EDB gone?

Days after the shocking move by the government of Pakistan to dissolve the Engineering Development Board (EDB)—a wing of the Ministry of Industries and Production—three new automakers have been approved to set up Greenfield assembly plants and kick off operations.

The Lucky group with South Korean Kia Motors, the Nishat group with South Korean Hyundai and United Motors which currently manufacturers motorcycles in Pakistan have all received the go-ahead with a total investment of $372 million. While the first two have been much touted for the past many months, the United Motors’ approval comes off as a surprise. There are at least six more companies that are waiting to hear back on their applications.

But while these approvals are a positive sign, the decision to dissolve EDB is troubling. It is unclear who would implement the auto and engineering related polices now. Industry leaders have denounced this decision widely. Both Lahore Chamber of Commerce and Industry (LCCI) and Pakistan Association of Automotive Parts and Accessories Association (PAAPAM) have requested the government to withdraw its decision as EDB was an integral body that connected the industry with the government. It supported the industry and helped in implementing government policies and guidelines which is a vital role, according to businesses.

EDB came under fire after multiple allegations that the board was involved in corruption. New auto entrants complained that the EDB was hindering in the implementation of the auto development policy, and delaying processing of their applications. Meanwhile, the Cabinet Committee on Energy informed the PM that EDB was not performing its regulatory and promotion functions, especially in the energy sector.

It is a bold move on the government’s part, no doubt, and it shows the state is serious about implementing its star auto policy as well as ensuring “game changing” CPEC projects move forward smoothly. However, was the EDB deliberately slowing down processes or merely performing due diligence?

It seems the inefficiencies within the organization have historically been many. In 2016, the Federal Audit, part of the Auditor General of Pakistan found dozens of malpractices within EDB on accounts of corruption, nepotism, and misuse of authority. Over the years, the EDB’s role in the low-productivity engineering sector has been questioned as the sector remains widely underdevelopment with the exception of the auto sector. It was tasked to improve competitiveness and exportability of the sectors and take technological initiatives for the sectors’ growth but it has been marred with government intervention and internal inefficiency.

The government should overhaul the structure of the EDB instead of dissolving it, and ensure the legacy of the past is not trailing forward. A merit-based CEO should be appointed along with a Board of Directors to have checks and balances in place. An engineering policy ought to be framed to serve the original purpose of the organization with a long term view of promoting the engineering sector. The institution and its mandate exist and could work with proper and efficient leadership.

In any case, the approval of auto plans may have been done but the implementation of the policy once operations kick off need to be overseen. Certain functions of the EDB are integral to existing businesses. The government needs an alternative plan posthaste.