BR Research: When was the Pakistan Business Council established and what are its objectives?
Ali S Habib: Established in 2005, the Pakistan Business Council is a business policy advocacy platform. Membership of the Council has increased from the initial 14 members to 38 of the country's largest businesses/ conglomerates including multinationals.
PBC is a not-for-profit entity registered under Section 42 of the Companies Ordinance of 1984. It is a professionally managed organisation, headed by a full-time CEO, Kamran Y Mirza who brings with him 36 years of experience of working in the corporate sector. The major objective of the PBC is to support Pakistan's efforts to accelerate its economic growth rate, develop its human capital and make it more competitive to arrest the decline of its share in global trade.
The Council also focuses on interacting with governments in the economic development of Pakistan and facilitating and fostering the economic, social and human resource development of Pakistan.
BRR: What is the contribution of the companies that are members of the Council, in terms of GDP, tax revenues, exports and employment?
ASH: PBC represents big businesses that have substantial investments in manufacturing and in the financial sector. In order to ensure quality of membership, the qualifying threshold for membership has been deliberately kept high so that no more than the largest 150-175 existing businesses qualify.
The 38 companies that are currently members of the Council, hail from diverse sectors of the economy and are represented at the PBC by their respective Chairperson or Chief Executive.
Cumulatively, PBC members and the conglomerates they represent contribute more than 11 percent of the country's GDP and nearly 15 percent of national tax revenues. These companies employ close to 230,000 people in Pakistan and make up about 15 percent of the country's total exports.
It is pertinent to mention here that the contribution of these companies has registered consistent increases in all realms, in successive years; they are in essence the drivers of growth and innovation in the country.
BRR: There are other policy advocacy platforms in the country. What, besides the scale and size of the members, sets the PBC apart from other organisations?
ASH: The Council believes in research-based advocacy. Hence the advocacy efforts of the Council are supported with evidence of best practices in economies at similar levels of development as Pakistan. Moreover, our recommendations are tailored to Pakistan's unique environment.
The Council does not advocate sector and industry-specific issues; rather its advocacy thrust is on improving the general business environment in the country.
We have worked closely with various government ministries, departments, regulators and other institutions and have been closely linked to taskforces in various areas such as: The Holding Company Law - 2007; The Law on Large Import Houses - 2007; The Real Estate Investment Trust Law - 2008; The Special Economic Zones Act - 2012; The revised Code of Corporate Governance for Listed Companies - 2012; The Take-over Code - 2012; The Corporate Law Reform Commission - Work in progress; The Law on Private Equity & Venture Capital - Work in progress; The Corporate Rehabilitation Act - Work in progress.
Besides, the PBC is represented by its CEO, on the taskforce constituted by the Planning Commission for the Development of the private sector. Our Director Research was a member of the team that negotiated the new Afghanistan-Pakistan Transit Trade Agreement. The same representative also served as a member on the Implementation Watch Committee of the National Commission of Women on Sexual Harassment Law.
Two members of the Council are part of the Economic Advisory Council of the Ministry of Finance, while one director of the PBC is on the State Bank of Pakistan's Central Board of Directors.
The Council has also signed MoUs with MEDEF the Movement of the French Enterprises, CII (the Confederation of India Industry), in addition to leading efforts to promote economic ties between Pakistan and India.
BRR: The PBC has also made considerable efforts towards developing a national consensus on major issues facing the domestic economy. Please share some details regarding the Pakistan Economic Forum and what it hopes to achieve.
ASH: We are striving to play a positive role by putting forward ideas and policy alternatives that are in the nation's best interest. This sets the PBC apart from the various industry associations and chambers, etc.
The Council has developed a National Economic Agenda which covers five areas of vital importance in the socio-economic areas; and we are working with stakeholders including political parties to get them to agree to a common agenda which cuts across the political divide. In April 2011, the PBC convened a meeting in Islamabad at which senior leadership of the five major political parties agreed to work to develop a common national economic agenda.
This time around, the Pakistan Economic Forum will again bring together the best intellectual capital available in the country to debate on major issues confronting Pakistan, including energy, education, macroeconomic stability, regional trade, social protection and water (for the first time).
Panels have been set up for each of these topics, each with its own chairperson, co-chairs and other members drawn from specialists of each field. Prominent personalities with a track record of contributions in the relevant fields such as Shams Kassim Lakha and Abdul Razzak Dawood on education; Aliuddin Ansari and Farooq Rehmatullah on energy; Dr Ishrat Husain and Mohsin Nathani on macroeconomic stability; Dr Ijaz Nabi and Bashir Ali Mohammad on regional trade; Asad Saeed and Asif Saad on social protection and Sikandar Mustafa Khan and Najeeb Suleiman on water, have been tapped for these panels.
The panellists are in the process of coming up with pragmatic recommendations for improvements in each of these realms. Their recommendations will be shared with a wide audience in the form of PBC position papers.
Through this exercise, we not only want to help bring to the fore the most pragmatic solutions and policy alternatives for the pressing issues confronting the economy; but also to get the major political parties to commit to these alternatives to ensure their support for the same, in the future.
BRR: Getting political parties to commit to reforms, many of which may be politically unpopular is a tall order. What other efforts are made by the PBC to supplement the annual Pakistan Economic Forum?
ASH: The PEF of 2011 was itself a significant occurrence since the PPP, PML-Q, MQM, ANP and PML-N were all present on one platform along with the private sector stakeholders; and they agreed to most of the recommendations put forth to them.
After the National Economic Agenda was developed by the PBC in April 2011, the Council has repeatedly met with the senior leadership, of the major political parties and lobbied them to adopt a minimum common agenda.
The media has a great role to play here now, in terms of getting the political parties to commit to those reforms that are commonly accepted as being in line with national interest, and with building momentum for the early adoption of these policy recommendations.
There are many rays of hope: the level and frequency of discourse on resolving the energy deficit have both improved; some of the policy recommendations put forth have been incorporated in the new Exploration Policy. The important thing is that the PBC, the media and the civil society at large must all work towards creating an environment that addresses issues instead of narrow parochial issues.
BRR: What are the salient objectives of the National Economic Agenda and what are some of the main recommendations for each of the major issues discussed at the PEA?
ASH: The Council believes that the adoption and early implementation of the National Economic Agenda would lay the foundation for sustained GDP growth in excess of six percent, accelerating to eight percent as reforms take hold and a virtuous cycle of increased savings and investments is put in place.
Inflation would be limited to single digits and unemployment would be reduced.
Higher job creation, low inflation and targeted social programmes will cause a significant dent in the level of poverty. Electricity and gas loadshedding would be curtailed and new economic opportunities would abound. Enrolment in schools would increase by 50 percent in the next five years leading to future generation that is better equipped to take on the challenges and opportunities of the future.
In order to achieve these goals, better macroeconomic management is needed: the tax-to-GDP ratio should rise to at least 15 percent within the next five years through better tax collection and reforms on the principle of equitable taxation regardless of the source of income. Public sector waste must be curtailed and the fiscal deficit should be limited to around three percent of GDP.
Regional trade must be seen as a growth driver. For this purpose, the country's national security paradigm must shift with respect to regional trade. The Safta framework should be used to address non-tariff barriers with India and investments must be made in supporting infrastructure.
Energy is crucial for economic sustenance and growth. To ensure adequate energy for the country, LNG imports must be urgently ensured; existing power generation and distribution infrastructure should be revamped to boost output and price distortions among different fuels and consumption segments must be rationalised.
The energy sector should be deregulated in a structured way within the next 3-5 years and an integrated energy ministry should be set up with the help of professionals to oversee the implementation of the Integrated Energy Plan.
On the social protection front, the Government must boost spending from the current one percent to three percent of GDP. Targeted subsidies should replace blanket subsidies, while the focus is shifted to nutrition, employment and health insurance. Overlap and duplication into existing social safety programs must be eliminated.
The current educational system cannot take the country to the next level of development. The first step towards a better educational system is political will; all levels of government must prioritise education immediately. The government should boost spending on education from one percent to five percent of GDP and should incentivize private/ not-for-profit sector participation. Examination boards and text books must be revamped and the HEC should be modified in light of the 18th Constitutional Amendment to be better able to aid the provinces in improving the education sector.
The Pakistan Business Council is committed to advocating those reforms that are in the supreme national interest. We need the help of the media, civil society and all Pakistanis to push for these reforms to be adopted immediately and regardless of which political parties emerge to form the next government.