INTERVIEW WITH IJAZ A. KHOKHAR, MD ASHRAF INDUSTRIES (PVT.) LTD.

KHALIL AHMED
(feedback@pgeconomist.com)

Apr 2 - 8, 20
12

PROFILE

Ijaz A. Khokhar
Occupation: Garments Business since 1971.
Company: Ashraf Industries (Pvt.) Ltd.,
Recognition: ?Pioneer of Martial Arts Garments Industry in Pakistan since (1969)
Honor:
i) Highest Civil Award in Business by the Govt. of Pakistan
Sitara-e-Imtiaz Awarded by President of Pakistan in March 2007
ii) Business Man of the Year Gold Medal 2007 Awarded by Prime Minister of Pakistan.
Achievements:
Winner of FPCCI Export Trophy Award for the last 25 years consecutively
since 1983-2008 being a leading exporter of Martial Arts Uniforms in Pakistan.
Executive Board:
International Apparel Federation
Member (IAF)
Founder Member: Asian Apparel Federation (AAF) of Executive Board comprising on following Asian Countries Garment Associations:
China, India, Bangladesh, Sri Lanka, Korea, Cambodia, Vietnam, Hong Kong, Macau, and Pakistan.
E.C. Member Federation of Pakistan Chambers of Commerce and Industry (FPCCI) (2012)
Chief Coordinator: Pakistan Readymade Garments Manufacturers and Exporters Association
Chairman: Chairman Pakistan Readymade Garments Manufacturers and Exporters Association 2004-05, 2006-07, 2010-11.
Board Member: Pakistan Readymade Garments Technical Training Institute
|Board Member: Skill Development - PRGMEA
Board Member: Implementation Committee Ministry
Textile Industry of Pakistan
Board Member: Lahore Garments City under Ministry Textile Industry of Pakistan
Life Time Member FPCCI
Life Time Trustee Sialkot Dry Port Trust
Director Port Services Sialkot
Director Capital Insurance Sialkot
Participation: To provide the financial support to organize the martial art events in Pakistan
Activities: i) Former Chairman Pakistan Taekwondo Federation
ii) Former Vice President Pakistan Judo Federation
Objectives: i) To promote the martial arts activities in male and female of Pakistan.
ii) To promote the martial arts activities in schools and colleges.
Trade Objectives: To establish the garments technical training institute in Sialkot for gender skill promotion.

PAGE: HOW WOULD YOU COMMENT ON THE BUDGET FOR THE UPCOMING FINANCIAL YEAR?

KHOKHAR: The budget exercise has become irrelevant because so many mini-budgets are presented during the year. For this year especially, the Federal Board of Revenue has requested the business community not to seek tax exemptions, concessions, or zero-rating facility. We have been asked only to submit proposals regarding simplification of tax procedures and expanding tax net. We, therefore, feel that the budget exercise is being done only to keep the state machinery running through added taxation. It has nothing to do with providing any incentive or relief to the industry or to the people.

PAGE: IT IS BEING SAID THAT THE FIFTH CONSECUTIVE BUDGET DURING THIS DEMOCRATIC ERA WOULD BE PRESENTED WITH A SPECIAL FOCUS ON PROVIDING RELIEF TO THE POOR MASSES WHILE KEEPING IN VIEW THE GROUND REALITIES. YOUR VIEWS.

KHOKHAR: Any democratically elected government has the responsibility to provide relief to the people and no doubt, same should be provided to the people. Ground realities are tough no doubt but this calls for radical and out-of-the-box solutions. However, our policy makers have a very myopic view with regards to our economy. As described above, they are only concerned with raising enough finances, through taxes, to run their own affairs. Other governments provide tax relief and other measures in time of recession to enhance consumption which ultimately leads to more taxes to the government, more production for the industry and more jobs for the peoples; but unfortunately for our policymakers it seems that raising taxes is the only way out.

PAGE: DO YOU THINK THAT THE IDEA OF GENERATING REVENUE THROUGH BROADENING TAX BASE IS GOOD?

KHOKHAR: We feel that taxes should be paid by all across the board; there should be no discrimination and no exemptions for anybody irrespective of whatever economic activity he/she may be in. Enhancing tax base is certainly good as only a small percentage of our population pays taxes but also important is the ease of procedure for the taxpayer. Tax net has to be broadened in order to keep the economy functioning, there is no doubt about it.

PAGE: YOUR COMMENTS ON THE BILLIONS OF RUPEES ALLOCATED FOR THE ENERGY SECTOR IN THE LAST BUDGET.

KHOKHAR: It is very good that billions of rupees were allocated for the energy sector, but I do not see any result as yet. Due to crippling electricity shortages, we are currently operating well below 50 per cent of our capacity. There are electricity riots happening almost daily in various parts of Punjab. Industry is not getting natural gas for five days in a week. If billions were allocated last year, maybe trillions will be allocated this year, but where are the results.

PAGE: THE GOVERNMENT REDUCED THE GST FROM 17 TO 16 PERCENT IN THE LAST BUDGET. WHAT SHOULD BE EXPECTED THIS TIME?

KHOKHAR: This is only a superficial measure; maybe they will again reduce it by another one percent in view of 'relief to the people' but inflation is still at double digit and shows no sign of going down. The government must realize that these half-hearted measures are not bringing any results. A new approach is the need of the hour.

PAGE: WHAT IS THE PRESENT STATE OF AFFAIRS OF THE TEXTILE INDUSTRY?

KHOKHAR: Textile industry in Pakistan is going through one of the most difficult times. On one hand, energy shortage is crippling our production and on the other, inflation and increase in utility prices are rendering our exports uncompetitive. In the current fiscal year, textile exports have declined by seven per cent, if the same trend persists, we expect a decrease of 15-20 per cent in our textile exports for the year. Due to this decline, not only we are losing revenue and millions of jobs have already been lost. Not only we are losing export markets, but several of our competitors like Bangladesh, Vietnam and Cambodia have also already one-upped Pakistan in terms of textile production.

PAGE: WHAT ROLE DOES THE STATE BANK PLAY TO FACILITATE EXPORTS?

KHOKHAR: SBP has a vital role of providing finance especially to the exporting industry. However, interest rates keep funds beyond the reach of borrowers. This is especially hard for SMEs which are slowly being driven out of business. Although the SBP claims that special packages are being devised for SMEs, banks are simply not willing to take the risk. SBP should realize that the economy is not dependable on bank borrowing. This is especially true for textile sector. According to the annual SBP report 2010-11, private loans to the textile sector amount to only 20 per cent of the total loans. SBP should, therefore, devise special borrowing rates for the textile industry and changes be brought in the Export Finance Scheme also.

PAGE: IN YOUR VIEW, WHAT ROLE TRADE DEVELOPMENT AUTHORITY OF PAKISTAN (TDAP) IS PLAYING TO JACK UP EXPORTS?

KHOKHAR: TDAP can play a pivotal role in enhancing exports by turning our commercial offices abroad into trade and facilitation centers for buyers and sellers of goods. However, a better performance is expected from TDAP if a performance-based approach is delegated to them by the government. As no targets are assigned to Pakistan's commercial attaches, they do their job half-heartedly as there is no responsibility on their shoulders. Contrary to this, Bangladesh and Indian counterparts are given specific targets and recalled if their performance is below par.

PAGE: YOUR VIEW ON GRANTING MFN STATUS TO INDIA AND OPENING OF TRADE WITH INDIA.

KHOKHAR: Opening of trade with India is a very positive sign and Pakistan's economy will benefit from increased trade. We should, however, remain cautious with respect to India because it has a habit to taking arbitrary measures, which are very detrimental to trade activity. Recently, India has imposed ban of cotton exports despite surplus cotton worldwide. These measures make the whole world jittery because India is the second largest producer of cotton in the world. India has super power intentions but such moves do not suit them and a more responsible role is expected of them.

PAGE: YOUR VIEW ON EU TRADE CONCESSION PACKAGE FOR PAKISTAN AND GETTING OF GSP PLUS IN 2014.

KHOKHAR: We really appreciate the support EU has given to Pakistan. Exports to EU will certainly increase because of the trade concession package on 75 items and the government is seriously working to ratify all the clauses, which will enable Pakistan to get GSP plus status in 2014. If Pakistan gets the GSP plus status, it will be a major boost for the textile exports. We have made it clear that this is a vital step for Pakistan and are following the government very closely on its implementation.