Financial Daily from THE HINDU group of publications
Saturday, May 24, 2003
Industry & Economy
`We don't want your ujala, soaps and pan parag'
Mr Majyd Aziz
(Recently in Karachi)
A VOTARY of better economic co-operation with India, Mr Majyd Aziz, former Chairman of SITE (Sindh Industrial and Trading Estates) and a textile manufacturer told Business Line in an interview that Pakistani businessmen were waiting to import machinery and engineering goods from India. "But we don't want your ujala, soaps and pan parag, which is making people sick here," he added.
How do you read the economic situation in Pakistan?
The change in the geo political situation after 9/11 has resulted in many positives for Pakistan. We are no more a failed or defaulting State, we have got recognition as an ally of the US, the change in American banking laws has resulted in our expatriates sending their money home, not through hawala but the regular route. Our exports are nearing the magic figure of $10 billion, a target that had always eluded us. We had not even imagined at one time that our reserves would be $3 billion. It is my theory that when the reserves touch a low of $500 to $600 million, phir hukumat jati hei.. (the Government goes). So $10 billion in both reserves and exports is the highest ever for Pakistan. In everything that matters, Pakistan is crossing the double-digit mark.
What are your main exports?
Textiles form 65 per cent of our exports. We are exporting wheat... just a few years ago, we were net importers of wheat and now we're exporters. We're also exporting rice and have crossed the target in textiles. Every target the Government had, whether in sales tax, import duty or income tax, has been achieved and surpassed.
So who is responsible for all this?
The economic team of General Musharraf, particularly Finance Minister Shaukat Aziz and (former) Commerce Minister Razak Dawood. But we're not out of the woods yet. We've built the foundation but to get the economy into shape tough decisions will have to be taken... it will hurt and hurt badly; like an operation without anaesthesia. The poverty levels are over 40 per cent and we have to address that.
But even after elections, though there were compromises, the economic policies have not been reversed, another new for Pakistan. Mr Shaukat Aziz got rid of 60 odd anomalies last year. I predict that Pakistan's federal Budget 2003-04 will be radical and address a lot of our problems. It will be a catalyst for growth and jump-start the economy.
What is your major expectation?
One of our biggest problems is sales tax. GST is an in-thing and good but it can only be truly successful if it is broad-based and takes care of all channels of production. But in our country in certain sectors it is half-quail and half-chicken and refunds take a long time. We are demanding that at least for the export sector it should be zero sales tax. And many of our industries should be made competitive.
How to make industries competitive?
We have been demanding the setting up of an industrial cost commission. Take cotton garments, for example. Can we compete with neighbours like India, Bangladesh or Sri Lanka? We have talent, cotton and expertise. But our infrastructure costs and duties are high and we have other problems. We're asking the Government to set up a team in partnership with the private sector and work an arrangement whereby we don't have to go through concessions, rebates, refunds and others.
In the countries I mentioned, the exporters are garlanded and put on a pedestal. Two categories that bring in foreign exchange are the exporters and the overseas Pakistanis. Or else you get khairat (alms), zakat (religious taxes) and loans. We are saying rationalise sales tax and bring it down to 5 per cent... 15 per cent is too much and results in evasion. Second, the infrastructure rate, for better or worse, should be frozen for a certain period of time. Do you expect these irritants to be removed by the Budget?
I expect a lot of radical changes. The Finance Minister is determined to do a lot. I am very optimistic.
If things improve on the Indo-Pak front, how will industry and trade benefit?
I always say why are we allowing the smugglers and unscrupulous people to make money? The peace process is getting roadblocks because the stakeholders... the biggest being the business community... are not active.
In what areas do you see co-operation with India?
Oh, we can buy so many things, machinery for instance, at a fraction of the cost we pay to get it from Europe. India has a huge market so the economy of scale works there. But we don't want your ujalas and your soaps. I hope we don't get even your pan parag here, which is making us sick. Every second man in Pakistan is chewing pan parag.
After 2 to 3 years, things will move but we need that to happen now.
So how hopeful are you this time?
On a scale of 10, I would give it 7. I say start the business co-operation, get Aishwarya Rai and Pakistani actors to work together in a movie.
What about Kashmir?
It is and will remain a core issue always. But it can be discussed in tandem with trade and business ties. Kashmir can't be solved by Pakistan and India. Take Palestine or Sri Lanka ... a third party is helping. Because of recent developments, America may not be acceptable to the hawks of Pakistan. I feel it should be Japan. Now Sri Lanka is going to change from negative growth to a good positive growth this year.
It's a peace dividend...
Absolutely. So let us also talk about peace dividends. Also, let our Information Minister and your Defence Minister keep their mouths shut. Our Sheik Rashid does not know what he is talking about and neither does your George Fernandes. When things seem to be moving, don't vitiate the atmosphere. I am an industrialist and my stake is in Pakistan. Two generations have gone by and we're still fighting... we could have been major powers in our own right.
What about the suggestion that the LoC be made the international boundary?
That is a political issue and I don't want to comment on it. But what I can say is that businessmen never have borders and my religion says so too. But we're still dilly-dallying and have made SAARC a moribund entity. We can't even have SAARC games. India and Pakistan can't play test matches. We have to go to a third country to play a cricket match. Then why not a third country to negotiate Kashmir?
The irony is that at WTO and other forums Pakistan and India have common views. I am a strong proponent of regional trade. Today we are accused of child labour, bonded labour and environmental pollution. But if I sell to Sri Lanka or Bangladesh they don't ask me this question. When I send dhal to India they don't ask me if a child has grown it.
My message to the business community in India is that we are the major stakeholders. So let's look away from racism and parochialism and ask if we are going to pass on this hatred to our children. We have to realise that only greater economic activity can make our poverty alleviation programmes work.
There are no winners in this game. We have to get out of the cocoon and breathe fresh air.
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