iv)

Develop exports for Pakistans high quality products The secondary industries should be sized and planned to take account of the development of export markets in the Central Asian States, Afghanistan, Sri Lanka and other adjoining countries in the Middle East.

v)

Development of Pakistanis Management, Technical and Industrial Manpower. The broad mix of Secondary Industries will provide a wide spectrum of opportunities for the utilization of all types of industrial manpower.

The present development of small and medium secondary chemical industries in Pakistan is based on the policy of import substitution and no consideration has been given to the potential for exports of the manufactured products. In addition the manufactured goods in many cases are not comparable in quality as well as costs with imported products. The Home Market The selection of candidate industries has been based on a review of the feedstocks produced by the Primary Industries and other raw materials available in Pakistan coupled

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with an assessment of the future needs of the industrial, agricultural, commercial and domestic sectors of the economy.

The assessment of the potential markets in Pakistan is hampered by the relative scarcity of market research data. The Import/Export Statistics cover materials handled through the ports but it is generally supposed that much of the overland trade goes unrecorded. The Export Market In the future development of secondary industries, based on import substitution, it is necessary that Pakistan also takes into consideration the potential for exports. However, in order to achieve this objective, it would be necessary that,

i)

Pakistan is able to produce high quality products at competitive costs in the world markets.

ii)

Pakistan will have to develop progressively its national innovation system which will enable it to improve continually its technological and management capabilities necessary for the improvement of quality as well as productivity of the manufactured products

iii)

Suitable recommendations for the development of national innovation system (NIS) consisting of Technological and Social capabilities has been proposed which are necessary for achieving self reliance in the commercialization of locally developed or imported technologies and reducing the costs of manufactured goods and products. It would be necessary to prepare an Action Plan for the implementation of these recommendations

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Suggestions for the Development of Secondary Chemical Projects Based on Locally Available and Imported Materials. For the future development of secondary chemical industries, it is proposed that various industries are divided into different industrial sectors as shown below. A list of potential industries has also been prepared as shown against each sector. The consultant would like to propose that preparation of feasibility reports are initiated for each of these industries by EDB. 1. Minerals Sector (i) Gypsum Plaster Board, Alpha Plaster, Gypsum Blocks (ii) Hydrated Lime/Lime Plaster Substitute for Cement (iii) Fiber Glass and Downstream Products (iv) Ceramics and Refractory Materials 2. Metallurgical Industry (i) Alloy Steels and Special Steels (ii) Ferro-Alloys (iii) Catalysts for Chemical Industry (iv) (v) (vi) (vii) Composite Materials Copper Based Products Raw Materials/Resources Gypsum Lime Stone Silica Sand Bauxite, Clays Chromites and Magnetite etc.. Iron/Scrap Iron and Additives Alumina with other materials. Fiber Glass, Polymers and Resins. Copper

Capital plant and equipment Spare Parts and Components for Capital Plants and Machinery 3. Agro-Based Industries (i) Vegetable Dyes (ii) Power Alcohol (iii) Bio-refining Processes for bio-fuels production (iv) Herbal Medicines and Associated Industries (v) Fruits and Vegetables 4. Alternate Sources of Energy (i) Natural gas, fuels and various organic chemicals (ii) Bio-Fuels (iii) Solar Panels, batteries and associated systems

Various Vegetable Materials Molasses Agricultural Wastes Various Agro Materials

Coal (gasification/Liquefaction) Jetropha/Oil Seeds Solar Energy

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for heating/electrification 5. Oils and Fats Industry Oleo Chemicals, Fatty Acids, Fatty Alcohols, Fatty Amines and Amides and a large number of downstream products. 6. Petrochemical Industry (i) PVC Based Industries Plasticized PVC Flooring, Windows Wood Products Un-plasticized PVC(UPVC) Pipes ad Fittings Fiber and Sheet, Records CDs/DVDs (ii) Polypropylene Based Industries Polypropylene Fiber (iii) (iv) (v) (vi) (vii) (viii) (ix) Synthetic Dyes, Colours and Pigments Detergents, Soaps Insecticides and Pesticides Dodecylbenzene Linear Alkyl Benzene ABS Resin (Acrylonitrile Butadiene Styrene)) Polypropylene Mono /Multi Filament

Vegetable Oils

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

Poly Vinyl Chloride (PVC)

Polypropylene (PP)

Various Petrochemical Intermediates

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Chapter 7 Tariff
Background: In order to develop the Chemical Industry, review of Customs Tariff structures for the Industrial Tariff lines including Chemical and related industry of Pakistan and ensure its best fit in these new tariff imperatives was initiated in 2000-2001. The exercise was primarily based to determine the optimum tariff structures achievable for each segment of the Industry taking also into consideration the need to remove anomalous relationships i.e., (cascading) upstream to downstream, as far as practical. Since then fine tuning of the Tariff Structure continued during the annual budget exercises in close consultations with the relevant stake holders.

Non-Agriculture Market Access (NAMA) Under Non-Agriculture Market Access (NAMA) Bound tariff rates of all WTO member countries are to be brought down as laid down under the Doha Mandate where it was agreed to initiate negotiations to further liberalize trade on non-agricultural goods. To this end, the Negotiating Group on Market Access (NGMA) was created at the first meeting of the Trade Negotiations Committee at Doha, in early 2002. The negotiations aim to reduce or eliminate tariffs, including tariff peaks, high tariffs, tariff escalation and non-tariff barriers for nonagricultural goods, in particular on products of export interest to developing countries. Special and Differential treatment for developing and least developed Members shall be fully taken into account, including through less than full reciprocity in the reduction commitments and measures.

Existing Status As a result of rationalization of Tariffs, investments were made in the capital intensive industries like PVC, Polystyrene, Hydrogen Peroxide and downstream industries of Pure Terephthalic Acid (PTA).Pakistan has now become a major exporter of PET resins. Similarly the PVC industry has not only invested in expansion but has gone for upstream integration through manufacture of Ethyl Di-Chloride (EDC) and VCM. This ultimately would create demand for a Naphtha Cracker which is considered to be the basic requirement for the growth of the Chemical industry. Under the existing Tariff Structure for approximately 1325 Tariff lines spread over 13 chapters of the Pakistan Customs Tariff relates Chemical sector which also includes fertilizers, Pharmaceuticals and Pesticides. Chapter and duty wise break up is shown in Table below;

Summary - Chapter wise Customs Duty Chapter CD% 2010-11 0 5 10 15 20 25 Rs.4000/MT 0 5 10 15 20 25 5 10 20 25 0 5 0 5 10 15 20 25 10 35 0 5 10 15 No of Tariff lines 3 166 32 2 2 3 1 209 6 442 32 5 14 13 512 9 32 10 3 54 23 1 24 6 16 10 19 28 1 80 16 30 46 4 5 8 1

28) Inorganic chemicals; organic or

inorganic compounds of precious metals, of rare-earth metals, of radioactive elements or of isotopes.

28 Total

29) Organic chemicals

29 Total 30) Pharmaceutical products 30 Total 31) Fertilizers 31 Total 32) Tanning or dyeing extracts;
tannins and their derivatives; dyes, pigments and other colouring matter; paints and varnishes; putty and other mastics; inks

32 Total 33) Essential oils and resinoids;

perfumery, cosmetic preparations or toilet

33 Total 34) Soap, organic surface-active

agents, washing preparations, lubricating preparations, artificial waxes, prepared waxes, polishing or scouring preparations, candles

and similar articles, modelling pastes, "dental waxes" and dental preparations with a basis or plaster

20 25 35 0 5 10 15 20 20 25 5 10 15 20 Rs. 5 per meter plus 5% ad val.

34 Total 35)

Albuminoidal substances; modified starches; glues; enzymes

pyrotechnic products; matches; pyrophoric alloys; certain combustible preparations

35 Total 36) Explosives;

15 6 4 43 1 3 11 2 7 24 5 3 8 33 1 1 1 2 38 8 40 28 13 23 5 117 3 31 24 7 80 25 170 1325

36 Total

37)

Photographic cinematographic goods

or

37 Total 0 5 10 15 20 25 0 5 10 15 20 25

38) Miscellaneous products

chemical

38 Total

39) Plastics and articles thereof

39 Total Grand Total

Road Map Analysis of this indicates that above 50% of the products are placed at 0 and 5% duty slabs. These products are mostly not manufactured locally or are basic inputs for other industries. Except for consumer products like Soap, Shampoos, Detergents, Cosmetics and Toiletries etc. which are placed at 25 and 35% duty, all other products are inputs for other industries and attract a duty ranging from 10 to 20%. Further rationalization of Tariff with a view to bring down duties of products attracting duties of 20% and above to a maximum of 15% ensuring a spread of minimum 10% between raw materials and finished products or value addition whichever is higher is considered imperative, through a process of phased reduction in consultation with the stake holders and spread over a period of 5 years. This reduction becomes all the more important in view of NAMA and the Free / Preferential Trade Agreements being planned by the Government. Products which are at 20% and above are listed below:

Products at 20%
S.# 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 PCT CODE 2815.1100 2836.3000 2905.4400 2905.4500 2905.4900 2915.3600 2915.7010 2916.3910 2917.3200 2933.3920 2933.5930 2933.5940 2939.4300 2939.4900 2941.9010 2941.9040 3004.9030 3004.9040 3004.9050 3004.9060 DESCRIPTION - - Solid -Sodium hydrogencarbonate (Sodium bicarbonate) - - D-glucitol (sorbitol) - - Glycerol - - Other - -Dinoseb (ISO) acetate - - - Stearic acid - - - Ibuprofen - - Dioctyl orthophthalates - - - Pyrazinamide - - - Ciprofloxacin - - - Norfloxacin - - Cathine (INN) and its salts - - Other - - - Cephalexin - - - Cephradine oral - - - Dextrose and saline infusion solution, with infusion set - - - Dextrose and saline infusion solution, without saline infusion set - - - Eye drops - - - Ointments, medicinal CD% 2010-11 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20

21 22 23

3005.1010 3006.2000 3006.5000

- - - Surgical tape in jumbo rolls -Blood-grouping reagents -First-aid boxes and kits -Gel preparations designed to be used in human or veterinary medicine as a lubricant for parts of the body for surgical operations or physical examinations or as a coupling agent between the body and medical instruments - -Appliances identifiable for ostomy use - -Waste pharmaceuticals - - - Tanning substances, tanning preparations based on chromium sulphate -Synthetic organic products of a kind used as fluorescent brightening agents -Other - - - Varnishes - - - Other - - - Varnishes - - - Other - - - Varnishes - - - Other - - - Varnishes - - - Other - - - Distempers - - - Prepared water pigments of a kind used for finishing leather - - - Other - - - Other -Stamping foils - - - Pigments in paint or enamel media - - - Other -Colours in sets -Other - - - Glaziers putty (mastic based on oil) - - - Grafting putty (mastic based on wax) - - - Resin cements - - - Other - - - Other - - - Other - - - Other - - - Other - - - Other - - - Other than in retail packing - - - Other - - Non-ionic

20 20 20

24

3006.7000

20

25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58

3006.9100 3006.9200 3202.9010 3204.2000 3204.9000 3208.1010 3208.1090 3208.2010 3208.2090 3208.9020 3208.9090 3209.1010 3209.9090 3210.0010 3210.0020 3210.0090 3211.0090 3212.1000 3212.9020 3212.9090 3213.1000 3213.9000 3214.1010 3214.1020 3214.1030 3214.1090 3214.9090 3215.1190 3215.1990 3215.9090 3402.1190 3402.1220 3402.1290 3402.1300

20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20

59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79

3403.1110 3403.1120 3403.1139 3403.1190 3403.1910 3403.1990 3403.9110 3403.9120 3403.9139 3403.9190 3403.9990 3505.1090 3505.2010 3505.2020 3505.2090 3506.1000 3506.9190 3506.9990 3601.0000 3602.0000 3603.0000

- - - Of a kind used in the leather or like industires - - - Of a kind used in the paper or like industries - - - -Other - - - Other - - - Greases - - - Other - - - Of a kind used in the leather or like industires including fat liquors - - - Of a kind used in the paper or like industries - - - -Other - - - Other - - - Other - - - Other - - - Starch based glues - - - Dextrin based glues - - - Other -Products suitable for use as glues or adhesives, put up for retail sale as glues or adhesives, not exceeding a net weight of 1 kg - - - Other - - - Other Propellent powders Prepared explosives, other than propellent powders Safety fuses; detonating fuses; percussion or detonating caps; igniters; electric detonators. -Liquid or liquefied gas fuels in containers of a kind used for filling or refilling cigarette or similar lighters and of a capacity not exceeding 300cm3 -Other - - - Other - - -Other -Other - - Based on lead compounds Preparations and charges for fire- extinguishers; charged fireextinguishing grenades. Organic composite solvents and thinners, not elsewhere specified or included; prepared paint or varnish removers. - - - Hydraulic brake fluids - - - Other

20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20

80 81 82 83 84 85 86

3606.1000 3606.9000 3701.3090 3808.9990 3810.9000 3811.1100 3813.0000

20 20 20 20 20 20 20

87 88 89

3814.0000 3819.0010 3819.0090

20 20 20

90

3820.0000

Anti-freezing preparations and prepared de-icing fluids. Diagnostic or laboratory reagents on a backing, prepared diagnostic or laboratory reagents whether or not on a backing, other than those of heading 30.02 or 30.06; certified reference materials. - - Stearic acid - - Tall oil fatty acids -Prepared additives for cements, mortars or concretes -Non-refractory mortars and concretes -Sorbitol other than that of subheading No. 2905.44 -Municipal waste -Sewage sludge -Clinical waste - - Halogenated - - Other -Wastes of metal pickling liquors, hydraulic fluids, brake fluids and anti- freeze fluids - - Mainly containing organic constituents - - Other -Other - - Non-plasticised - - Plasticised - - In aqueous dispersion - - Other - - - Cyanoacrylate - - - Acrylic binders -Epoxide resins -Alkyd resins - - - Other -Poly(lactic acid) - - Unsaturated - - Other - - - Other -Melamine resins -Other amino-resins -Phenolic resins - - - Petroleum resins - - - Other -Other - - - Cellulose nitrates nonplasticised - - - Other

20

91

3822.0000

20

92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126

3823.1100 3823.1300 3824.4000 3824.5000 3824.6000 3825.1000 3825.2000 3825.3000 3825.4100 3825.4900 3825.5000 3825.6100 3825.6900 3825.9000 3904.2100 3904.2200 3905.1200 3905.1900 3906.9010 3906.9020 3907.3000 3907.5000 3907.6090 3907.7000 3907.9100 3907.9900 3909.1090 3909.2000 3909.3000 3909.4000 3911.1010 3911.1090 3911.9000 3912.2010 3912.2090

20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20

127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162

3916.1000 3916.2000 3916.9000 3917.2100 3917.2200 3917.2390 3917.2900 3917.3100 3917.3200 3917.3300 3917.3990 3917.4000 3919.1090 3919.9010 3919.9090 3920.1000 3920.2010 3920.2020 3920.2030 3920.2040 3920.2090 3920.3000 3920.4300 3920.4910 3920.4990 3920.5100 3920.5900 3920.6100 3920.6200 3920.6300 3920.6900 3920.7100 3920.7300 3920.7900 3920.9100 3920.9200

-Of polymers of ethylene -Of polymers of vinyl chloride -Of other plastics: - - Of polymers of ethylene - - Of polymers of propylene - - - Other - - Of other plastics - - Flexible tubes, pipes and hoses, having a minimum burst pressure of 27.6 MPa - - Other, not reinforced or otherwise combined with other materials, without fittings: - - Other, not reinforced or otherwise combined with other materials, with fittings - - - Other -Fittings - - - Other - - - Oriented Polypropylene (OPP) packing tapes - - - Other -Of polymers of ethylene - - - Biaxially Oriented Polypropylene (BOPP) film, plain - - - Biaxially Oriented Polypropylene (BOPP) film, printed - - - Biaxially Oriented Polypropylene (BOPP) film, metallized - - - Biaxially Oriented Polypropylene (BOPP) film, laminated - - - Other -Of polymers of styrene - - Containing by weight not less than 6 % of plasticisers - - - Polyvinyl Chloride (PVC) Rigid film - - - Other - - Of poly(methyl methacrylate) - - Other - - Of polycarbonates - - Of poly(ethylene terephthalate) - - Of unsaturated polyesters - - Of other polyesters - - Of regenerated cellulose - - Of cellulose acetate - - Of other cellulose derivatives - - Of poly(vinyl butyral) - - Of polyamides

20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20

163 164 165 166 167 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 185

3920.9300 3920.9400 3920.9900 3921.1100 3921.1200 3921.1300 3921.1400 3921.1900 3921.9090 3923.1000 3923.3010 3926.2010 3926.2090 3926.3000 3926.4010 3926.4020 3926.4030 3926.4040 3926.4090 3926.9010 3926.9030 3926.9060 3926.9099

- - Of amino resins - - Of phenolic resins - - Of other plastics - - Of polymers of styrene - - Of polymers of vinyl chloride - - Of polyurethanes - - Of regenerated cellulose - - Of other plastics - - - Other -Boxes, cases, crates and similar articles - - - Bottles - - - Plastic belts - - - Other -Fittings for furniture, coachwork of the like - - - Ornamental articles of plastics - - - Plastic bangles - - - Spangles of plastics - - - Plastic beads - - - Other - - - Synthetic floats for fishing nets - - - Transmission, conveyor or elevator belts - - - Shoe lasts - - - -Other

20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20

Products at 25%
S.# 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 PCT CODE 3926.1000 3925.9000 3925.3000 3925.2000 3925.1000 3924.9000 3924.1000 3923.9090 3923.5000 3923.4000 2803.0010 2803.0020 3923.3090 2803.0090 3923.2900 DESCRIPTION -Office or school supplies -Other -Shutters, blinds (including Venetian blinds) and similar articles and parts thereof -Doors, windows and their frames and thresholds for doors -Reservoirs, tanks, vats and similar containers, of a capacity exceeding 300l -Other -Tableware and kitchenware - - - Other -Stoppers, lids, caps and other closures -Spools, cops, bobbins and similar supports - - - Carbon black (rubber grade) - - - Carbon black (other than rubber grade) - - - Other - - - Other - - Of other plastics CD% 2009-10 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25

16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56

3923.2100 3922.9000 3922.2000 3922.1000 3919.1030 3919.1020 3918.9000 3918.1000 3915.9000 3915.3000 3915.2000 3915.1000 3909.1010 3811.1900 3808.9150 3808.9120 3808.9110 3808.5090 3605.0000 3604.9000 3604.1000 3406.0000 3405.9000 3405.3000 3405.1010 3402.9000 3402.2000 3209.1090 3005.9090 3005.1090 3004.1010 2941.1000 2939.4200 2939.4100 2935.0060 2935.0050 2935.0040 2934.9910 2924.2910 2918.2210 2915.3300

- - Of polymers of ethylene -Other -Lavatory seats and covers -Baths, shower-baths, sinks and wash-basins - - - Scotch tape, plastic - - - PVC electric insulation tapes -Of other plastics -Of polymers of vinyl chloride -Of other plastics -Of polymers of vinyl chloride -Of polymers of styrene -Of polymers of ethylene - - - Urea formaldehyde moulding compound - - Other - - - Para dichlorobenzene blocks - - - Napthalene balls - - - Mosquito coils, mats and the like - - - Other Matches, other than pyrotechnic articles of heading 36.04. -Other -Fireworks Candles, tapers and the like. -Other -Polishes and similar preparations for coachwork, other than metal polishes - - - For footwear -Other -Preparations put up for retail sale - - - Other - - - Other - - - Other - - - Ampicillin, Amoxcillin and Cloxcillin capsules/ syrup -Penicillins and their derivatives with a penicillanic acid structure; salts thereof - - Pseudoephedrine (INN) and its salts - - Ephedrine and its salts - - - Sulphanilamide - - - Sulpha-thiazolediazine - - - Sulphamethexazole - - - Furazolidone - - - Paracetamol - - - Aspirin - -n -Butyl acetate

25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25

57 58 59

2915.3100 2915.2100 2915.1100

- - Ethyl acetate - - Acetic acid - - Formic acid

25 25 25

Products at 35%
S.# 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 PCT CODE 3401.3000 3401.2000 3401.1900 3401.1100 3307.9090 3307.9010 3307.4900 3307.4100 3307.3000 3307.2000 3307.1000 3306.9000 3306.2000 3306.1090 3306.1010 3305.9090 3305.9020 3305.9010 3305.3000 3305.2000 3305.1000 3304.9990 3304.9920 3304.9910 3304.9190 3304.9120 3304.9110 3304.3090 3304.3010 3304.2000 3304.1000 3303.0090 3303.0020 3303.0010 DESCRIPTION -Organic surface-active products and preparations for washing the skin, in the form of liquid or cream and put up for retail sale, whether or not containing soap -Soap in other forms - - Other - - For toilet use (including medicated products) - - - Other - - - Contact lens solution - - Other - - "Agarbatti" and other odoriferous perparations which operate by burning -Perfumed bath salts and other bath preparations -Personal deodorants and antiperspirants -Pre-shave, shaving or after-shave preparations -Other -Yarn used to clean between the teeth (dental floss) - - - Other - - - Tooth paste - - - Other - - - Dyes for hair - - - Cream for hair - Hair lacquers -Preparations for permanent waving or straightening -Shampoos - - - Other - - - Tonics and skin food - - - Face and skin creams and lotions - - - Other - - - Talcum powder - - - Face powder - - - Other - - - Nail polish -Eye make-up preparations -Lip make-up preparations - - - Other - - - Perfumes - - - Eau-de-cologne CD% 2009-10 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35

Tariff reduction modalities under NAMA

The text under negotiation stipulates Formula Coefficient and Flexibilities as under: For developed countries the proposed co-efficient is [5-7]. For developing countries either of the following can be accepted (x) 20 with flexibilities of 14%] with trade volume of 10%]. (y) 22 with flexibilities of 10% and trade volume 10%. (z) 25 with no flexibilities.

A preliminary exercise, carried out to determine the impact, the following scenario emerges on a bound rate of 75% which has been considered in this example as most of the Tariff lines have this rate:
Duty Rate (201011)

BOUND VS APPLIED RATES UNDER NAMA

Existing Bound Rate 15% Bound Rate at different coefficients 20% 15.79 15.79 15.79 15.79 17.1 17.1 17.1 17.9 18.6 18.6 25% 18.75 18.75 18.75 18.75 20.7 20.7 20.7 21.8 22.9 22.9 30% 21.43 21.43 21.43 21.43 24.0 24.0 24.0 25.5 27.0 27.0

5% 10% 15% 20,25,30,35% 50 55 60 65 75 80

20 to 75% 30 to 75% 50 to75% 30 to 75% 120 120 170 170 250 250

12.5 12.5 12.5 12.5 13.3 13.3 13.3 13.8 14.2 14.2

Under the Swiss formula for calculating reduction in bound rates, cut would be greater on higher rates as elaborated in the Table above and products at duties upto 15% would be least affected therefore the industry should prepare for reduction of tariff to 15% which otherwise is also considered as tariff peak.

CHAPTER - 8
CONCLUSIONS AND RECOMMENDATIONS

(i)

The development of chemical industry produces high value-added goods and is essential if Pakistan is to remain internationally competitive, reduce its trade deficit and record strong rates of economic growth.

(ii)

Feedstocks derived from primary industries, as well as alternative sources of raw materials, which are required for the development of secondary chemical industries have been investigated and processes for their utilization have been outlined. These will form the basis for the future development of secondary chemical industries in Pakistan. A number of potentially feasible projects in various sectors of chemical industry have been proposed for future implementation.

(iii)

Pakistans major exports consist of low technology, labour intensive products. The share of medium and high technology products in total exports from Pakistan remains very small in spite of the trade liberalization policies that have been adopted over the past 10 years.

(iv)

The development of primary and secondary chemical industries has occurred primarily with the help of foreign engineering corporations, which were awarded turnkey contracts for the commercialization of local and / or imported technologies on EPC (Engineering, Procurement and Construction) basis.

(v)

The National Innovation System (NIS), consisting of process science and engineering technology (PS&ET), necessary for the integration of facilities for technology development, process design, detailed engineering, manufacturing of `capital plant and machinery, plant construction, and marketing management is very weak. It requires enhancement and modernization in order to enable the development of local capabilities for the commercialization of local and / or imported technologies.

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(vi)

We recommend that the scope of the Engineering Development Board should be enhanced and given the additional responsibility for technology development. In order to achieve this objective, we propose that three committees should be established under Engineering And Technology Development Board (ETDB) in order to strengthen the NIS. These are: (a) A National Committee / Council for research and technology development, A National Committee / Council for the development of software and hardware for the commercialization of technologies, A National Committee / Council for the development of Technology Policy and Investment Planning.

(b)

(b)

The task of each of these Committees will be to foster links between universities, research and development (R&D) institutions and industry necessary for the development, appraisal and evaluation of local and / or imported technologies, to create engineering companies as joint ventures between local and / or foreign companies for the development of facilities required for the commercialization of local and imported technologies and to develop industrial and investment policies for capital formation on continual basis. (vii) In order to facilitate the formation of investment capital, we suggest that a Holding sector, Company should be established with the participation of the financial international donors, friends of Pakistan, overseas Pakistanis, and other

investors, who should be invited to participate as shareholders in this company. (viii) The chemical industry is the driving force in developing a healthy Pakistani economy, so as to provide jobs and bridge the gap between imports and exports. This poses an increasing challenge for the chemical industry over the next twenty years as global competition, technology advances, public health and environmental concerns, and new markets and products shape the future.

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The present policy for the development of chemical industry based entirely on imported technologies and their commercialization by awarding Turnkey contracts to Foreign Engineering Companies on EPC basis (Engineering, Procurement and Construction) is costly and highly uneconomic. According to World Bank estimates the investment costs of chemical projects in countries where National Innovation System (N.I.S) is lacking or not well developed is about 40 percent higher compared with their costs in countries where industrial infrastructure is locally established. (ix) The rapid development of South East Asian and ASEAN Countries as well as China and India has been based on the development of their N.I.S. which forms an important aspect of their economic policies and institutional framework. The rapid development of their manufactured industrial products and spectacular rates of growth in exports has been the result of the development of local technology, engineering and industrial infrastructure. Pakistan will not be ale to compete with these countries on quality as well as costs for the export of its manufactured products unless it is able to enhance its capability with the development of N.I.S. (x) In order to prepare an Action Plan for the development of N.I.S. and Institutional infrastructure, it is suggested that ETDB establish a Commission with its members drawn from:-

i. ii. iii. iv. v.

Ministry of Industries and Production Ministry of Science and Technology Ministry of Planning and Development Higher Education Commission Industry

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The development of Action / Implementation Plan will become the basis for the preparation of PC-1 for the allocation of Resources. In addition we would like to propose that ETDB organize a National Conference with the participation of various public/private sector organizations which will also be useful for the preparation and development of comprehensive policy for the development of National Innovation System. (xi) The main factors affecting continual brain drain of Pakistans highly qualified manpower is due to lack of employment opportunities. The development of NIS will require the services of tens of thousands of scientists, engineers, technologists, economists and social scientists, and will therefore result in job creation which will reverse the current brain drain. (xii) Pakistan has been importing Second Hand Plants based on Antiquated Technology, Energy Intensive, Low Productivity Projects. The products manufactured by these plants in many cases are not economically competitive with the imported products. Such plants in many cases were ultimately shutdown. In addition the investors in some cases were not able to pay the Bank Loans which had to be written off. We suggest that GOP should undertake investigations / survey of such projects in order to determine the extent of financial losses incurred by the Banking Sector and the Country. It is also suggested that the policy of importing second hand plants is reviewed and a Ban is imposed on the future import of such plants. (xii) Pakistan is dependent upon foreign engineering and construction companies for the acquisition and commercialization of technologies for the development of its primary and secondary industries. Under the circumstances it is not possible for its industrial products to compete in the international markets in respect of quality and costs unless it is able to achieve self reliance by developing its local technological and social capabilities as a part of its NIS.

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The national innovation system consists of a set of institutions whose interaction determines the innovative performances of the economy. These consist of private and public R&D institutions, operations, design, engineering and construction management corporations, capital plant manufacturing companies, financial institutions, the educational system and government regulatory bodies. These constitute the framework for the creation of pro-innovative environment aimed at maintaining quality, productivity of manufactured goods and products and increasing the competitiveness of a country in the international markets.

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Annexure - B REFERENCES Serial No 1. Chemical Industry Wikipedia. The Free encyclopedia 2. World Industries, World Industry 3. The Chemical Industry Reference http://en.wikipedia.org/wiki/chemical_industry

http://www.economywatch.com/world-industries/ http://www.politics.co.uk/opioionformers/Chemical-Industries-Association/thechemical-i http://en.wikipedia.org/wiki/Industry http://www.referenceforbusiness.com/industries/Pri mary-Metals/Secondary-Smelting-Refi http://www.absoluteastronomy.com/topics/industry

4.

Industry Wikipedia. The Free encyclopedia 5. SIC 3341 Secondary Smelting and Refining of Nonferrous Metals 6. Industry: Facts, Discussion Forum, and Encyclopedia Article 7. Primary Sector of Industry Industries Raw Materials Considered 8. Chemical industry 9. Technological Strategies and Exports: A study of Indian Basic Chemical Industry 10. Bio-refineries for the chemical industry A Dutch point of view 11. Research Energy The bio-refinery concept 12. Chemical Industry in India 13. Bio-refineries for the chemical industry A Dutch point of view 14. Development of Petrochemicals from natural gas (methane)

http://www.economicexpert.com/a/primary:ssector: of:industry.htm http://www.answers.com/topic/chemical-industry Research Scholar, Department of Humanities and Social Sciences, Indian Institute of Technology, Bombay Dr...Ir. Ed de Jong1, Drs.ing. Rene van ree rea2, Ir, Robert van Tuil1, Dr.Ir.Wolter Elbersen1 http://europa.eu/research/energy/nn/nn_pu/renews/ 003/article_2293_en.htm Source: Central Statistical Organization, Ministry of Statistics and Programme Implementation, Government of India. Dr...Ir. Ed de Jong1, Drs.ing. Rene van ree rea2, Ir, Robert van Tuil1, Dr.Ir.Wolter Elbersen1 N.S. Maina Department of Chemical Engineering, Ahmadu Bello Bello university,Zaria, 810261. EMail : nsmaina@yahoo.com

_____________________________________________________________________ References Page 1 of 3

15. Source of Bio-mass http://www.brighthub.com/engineering/mechanical/ Materials, What are Bio- articles/6362.aspx mass Source ? What is Bio-mass Energy? 16. Secondary Smelting and http://www.referenceforbusiness.com/industries/Pri Refining of Nonferrous mary-Metals/Secondary-Smelting-Refi Metals 17. Industry Sectors http://www.albertacanada.com/industries/861.html Chemical & Petrochemicals 18. Chemical Industry http://en.wikipedia.org/wiki/steel Wikipedia The Free encyclopedia 19. A advanced Steel Making www.uktradeinvest.gov.uk 20. Vision 2020 Chemical Technology Road Map Industry of the Future 21. Singapores Science and Public Policy October 2001 manufacturing Sector as engine for economic growth: past, present and future 22. Technology Mun-Chow Lai and Su-Fei Yap Development in Malaysia and the newly industrializing economies: A comparative analysis 23. Towards a vision 2030 Khan Muhammad Tariq Yousuf Institute of and the challenges of Developing Economies, Japan External Trade openness to Pakistan Organization economy: 24. United Nations Science and Technology for Africas Development Economic Commission http://www.un.org./depts/eca/divis/fssd/ for Africa 25. Commercializing Annual Dass is with Wipro Limited, Yokohama technology Solutions City, Japan 2208109(phone:+81-80-3206-2139, Moving from products to fax+81-45-650-3951;email: Solutions anand.dass@wipro.com). 26. Survey of Trends in the http://www.nistep.go.jp/achieve/abs/eng/rep038e/rep Development of Science 038ae.html and Technology Parks NISTEP Report No. 38 27. Failure of the Miracle: Hhp://www.gongol.com/research/economies/ Why South Koreas ethaebol/; Managed Economy Is Dying _____________________________________________________________________ References Page 2 of 3

28. Towards the furthering of export promotion and industrial development of Egypt looking at Japans Experiences. 29. Technology Vision 2020

Keynote speech by Osamu Watanable, Chairman and CEO of JETRO at the Management Development Centre, Cairo Egypt on June 16th 2004.

30. 31. 32.

33.

The US Chemical Industry 1155 16th Street NW Washington DC 20036 (202) 452 8917 http://www.acs.org Jaebeol Wikipedia http://en.wikipedia.org/wiki/chaebol The Free encyclopedia Japans Keiretsu Zaibatsu http//www.encyclopedia.com/doc/1048Encylcopedia.com zaibatsu.html. Keiretsu Economy New http://www.thefreelibrary.com/Keiretsu+Economy Economy? Japans New + E economy% 3F+japans Multinational+E Multinational Enterprises from a Post Modern perspective. Various Five year plan Economic Surveys of Pakistan World Bank ADB Reports

_____________________________________________________________________ References Page 3 of 3