Mistakes past, present

Businessmen complain that they have to pay taxes & bribe to over 22 agencies to simply engage in production and export

This week marks the death anniversary of Dr Mahbub-ul-Haq, one of Pakistan’s most gifted economists. He will be remembered for a number of things, including the establishment of the Human Development Centre, a centre of excellence in the otherwise dry and barren academic landscape of Islamabad.

While the doctor may have meant well, in 1968 he identified 22 families/groups in Pakistan that he claimed were dominating the financial and economic life of the country, controlling as much as 66% of the industrial assets and 87% of the banking sector. These families, alleged Dr Mahbubul Haq, had become both the Planning Commission and finance ministry for the private sector by 1968.

The list included the Dawood family, the Saigols, the Adamjees as well as families and groups called Fancy, Valika, Jalil, Bawany, Crescent, Wazir Ali, Gandhara, Ispahani, Habib, Khyber, Nishat, Beco, Gul Ahmed, Arag, Hafiz, Karim, Milwala and Dada.

Possibly the only crime of these families was to invest in the newly emergent state of Pakistan. Habib Bank, for example, provided banking services to the newly independent country at a time where there were no other local banks. But the bogey of the 22 families had been raised. As if on cue, some years later Zulfikar Ali Bhutto took public control of most assets of these groups in his socialist government under the garb of nationalisation.

It was a questionable move. Being a landlord himself, Bhutto stayed away from nationalising the vast swathes of land owned by the powerful landed families and instead focused on taking away the assets of the vibrant business community as well as the schools, hospitals and other public service entities they had created.

Ardeshir Cowasjee, one of Pakistan’s most respected columnists, who was also in the shipping business, never forgave Bhutto for this move. The private shipping industry was destroyed forever. Many industries also suffered in silence.

The late Sabihuddin Ghausi, who is remembered for both his business reporting and his trade-unionism, used to tell us how at a meeting of journalists with Bhutto, Ghausi sahab thumped his fist on the table and asked Bhutto why he was not nationalising the lands as he had promised. “The otherwise well spoken Bhutto was at a loss for words,” Ghausi sahab would recall with glee.

It was during Zia’s time that some of the nationalisation was reversed but only to patronise those who supported the military dictator. It was in this time that the Sharif family emerged on the political scene. They too had suffered at the hands of the Bhutto’s nationalisation.

Looking back, one can only wonder what would have happened had we not suffered nationalisation. Our business groups would have become multinationals given their drive and forward-thinking. Instead, even today most of them have never recovered from the blow they received then.

Today our business and industrial houses continue to be shy of moving ahead aggressively. While Indian companies have established themselves the world over, our presence is missing.

Even in Dubai, which should be our first stop for business and manufacturing ventures, we have relegated much of our trade to agencies and small representations.

Possibly the reason for this reluctance may be that the government has not given up playing games with local business and industry. Only this year we are told of how one of the country’s largest masala exporting companies, which has made a name for itself all over the world for its products, was approached by an official who threatened to register a case against them for smuggling heroin if a certain amount of money was not paid.

The official said he was helpless as his superior had demanded money and he had no option but to comply. After a round of negotiations, a reduced amount was agreed upon – that too in crores, and paid fully in cash. It is not an isolated incident.

The biggest bhatta collector, it seems, remains the government, with businessmen complaining they have to pay over 22 agencies in taxes and bribes for them to simply engage in local production and export.

Published in The Express Tribune, July 21^st, 2014.

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