Promoting Workplace Safety in Sindh: A Strategic Dialogue

Majyd Aziz

September 11, 2012 was to be just another mundane day in the lives of 257 families residing mostly in low income areas of District West in Karachi. Alas, that fateful day turned into 9/11 Duex for them and for some 600 other families. A well-known apparel manufacturing company, employing between 1200-1500 workers got engulfed in a fire incident that some attribute to the boiler and many who suspect it to be the handiwork of Karachi’s ruthless extortionists. By the time the smoldering ashes subsided and the fire-fighting crew left the premises, this tragedy became the worst and most deadly industrial event in the history of Pakistan.

It is over a year now that this avoidable disaster occurred. During the past one year, it fully exposed the flaws and inadequacies in the systems of industrial operations, the role of governmental agencies and departments, the exploitation of workers, the callous attitude and mindset of employers, the lack of security provisions, and the disregard of rules and regulations by the workers. However, most importantly, the total deficiency, ignorance, and implementation of occupational safety standards that are fundamentally vital in the smooth functioning of an enterprise, where there is substantial human involvement, were either lacking or adopted casually.

The blame game reached a crescendo within no time and the social activists, media and worker representatives demanded exemplary punishment for the Directors. The payola factor enabled the company to keep itself off the records of the provincial Labor Department and other worker-related government organizations. The internationally-based certification agencies had very nonchalantly issued the required certificates without intensive checks. The foreign buyers were more concerned with getting products at dirt-cheap prices and so turned a blind eye to the shortcomings in the implementation of various standards. Globally, the negative image of Pakistan was further highlighted in a brandish tone. It seemed that Pakistan’s value-added textile products would face a very disturbing backlash in various foreign markets.

There have been clarion calls emanating from various sections that the concept of inspection of industries is missing and that sanity would only prevail if inspectors from the Labor Department, from the Civil Defence, and from other government organizations were empowered to conduct detailed inspections and to penalize the errant industrialists. This is better said than done. The rationale behind the discontinuation of these so-called inspections was that the inspectors were mostly concerned with their proverbial pound of flesh rather than a facilitative and productive inspection. Moreover, the obsolete Factory’s Act 1934 is still on the statute books despite outliving its conditions.

The AFL-CIO, the largest workers’ representative organization in USA, in its report, “Responsibility Outsourced” castigated the role of Social Accountability International (SAI) that issues the SA8000 Certificate after exhaustive inspection, audit and monitoring. In the Baldia case, SAI outsourced the task to RINA who further subcontracted it to a local agency. The report says: “Far from enabling major multinationals to ensure safe conditions  . . . . .  SAI appears to have problems .  . . . in delivering credible corporate accountability services.” Germany’s largest discount clothing retailer, KIK, also blindly accepted the flawed certification and continued with its orders to this unit.

The Wal-Mart syndrome is also a root cause for the unsafe environment prevailing in enterprises in the developing countries. For mega companies like Wal-Mart to continue to offer products at competitive rates, it is imperative that they source countries for a bottomless reserve of cheap and low-priced goods. This exploitation compels manufacturers to disregard costly safety standards and a working environment that is conducive. The charm to become a formidable and sustainable supplier becomes an incentive as well as a noose around their necks. The factory in Baldia got caught in this vassal-type whirlpool too.

In an article, “SITE Inferno” penned after the Baldia tragedy, this writer stated, “Karachi has seven industrial estates where about 10,000 industries are based. Moreover there are atleast 50,000 cottage and small industries in the informal sector that are based in residential areas too. Many factories are like a cauldron waiting for its contents to overflow. It is also important to state that corruption, lax conformation of safety rules and regulations, ill-planning of units, usage of shoddy material such as electric wires, switches, gas cylinders etc are prime as well as disturbing reasons for such incidents.”

In Bangladesh, the eight-storey Rana Plaza, where thousands of workers earned their livelihood, collapsed on April 24, 2013 resulting in the death of 1126 people. This enterprise too had the required Suppliers Code of Conduct, ISO 9000 and ISO 14000, SA 8000, and other types of certification.  But, here too, this disaster will always remain a testimony to unbridled greed, political influence, and outright sleaze.

Taking due cognizance, The International Labor Organization also became pro-active and authorized and funded a project to develop a “Joint Action Plan for Promoting Workplace Safety and Health in Sindh”. This report would be officially launched on October 3, 2013 in Karachi at the “Promoting Workplace Safety in Sindh:  A Strategic Dialogue”. This event has been initiated by the US Consulate General in Karachi and is being supported, endorsed, and approved by Trade Development Authority of Pakistan, ILO, Sindh Labor Department, WEBCOP, PILER, SGS, and enlightened industrialists such as this writer. 

The idea behind this Dialogue is to end the blame game and to inculcate in the ranks of employers the crucial need to understand, accept and implement safety standards in their units. It will also promote the concept of safety among the workers and the employees. Moreover, there would be the demand of employers that the concerned government officials should become facilitators rather than inspectors who are more concerned with penalties and fines rather than improving the quality of the workplace. The role of TDAP is extremely important since a recurrence of another tragedy may force importing countries to withdraw various trade facilities and benefits given to Pakistan. At this crucial juncture, all eyes are on Brussels where EU is to decide on GSP Plus for various countries and Pakistan is well-poised to be granted this from January 01, 2014. The best message for all who have a laidback outlook towards overall safety standards is what Captain E J Smith, the Captain of Titanic said: “it will never happen to me”. The rest, as they say, is history!

Multi-Dimensional Chinese Lessons for Pakistan

Majyd Aziz

“The friendship between China and Pakistan is deeply rooted in the hearts of the two peoples. It is in our blood, and has become our noble and firm conviction.” Wen Jiabao, former Premier of China, December 2010. “The China-Pakistan all-weather strategic partnership of cooperation has gone beyond bilateral dimensions and acquired broader regional and international ramifications.” Joint statement issued after his state visit to Pakistan in December 2010.

The comforting exhortations do echo the sensitivities of this all-weather friendship and creates a rhapsodic emotion among the Pakistanis. The disconcerting fact is that it is very seldom that a serious effort is undertaken either by political leadership, by economic planners, by trade and industry or by media to actually adopt Chinese lessons. China is focused on long-term commitment to the policies and reforms that have been undertaken. This allows the policymakers to introduce practical aspects in a gradual and evolutionary manner rather than mid-term second-guessing. The emphasis is on institutions and rarely on individuals. This concept is, regretfully, anathema to the mindset of Pakistani leadership and is probably one of the reasons why Pakistan’s economy or other state matters dive into troublesome waters. 

It has been the avowed policy of Chinese leaders to assiduously go for development through a focused transformational process. The guiding principle is what is known as the Beijing Consensus rather than the oft-emulated Washington Consensus forced on, or followed by, many a country.

In 2004, the United Kingdom's Foreign Policy Center published a paper The Beijing Consensus by Joshua Cooper Ramo , a former senior editor at Time magazine. Ramo laid out three broad guidelines for economic development. The first guideline involves a "commitment to innovation and constant experimentation." The second guideline states that “Per Capita Income (GDP/capita) should not be the lone measure of progress.” The third guideline urges a policy of “self-determination”, where the less-developed nations use leverage to keep the superpowers in check and assure their own financial sovereignty. In his January 2012 article in Asia Policy, John Williamson, an English economist who coined the term Washington Consensus,  described the Beijing Consensus as consisting of five points: 1. Incremental Reform (as opposed to a Big Bang approach) 2. Innovation and Experimentation 3. Export Led Growth 4. State Capitalism (as opposed to Socialist Planning or Free Market Capitalism) and 5. Authoritarianism (as opposed to Democracy or Autocracy).

The result has been phenomenal for China and is reflected in a stellar growth in foreign exchange reserves, in formidable GDP growth in the past three decades, in developing a process of political, socio-economic influence in many countries, blocs, and regions, and a resolute reliance on traditional perspectives rather than borrowing theories or dictates. Until 2008, China still followed Premier Deng Xiaoping’s vision to build China’s strength while maintaining a low profile in international affairs. But in 2008-09 when the global economic crisis devastated the economies of most of the democratic countries, China survived the downward spiral and emerged in a dominant position. A re-thinking then evolved and China ventured to become a global force.

China’s model of development is actually more complex and highlights steps designed to ensure that the government remains the focal point of economic and political policy-making and maintains a high degree of control over the economy. China has created substantially favorable strategies to attract foreign investment. Beijing has developed a mixed form of capitalism in which there is an open-economy to some extent, yet it ensures governmental control of strategic industries, encourages entrepreneurship, decides the investing of state funds, and allows the banking sector to prop up profitable and innovative enterprises. Thus there are now over 300 billionaires in China.

An important point within the Beijing Consensus guidelines is emphasis on export-led growth. That has been the hallmark of the Chinese economy and it is through this determined policy that today China has been able to become the envy of other nations and has enabled Beijing to play a leadership role in the global marketplace. The prediction is that Chinese exports would cross US$ 2.75 trillion in 2013. Of course China is also a major market for global goods and in 2013 imports may exceed US$ 2.25 trillion. China’s foreign exchange reserves are a mind-boggling US$ 3.50 trillion. These figures are a manifestation of adherence to Beijing’s own thinking process rather than allowing external influences to dictate strategies.

“Indigenous Innovation”, or “zizhu chuangxin”, has been a cornerstone of China’s march towards self-sustainment. When Deng Xiaoping launched the reform process and opening up of the economy in 1978, he counseled that supremacy in science and technology should be the key to China’s modernization. Some 20,000 experts were at that time directed to draft a new blueprint for science to serve as a conducting force for restarting China’s economy. The importance accorded to science and technology is evident even today by the fact that state leaders themselves control the science policy. The prime factor of this policy is to reduce China’s overall reliance on foreign technology to below 30% from an estimated 50% at present. More importantly, China is embarking upon a campaign to inculcate “Buy China” on the domestic front. This would be a monumental boost to domestic industry and would become a source of concern for countries that do bilateral trade with Beijing. Furthermore, even foreign companies now have to conform to the Chinese demands for co-innovation and re-innovation, a conditionality that is agonizing and difficult to fathom.

The reliance on this policy has enabled the Chinese government to undertake mega reforms that has resulted in China making tremendous headway into solving the infrastructure shortages, development  of efficient physical infrastructure like high-speed railways,  excellent road network, and utilization of automotive vehicles, etc. Four basic research sectors have been provided extensive support and significance. These are protein science, nanotechnology, quantum physics, and developmental and reproductive science. The decision makers have a target of increasing gross expenditure on R&D to 2.5% of GDP by 2020 with basic research reaching 15% of R&D spending by 2020. More importantly, the Chinese policy is to ensure that essential goods, services, and privileges are provided to assure quality of life. One fact that exemplifies this is that official poverty that was 15% in 1984 is less than 2% today. This is possibly the most dramatic poverty reduction achievement in recorded history.

Pakistan has to learn a lot from the Chinese Model. The potential lessons that deem consideration include ownership of policies at all levels of society. Recently, the political and establishment leadership displayed such an ownership during the All Parties Conference on National Security. This sincerity can and should be replicated in other sectors too. It is imperative that there should be an Islamabad Consensus on the economic vision that is notoriously deficient in Pakistan’s policymakers. An APC should have been convened long time ago in association with representatives of trade and industry to discuss and agree on a three-tier economic vision, containing short, medium, and long-term strategies and targets.

Another lesson to be learned from China is that reliance should be on homegrown or indigenous solutions rather than depending on imported or abstract answers to resolve the country’s myriad issues. It is important to understand that the encouragement accorded to grassroots initiatives would generally indoctrinate commitment to reforms, a feature that is seriously missing in this nation of nearly 190 million denizens. A paradigm shift is crucial and this may even be requiring an unorthodox approach and revisit of established parameters. It seems that building constituencies, scaling up the initiatives, and shedding unworkable decisions just do not factor in any successive Pakistani government’s thinking.

There is a fundamental need to change the equation by stepping onto a higher plateau and imbibing the wisdom oozing out of the Chinese success of becoming a great nation. Pakistanis should now literally follow, in more ways than one, the Hadith of Prophet Muhammad (PBUH): “Seek knowledge even as far as China.”

Sino-Pak Strategic Alliance: A Committed Avatar

Majyd Aziz

“Pakistan and China have a relationship that is deeper than the ocean and higher than the Himalayas” is the favorite mantra of Pakistan’s leaders. Pakistan and China do have a very special relationship that has transcended many events and has weathered many a storm. There has been a generous outlook towards each other, in economic, political, cultural, and social fields. Pakistanis consider themselves much closer to the Chinese people then to any other nationality. China is regarded as a Big Brother, and Chinese delegations and dignitaries are received with open arms and with respect. At the same time, it is also worthwhile to mention that Chinese products, equipment and material are available aplenty in this country. 

China and Pakistan have, over the past many decades, embarked upon a strategic relationship that is all-encompassing and is a manifestation of the importance that Beijing accords to Islamabad.  The accent has been on diplomatic, military, and economic cooperation. Both the countries have realized that a congruous disposition is essential despite certain reservations that have cropped up in the last decade or so. The influx of Islamic radicalism in China has been a matter of consternation for China and there have been times when Pakistani leaders have had to hear strong worded disapprovals even on official state visits to Beijing.

Whenever there is a state visit by Presidents or Prime Ministers to each other’s countries, the ritual of signing of MOUs and agreements is an integral part of the official itinerary. This ritual is hyped up through the media and it is generally pronounced that this ritual is really the game changer that would further consolidate and strengthen the bilateral relationship. However, the process goes to pot and the euphoria is busted when there is no follow-up or when the MOUs or agreements are half-baked or not feasible. This has been the stumbling block in the solid foundation of a focused Sino-Pak industrial and infrastructure base.

There has been this highlighted propaganda by all and sundry that Gwadar Port and Thar Coal are the two saviors of Pakistan and that the full development of these projects would put Pakistan is the comity of developed nations. Actions have exposed the fact that it is easier said than done. Pakistani decision makers committed a cardinal sin when their obduracy and inflexibility negatively impacted on the total commitment of Shenhua Group, a state-owned mining and energy company in China that is the largest coal-producing company in the world. The after-effects of that monumental indecision put Pakistan’s Thar Coal project behind by more than a decade. Fortunately, better sense prevailed and China was requested to build and develop the Gwadar Port. On the military front, the JD-17 Thunder multirole combat aircraft is testimony to technical and sensitive collaboration between the two nations. Over 100 planes have been produced from this project that cost in excess of $500 million.

During the recent visit of Prime Minister Nawaz Sharif to China in July, it was announced with the usual fanfare that the two governments will focus on mega projects that would include establishing a Pakistan China Economic Corridor, an ambitious but visionary project costing over $ 18 billion for building a series of 200 km tunnels, that would bring about the fundamental changes that are imperative in future Sino-Pak trade regime. Eight cooperative agreements and MOUs were inked. Meanwhile, the first and foremost decision implemented was that the formal handing over of management and operation of Gwadar Port to China was agreed and implemented. This has reinforced the claims of those that are gung-ho about massive Chinese investment and financing of mega projects that have been planned and conceived. The prime emphasis is on energy as well as physical infrastructure projects that include the Gadani Power Park, where ten coal-based power plants with a combined capacity of over 6000 mw are planned. The Karachi underground train, the Karachi-Lahore segment of the Motorway network, the rehabilitation of the Karakoram Highway, and the desire to participate once again in Thar are some of the aspects of the new thinking.

The Pakistan-China Economic Corridor may turn out to be the sheet-anchor if properly, timely and determinedly financed and executed as this would open new vistas besides enhancing the influence of China in many ways. This should make Gwadar viable, this should enable a favorable logistics scenario for minerals from Balochistan as well as KPK and Afghanistan, and this should provide Pakistan with substantial revenue in transit fees and taxes. Moreover, the tunnels would substantially cut down travel time in transporting goods and products. An added charm would be the setting up of industries and businesses along the route of the Corridor. The rationale behind all this is the concept of Aid for Trade since this project would undoubtedly boost Pakistan’s economic base in many areas.

There is a large potential for more Chinese investment in other relevant sectors. China has her eyes on the mineral wealth of Afghanistan and has already entered into multitude of agreements to develop, finance, and extract the minerals there. At the same time, China has become a major buyer of Pakistani minerals and the demand is growing rapidly. Unfortunately, the government is paying more attention to textile and leather exports rather than minerals and other non-traditional items that have a formidable market in China and would also boost the export figures. It is imperative that these sectors be supported and promoted heavily in China.

The future bodes well for the success of the Sino-Pak strategic alliance. Bilateral trade, excluding under-invoicing, smuggling, and mis-declaration, has crossed the $ 13 billion mark and would surely cross $ 15 billion in 2014 as desired by the leadership of the two countries. The Free Trade Agreement is gradually becoming beneficial to all.  Meanwhile, Chinese cultural programs, language courses, and technology transfer have become common and acceptable. Ban Zong You Yi Wang Tsui (Long Live Pakistan-China Friendship.

Indo-Pak Trade: Fragility amid Hostility

Majyd Aziz

Tuesday, August 6, 2013 was not expected to be any special day for the troops or village folk living on the western side of the 740 km Line of Control (LoC) that divides Kashmir. Most of them were observing Ramadan, the month of fasting and special prayers, when clashes flared up due to firing from both the nuclear neighbors. Who fired the first shot and what provoked the firing remains a moot point as the usual accusations and counter-accusations from state players were made and the blame game commenced. The tense environment was further vitiated when the hawkish minority on both sides further aggravated the situation. The brouhaha created by retired uniformed personnel, who are termed ‘defense analysts’ and by the Indian media anchors reached a crescendo and it seemed that they would prevail and goad the weak New Delhi government to go whole hog and give the troops the fighting order.

There are, however, doves on both sides of the border too who, in realizing the imperative need to co-exist, urged restraint and reason since a continued series of violations and provocations would jeopardize the easing of tensions, the movement of people, and more importantly, the liberalization of trade and investment. The skirmishes have not ended completely since indiscriminate and unprovoked firing on forward posts along LoC occurs on a daily basis and the collateral damage has become a matter of serious concern.

Prime Minister Nawaz Sharif and his Indian counterpart Manmohan Singh were singing a pleasant duet even before the former took oath of office. A new Track II initiative was agreed with Islamabad nominating veteran diplomat Shahrayar Khan while Premier Singh sent his trusted man, the former High Commissioner to Pakistan, S K Lambah. Saner elements in India and Pakistan are cautiously optimistic that the meeting of the two Prime Ministers on the sidelines of the United Nations General Assembly in September would proceed as planned and there is this hope that the meeting would be a game changer in a real time mode.

The above narrative is a reflection of the blow hot, blow cold relationship as far as trade and industry is concerned. Whenever the businessmen are able to lobby successfully with both governments to ease up on restrictions, the anti-bilateral elements ensure that the progressive movement slows down to a snail’s speed. Ironically, the informal trade, whether through cross-border, or through third-country, or through personal baggage, continues unhindered, increases exponentially, and becomes more profitable. While documented bilateral trade is US$ 2.35 billion, Indian exports around $ 1.85 billion while Pakistan has managed to cross the $ 500 million threshold, the informal trade is estimated between $ 3 billion to $ 4 billion. Thus, the vested interests cannot afford at any cost to upset the apple cart. It is a sad commentary for SAARC that border tensions and hostilities on LoC affect the overall regional cumulative integration that is crucial for the economic deliverance of the denizens inhabiting in this dynamic region. 

 The concerned Ministers and officials tell the business community that they envisage bilateral trade of $ 15 billion by end 2015 and that they are sanguine that the potential for Pakistani goods is atleast $ 5 billion. That is easier said than done. Notwithstanding these optimistic forecasts, the fact is that words need to be sincerely put into action. Pakistan and India have to determine the route and their leaders have a choice, either move on a positive or progressive path or continue to maintain their vulnerability to jingoistic outbursts of the hardliners and the vested interests.  Both countries are at this moment in the throes of an economic crisis. The deterioration in the value of their currency, the hardships faced by the burgeoning population, the economic fall-out on their industries and business establishments, their ever-increasing budgetary allocations for their defence requirements, and the perennial energy and other infrastructure shortages, etc, demand that efforts should be focused on regional cooperation for setting up a development agenda that is inclusive and sustainable. The present imperatives should be common policies that are welfare-oriented rather than militaristic-focused, the emphasis should be directed towards food security and cooperation in agriculture, the planning should be initiated to tackle the energy poverty and energy deficits, there should be a synergistic approach towards reduction of risks whenever and wherever natural disasters affect the region, and concerted efforts and decisions must be undertaken to streamline regional connectivity, liberalize regional mobility of workers, allow regional access of vehicles to transit, and be in agreement on a futuristic approach to take advantage of the youth bulge, the demographic dividend that would be the game changer for the region if pragmatically and properly  harnessed in the years to come. 

Recently, the World Bank issued a 293-page document, “Pakistan the Transformative Path” that lists twelve most urgent transformational reforms required to be taken by the Nawaz Sharif government. The World Bank insists that despite the tensions and other complexities that are affecting the normalization process, it is incumbent upon both the democratic governments to complete the liberalization and normalization of the trade and investment process. The report also stated that “Conservative estimates suggest that bilateral trade flows could multiply at least three times, and most observers agree that the growth-enhancing dynamics that this process would unleash would be even more significant for foreign direct investment (especially information technology and manufacturing), services (including financial and tourism), integrated value chains in manufacturing, and power projects.”

 

Pakistan and India must embark upon a new generation of a thinking process. The people’s aspirations must become more vociferous in calling for a paradigm shift towards social, economic, and regional stability. The social benefits of economic progress must benefit the people and must trickle down to the region’s population. The governments must endeavor to create the environment that promotes trade and investment. It is time to remove most of the Non-Tariff Trade Barriers, it is time to leverage the private sector’s knowhow, capital, entrepreneurship, and efficiency to drive the region’s economic growth, and it is time to dilute the nexus of belligerent hardliners that includes retired and redundant defence analysts, unscrupulous advocates and facilitators of undocumented trade, extremist nationalists, bigoted politico-religious parties and organizations, and confrontational media anchors, etc. 

This year when the United States celebrates the 50^th Anniversary of the iconic “I have a dream” speech of Rev Martin Luther King, Jr, his words take on a significant meaning when echoed in the Pakistan-India context: “We must learn to live together as brothers or perish together as fools.”