Business in the Unusual Naya Pakistan
Investment, which lags in the region, must be doubled
The writer is CEO of the Pakistan Business Council
What could business do for Naya Pakistan? Assume the unusual. Assume now that policy framework exists to promote industry, balance the external account and broaden the tax base. Imagine that all trade agreements now maximise Pakistan’s interests. Assume import tariffs are perfectly cascading to promote manufacturing. Stretch your imagination to zero-tolerance of under-invoicing and smuggling. Contemplate a competitive exchange rate. Envisage energy costs that are competitive.
Visualise the separation of fiscal policy making from the collection of taxes. Picture the FBR, as a national tax authority, with technology and talent to pursue taxes instead of harassing taxpayers.
Envision zero tax-rating for exports and an automated system of export rebate credits. Assume that the incentives to grow more sugar cane and wheat are switched to encourage the cultivation of cotton (required by textiles) and edible oil seeds (on which we spend billions to import).
Imagine that Pakistan’s ranking in Ease of Doing Business improves by 75 positions. Picture an economy run like a board of a company, with the PM as CEO, Cabinet as management and business leaders as directors, with a single-minded focus on making Pakistan competitive. In this utopia, what should business do for Naya Pakistan?
Investment, which lags in the region, must be doubled. Skills to deliver quality and productivity need focus. We must export value-added goods instead of commodities and basic items. Emulating the sweat-shop model of Bangladesh is not sustainable. Reliance on near-100% cotton-based textiles should shift to man-made fibres. Market reach must be broadened beyond the EU and the USA. Textiles represent just six per cent of world trade, whereas our reliance on this sector is 60%. We must look at other industries. Agriculture is one in which yields are sub-standard. With 60% of the population in rural areas, the potential to lift a large segment of population is vast. Foreign Direct Investment in agriculture will infuse technology and open our produce to global markets. Think, the likes of Del Monte and Uncle Ben’s…. In textiles and other industries, partnering the Chinese looking for lower conversion costs is an opportunity. Another is to attract Western textile companies to invest in the value-chain in Pakistan. Neither are as good as developing our own brands.
In Naya Pakistan, business must be open to vigorous competition. New players in the automobile sector will make local vendors more competitive. Big business should participate in start-ups. It is a pity that venture capital has to be sought from Silicon Valley. Bricks and mortar businesses should consider diversifying into the digital economy. IT and BPO offer good opportunity. Multinationals in Pakistan should commit to exports instead of merely harvesting the domestic market. It is useful to remember that unlike India, where FDI is taxed at a higher rate, Pakistan provides a level playing field.
Adoption of responsible business practices is both a necessity and an opportunity. Greater inclusion of women at all levels in business will harness a valuable resource. Incorporating more SMEs into the extended value chain will uplift standards across business. Responsibility to the environment is also an opportunity to cut cost. This applies particularly to water. Equally industry must become more responsible in reducing, recovering and recycling, especially plastics. Using waste to produce energy and to deploy it in desalination of water gives business an opportunity to do well by doing good. Businesses must make more contribution to the UN Sustainable Development Goals to which Pakistan is a signatory.
The appetite to take risks must be revived. Industry should look beyond guaranteed returns. Banks must adapt their risk management to the SME sector. Family businesses should professionalise and widen their shareholding. Big textile and industrial groups that entered retail must not abandon their manufacturing core and role in exports. Business needs to make more, to serve more … of Pakistan and the world. This Make More, Serve More spirit should drive business in the Naya Pakistan.
Published in The Express Tribune, September 16th, 2018.
Visualise the separation of fiscal policy making from the collection of taxes. Picture the FBR, as a national tax authority, with technology and talent to pursue taxes instead of harassing taxpayers.
Envision zero tax-rating for exports and an automated system of export rebate credits. Assume that the incentives to grow more sugar cane and wheat are switched to encourage the cultivation of cotton (required by textiles) and edible oil seeds (on which we spend billions to import).
Imagine that Pakistan’s ranking in Ease of Doing Business improves by 75 positions. Picture an economy run like a board of a company, with the PM as CEO, Cabinet as management and business leaders as directors, with a single-minded focus on making Pakistan competitive. In this utopia, what should business do for Naya Pakistan?
Investment, which lags in the region, must be doubled. Skills to deliver quality and productivity need focus. We must export value-added goods instead of commodities and basic items. Emulating the sweat-shop model of Bangladesh is not sustainable. Reliance on near-100% cotton-based textiles should shift to man-made fibres. Market reach must be broadened beyond the EU and the USA. Textiles represent just six per cent of world trade, whereas our reliance on this sector is 60%. We must look at other industries. Agriculture is one in which yields are sub-standard. With 60% of the population in rural areas, the potential to lift a large segment of population is vast. Foreign Direct Investment in agriculture will infuse technology and open our produce to global markets. Think, the likes of Del Monte and Uncle Ben’s…. In textiles and other industries, partnering the Chinese looking for lower conversion costs is an opportunity. Another is to attract Western textile companies to invest in the value-chain in Pakistan. Neither are as good as developing our own brands.
In Naya Pakistan, business must be open to vigorous competition. New players in the automobile sector will make local vendors more competitive. Big business should participate in start-ups. It is a pity that venture capital has to be sought from Silicon Valley. Bricks and mortar businesses should consider diversifying into the digital economy. IT and BPO offer good opportunity. Multinationals in Pakistan should commit to exports instead of merely harvesting the domestic market. It is useful to remember that unlike India, where FDI is taxed at a higher rate, Pakistan provides a level playing field.
Adoption of responsible business practices is both a necessity and an opportunity. Greater inclusion of women at all levels in business will harness a valuable resource. Incorporating more SMEs into the extended value chain will uplift standards across business. Responsibility to the environment is also an opportunity to cut cost. This applies particularly to water. Equally industry must become more responsible in reducing, recovering and recycling, especially plastics. Using waste to produce energy and to deploy it in desalination of water gives business an opportunity to do well by doing good. Businesses must make more contribution to the UN Sustainable Development Goals to which Pakistan is a signatory.
The appetite to take risks must be revived. Industry should look beyond guaranteed returns. Banks must adapt their risk management to the SME sector. Family businesses should professionalise and widen their shareholding. Big textile and industrial groups that entered retail must not abandon their manufacturing core and role in exports. Business needs to make more, to serve more … of Pakistan and the world. This Make More, Serve More spirit should drive business in the Naya Pakistan.
Published in The Express Tribune, September 16th, 2018.