Wednesday, November 23, 2016

Business Recorder editorial Nov 23, 2016

IDEAS 2016 Prime Minister Nawaz Sharif inaugurated the annual International Defence Exhibition and Seminar (IDEAS) in Karachi on November 22. Speaking to a distinguished audience including high civil and military leaders, foreign dignitaries and representatives of foreign and local companies participating in the four-day exhibition of weapon systems, the prime minister was at pains to underline Pakistan’s commitment to discouraging an arms race in its periphery and promoting the motto: “arms for peace”, meaning ensuring a balance of power to ensure stability. This year’s IDEAS is the ninth exhibition in a row, reflecting its establishment as a credible event in Pakistan and the global community’s calendar. This year has seen a greater than ever participation, with 55 countries and 480 companies, some of them local, attending the grand event. The prime minister pointed to Pakistan’s increasing self-reliance in defence production, given the 2,000 weapon systems on display, developed by both the public and private sectors. Nawaz Sharif emphasised the improved Pakistani environment for foreign investment, with law and order better, terrorism phenomenally decreased and the power sector’s deficit being incrementally met through new energy projects. He said Pakistan has an abundance of foreign capital and the lowest interest rates, which makes the prospects for trade and joint business ventures very bright. IDEAS 2016 is the bright culmination of the years of effort and organisation that have gone into making it a glittering showpiece for Pakistan’s indigenous defence industry. Like all such annual exhibitions, it offers opportunities for agreements to be arrived at on the sidelines between interested parties. IDEAS has been a magnet for buyers and sellers from all over the world. This year was no exception, with notable early results being the Memorandum of Understanding (MoU) signed with Ukraine for the Al-Khalid tank’s engine and a deal with Turkey to export Pakistan’s Mushak fighter. Starting from the indigenous production of small arms, largely located in the state sector with Pakistan Ordinance Factories (POF) Wah being at the heart of the effort, Pakistan now can proudly put on show the indigenously produced K-8 aircraft, Fast Attack Craft Missile boats, Armoured Personnel Carriers (APCs) and the JF-17 fighter, apart from the big ticket items mentioned above. Although by the very nature of the industry, most defence production is concentrated in the state sector, this is slowly changing with the entry of the private sector in the field. Despite the great progress made from the early, humble beginnings of defence production, there is obviously still a long way to go before Pakistan can rest content that it no longer has to rely on foreign sources for high tech, advanced weapons systems. While the defence industry is inherently capital intensive and slow gestation, not to mention profitable only in the long run, incentives for greater participation of the private sector can be encouraged through outsourcing. Weapons systems whose production has reached surplus levels can offer attractive terms that compare well in terms of cost to many countries otherwise in thrall to the developed world’s suppliers. Entering into joint ventures with international companies can bring critical state-of-the-art know-how to our own soil. On the evidence to date, it seems clear that Pakistan is embarked on the road to incremental self-reliance in defence production, with the icing on the cake being the prospect of increasing export opportunities.

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