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Pakistan’s economy set to peak under China support; prompt need to bring back rice and other export glory

Interview with Mr Abdul Rahim Janoo — Chief Patron, Rice Exporters Association of Pakistan

Profile

CHIEF PATRON: RICE EXPORTERS ASSOCIATION OF PAKISTAN (REAP)
CHAIRMAN: HAJI RAZAK JANOO MEMORIAL TRUST, KARACHI
– PAKISTAN ECONOMIC FORUM
– MASJID AL-RAZAK, S.I.T.E/ MASJID AL-HAMIDA, SUPER HIGHWAY/JAMA MASID HAIDER-E-KARRAR (CLIFTON)/JAMA MASJID MUSTAFA (NOORIABAD)/JAMA MASJID UMER (MANZOOR COLONY)
EX-CHAIRMAN: FEDERATION OF PAKISTAN CHAMBERS OF COMMERCE AND INDUSTRY (FPCCI)
EX-SENIOR VICE PRESIDENT: FEDERATION OF PAKISTAN CHAMBERS OF COMMERCE & INDUSTRY
EX. VICE CHAIRMAN: PAKISTAN RICE BOARD, GOVT OF PAKISTAN
EX-PRESIDENT: DHORAJI COOPERATIVE HOUSING SOCIETY
MEMBER MANAGING: KARACHI CHAMBER OF COMMERCE & INDUSTRY (1999-2002)
LEADER OF DELEGATION: DUBAI, IRAN, SAUDI ARABIA, SWEDEN, SRI LANKA, UK, USA, SOUTH AFRICA, INDIA, KUWAIT, QATAR, YEMEN
MEMBER: FEDERAL EXPORT BOARD, GOVT OF PAKISTAN
– KARACHI CLUB/MUSLIM GYMKHANA
COMMITTEE FOUNDER CHAIRMAN: PAKISTAN SRI LANKA BUSINESS COUNCIL (1991-95)
– PAKISTAN MILK POWDER IMPORTER’S ASSOCIATION (2006-2008)
CHIEF ORGANIZER: BABA FARID FREE EYE CAMP (LARGEST & MOST MODERN FREE EYE CHARITY TRUST IN PAKISTAN) ALSO DONE FREE EYE CAMPS IN AZAD KASHMIR, AFGHANISTAN & BANGLADESH. UPTO DECEMBER 2016 HAVE ORGANISED 253 FREE EYE CAMP’S IN PAKISTAN & ABROAD
RECIPIENT: GOLD MEDAL FROM PRIME MINISTER OF PAKISTAN AS BEST CHAIRMAN OF ANY ASSOCIATION IN 2003
GOLD MEDAL FROM PRIME MINISTER OF PAKISTAN IN 2006 FOR INCREASING RICE EXPORTS MORE THAN 550%
GOLD MEDAL FROM FEDERAL HEALTH MINISTER GOVT. OF BANGLADESH IN 2007 FOR EYE CHARITY SERVICES IN DHAKA, CHITTAGONG AND MYMENSINGH BANGLADESH
GOLD MEDAL FROM PRIME MINISTER OF PAKISTAN FOR GOOD VALUE EXPORT FROM PAKISTAN ON 28/12/2015.
GOLD MEDAL, GOVT OF SWEDEN ON AGRICULTURE PAPER
AWARD OF MASEEHA BY JANAB MOHAMMAD MIAN SOOMRO, ACTING PRESIDENT OF PAKISTAN AT PAK PATTAN

 

PAGE: YOUR VIEWS ON CHINA-PAKISTAN ECONOMIC CORRIDOR (CPEC):

ABDUL RAHIM JANOO: Traditionally, China and Pakistan have cooperated closely at the strategic and political levels. Now the two nations are making efforts to expand their bilateral collaboration economically as well. The construction of the China-Pakistan Economic Corridor (CPEC) is a milestone that signifies this shift. At its core, the CPEC is a large-scale initiative to build energy, highway and port infrastructure to deepen economic connections between China and Pakistan. This initiative has been well-received in both countries, although it is not without its problems.

Nevertheless, China and Pakistan regard the CPEC as a new source of potential synergy between their respective national development strategies, which may help the two countries translate their close political cooperation into multifaceted economic cooperation, attain mutual benefits, and achieve win-win outcomes. For the economic corridor to reach its potential, however, there are security and political challenges in Pakistan that must be addressed.

Pakistan serves as a crucial bridge between China and Central Asia, South Asia, and the Middle East. Security and stability in Pakistan will make it possible for China to exercise greater influence in these regions and to ensure security at home. This is why China is willing to pour vast amounts of resources into the economic corridor based on the logic of improving security through economic development.

The logic behind this strategy is that fundamentally improving Pakistan’s economy will help alleviate the challenges posed by political extremists, radicals, and jihadists. China and Pakistan share the belief that economic development can help stabilize Pakistan and improve its domestic security situation. However, China also recognizes that the security, political, and cultural risks and uncertainties facing the economic corridor cannot be overlooked. The corridor also aims to facilitate multi-sectoral economic cooperation in finance, trade, energy, and industry. Impact will be as follow on each sector:

Power: as most power project are inclined towards usage of coal/renewable energy sources, gas generation costs are expected to lower tariff determination. Consequently this bodes well for the intensity of circular debt position.

Cement: with expansion and up gradation of highways tagged with construction of dams and ports in process under CPEC, demand for cement to remain stellar driven by the need.

Steel: we expect to witness a positive coorelation in the demand of cement and steel over time.

Automobiles & OMCs: its use to transport cargo will not only derive the demand for heavy trawlers/4×4 trucks etc, these vehicles may have to be refueled during the 3,000 KM journey hence demand for diesel should also hike.

Textile: we also expect textiles to be a major indirect beneficiary of CPEC as electricity shortage issues are set to curtail largely due to the power projects in coming years.

China and Pakistan have taken positive measures to help set up the CPEC for success. Nevertheless, Pakistan’s domestic situation is still decisive. Until the country’s political and security conditions turn a corner, it will be difficult to judge the corridor’s future prospects. For China, this means neutrality, strategic patience, and caution are needed as the construction of this grand initiative continues, generally CPEC will be a game changer and once China establishes heavy industries in region, it will approximate generate about a million jobs. This will stabilize law & order situation as well as will uplift standard of living.

PAGE: HOW WOULD YOU COMMENT ON THE EXPORT AND THE ECONOMY OF PAKISTAN FOR OVER LAST 70 YEARS?

ABDUL RAHIM JANOO: As per Economic Survey of Pakistan, Pakistan’s economy continues to maintain its growth momentum for the 3rd year in a row with real GDP growing at 4.71 percent in FY 2016, which is the highest in eight years. GDP posted a reasonable growth over last year despite a major setback in agriculture growth on account of massive decline in cotton production.

We hope that Pakistan’s export should be more than US$ 100 billion due to the abundant resources available in Pakistan, but sadly there are no long term policies adopted by Government of Pakistan and exports from Pakistan are continuously showing decline. There should be a long term policy for increasing export trade, which is the backbone for country’s economy.

Different ministries should be developed for the important export sectors after cotton. Rice export sector has done wonders and it has shown a substantial growth from mere US$ 300 million to US$ 2.5 billion within a very short span of a decade and there is our vision of US$ 4 billion by the end of 2018/close of FY 2018-19, subject to research and development work to be done in Public Private Partnership as well as the privatization of Rice Research Institutes of Government.

PAGE: WHAT MUST BE DONE WHICH HAS NOT BEEN DONE FOR LAST 70 YEARS?

ABDUL RAHIM JANOO: There should not be any political appointees in Pakistan missions abroad especially, Ambassadors and Commercial Counsellors/Commercial Secretaries CC. If they are real professional and competent, they may contribute to increase Pakistan’s export trade tremendously. Ministers of concerned ministries should be easily approachable as well as they must visit respective trade associations at least 2/3 times per year to find out problems of the respective sectors and extend their support to resolve the same.

This step will motivate export associations to actively play their role for growth of country’s economy. Prime Minister of Pakistan is also requested to establish Federal Export Board like it was functioning previously. This Board will comprise of the heads of various trade associations along with the few relevant ministers.

PAGE: YOUR VIEWS ON INVESTMENT IN PAKISTAN:

ABDUL RAHIM JANOO: The country’s economy was back on track after strenuous efforts of the present government, adding that the leading financial institutions of the world had acknowledged the tremendous achievements made by Pakistan in the areas of macroeconomic stability, GDP growth, low inflation and achieving new heights in stock exchange.

The government had largely overcome the issue of power shortages and the country’s industrial sector was supplied uninterrupted electricity. Mega investments were made in diverse fields of energy including hydel, thermal, coal, solar and wind to overcome the energy shortages. The government was giving special focus to building infrastructure, motorways and expressways all over Pakistan.

China-Pakistan Economic Corridor (CPEC) alone has the potential to accelerate trade and business activities in the entire region, he said adding that Pakistan was welcoming countries of the region to join the CPEC and reap the benefits if this significant connectivity project.

Although potential exists but efforts must be made to improve the perception and image of Pakistan in order to transform this potential into success story.

In order to attract more investment in Karachi, we will have to concentrate on improving the perception about the security situation in Karachi and the overall image of Pakistan. Although the existing investment and trade figures were very nice, but they were still low which needed to be improved.

Overall security situation is much better as compared to the perception. It has improved during the last few years and it will encourage many international companies, including SMEs, to get into this market and look for opportunities.

Karachi held huge potential for international companies and it was a good sign that many businessmen from Karachi were also eager to do business with their counterparts. Many foreign companies operating in Pakistan were engaged in different sectors including energy, chemicals, pharmaceuticals, agriculture solutions, catering, cigarette manufacturing, food, telecommunication, quality testing, machinery and construction material which the business community warmly welcomed but many other important sectors also offered lucrative opportunities, and hence, exploring opportunities in these sectors should also be considered by foreign companies.

Potential existed for foreign businessmen to invest in Pakistan on 100 percent equity basis or as joint ventures with local industries. Pakistan can greatly benefit from foreign expertise in the energy sector, mining, agriculture, and equity market. The possibility of cooperation also existed in supplying raw materials and finished products for fertilizer, chemicals, and pharmaceutical industry in Pakistan. On 20th March, 2017, I inaugurated Food & Technology Expo at Expo Centre, Karachi and it was heartening to see more than 150 foreign delegates.

PAGE: YOUR VIEWS ON RICE VARIETIES AND RESEARCH:

ABDUL RAHIM JANOO: Since long, Pakistani Rice Research Institutes have not introduced any new rice seeds to increase the yield as well as quality. Right now many seed companies are importing hybrid seeds of rice which have better yield but their quality is not at par with the traditional Pakistani basmati/non-basmati rice.

Production of Pakistani rice is stagnant between 6.5 to 7.0 million metric tons. REAP has been demanding since long that either these Rice Research Institutes may be privatized or REAP members are included in their Board or Government of Pakistan may sanction grant to REAP from the Export Development Funds, wherein more than Rs7.5 billion are deposited by rice exporters and REAP can established its own institute and this will be instrumental to increase the rice exports upto US$ 4 billion within next 2-3 years.

VARIETY WISE EXPORT OF RICE
2015-16
Quantity (M/Tons)
Value (US$)
Basmati
503,037
455,249,000
Non-Basmati
3,759,179
1,405,068,000
TOTAL
4,262,216
1,860,317,000
2014-15
Quantity (M/Tons)
Value (US$)
Basmati
523,450
601,268,000
Non-Basmati
3,337,956
1,433,985,000
TOTAL
3,861,406
2,035,253,000
(Source: TDAP Statistics)

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