Pakistan is a member of the World Trade Organisation (WTO), which is the international organisation dealing with the rules of trade between nations. The goal of WTO is to help producers of goods and services, exporters, and importers conduct their business. All trade quotas would be abolished effective January 1, 2005.
Many sectors of our economy particularly trade, agriculture and industry shall then be fully exposed to the globalisation challenges. I have no doubt in my mind that the Pakistani people would effectively meet the competition on quality, price and delivery schedule basis, as they have the tenacity and ingenuity to successfully face all such challenges.
However, for that they have to plan now and improve their weak areas to the international standards. Moreover, their efforts would only succeed if concurrently there were similar improvement actions by the government of Pakistan and its various agencies for creating conducive environment.
Twenty months is not much of a time for the gigantic restructuring tasks ahead. The nation may have to burn the mid-night oil to make up for the easy life we had in the past over fifty years.
Once the improved systems and physical infrastructures are in place, the whole nation would be experiencing the benefits that go much beyond the local and export trade of goods and services. Economic activity would accelerate with greater employment opportunities and prosperity of the people.
Major improvements are to be implemented by the entrepreneurs as well as the government. The entrepreneurs would largely be removing the weaknesses on the cost or quality of inputs/utilities, the machines/technology involved, capitalisation structure, organisational set up, knowledge of WTO and other rules, technical/marketing tie ups with experts and making realisation to the personnel on buyers' prescribed quality, cost and delivery schedule of the goods being produced.
However, the government has to implement the main improvements in areas that are beyond the control or capacity of the entrepreneurs. The areas in the government domain include the overall business environment, law and order situation, security to investors, attitude of the government officials towards industry/business, suitability of the applicable laws/rules/regulations and their fair implementation, adequate physical infrastructure, utilities and their tariff structure, etc. These are more difficult areas to improve.
Every country has natural comparative advantage in one or more agriculture produce, manufactured goods or services. The government should see that the entrepreneurs concentrate on manufacturing or marketing only such products and services for which the country has strong comparative advantage.
This advantage might be enhanced through better technology, innovations, technical/marketing tie up with experts and training of the personnel. The research at the PCSIR and local universities/institutions may also be exploited for overcoming some of the production/process problems or for producing new products for a niche market.
The entrepreneurs who are able to attract to Pakistan the special status manufacturing facilities under joint venture arrangements with foreign investors might also be supported. Policies might be developed to attract such projects to the country.
The entrepreneurs, in their effort to effectively compete internationally, should in a planned manner re-examine the cost, quality and quantity of all inputs including utilities.
This is expected to result in considerable savings and thus enhance the competitive advantage of the company. They should also critically review the capitalisation structure and organisational set up of the company for efficient operations.
They should also train the company personnel in the WTO and other rules as well as the laws, rules and regulations of the government of Pakistan. Training of the production personnel particularly labour is called for making them aware of the buyers' prescribed quality, cost and delivery schedule of the goods being produced.
These measures are expected to have positive impact on the morale of the employees. This should result in higher productivity, lower unit cost of manufacture, less rejection or wastage and better profits for the company.
The business and industry, however, can improve weak areas over which they control and that too up to a limit. There are a large number of weak areas the improvement of which is beyond their control or capacity and only the government can bring an improvement.
These areas include the overall business environment, law and order situation, security to investors, attitude of the government officials towards industry/business, suitability of the applicable laws/rules/regulations and their fair implementation, adequate physical infrastructure and utilities with their tariff structure. Despite claims by the government authorities, the law and order situation is not ideal.
The power looms operators in Lahore area, after suffering at the hands of armed robbers, had complained through press about the armed robberies and the forcibly taking out costly parts from the weaving machines.
The Punjab government moved quickly and arrested the culprits and recovered the machine parts. This is an isolated case but it shows the government resolve. Similar actions by the law enforcement agencies in other areas can help build the confidence of the investors.
It is not uncommon that the attitude of the government functionaries towards the industry and business people is harsh. Instead of helping them and guiding them to be in full compliance of the prescribed requirement, they are reminded of the possibilities of big fines and punishment when not in full compliance of the rules.
The government has to streamline the workings of various departments that come into contact with the trade and industry. It is imperative that the government motivates civil servants properly so that the cost of doing business in Pakistan is not excessive. This cost may be financial or the time of the entrepreneurs or their senior teams who may be obliged to repeatedly work with these officials for sorting out refund or other matters. Income tax and sales tax matters are complex but the refund of duty or sales tax on exported goods is quite cumbersome.
Large amounts are stuck for quite some time. This adversely affects the working capital situation and the businesses suffer substantially. The government is urged to let the business people concentrate on producing quality goods at competitive rates.
The government has already initiated the reforms in the civil services. Reforms in the Central Board of Revenue are also on the cards.
The reforms in the civil services coupled with increased emoluments and training of the government employees can make a big difference and therefore might be pursued by the government without further delays.
Trade and industry appreciate the importance of pollution control measure and in due course would be in full compliance of the prescribed standards.
This however, might be planned for gradual implementation. In the meantime, the government functionaries might work with the industry and businesses in stages moving towards full compliance by controlling production process, by treating effluents and by installing the necessary equipment for the purpose.
The government might consider providing or arranging concessional loans and grants for the installation of equipment for pollution control and effluent treatment.
The government has to take steps to provide good roads, ports, bridges, efficient railways, etc with a view to make the transport of raw material, finished goods as well as produce from the agriculture fields easy and at a much lower cost than what is actually spent at present.
The private-public airport projects such as the Sialkot Airport must be supported and its implementation expedited. Wastage of allocated funds and delays in the implementation of infrastructure projects has to be eliminated for accelerated economic activity.
The entrepreneurs might enlist the support of the provincial government in redressing the problems or difficulties faced by them at the federal level. All the provincial governments are taking keen interest in the industrial development as is evident from some of the reports that recently done by the Punjab government.
-- One window operation for industry.
-- To create export culture in the unorganised sectors of industries of Punjab.
-- To upgrade the industrial estates in Punjab.
-- More facilities for farmers.
-- Reduction in mark-up rates.
-- Introduction of a scheme regarding government banks' sponsored industrial loans.
-- The role of PSIC would be expanded and investors provided soft loans and technical assistance to restart stalled industrial activity in the province.
-- Facilities like power, water, gas, telephone, roads etc are being provided in industrial estates so that investors do not face any problem.
Comments
Comments are closed.