Regulatory gaps stymie fresh investment

Industry confused about regulatory standards after 18th Amendment.

KARACHI:

Multinational food and consumer goods companies have been growing significantly despite all regulatory challenges. However, these businesses say their investment could rise further if the government closes the loopholes in the regulatory framework.

Overall, the regulatory environment has been conducive for business but there have been pitfalls emerging from time to time, Nestle Pakistan Head of Corporate Affairs Waqar Ahmed said.

Ahmed acknowledged that the country offers business opportunities but at the same time challenges do exist as far as the business and regulatory environment is concerned. Reliability of outcomes, exchange rates, inflation, etc do have an effect on business operations.

Ahmed, however, added they try to overcome the challenges by developing a close working relationship with the government and collaborating with all stakeholders.

Anglo-Dutch foods and consumer goods giant, Unilever Pakistan, however, was a bit more vocal in his views on the regulatory challenges.

As a country Pakistan has some good policies in place to facilitate businesses but there are gaps in the regulatory framework which creates an uneven field for the formal sector, Unilever Pakistan CEO Ehsan Malik said.

“Two core issues that need to be addressed are smuggling and counterfeiting,” Malik said. “Half the tea consumed in Pakistan is smuggled, the legal framework does not deal with counterfeiting in an effective manner,” he said.

The single largest challenge that the industries are facing across the board is the confusion about regulatory standards after the 18th Amendment to the Constitution, said an official who asked not to be named.

The amendment has transferred many powers to provincial governments. Regulation of agriculture, for example, has entirely gone to the provinces.

After the amendment, there is a lot of confusion about the regulatory regime, the official said. Provincial agencies are framing new laws without taking the stakeholders – chambers and businesses – on board, he said.

The consumer goods and food companies follow the Pakistan Standards and Quality Control Authority – a centralised regulation standard – and print its logo on their products. The industry pays 0.05% to PSQCA on every bottle of water or juice sold.

However, the Punjab Food Authority is now asking the industry to put its logo on the products as well, the official said. It is economically impossible to follow four different regulations, he said, adding these agencies should consult the industry before making any such laws.

Published in The Express Tribune, December 9^th, 2013.

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