INTERVIEW WITH KHALID TAWAB, VP FPCCI
Jan 9 - 15, 2012
PAGE: TELL US SOMETHING ABOUT YOURSELF.
KHALID TAWAB: I am presently vice president of the federation of Pakistan chambers of commerce and industry, which is the representative body of Pakistan's trade and industry, encompassing over 40 nationwide chambers and 90 trade associations. Besides, I am also chairman of the Tawab Group.
PAGE: YOUR VIEWS ABOUT GDP GROWTH AND EXPORT PROSPECTS THIS FISCAL YEAR.
KHALID TAWAB: The real growth rate for 2010-11 was estimated to remain at 2.4 per cent against the targeted 4.5 per cent. The growth target of 4.2 per cent for 2011-12 has been revised down to 3.5 per cent due to the 2011 floods. The floods severely affected our cotton, sugarcane and rice crops in Sindh, and it is expected that Pakistan will be a net importer of sugar and cotton in FY12, while the agricultural growth target of 3.4 per cent may not be achieved. The agricultural losses are also expected to affect our industrial and services sectors. On one hand, the growth of agro-based industries like textile, leather, and food processing might show a negative growth; on the other, the construction sector may demonstrate positive growth in the ongoing fiscal year due to massive rehabilitation activities. It may be observed that the share of manufacturing in the national output is decreasing while the service sector's contribution is continuously increasing. It must be realized, however, that an economy's key sufficiency lies in industrial growth, which provides employment, earns foreign exchange through exports and helps in bringing people above the poverty line.
PAGE: HOW COULD PAKISTAN OVERCOME ITS ECONOMIC PROBLEMS?
KHALID TAWAB: The macroeconomic outlook of Pakistan remains volatile due to numerous challenges on both the external and internal fronts which must be addressed. On the external side, rising oil prices, the war on terrorism and the ongoing financial crisis in the Western world and on the internal front, the energy and water crises, the law and order condition, double-digit inflation, and political instability are all causes of serious concern. Today, our external debt has risen to $62 billion. Our public sector enterprises such as PIA, Pakistan Railways, Wapda, utility stores, and others continue to act like the proverbial white elephants, which are a burden on the exchequer. Finally, the importance of improving the state of education should not ignored. Current spending on education is hardly 1.8 per cent of its gross national product, whereas our literacy rate is just 58.5 per cent. An education policy that raises the status of the national language could be a positive step in this direction. Moreover, the low level of public health spending is also not conducive to achieving a decent level of human development. Therefore, at this stage, we strictly recommend the government to increase the health budget, which is now lower than 0.5 per cent of GDP.
PAGE: COULD FOREIGN DIRECT INVESTMENT HELP THE COUNTRY GROW ECONOMICALLY?
KHALID TAWAB: Today, our investment to GDP ratio, which was 22.5 per cent in 2007, stands at a paltry 13.4 per cent, which is very unfortunate. If we were to examine the breakup of this figure, we would observe that fixed investment decreased to 11.8 per cent of GDP in 2010-11 from 13.4 per cent the preceding year. According to the board of investment, foreign investment inflows in Pakistan fell in 2011 to $1.7 billion from $5.1 billion in 2007 because of a decrease in foreign direct investment and foreign portfolio investment. However, it is some consolation that in spite of all these problems, the country remains the most investment-friendly nation in South Asia. The World Bank recognized Pakistan at the 105th rank in its ease of doing business index and 90th in ease of starting a business in the world in its report titled 'Doing Business 2012'.
PAGE: WHAT MUST BE DONE TO INCREASE EXPORT OF NONTRADITIONAL PRODUCTS?
KHALID TAWAB: Exporters should be provided with facilities to hold single country exhibitions so that the visitors may be introduced with Pakistani commodities. There should be the implementation of memoranda of understanding regarding joint ventures in the areas of telecommunication, light engineering, construction, oil refineries, textiles, garments, leather and fertilizers. There is need of be improvement in technology in the mining sector. The possibility of different collaboration for mining of marble and granite could be examined. We could request for joint ventures in cutting and polishing of our stones. There must be an exchange of delegations to identify the areas of mutual interest for joint ventures.
PAGE: WHICH SECTORS OF OUR ECONOMY COULD GIVE BETTER RETURNS TO THE EXPORTERS?
KHALID TAWAB: There are various areas of our economy that possess great potential for exports, but are currently lying unrealized. For instance, food processing is currently not performing up to its potential. Pakistan is among the largest dairy producing countries of the world, but our dairy packaging and processing sectors are weak and we have been unable to capture considerable share of the global dairy market. In other areas of food processing as well, there is a need to work on preservation of freshness and hygiene standards in packing for instance, fisheries, meat products, and fresh fruit to ensure better performance of these items. At the same time, Pakistan currently exports raw naphtha, and there is need to set up a naphtha cracker plant to capitalize on this abundant supply of raw materials.