November 30, 2003

‘There is hardly a country in the world that has a long-term success story based on IMF policies. Why should we hope that the case with Pakistan will be any different,’ asks Maher Alavi

MAHER ALAVI, a known name in business circles who has held senior positions in trade bodies, believes concentrating on agriculture-related exports is a folly, and is not going to pay in the long run. In his view, the export of manufactured goods alone can be fruitful in real terms, a sector which, he regrets, has not shown any improvement.

In a recent chat with Dawn Magazine, Mr Alavi talked about current business issues, Pakistan’s image abroad, corruption, and the role played by international lending agencies in formulating our policies. The following are excerpts from the interview:

Q. How do you find the business environment in Pakistan today after the military government took up with religious zeal the implementation of IMF and World Bank programmes?

A. Show me a single country in the world where success can be attributed to the adoption of the policies of the International Monetary Fund (IMF) and the World Bank. When that has been the case elsewhere, why should it help Pakistan? Business environment has not changed in any way due to the implementation of IMF and World Bank agenda. Not a bit.

Q. Pakistan’s macro economic indicators have never been so good as they are today, so claim our finance and economic managers. How do all these achievements manifest in Pakistan’s domestic market behaviour? Do you think the number of buyers have increased in Pakistani markets during the last four years?

A. The macro economic indicators, as you said, on the paper show an overall rosy picture. The ground realities appear to be quite to the opposite. Poverty has risen in the last four years, health of the nation has deteriorated, education has suffered and today the rate of literacy has decreased. Besides, prices all around have risen as the real value of rupee has suffered over the last three years.

While the export performance has improved, exports to the Arab and Middle Eastern countries have a shady story that need to be looked into. In addition, one must not link our exports to the agricultural items, because these are not a sound base to depend on. These are all dependent on the vagaries of weather and the worldwide demand that fluctuates. In real terms, export of manufactured goods is pertinent which has not shown any improvement.

Q. Do you think Pakistan lost a golden opportunity of progress and development during the 1990s? How do you see the prospects in the first decade of the 21st century?

A. The decade of the nineties, despite all the political upheavals in that period, had its progress. After September 11, the world has changed, and great changes are taking place. I, therefore, see a great opportunity for Pakistan to march ahead in its development efforts, provided decisions in the right direction are taken. In the past, Pakistan lost golden opportunities because of bureaucratic bunglings and wrong decisions. There are many opportunities, which, if taken, shall lead Pakistan to overall economic improvement.

Q. It is generally believed that Pakistan suffers from an image problem. Growing lawlessness, religious fundamentalism and sectarian killings have compelled the investors to put a red circle around Pakistan. Has this image caused you a problem in your business dealings with partners abroad?

A. Yes, Pakistan does suffer from an image problem which over the years has only multiplied. As for this rather negative image problem causing problems in my own business dealings, yes I, like most other businessmen, have had to suffer on this count.

For instance, we were negotiating with a leading German manufacturer to set up a joint venture with them. We had extended negotiations and a number of visits took place to finalize the arrangements. But our German collaborators suddenly withdrew from the project without assigning any clear reason.

Our impression is that while the image problem caused by the law and order situation at the time was the major reason, the last straw clearly came in the shape of all those piles of forms they had to fill for approval from the various ministries and agencies. The project was later set up in India.

Q. Coming to the situation at home, there is a perception that business cartels have become unduly strong in Pakistan. Cement, sugar, textile, oil, you name it. The cartels keep rising the prices of their respective products even after the government offers them concessions. How do you look at it?

A. Making profit is essential for any enterprise. Without this margin of profit, no private enterprise shall exist. However, there is a difference between a reasonable profit on investment and minting enormous profits. In today’s climate, an industry that could give a reasonable return is considered good, but in Pakistan the tendency is to free the investment before even the first screws of the plant are tightened. This surely is illegal profit, which has tarred the image of private enterprise.

Q. How do you find the current taxation system? Does it help the business to grow and market to expand? How do you see the sales tax, development surcharge on petrol and gas and such other things?

A. The entire taxation system is outdated and tailor-made for corruption. At every step there is a roadblock that cannot be moved unless the palms are greased. In such circumstances, only corrupt business grows. One of the reasons why growth has been uneven and not able to expand is the corruption factor. It is indeed a sad commentary on the prevailing situation that only recently, while approving a loan for Pakistan, the World Bank has observed that corruption and bad governance are the reasons for the country’s lack of growth.

Q. People complain a lot about corruption in government departments — taxation, utilities, police and what not. What are your experiences as a businessman and as a citizen?

A. Candidly, on a personal level I have avoided corrupting people, but at considerable cost and financial losses. Corruption exists and is rampant at lower levels. One would get away with murder if one is willing to open his purse freely.

Q. Muslim businessmen and particularly those from Pakistan are found wanting in philanthropy. For instance, there is nothing to match Ganga Ram Hospital or NED college (please don’t mention Shaukat Khanum Memorial Cancer Hospital as an example). How would you explain this lack of social responsibility on the part of Pakistani Muslim businessmen?

A. I am sorry, what you have said is wrong. As president of the Federation of Pakistan Chambers of Commerce and Industry, I had undertaken a survey on this particular point and was very pleasantly surprised to see the large-scale participation of Pakistani businessmen in the field of education, health and general philanthropy.

This survey brought out the achievement from Karachi to Khyber in all cities, towns and villages of Pakistan. The perception that you have talked of is definitely there, but this is primarily due to the fact that Pakistani businessmen have not tried to highlight or propagate their participation in philanthropic activities.

To quote a single example where I am personally involved is the reconstruction of the School for the Blind here in Karachi. We had to undertake the reconstruction of the entire complex at a cost of over Rs70 million, all raised from private donors. You will be surprised to know that a single donation of almost Rs30 million came from Begum Nadira Panjwani, a Pakistani Muslim lady with a very large heart.

Q. You were very active in business politics till about a couple of decades ago. What happened then, and why?

A. I believe one should give way to younger people to take over the affairs of a trade body like the Chamber of Commerce and Industry etc. However, I feel pained that over the years, the quality of leadership in trade bodies has gone down just as has been the case in other areas of our national life. For this, there are many reasons, including once again the free use of money in trade politics. This has led to a leadership crisis, and, as a consequence, trade bodies have suffered.

Q. What was the Pakistan like that you inherited from your father? And, what sort of Pakistan you are leaving for your children?

A. This, indeed, is a very sad story. Over the years, Pakistan’s interest has been compromised and sacrificed in all fields of our national life. I hang my head in shame over the fact that while we had received a Pakistan full of hope and optimism, what we are leaving behind for our children is a sad legacy for which my generation is solely responsible. The most dangerous tendency that one sees in today’s Pakistan is that everything, literally everything, carries a price tag and you can buy anything if you can quote and pay the right price. This must be reversed if we want Pakistan to march ahead. My father used to advise us that if a cane is bent, the only way to strengthen it is to bend it the other way round. This is what we need in Pakistan today on the national level. Who is there to bell the cat, is for the future to decide.

MAHER ALAVI is a thorough Karachian. Born here in 1930, Maher was brought up, educated and trained as businessman in the metropolis. He saw Karachi when it was the ‘cleanest city on the east of Suez’ and now lives here when it qualifies to be declared the ‘dirtiest city on this side of Suez’.

His father, the late Hatim Alavi, also had some contribution in keeping Karachi clean because he was the first Muslim mayor elected in 1938. The late Hatim Alavi was a close associate of Quaid-e-Azam Mohammad Ali Jinnah and a front-ranking leader in the movement to separate Sindh from Bombay. Hatim Alavi was also one of the three individuals, alongside Liaquat Ali Khan and Ghulam Mohammad, who were assigned by the Quaid in early 1947 to prepare the planning blueprint for the new Muslim state of Pakistan. “These papers are lost somewhere in the archives,” moans Maher. Hatim Alavi’s library was one of the best kept and well maintained. Maher retains the inheritance with pride and plans to hand it over to Karachi University “if it is of some use”.

Maher Alavi remained active in business politics almost for three decades. He served on the Managing Committee of Karachi Chamber of Commerce and Industry for a number of years. For several terms, he headed the All-Pakistan Iron and Steel Merchants Association, and finally became the President of the Federation of Pakistan Chambers of Commerce and Industry in 1984.

Renowned scholar, Dr Hamza Alavi, though senior in terms of age, is a nephew of Maher Alavi.

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