Good governance and structural reforms in managing the industrial estates in Sindh will have to be ensured to qualify for Asian Development Bank (ADB) budgetary support for infrastructure development of industrial estates in Sindh. This was stated by Naheed Shah Durrani, Special Secretary, Finance, at the consultation meeting held here to discuss governance and infrastructure reforms in industrial estates in Sindh on May 30.
According to details available here on Monday, opening the consultations, Naheed said that Sindh government, under the rural vitalisation program, has received loan from ADB which also outlays support for enhancing infrastructure in industrial estates in the province.
She said that under the terms of understanding with ADB, the support is subject to improving governance, administrative reforms, and change in the present management system of industrial estates. The single overall board for all the seven industrial estates in Sindh and a single management of each industrial estate under the board are considered for proposed changes in administrating the industrial estates in Sindh to qualify for the budgetary support in line with the demands of ADB.
Naheed said: "We have to place the structure, and transform the present management system into improved structure in which private sector will be administering the management of industrial estates." She said that the model of Punjab industrial management board for Sundar, Kot Lakhpath, Multan and Faisalabad industrial estates could be borrowed, or revisited, for adoption in Sindh to effectively manage the industrial estates in the province.
She said that ADB may not support the budgetary grants for the infrastructure development of industrial estates by Sindh government if it does not come up with the solution to ensure good governance and structural reforms in managing the industrial estates.
The Chairman of the board is proposed to be from private sector, as per Punjab model, and Managing Director or CEO may be appointed by the restructured board from the private sector, being a professional person, she said.
She said that revitalising the growth in Sindh needs connectivity between rural and urban economy. Good governance and transparent maintenance of funds would be the review points for ADB while considering the Sindh government loan component for revitalisation of industrial growth. "Management reforms in the industrial estates would enable us to have tranches of the loan," she said, adding that last year, "partly we lapsed expenditure for financing industrial estates due to no solution as to the prerequisite of developing and transforming present managements of industrial estates".
Arif Elahi, Secretary, Board of Investment (BoI), concurred on the need for improving governance issue in industrial estates in Sindh. Chawla, Chairman, Super Highway, Sindh Industrial Trading Estate (Site), complained about lack of facilities in Phase-I and expressed concern on facilities in Phase-II which remains non-industrialised as of today.
Power shortage in Phase-I, and no power in Phase-II are some of the reasons to mention for slow or non-industrialisation in Phase-I and Phase-II, respectively. He questioned as to how there could be progress of industry when basic necessities, like water, gas, electricity and security, are almost non-existent in the industrial estates.
Naheed, responding to the issues regarding shortages of facilities and other problems in industrial estates, said that instead of talking about problems of yesterday and confronting issues of today, "we should look forward for macro reforms in which the management re-structuring under the chair of private sector would ensure that businessmen are looking after their own interests instead of always looking towards public sector and engaged in criticising public sector for questionable performance".
Nazar Hussain Mahar, Additional Chief Secretary, Development (ACSD), said that the current level of management in industrial estates is not compatible with the requirements of industry, and may not match with the increase in the industrial economy and is not properly equipped with the professional requirements to address the issues of international trade facilitation.
He said that Site management should be in the hands of private sector, and the government may participate as expert, facilitator and minor shareholder. Quality of infrastructure has the main bearing on the performance of industrial economy and possible way is public-private partnership with driving seat with the private sector, he said, adding that the present mode provided by the government cannot respond to the demands placed by globalised economy which has dynamics of increasing demands on day to day basis.
Engr M A Jabbar, Chairman of Site Association of Industry (SAI), concurring with the ACSD, said that "we have narrowed the discussion and consultation needs. It is time to reduce the discussion into tabulation of present management structure of Site and the required transformation of management by private sector and provide further table for managing each Site by private sector to achieve the desired changes in the present structure of management of industrial estates in and under Site".
He said: "Let the businessmen blame their own misconduct on account of bad performance when they are managing the industrial estates as today private sector is alleging the bureaucracy and public sector for failure of the past, appearing today as a dismal performing economy."
He also pointed to the discrimination between management structures of seven Sites and Korangi, FB Area and North Karachi which are now developmental companies in the hands of private sector. "In the province there should be a synchronised system of looking after industrial estates and not the discriminatory one as we are seized of today," he said.
Naheed Shah further explained that ADB loan releases also include structural reforms in agriculture and marketing in addition but all are subject to improvement in governance and structural reforms.
Arif Elahi said that there is mistrust between businessmen and regulators. Businessmen also face a lot of harassment levels. Government of Punjab has trusted officers who deliver and have helped in improving the existing industrial estates. He said: "We need teeth to work the BOI in the interest of industrial economy so that we are effective co-ordinator in the real sense for ensuring facilitation, and the concept of one-window operation also lives to its reality.
The BOI has to be made strong through legislation so that all the ministries respond to its well worked out suggestions and recommendations." Contributing further, Naheed said that management structure to replace the present structure in the management of industrial estates would be like a watchdog, "and we need tabulated suggestions from the participants as to the specific amendments in the present structure for taking policy decisions and as well as take ADB into confidence of our share of efforts to satisfy them to allow the financing of component for improving the industrial estates in Sindh".
Zubair Motiwala, Advisor on Investment to Sindh Chief Minister, said that he would concede to all the arguments as positive and would favour the management leadership to be elected by single vote of single unit industry so that the chair of the board is not nominated, but elected, and holds full accountability to the voters who are all industrialists. "Present structure needs to be changed so that the funding sources are satisfied with the productive yield out of the resources planted for the purpose irrespective of their origin".
Arshad Tanveer, Director, Site Ltd, apprised the participants about the present problems in Site and said that there are a lot of difficulties which conclude that private sector in the present management structure is not being well weaved into decision making or running the affairs of the industrial estates. He informed the participants that previous Managing Director, Site Ltd, squandered Rs 200 million in the speculative business, without taking any approval from finance committee, or from the board.
He said that private sector management could never do so. He asked for accountability of the gross misconduct of the previous Managing Director who inflicted a heavy loss on Site Ltd.
Naheed asked the participants that since they have concurred with the concept of developing new management of Site to be managed by private sector, it required that all the participants should give proposal of existing structure and the proposed structure foundations so that things become easier for the government to affect decision making. "We want management of industrial estates to be autonomous, to regulate themselves and negotiate with all the regulatory and facilitating agencies including utilities so that we could meet the objectives of improvement of governance and attain structural reforms required by ADB".
Alam Bullo, Secretary, Labour, said that the bad performance is only due to posting of some adventurers who have more to look for their own service rather to do public service. Site Ltd used to have very good officers, committed to the industrial development, and as such not all the public servants could be blamed for the bad management of Site.
The consultations concluded with the consensus that the present management structure of Site Ltd should transform for managing the industrial estates by private sector, and managing director or chief executive officers should be professionals appointed in terms of reference of merit for running the industrial development board managing the seven industrial estates of Sindh presently under Site Ltd, which presently is a government company.
Engr Jabbar pointed out that with the restructuring of the managements, the questions like the development of power sector could also be handled by public-private partnership. He said that the present limitation imposed by national power policy for limiting the generation up to 50 MW is illegal as the power and electricity are on the concurrent list and as such a province is not barred from taking any power project beyond 50 MW.
He concurred with the Special Secretary, Finance, that Punjab government's legal department has given ruling that limiting province to 50 MW by National Electric Power Regulatory Authority (Nepra) or by national power policy is illegal as it infringes upon constitution. Punjab is now developing generation and distribution to suit the interests of industrial economy of the province.