EXPORTABLE SURPLUS ON THE DECLINE

ENERGY CRISIS IS THE PRIME REASON FOLLOWED BY PRECARIOUS LAW AND ORDER SITUATION

SHABBIR H. KAZMI
(feedback@pgeconomist.com)

Oct 15 - 21, 20
12

Around the world governments facilitate the business community in achieving optimum capacity utilization of industrial units. Contrary to this in Pakistan the bad policies are solely responsible for dismal output of the manufacturing units. Policy hiccups can be termed the major cause of sluggish economic activities in the country. These include: 1) curtailing gas supply of industrial units, 2) delay in granting permission to export sugar, 3) failure in finalizing wheat export to Iran and 4) textiles and clothing sector on the low priority regarding gas supply. Added to these are poor law and order situation and political uncertainties.

One of the most important factors in boosting exports is commitment to deliver the goods according to the agreed schedule. Since the incumbent government has come into power, industrial units have been facing prolonged outages. The policy planners are fully cognizant of the fact that looming energy crisis is adversely affecting performance of the manufacturing sector but nothing has been done to improve supplies. It has been pointed out repeatedly, that the country has around 24,000MW electricity generation capacity but actual generation hovers around half. The key reason is limited availability of fuel, which generation companies just can't buy due to financial crunch. Added to this have been prolonged outages of gas.

Manufacturing units, especially the smaller one face a difficult situation due to limited options. If they run the machines on standby generators, hike in production cost renders them uncompetitive in the global markets. If they can't exercise this option due to shortage of funds, they lose their customers for good. On top of this distribution companies keep on increasing the tariff but failing in ensuring uninterrupted supply at afford able cost. It may not be wrong to say that the policy makers know the issues as well as their solutions but take no corrective steps. It seems they are being paid funds from external sources to add to the agonies of Pakistanis.

Pakistani exporters also suffer due to the rising cost of doing business. In the past the central bank followed tight monetary policy and kept the interest rate high to curb inflation. One could shed tears on the mindset of the decision makers. They are fully aware that Pakistan suffers from cost pushed inflation. In such a scenario keep the interest rate high and persistent increase in electricity and gas tariff could add to the cost of production.

Taking specifically of Karachi the industrial units not only suffer from load shedding of electricity and gas but booty culture. Some of cynics say that the fire at the garment factory in Karachi, which killed more than 300 people, was not an accident but the brutal act of booty collectors. Some of the quarters are trying to put the blame on the owners for keeping the doors looked. However, no one is asking why the doors were closed? Doors were locked due to security reasons.

Since the unit has been exporting it products to the developed country and it has different certification, saying that it didn't have appropriate fire extinguishing facilities does not make any sense. In fact it also raises questions about the performance of different government departments that are required to conduct regular inspection of the facilities. One also wonders that when fire broke out at a pint factory and virtually the entire plant was burnt, number of deaths was not so high.

Some of the acquisitions are: 1) there was no water at the factory and 2) fire tenders took too long to reach the factory inferno and they also ran short of water. Since it was a garment factory it didn't require huge quantity of water. However, the brutal fact is that the city is still a hostage of 'tankers mafia'. CDGK had spent billions of rupees on laying pipelines but now only a little quantity runs in these. It is true that KW&SB owes billions of rupees to KESC but if it does not get payment from consumers what could be done.

Besides the threats of booty collectors, trade and industry also has to face precarious law and order situation. In board day lights people are kidnapped for ransom. Now even school going children are kidnapped and often their muted dead bodies are found. Added to this is killing in the name of sects, languages and professions. If killing of academicians and doctor was common in the past, the prevailing situation suggests presence of 'merchants of death'. It seems the killers are paid and the reward is higher, if they kill known and famous personalities.

It has been highlighted repeatedly that now the killers have also joined the law enforcing agencies. The killers may not be on the payroll but they are certainly given protection by the law enforcing personnel. This conclusion can be drawn after exploring how many killers have been arrested and punished.

Most of the criminals are acquitted due to lack of evidence. There could be two probabilities: 1) killers belong to other parts of the country, 2) take shelter in ethnic concentrations and 3) return to their home towns after the mission is accomplished. One of the reasons behind this conspiracy theory is that most of the people working in different law enforcing agencies don't belong to the city. In the past voice has been raised that these aliens commit the crime and remain in hibernation. In police it is most common that in charges are willing to mark any one and every one on duty provided the person is willing to share part of his salary.

Most of the guards working for private security companies also don't belong to Karachi. It is on record that employees of these firms were involved in robberies of bank branches. There are also complaints that at times these guards play the role of 'informer'. Robbery at factories and offices are common on salary distribution days. Most of the time robbers follow the vehicle carrying cash and run away quickly because guards hardly pose any resistance.