With a background in leather, textile, and banking businesses, Mr. S.M. Muneer is no stranger to Pakistan's business community; nor is he to government circles. In his decades of illustrious career, Mr. Muneer holds and has held numerous positions including Vice Chairman of MCB Bank, President India-Pakistan Chamber of Commerce & Industry, Vice Chairman SITE Association and what not. In March 2014, Mr. Muneer was appointed as the CEO of Trade Development Authority of Pakistan (TDAP).
In this 30-minute interview with BR Research, Mr. Muneer answers a rapid fire of questions on a host of topics - ranging from TDAP's performance and its turn around, new markets, exchange rate, and corruption. Below are edited transcripts.
BRR: What kind of reforms have you rolled out at TDAP?
SMM: The biggest reform at TDAP is that corruption has been brought to zero. Second, the culture of unnecessary delays has been weeded out. There was a time when TDAP didn't use to respond for more than 12 months; today our staff and officials have to respond within three days. I have given TDAP a whole new corporate culture with the instruction that they have to serve the business community. Moreover, I have rolled out an open door policy.
I come from the private sector; and I am a very tough man; I have already fired four Director Generals for their unprofessionalism. Today, no chamber can complain about TDAP being unresponsive. Now I meet with every DG every fortnight; if any issue gets delayed by more than a week, then I look at the matter personally.
However, the biggest issue we are facing is that our workforce is very small. Rules for new hiring have been made, but the Ministry of Finance has not given the go ahead as yet due to shortage of funds.
BRR: That's very good to know. However, there is one issue that we would like to bring to your attention and find your views on the matter too. Research lies at the centre of what TDAP does, especially in today's fast and globalised economy. Yet if TDAP's website is any guide, its research work is much wanting. For instance, according to TDAP's website, its last product report was in April 2014, its last market report was in July 2012, the last bilateral trade analysis was done in 2013; the last exhibition delegation report was September 2012 and so forth.
SMM: Thank you for highlighting this. I have taken note of it [and he actually does, by writing down the details]. This will be the first order that I will issue on Monday (January 25th) and you will see soon TDAP releasing timely and relevant research for the general benefit of business community via our website.
BRR: What is your strategy to facilitate product and market diversification of exports?
SMM: More important than diversification is the need to increase exports. Pakistan should be exporting everything, where we should prefer value addition, which can help to get more dollars for the country.
However, unfortunately the global recession has come down hard on Pakistan's economy; Pakistan's exports have come down nearly 14 percent, India's and China's exports have also fallen by 10 and 8-9 percent respectively, whereas that of Korea and Japan have dropped by 7 percent and 14 percent respectively. Fiscal year 2016 will be a bad year for Pakistan and many other countries in terms of exports.
Then we also have the most expensive electricity in the region. Another reason why our exports are falling is the government's failure to address the issue of tax refunds. Tax refunds of more than Rs250 billion are pending, which has left the small export units paralysed, and increased the cost of doing business across the board. Of that Rs250 billion, Rs8 billion is of customs rebate, about Rs115 billion is in sales taxes, Rs80 billion is in income tax and about the same amount is pending under SBP's export incentive schemes. If they clear these refunds, I as TDAP's CEO can ensure that this country's exports increase by $4 to $5 billion every year.
BRR: But surely one has to decrease the dependency on textile exports?
SMM: Well, when cotton is one of the biggest crops, then it is only natural to have a textile-heavy export basket. We can't switch over to other exports just like that.
BRR: So you think there is no scope for product diversification?
SMM: No, there is scope. But it is a matter of time. Currently, TDAP's focus is on increasing exports regardless of howsoever, it comes from - whether it is kinnow, rice, mango, leather, carpet. I am willing to send export delegations of any industry that shows and proves export potential.
For instance, rapeseed has an export potential of $1 billion - mainly to China. But China was not approving that commodity. Now after many efforts we brought Chinese officials to Pakistan and they evaluated the factories of potential sellers, after which they approved 11 out of 13 producers. The only thing remaining on that front is the issuance of NOC by Chinese authorities - and that matter is being followed by our trade commissioner in China.
BRR: And what about market diversification; is TDAP targeting any specific region?
SMM: We are willing to target every new market; I am personally open to any good suggestion made by the business community. In recent efforts, we have sent delegations to Nigeria, South Africa, Kenya and other African markets, which have been our focus of late. Moreover, the time has come to focus on Iran. Iran is also ready to work with us. REAP delegation to Iran will be sent soon; another delegation with a focus on fruits and textiles is being made.
However, many countries do not have a commercial counsellor; for instance Argentina does not have a Pakistani commercial counsellor.
BRR: What are you doing about commercial counsellors; they have a reputation of being more like tour guides than trade and marketing specialists?
SMM: All Pakistani commercial counsellors across the world now report to me. Previously, we never used to get market reports from our commercial counsellors. But ever since I have taken charge, I have mandated our commercial counsellors to send market intelligence reports every month at the very least. Now, you will not hear complains about our commercial counsellors.
The thing is that the local offices have to shake these counsellors into action; somebody has to do that job, which sadly hasn't been done before.
BRR: Do you see any export-oriented industries to be set up alongside CPEC?
SMM: It's too early to say. We will have to wait and see.
BRR: You have headed a lot of SEZ, EPZ and other different kind of zones. What's wrong with our SEZ, EPZ etcetera; we have made many of these, and most of these have failed?
SMM: I think lack of interest by government authorities is the most critical element that is missing from these zones.
BRR: Where do you stand on the dollar issue?
SMM: We have to let rupee depreciate eventually. China has devalued its currency recently. And I predict that China will see further sharp devaluation in six to twelve months at the most. That devaluation will be like a bomb; it will be so big it will shake up the world. In that context, Pakistan should already let its currency depreciate; the PKR should be at least 110 to the dollar at present. Any delay in that is only hurting the country's exports by the day.
BRR: TDAP is mandated to publish annual reports highlighting successes, failures, weakness, plans, targets etc. Yet TDAP hasn't produced and released one to public in many years. What are you doing about it?
SMM: You will see an annual report for FY16. I have already tasked my staff to start producing annual report highlighting the milestones achieved as well as the failures and weakness every year. When I joined, TDAP didn't even have a brochure to be distributed in exhibitions abroad; I even had to get that made.
BRR: TDAP seems short of funds; why isn't Export Development Fund being put to use?
SMM: Unfortunately Rs28 billion is lying unused in the Export Development Fund, because the ministry of finance is not releasing those funds. It releases Rs1-2 billion at the most in a year. If this continues, TDAP would have to consider cutting down on marketing delegations abroad.
BRR: When will the latest export policy be announced; it has already been delayed many times?
SMM: The policy draft is pending Prime Minister's approval for more than two months. Some media reports suggest that the PM has rejected that draft but according to my information, PM has not rejected it, it is just that he has been terribly busy.
BRR: Was TDAP a part of the policy formulation process?
SMM: Our input was incorporated by the Commerce Ministry but we were not part of the formal policy formulation; we should have been a part of the whole process.
BRR: Corruption is said to have gone down in Pakistan, according to international watchdogs. What is your view as a businessman?
SMM: I have no doubt that top echelon of PML-N and the top officials of the government are honest, there is zero corruption. But at the ground level, there is still plenty of corruption, which will take time to resolve.
BRR: You once said that SAARC should be like EU. How practical is it?
SMM: You are right; it is not as easy in the case of SAARC. As long as the clouds of conflict are cast upon India and Pakistan, SAARC cannot move forward. The Indian side has been very aggressive, despite goodwill gestures by our Prime Minister. India and Pakistan should sign a no war pact; they should learn how to separate politics and business.
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