Of Councils and Chambers

OPINION

Asif Saad

Of Councils and provided by the government as a result of regulatory capture, guaranteed returns, subsidised inputs, state granted cartels Chambers and monopolies – to name a few traditional avenues for wealth creation in Pakistan. When banks and financial institutions fix interest rates with little or no competition – there is a huge price Do various business lobby groups operating in Pakistan represent the rentier economy? paid by businesses and the economy. When power producers and distributors are provided dollarized guaranteed returns there is a large burden placed on the economy. I am sure everyone has heard about lobbyists and most people know that these individuals or organisations exist all over the world and are connected to politics and government. In fact, their main task is to influence the government – to ensure protection of business and financial interests of those they represent. It could be to lobby When entire industrial sectors are placed in near to zero tax regimes, the economy loses a major revenue source. When industries are protected beyond reasonable levels, the extra cost is borne by the consumers. When certain sectors are chosen to access the fast-dwindling natural gas reserves, the entire country pays for lost opportunity. for or against laws, regulations and rules which promote or hamper the When was the last time a bank tried to take risks and particular lobby. In Pakistan, these lobby groups include various cham- provide loans to businesses to try and jump-start the economy, bers of commerce, business councils and many powerful industry-specific instead of earning massive returns from government treasury associations. Is their role in our economy good, bad or perhaps both? operations? Can the power producers free themselves of the We recently heard of a delegation of a prominent business lobby guaranteed dollarized returns / over invoicing model which has group visiting the prime minister. According to press reports, this partic- broken the back of this country? Can they risk investing in modular delegation, which was composed of top businessmen and corporate els in which they have to be competitive? executives in the country, gave a strong message to the Prime Minister Has the manufacturing sector thought about innovation and his economic team. Something on the lines of what must be done by and better business strategies to compete in the international the government to save the economy. market – instead of relying on cheap labour, energy, tariff protecNoble intentions, I am sure and from well-meaning individuals who tion – all underwritten by the government. have the country’s interest well and truly deep in their hearts. Of course, I can go on and on but the point is that no large-scale this was not the first or the last group of business representatives to sug- industrial sector in the land of the pure is able to run without gest what needs to be done to fix the problem. government handouts. It is not just the physical loss of revenues The problem, as we all know, is simply that the country spends or higher cost for the public; government dole is the very reason much more than it earns and therefore it has no money to pay its bills. For that these sectors remain inefficient and their management this problem, everyone, at least the dozens who pop up on the idiot box teams, ably backed by the lobby groups, exert maximum efforts every day, has a solution. The business councils and chambers being no in trying to cling to these broken business models. different, wave their own magic wand. It’s a vicious circle – the more the government gives the But I am curious if any of these lobby groups have taken note of how more needy the sector becomes. Where are the Pakistani big the government earns and where it spends. I don’t mean an analysis of businesses taking risk – is something one would like to undergovernment tax revenues and expenditure on defence, debt servicing etc. stand! Or as some would say – being in Pakistan is the riskiest of Even school children in Pakistan are well acquainted with those. all enterprises. If so, there are over two hundred million of these Instead, I mean analysis of government support and subsidies that risk takers and most of them probably not by choice! benefit the many augusta members of these lobby groups. How much is Coming back to our councils and chambers, what purpose do they wish to serve? Should they continue to support elite capture or they need to introspect and think about reinventing themselves? How about planning to wean off their industry from all types of government subsidies, sooner than later? This, in my view, is the biggest challenge The writer is a strategy for any industry and one that merits all the brains associated with any particular sector to work endlessly for. consultant who has It is sad to see the continuous parade of businessmen and lobbyists to and from government offices, frepreviously worked at quently followed by atrocious looking newspaper advertisements with claims about employment generation, various C-level positions taxation and how they are the Almighty’s gift to the nation. for national and multi- All in bad taste. national No doubt that government subsidies and concessions have a role to play – and this is true globally. But corporations should it be timeless and indefinite? Something that the industry learns never to live without? If so, and if our businesses can only survive on the ventilator, then the only decision to be made is when to pull the plug. The lobby groups need to think out of the box! n