Business leaders in Karachi give PM food for thought

• Premier asked to forge trade ties with India, reconcile with Imran for ‘political stability’
• Industrialists concerned by ‘cross-subsidies’, call for fair energy tariffs
• Warn rising costs would help competitors take over Pakistan’s export orders

KARACHI: As Prime Minister Shehbaz Sharif sat down with the business community to find ways to uplift the economy through exports, his resolve was met with apprehensions from industry leaders who said it was “almost impossible” to do business under the current circumstances, particularly with high energy costs and inconsistent government policies.

Posing tough questions during an hour-long meeting at the CM House, Karachi’s business community appreciated the PM’s “determination”, but advised him to focus on bringing about political stability to “turn around” the economy.

Appreciating the newly-installed government for moving forward with the International Monetary Fund (IMF) that brought some consistency to the money market and contained inflation, they suggested PM Shehbaz initiate trade talks with India and “shake hands” with imprisoned PTI founding chairman Imran Khan — apparently for political stability.

PM Shehbaz, who had arrived in the port city on his maiden visit after his election, said the meeting was an attempt to listen to the “brilliant minds of business, absorb what they say and put it into action” for a comprehensive economic growth roadmap.

“You all are great minds of business… Today we need you to take a step forward and bring this rental business to an end. Let’s focus on genuine industrial and agricultural growth and double the exports in the next five years. It’s difficult but not impossible. It’s an article of faith for me. I would listen to you and make a plan to put that into action.”

In a veiled reference to the booming economy of Bangladesh, he recalled ‘East Pakistan’, which was “once considered” a burden on the country, but had made tremendous strides in industrial growth.

“I was quite young when … we were told that it’s a burden on our shoulders… Today you all know where that ‘burden’ has reached [in terms of economic growth]. And we feel ashamed when we look towards them,” said PM Shehbaz.

Trade ties with India

After the PM’s brief speech, the house was opened for a question and answer session, where business leaders voiced their appreciation for the government’s recent moves, but made more demands.

They also shared proposals for economic policies to achieve desired results.

There was a sense of concern among the business leaders over the political instability in the country for which they even advised the PM to take initiative as the head of the government. “You have made a few handshakes after taking the charge that has produced good results and progress on the IMF deal is one of them,” said Arif Habib, the chief of Arif Habib Group – a capital market giant.

“I suggest you do a few more handshakes. One of them is regarding trade with India, which would greatly benefit our economy. Secondly, you should also [patch up] with a resident of Adiala Jail (a reference to jailed PTI leader Imran Khan). Try to fix things at that level as well and I believe that you can do it.”

The PM avoided responding directly to the questions aimed at political stability, but claimed to have noted down his proposals for economic growth and assured him that he would soon invite businessmen from all across the country to Islamabad and sit with them “till all the issues aren’t resolved”.

Then came a presentation from Zubair Motiwala, a prominent industrialist and chief of the Trade Development Authority of Pakistan (TDAP), who heads the Karachi businessmen’s body called Businessmen Group (BMG).

In his presentation, he questioned the government’s ambitious plan amid the existing business regime. “The prime minister is keen to support the industry by doubling exports and reducing business costs but it seems impossible in the current situation,” said a point of his presentation shared by the Karachi Chamber of Commerce and Industry (KCCI).

“Due to the increasing cost of doing business with these gas and electricity prices, our competitors would soon take us over and get Pakistan’s export orders. It is surprising that we want to increase exports and local manufacturing, but we are increasing energy prices by including cross-subsidies, which has resulted in a gas tariff of Rs2,600 per unit for industrial heating and Rs3,100 per unit for captive power.”

‘Fair gas price’

He referred to the gas prices six months ago when they were charged at Rs1,150 and Rs1,350 per unit respectively and asked “if any business can survive with such an increase in the current international market situation”.

“The industry is willing to pay 100 per cent of the gas price without any subsidy. We don’t want any subsidy. We just want the industry to get a fair gas price,” said Mr Motiwala. In his presentation, he pointed out that the “unnecessary capacity” of power plants had put a burden on Pakistan in the form of capacity charges, resulting in a situation where surplus electricity was neither sold nor provided to industries at lower rates.

“This unnecessary capacity is also increasing the circular debt issue in the power sector. Therefore, it is necessary to introduce a scheme to reduce the flat tariff for industrial consumers, which will increase electricity consumption and also help reduce the circular debt issue,” he added.

Earlier, the premier was received by Sindh Governor Kamran Tessori, CM Murad Ali Shah, Sindh ministers and senior officials at Karachi airport. The PM also went to the Quaid-i-Azam’s mausoleum to pay his respects.

Published in Dawn, April 25th, 2024