THE promulgation of Trade Organisation Ordinance 2006 on the last day of the year has left business leaders guessing and confused as to whether it will regulate or strangulate the existing 48 chambers of commerce and industries and about 200 sectoral trade associations. More confusing is the fate of five town associations of Karachi—the SITE Association of Trade and Industry, the Korangi Association of Trade and Industry (KATI), the North Karachi Association of Trade and Industry, the Federal ‘B’ Area Association and Landhi Association of Trade and Industry.

The confusion about the fate of Karachi-based five town associations of trade and industry is because the new law clearly stipulates the grant of licence to a chamber of commerce and industry and services in a district. The city government in Karachi functions as one of the 104 district governments of the country and so by the same rule only one chamber of commerce and industry will operate. A town association, organised to represent trade, industry or service in a town, tehsil or district will be given a licence to function only when that tesil or taluka is upgraded to a district. The law declares that the town associations cease to exist after a chamber has been given a licence in a district.

By implication it means that the Karachi Chamber will be given licence to function in the district after all other associations cease to exist. On promulgation, the government has announced cancellation of all licences to chambers and trade associations. These bodies have been asked to furnish fresh applications within one month. These applications will be processed in 90 days after which the authorities will take a decision whether to issue the licence or not. So by March or April next, all these five town associations having thousands of members, will cease to exist and the Karachi Chamber with a membership of 15,000 will be the only functional trade body.

Despite these clear provisions in the new law on granting of licence to only one chamber of commerce and industry in a district, the local business leaders are confused and trying to convince the government that Karachi had five administrative districts till recently which give enough room for five town associations. In case, Karachi is taken as a district then the business leaders—Majyd Aziz of KCCI and Amin Bandukda of SITE Association plan to make a representation to the government to make some special provision that may allow them to operate with the Karachi Chamber. The contention is that five town associations are legitimate bodies with a huge membership and an enviable service record.

“Why should only Karachi be given the privilege to have a chamber and five town associations?,’’ a businessman active in the Federation of Pakistan Chambers of Commerce and Industry affairs raised the question. According to his perception there are many districts in Punjab — Lahore, Multan, Faisalabad, Gujranwala, Gujrat and Sialkot — which are centres of business and industrial activities and should have many trade bodies. “And even in Karachi there should be 18 chambers, one each in 18 town areas rather than one plus five’’ is the other view.

Instead of providing a solution to the problem, the present law raises many questions that will trouble the businessmen. One such question pertains to the number of members that the authorities want to prescribe for any chamber to be entitled for a licence. No such number has been given by the authorities but business leaders, on the basis of their meetings particularly the one they had with Federal Commerce Ministsr Humayun Akhtar Khan on December 5 quoting a minimum membership figure of 350.

“Why traders and industrialists of such areas of the country where business activities are relatively less than the developed areas be denied the facility of getting together as a chamber or trade association for their interest?’’, is another question asked by senior businessmen who recalled from history that the Karachi Chamber of Commerce and Industry was set up in 1860’s with a very small initial membership.

All said and done, the fact remains that there were chambers and trade associations in the country without justification. There are chambers of commerce and trade associations which are family fiefdoms. There were many top business leaders in the apex trade body — the Federation of Pakistan Chambers of Commerce and Industry — represented those chambers and trade associations that never held any meeting or any elections. Neither, the FPCCI questioned the credentials of such trade bodies nor the much feared Director Trade Organisation (the DTO), a joint secretary in the Federal Commerce Ministry, ever bothered to investigate, as long as he was kept in good humour.

Designed to target fake and bogus chambers and trade associations—50 to 60 according to a rough assessment — that perpetuated a set of controversial business leadership during the last 45 years at the apex level, the present law also hits the trade bodies, which according to business leaders, are legitimate entities, comply with all corporate and legal provisions, provide excellent services to their members and are contributing in the growth of trade and industry.

Businessmen are now waiting for framing of the operational rules that may give a better vision to them to assess the pros and cons of the new trade organisations law. Federal Commerce Secretary Syed Asif Shah was unable to give any timeframe for the finalisation of these rules, but said that a private consultant had already been engaged to do the job and it goes without saying that the rules would incorporate the views and opinions of all the stakeholders.

The law, according to the federal commerce secretary, provides much more comfort to the businessmen and trade bodies in respect of appeals against any harsh administrative actions. “Except for replacing a Director Trade Organisation (DTO) with a Director General, there is no qualitative change’’, Tariq Sayeed, a senior business leader remarked. Articulated and well versed with business and law affairs, Mr Tariq is dominating businessmen politics for almost three decades and has won friends and foes, admirers and adversaries. “Is there any restriction on formation of a political party in the country?’’, he questions while wondering as to why the government should look proliferation of trade bodies with suspicion. There are 528 chambers in Japan and countless in the United States, he argues.

Mr Tariq’s rise in the FPCCI and the resultant adversarial reaction has reduced business politics to a petty personality level putting behind all real issues. The chambers and the trade bodies now lack long and short-term vision of industrial development, a global business perspective, environmental issues and socio-economic problems afflicting 160 million people of Pakistan. In 1973 the late J.R.D. Tata was the President of the Federation of Indian Chamber of Commerce and Industry who raised such issues of an over centralised economic structure and then articulated on coming global challenges, in his address of welcome to the then prime minister late Indira Gandhi that many senior businessmen still recall with awe and admiration. The late Indian premier was found wanting for words in replying to a few of the pressing questions raised by Tata. After his death, Tata was declared one of the architects of modern India and a hero.

Then as far bask as 1882, the members of the maanaging committee of the Karachi Chamber of Commerce and Industry questioned the decision of the Calcutta-based British government to merge Sindh in 1849 with Bombay instead of Punjab. Then in those days, the canal network in Punjab has made that province food and cotton supplier to Britain and Europe through upcoming Karachi port. Sindh and Punjab may be ethnically different entities but are one single economic unit, the business leaders in late 19th century had the courage to declare.

But the present law hardly provides such an environment in trade bodies in which the leaders would be straight, bold, imaginative, probing and articulate. Under the law, every trade body will seek fresh licence after a period of three years. It means giving enough room to the bureaucrats for keeping business leaders and trade bodies under their control.

As if this was not enough, the DTO has been elevated to the post of Director General who, according to the new law, will have the power of the judge of a civil court. He has the authority to summon any person and enforce his presence, demand production of documents, receive evidence and issue commission for the examination of witnesses.

The DG will conduct enquiries into the affairs of trade bodies. He will inspect, with or without any notice any office of such trade organisation, attend meeting of executive committee or the general body or any committee set up by the trade body, watch and supervise elections. He will be the final forum of appeal against verdict of any committee of the trade body. He is also authorised to enter the premises for search.

The powers of the DG are so wide and immense that these will literally strangulate the trade bodies rather regulating in smooth and orderly functioning. This law replaces the TDO 1961 enforced by the Ayub Khan government. Soon after imposing Martial Law, the Ayub regime had detained a number of top business leaders who included late A.K. Sumar and Mohammad Ali Rangonwala. There were strikes and agitation by the traders and businessmen. The 1961 law promulgated to rein in these agitating businessmen. Then in the subsequent period, the businessmen were given opportunities.

There were attempts to register small and retailer businessmen in Sales Tax department in the year 2000. There were strikes and agitation. Business leaders feared that the government may use trade bodies for political purposes. Trade bodies in Punjab have been displaying their support to Chowdhry Pervaiz Elahi. Recently in Karachi trade bodies were asked to put on bill boards and banner to hail the completion of four years of the governor. Trade bodies have been used as tools by the governments and perhaps this law gives more chances to do that.