By SHABBIR H. KAZMI
Feb 21 - 27, 2000
Muhammad Yakub Karim is currently Chairman of All Pakistan Soap
Manufacturers' Association. He was also Chairman of SITE Association of Industry for the
year 1995-96. He was born in 1944. He did his B. Sc. (Hons) from Karachi University in
1969 and B.S. in Chemical Engineering from South Dakota, USA in 1972. He has 3 years
experience of working with a manufacturing company in the USA. He is Life Member of
Pakistan Association of Science and Scientific Professions and Council Member of the
Institute of Engineers of Pakistan. He has also represented Pakistan at Economic
Committee, General Assembly of United Nations.
PAGE: What is your impression about the current state of the
economy?
KARIM: Our economy lacks directions and targets. The result is
obviously unstability and confidence gap between economy nurturing centre and the
Government. The new economic managers have realized the widening gap. It appears that they
are making efforts to put the economy on the track of fast development. This may also be
said that the new economic managers are endeavouring to protect ttheir policy decisions
through legal and constitutional covers. All these efforts have created optimism among the
business community. These measures include broadening of the tax net as well as bringing
the agriculture income into the tax net. At the same time they are trying to minimize
dependence on the assistance from multilateral and bilateral lenders. Therefore, I am
optimistic, if the policies are followed strictly and continuously, we will be able to
acquire a niche position among the developing nations.
PAGE: Why the process of development was reversed?
KARIM: The best economic development period was Field
Marshal Ayub Khan's era during which dozens of economically viable industrial units were
established. During that period highest industrial growth and economic prosperity was
attained only due to, though, liberal but prudent policies. However, during the regime of
Zulfiqar Ali Bhutto the whole process of economic activities became negative. This was
mainly due to ruthless and indiscriminate nationalization and rackless attitude to resolve
the problems of blue collar workers. He pampered the labour unions which disrupted
production activities. These impulsive and politically motivated pollicies ruined the
entire economic infrastructure of the country. The other reason is that in the subsequent
period there was hardly any research and development activities and industries failed to
acquire new technology too. Import substitution was not encouraged. The drastic
devaluation of currency coupled with aformentioned steps damaged the economy to a level
that it has not been able to recover even after dismisal of Bhutto government in 1977.
PAGE: In your opinion what are the key issues faced by
the country?
KARIM: The subsequent governments also resorted to
adhoc measures such as frequent devaluation of currency, IPP controversy and following
politicaly motivated development programmes. Freezing of foreign currency accounts also
contributed towards desiruction of economy.
PAGE: What measures do you suggest for the revival of
the economy?
KARIM: Most important point is that pros and cons of
any economic policy should be deliberated thoroughly anticipating at least 30 years
requirements. The policy should be prepared for short-term as well as for long-term.
However, all the efforts should be made to ensure documentation of economy. Research and
development should be given priority for industries. Export oriented industries using
indigenous raw materials should be encouraged particularly to enable them to sell their
products in the international market with the highest value addition. At the same time,
the industries producing basic raw material should be encouraged. Export of
non-traditional products should be lookedafter and hurdles should be removed. One such
industry is soap and detergent manufacturing. Though, the current export of soap and
detergent is not substantial, it has enormous potential — provided the level of
duties and taxes is reduced. The import of finished soap should be curbed by imposing
higher duties so that breathing space is made available for the revival of local soap
industry. Other export incentives such as custom duty refund or duty free release of raw
materials including exemption from provincial or municipal taxes, lower electricity
tariff.
PAGE: What are your suggestions for the revival of
soap industry?
KARIM: At present soap industry faces serious crisis,
and many units have been compelled to stop production. The custom duty on basic raw
material of soap comes to approximately 62 per cent. Whereas, the custom duty on finished
soap is only 25 per cent. This anomaly has been maintained by the bureaucracy at the
behest of some multinational companies. Higher duties have crippled the local maufacturers
whereas foreign companies have been the largest beneficiery. This has been going on though
the country continue to suffer from adverse balance of payments and limited forex at its
disposal.
