A strong lobby has emerged to beat the spirit behind the Trade Organisations Rules (TOR) - 2007, framed by the commerce ministry under the Trade Organisations Ordinance (TOO) - 2006.
The Trade Organisations Ordinance - 2006 was promulgated with good intentions of cleansing the trade bodies of fake associations and chambers and introducing good governance to enable them undertake professional development in order to meet the requirements of their respective office.
There is no provision of nominations in the Trade Organisations Rules - 2007, but an interested group is trying hard to prevail upon Commerce Minister Humayun Akhtar Khan to allow nominations on chambers' reserved seat, one each in Karachi, Lahore, Quetta, and Peshawar. Since the concept of nominations has been abolished, it would be a travesty of rules in case the system of nominations is accepted and the purpose of whole exercise would be defeated, business leaders opined. In the opinion of Tariq Sayeed, former president, Federation of Pakistan Chambers of Commerce and Industry (FPCCI), the Trade Organisations Ordinance - 2006 has been promulgated in haste and the manner in which trade bodies are to be regulated in Pakistan, is not done in countries of the region or for that matter in most countries of the world.
In a letter sent to Commerce Minister Humayun Akhtar Khan following the February 23 meeting in Islamabad, he recalled that TOO-1961 was clamped down to strangulate the business community of Pakistan but unfortunately it resulted in many ills seeping into the trade bodies.
President, General Pervez Musharraf, in order to weed out these ills and in accordance with the policy of liberalisation, had announced at businessmen's convention in 2001 to abolish TOO-1961. But that did not happen then and it took some six years in promulgating the new ordinance and subsequent framing of rules.
Tariq Sayeed said that was in favour of the provision of Advisory Council made in the draft TOR-2007 and suggested that it be given legal cover. He has pointed out in the letter that though the ordinance has been promulgated in good faith, but in the process trade bodies would become over regulated. Sweeping powers have been given to the director general, but there is no check on their misuse. The power to enter and search the premises of non-profit making organisations is deplorable, he said. "Such stringent provisions in law from a government which professes adherence to liberalisation of economy and freedom of association is unthinkable", he added.
What impression international business community will get from such a move on the part of the government is obvious? he questioned.
Tariq Sayeed, who is also the chairman of Businessmen Panel (BP) which had swept the 2007-08 FPCCI polls, has suggested that the main focus of the law should be on: genuine membership of trade bodies, free and fair elections in time, annual audit of accounts, and filing of returns, ie A, B, 28 and 29 under the Companies Ordinance-1984 and role of the director general to be restricted to the extent of ensuring that these basic requirements are complied with by the trade bodies. In response to the commerce minister's desire, Tariq Sayeed has enclosed his comments on TOR-2007, which run as under:
He has proposed that the condition of minimum number of existing or prospective membership be relaxed in case of chambers in small districts so that the businessmen of the area may join hands to initiate economic activities in accordance with the potential in their areas and attract investors and entrepreneurs from outside the district. The case in point was the Gwadar Chamber, where at present, it may not be possible to have a membership of 300 existing or prospective businessmen, but with the development of the Gwadar port prospects will brighten for attracting investors and entrepreneurs in large numbers.
He appreciated that the commerce minister has agreed to waive the condition of 300 prospective or existing members in case of Overseas Investors Chamber of Commerce and Industry (OICCI) and the American Business Council. The existence of a chamber of commerce in a small town gives a sense of confidence to the businessmen of that town and motivates them to exploit the available resources to the maximum.
The words 'permanently domiciled' be replaced with the words 'who have either registered office in the relevant district'. For example many businessmen from Hub operate their businesses from Karachi. Therefore, the condition of permanent domicile be omitted. At a time when the government is striving for attracting foreign investment, there should be no restrictions placed on Pakistani businessmen to invest wherever they find opportunities.
In case of associations too relaxation in the number of prospective or existing membership be made keeping in view the special conditions of that industry or trade. For instance the associations representing ship-breaking industry, jute industry, sugar industry, cement industry and ceramic industry, etc, cannot have 150 members.
The condition for registration in sales tax be withdrawn from sectors which are exempted from sales tax as agreed in the meeting. There is no need for profile as under the Companies' Ordinance, Form 29 is submitted and all particulars are mentioned in the said pro forma. In fact, it is a duplication of sponsors' data.
The requirement of justification for the establishment of a trade organisation may be omitted as it is enough justification that some businessmen have decided to join hands to work for the economic development of their area or for the promotion of their trade/industry for the good of the country. Since trade organisations are non-profit companies and do not earn profits, therefore, economic profile is not required. This, in fact, is the requirement under the Companies Ordinance - 1984 for companies, which earn profit
There is no need for publication of notices in national press as the association is already existing and the non-profit companies have no need for business plans, as this requirement is applicable only to business companies.
Regarding the proviso that the trade organisation is incorporated as a company under the Companies Ordinance - 1984 within 30 days of the date of the license, he has proposed that the trade body should not be responsible for delay by the Registrar of Companies.
The period for the compliance to the rule that an association shall maintain a minimum of two regional offices, may be extended up to 90 days because newly established trade organisations need more time.
Regarding the rule that a trade organisation shall be licensed for a period of three years, he has proposed that the validity of the license should be perpetual as the process of applying for license every three years distracts the trade body from pursuing its objectives. Tariq Sayeed has also proposed that the membership of FPCCI should expire before June 30 every year, at which fiscal year ends, instead of March 31 for other trade bodies. The membership shall be renewable on annual basis subject to payment of prescribed subscription within the time stipulated in the articles of association. Further the Trade Organisations Advisory Council should consist of four official and four non-official members, one of whom should be the president of FPCCI, while the three non-official members should be selected in consultation with the FPCCI. The federal government shall appoint four non-official members from the private sector, one of who shall be the sitting president of the FPCCI.
He elections of the FPCCI be held after every two years as there is rotation cycle for the office of the president, two terms for Punjab, two terms for Sindh, one term for NWFP, one term for Balochistan and one term for AJK/ICT. The cycle is completed in 14 years. If government insists on one-year tenure, let the rotation cycle be completed first on two-year term. Otherwise, it will be doing injustice to the remaining two presidents, the sitting president from Punjab and the next president from Sindh.
The general body of the Federation be defined as consisting of minimum two nominated members from each association and chamber on or previous pattern under which four from chambers and two from each association were elected. Tariq Sayeed has proposed that in order to promote good corporate governance among the trade and business circles, the federal government shall promote the institutional development to achieve the growth. Trade organisations, associations, and chambers and for the purpose of capacity building, the federal government may, by notification in the official gazette, make rules from time to time to allow privileges to achieve the purpose and encourage trade organisations, associations, and chambers to increase their membership.
The privileges usually allowed by the federal government such as rebates payable by the government departments, grant of business and professional licenses, registration /enlistment to obtain or to extend business opportunities, investment opportunities and opening of letters of credits from scheduled banks of Pakistan etc, etc, may be allowed only for business concerns/entrepreneurs, which have obtained the membership of relevant business, trade, chamber or association.
He has also proposed that the present articles of FPCCI maintain parity between the members of chambers and associations on the managing committee and this should be continued. Representatives of chambers on the managing committee be 18 - five from Punjab, five from Sindh, three from Balochistan, three from NWFP, one from AJK and one from Fata/NA/Pata - and 18 from all Pakistan associations.