Imprudent decision

The news of shifting some offices of the State Bank to Lahore is quite disturbing for the residents of Karachi as well as various business organisations located in the metropolis and the Sindh government. Warning the federal government about the implications of the decision, Sindh Minister for Industries and Commerce Manzoor Wassan said the federal government is conspiring to keep Sindh on the backseat and the provincial government is not in its favour. The business community of Karachi is already facing difficulties due to such decisions and Sindh government will stand-by the industrialists of Karachi and not allow anyone to do an injustice to them. Chairman Senate Standing Committee on Finance, Saleem Mandviwalla also took exception to this decision of shifting five key departments of the SBP from Karachi to Lahore, terming it a political move. Rejecting this move, he said that "we will not let this happen. The federal government wants to shift all government entities to Lahore." SBP has been working smoothly for the last 70 years in Karachi and what has happened to it in the tenure of the PML-N regime. "The decision will damage the credibility of the SBP, create distances among the employees and affect the working of the SBP," Senator Mandviwalla added.

Expressing deep concern over the move, President KCCI urged the federal government to stop doing such a grave injustice to business and industrial community of Karachi. The decision will deprive Sindh and keep it on the backseat which will not be acceptable. As it is, the business community of Karachi has already been facing immense difficulties due to negligence of the federal government. President, KCCI also asked "how the federal government even think of transferring five major departments of the State Bank to Lahore regardless of the fact that all head offices of banks, financial institutions, multinational companies and LSM units, etc, are based in Karachi whereas the two major ports which cater to the needs of entire Pakistan are also situated in Karachi." It may be mentioned that according to the decision of the SBP, Currency Management Department, Foreign Exchange Department, General Services Department and Accounts Department would be moved to Lahore. The employees of these departments have been advised to inform the management of their willingness to move to Lahore before 14th October, 2016. On being contacted, the spokesman of the SBP informed that there is no plan to relocate the head office to Lahore and only a few portions of these departments are being shifted to Lahore.

We fail to understand the logic of the above decision, especially when there is no demand from Lahore for such a decision and the current system is working smoothly from Karachi since 1948 when the Father of the Nation Quaid-e-Azam Muhammad Ali Jinnah inaugurated the SBP's head office in Karachi. There is no doubt that the Quaid knew that Karachi would continue to remain financial, commercial and industrial hub of the country and play an enormous role in the overall development of Pakistan and as such, the location of its head office must be in this city. Its seat of location was reinforced when the capital of the country was shifted to Islamabad in the 1960s and the SBP's headquarter continued to operate from Karachi. It means that the decision-makers of the country, at that point, also realised the importance of keeping the head office of SBP in Karachi. They knew that Karachi is the only cosmopolitan city of the country and its financial hub that contributes more than 65 percent revenue to the national exchequer, most of the banks' head offices are based in the city with their largest network of branches and the country's two ports catering to most of the foreign trade requirements of Pakistan are located in Karachi. In view of the prominence in all areas of economic activity, Karachi city looks like a natural location for the head office of a central bank. Its sub-offices were, nonetheless, distributed in various parts of the country to meet the needs of all the population of Pakistan and there have been no complaints about its services from any quarter.

What has prompted the federal government/State Bank to take such a decision is difficult to guess but it will certainly be interpreted as a political rather than an economic decision. Looking at the present overall situation in Karachi and comparing it with Lahore, the Karachiites will certainly get the impression that another undue favour has been granted to Lahore at the expense of Karachi to win the favour of Lahorites in the next elections. Also, it is hard to believe the statement of SBP spokesman that there are no plans to move the head office of the central bank to Lahore. While this could be true for the time being, such a guarantee cannot be extended if the PML-N government continues to be in power both in Islamabad and Lahore. If such plans are actually afoot, such unfortunate missteps would create a lot of heart-burning and acrimony between various provinces. Since there is nothing much to be gained from the shifting of State Bank's or BCS's departments to Lahore, the country's interests, in our view, would be better served by maintaining the status quo rather than indulging in a bitter row over something which could turn out to be divisive and create discord between provinces.

The SBP explained once again on 14th October, 2016 that five out of eleven departments of the BCS are being partially relocated to Lahore to meet the oversight and logistic requirements for operational efficiency. However, FPCCI has opposed the decision saying that the move is unfair and has created a lot of anxiety in the business community, particularly in Karachi. Sub-offices of the SBP are already operating in other cities of the country. As the matter has the potential to create misunderstanding and bitterness among federating units, it would be better to resolve the issue by taking into confidence various stakeholders in Karachi including the Sindh government and KCCI. It is quite possible that those opposing the move would also agree to the suggestion if they are fully convinced that the matter is only trivial and the head office of the SBP will never be shifted to some other city.