INTERVIEW: ZUBAIR MOTIWALA

ENERGY CRISIS HAMPERS ECONOMIC GROWTH

SADAF AURANGZAIB
Feb 18 - 24, 2008

In an interview with PAGE, Mr. Zubair Motiwala, a renowned name in the business circle of Pakistan, talked about the problems our industry has faced in the last quarter of the current fiscal year.

While reviewing the problems, he said that there are many incidences that has taken place with respect to the law and order situation, with respect to energy crisis and the recent gas crisis has really played havoc with the industries and today around 3000 units are nonfunctional in Punjab and NWFP and they are not running because of the shortage of gas as the gas supply has stopped to them. Government is saying that it is because of the severe weather, and there is around 500-600 million cusecs is the increase in the volume of domestic consumption. When you see the quantum of supply going up, 500-600 million cusecs is not a big average so it means that we are standing on the verge that whether the supply would remain there, or low pressure would sustain or the closures have to take place. Government has granted CNG Stations like anything, it's a good thing to do to save the petroleum bill but at the same time we have to see as to what kind of consumption we are creating so government has failed to understand this. Government has been very instrumental in taking these kinds of negative decisions. At one place there are huge queues for industrial captive power plants gas connections which they are unable to give and at another place they are giving connections to the CNG stations so that is becoming a great problem. Our petroleum bill has gone down considerable but at the same time we are actually closing down the industry which is not a very nice option. At one end we want to give job options to the masses of Pakistan that could only be possible if the industries would run. Today there are lay offs in Faisalabad and people are actually thinking of closing their industries completely because today there are much better options open for them in the Gulf countries without any hindrance of the law and order situation and energy crisis where they can invest in the real estate sector and other allied opportunities.

In the first quarter of the fiscal year, our industries were running smoothly but suddenly the whole thing got changed for us in the second quarter of 2007-2008, that's where things started depleting and everything went wrong. We believe that it is because of the two very big incidents in the country and in this 3rd Quarter we have a disastrous situation where we have almost very small quantities of order, there are delays and the buyers are worried about their supply guarantee of the articles which they have ordered to Pakistan so I can see a bleak scenario even after March. The big buyers like Wal-Mart and JCPenney do not take any risks and there are penalties now if their shelves remain empty for any reasons, the commodity has to be there in the stores according to the sale trend.

The government eight year tend is now broken and the large industries even are not meeting the targets they set for and the small and medium industries are nowhere. It has already hurt the six month figure of the revenue collection which is 37 billion less than the actual target so that needs to be revised downwards. The government is also revising the PSDP program which costs it almost 520 billion rupee. Now the government has asked that the programs that are not yet initiated must be consulted back to the Planning and Development commission. So there would be a delay in those activities, today the highest amount of internal borrowing by the government is unprecedented and the worse law and order situation has added to the negative trend. I think that in the year 2007-2008, we will not see a satisfactory figure as far as the economy of Pakistan is concerned.

We also could not deny the affect of the yellow journalism and the financed journalism by the lobbies against Pakistan. The lobbies that Pakistan has in United States and European Union are not playing their due role, which is also reflected upon by the President when he was last meeting us here in Karachi after the worse incidents. In order to improve our image we need to lobby in the Senate and Congress of the United States which is very necessary for a country like Pakistan. Indian People are doing a very fine job in lobbying against Pakistan and one of the examples that I can give is of the Hemp Textile Fair that is the largest fair held in Germany and where importers and buyers from almost all the countries come and place their orders, this year the Indian people placed the copies of the Time magazine on the every floor in which the title story was on the Mohtarma Benazir Assassination with her photo and a headline " Nobody could save Benazir, why should we save Pakistan", so these free copies were of avail to the people from different corners of the world and because of that negative culture, we lost a one very precious order of Wal-Mart that is of 21 million dollars and they gave the order to India on a 12% more price.

Law and order remained a major obstacle in attaining the targets. When our far away relatives got much worried because of the stories shown on television and press, then one could understand that how perturbed our buyers would be about their orders. We need to think about the offshore procurement that why a importer sitting in New York want to take risk where everyone is saying that Pakistan is in danger so they just switch over to other countries for placing their orders.

We grow almost 18% of the world cotton and we should be 10-12% supplier to the United States which we are not. Here we are not getting enough energy to run our industries smoothly, there is no gas and then there is a water shortage which make it almost impossible for us to bring value addition to our products. The actual value addition takes place at the stage of processing where we can add logo "Made in Pakistan" which can only be added when you print to dye the cloth then you can say it is "Made in Pakistan" otherwise the grey cloth or yarn doesn't signify anything. What mostly happens is that it is manufactured and printed in Japan or in Bangladesh and becomes their product. This all requires good quality and a good quantity of water which is absent in Karachi which is responsible for 67% of exports. In Punjab the water is there, but they are having different other problems.

We need to work that our perception would get better and the end consumer would be ready to accept our products with our logo and brand names. The perception can get better if the supply guarantees are given to those who are buyers. We need to work on both as the importer could cancel an order provided the end consumers do not accept the "Made in Pakistan" logo. Today Bangladesh which doesn't grow a single kg of cotton, earning a 10 billion dollar export by adding value to our grey cloth.

We also need to work upon the price factor, if we are low in price, we will keep on exporting but exporting basic commodities will not make us good money. We are still not marketers and still suppliers and until you do not become a marketer, you can't negotiate on price. We are asking people to work on their own trade marks because now we have suffered a lot and we want to market our goods with our logo and the second thing we are concentrating on is that we are trying to create fashion design, the trend in design like the colors of autumns, of springs etc. We are also working on hiring professional marketers to promote our marketing. This will take time but we are really working in our domain. What we want from the government is to work hard on the perception of Pakistan; the government should held responsible commercial attach's in the respective countries. Tell them that the perception should be made cleared and positive attitude must be brought in those minds through concerted efforts. We should reinforce our relation with our existing buyers and try to expand our base with the help of those commercial councilors.

We are hopeful that this phase will pass smoothly and law and order remains in control. We hope that out of this election, we will have a government that is patriotic and loyal to Pakistan and that can look after the economy. I also want to say that we have all the hopes in Pakistan, we live here and we want to die here too. We are as patriotic as any other Pakistani and this I am saying on behalf of the whole business community. Pakistan has given us much, so if we loose a little for a while but still we see the light at the end of the tunnel, we would be willing to do any sacrifice for Pakistan.