Monday, July 25, 2016

Business Leadership Potential

Majyd Aziz

Business community is considered a very strong and potent force anywhere in the world. The opinions, views, and concerns of business/industry community are taken with all merit. A united business community can do wonders and zoom up the nation's economy. The sad fact is that despite all the announcements coming out of Pakistani trade organizations, the ground reality is that business community is rudderless in turbulent seas. What has been the real time achievement of business leadership in the last 8 years? Has it done any soul-searching to grasp the reality? They profess thru bombastic statements and press releases that they have done wonders whereas they are seldom taken into confidence by policymakers and powers that be.


Moreover, the business leadership, primarily due to its own fault, has been divided like never before. Those external forces who wanted this situation have succeeded beyond any doubt. Business leaders have been relegated to making Welcome Addresses, presenting plaques, and singing high praises of people who are guests of trade organizations. Lunches and dinners, laudatory phrases, photo-ops, and making irrelevant statements are the tools employed to lobby with people who matter. Former State Bank of Pakistan Governor, Dr Ishrat Hussain, once very candidly warned the business community about the perils of this approach. He has been proven right.


The Federal Budget is anxiously awaited every year and as per Standard Operating Procedures, the trade organizations get their act together and present their proposals. Every year they find out that most of their proposals have made it into the waste paper basket instead of in the Budget papers. Business leaders make a beeline to Islamabad to remove anomalies or get clarifications and come back either empty-handed or hollow assurances. Millions spent on airfare, hotels, and transportation due to this tedious process of rushing to Islamabad. The double jeopardy is that most of the business leaders are hostage to those who are non-tax filers who have strong street power and they manage to prevail upon the leadership to toe their line. There is obviously a downward spiral of segregation between the documented economy and those who are out of the tax net. More often than not, the registered businessmen and industrialists get the lower end of the stick.

On the other hand, inimical forces in bureaucracy conspire to create serious issues for industrialists. Recently, SITE Karachi, the largest industrial estate of Pakistan, that has 30% of Pakistan's textile processing mills, faced a severe water crisis. As it is, SITE requires 42 million gallons daily to cater to the 3500 industries and commercial establishments. Karachi Water Supply Board has never provided even 9 MGD despite the increased demand. The textile processors managed to convince the authorities to allow them to pipe in sub soil water from the periphery of the estate. Thirty-two suppliers pump in around 2 MGD to many industries. SITE Karachi was on the verge of closure due to the conspiratorial attitude of KWSB higher-ups and the Minister who, sad to say, is very ignorant of the dynamics of water supply to industrial areas. The right message was not been seriously conveyed to the decision makers. SITE Association of Industry organized protest meetings, press conferences, and even a sit-in at the Sindh Chief Minister House. The octogenarian Sindh Chief Minister did step in and ordered the status quo. Billions were lost in this anti-industry decision of the KWSB.

One vivid example of business leadership was witnessed in 1986, during the draconian days of Gen Zia. The then CBR came up with a so-called "Simplification of Excise Rules" opera. The actual conspiracy was to stab the industrialists deeper in the back and to create a chasm between General Zia and the business community. SITE Association of Industry, led by the dynamic and bold Mian Ejaz Shaffi, got its act together and mobilized the industrialists. For nine days, the affected factories remained closed and 500-600 industrialists were daily present in the Association office. Despite threats of all kinds, Ejaz Shaffi and his defiant colleagues held their ground. The protest was front-page news in all newspapers every day. Prime Minister Muhammad Khan Junejo had to fly to Karachi and meet the industrialists and ordered CBR to back off. This is real power. Alas, those were the days and there was a strong leader, Ejaz Shaffi.

Why cannot this be done today? Federal Budgets are routinely approved by a Parliament that does not understand the ABC of finance and taxation. What has been the result? Exports have dipped, taxes on the rise, non-filers still out of the tax net, anomalies still not addressed, wealth being diverted to real estate rather than productive areas, and despite all firewalls, capital continues to shift to safe lands. And, more such negative signals that one can carry on enumerating.

The time has come to take stock of the situation. And time is running out. There are very positive opportunities on the highway to economic progress and there are still dangerous roadblocks along the way. CPEC is a golden opportunity if it is shielded from political and parochial attacks. Gwadar Port and Thar Coal are avenues of economic and social prosperity if pragmatically managed. Low Inflation, reduced Discount Rate, achievement of MSCI status, etc are signs of reassurance. Brexit is a serious concern. Corruption is talked about but not attacked seriously. This is eating away the nation's moral fabric. Political instability is on the ascent. Another negative signal. Deterioration of civic amenities and infrastructure are impacting on economic progress. Export culture is just a mirage while there is official enthusiasm for imports.

Therefore, the business and industry leadership have to come out of the cocoon and get their act in shape. This is the time for assertiveness. This is the time to forge real unity. This is the time to restrain from meekness, misplaced ego, and inertia. This is the time to show the strength and power of the engine of economic growth - - - the business and industrial community. It's now or never. The decision lies with the business leaders. Walt Disney very rightly said, "The way to get started is to quit talking and begin doing"

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