ONE cannot but regret and sympathize with the exporting segments that lost export orders mainly because of an ill-informed and/or a phobic view of the situation taken in the importing circles.
War risk insurance and anthrax testing of containers compounded the problem by increasing the costs and disturbing the delivery schedules. So, could we say that the importers made a timely strategic response to guard against any further eventualities in the region by diverting their orders to the regions from where future supplies’ cost and delivery would be assured irrespective of the situation in traditional exporting countries? What then should be or should have been the strategic response/s from our country as compared to what it has been already?
Pakistan estimated an export loss of the order of $1.0—1.5 billion. In response, they sought greater market access, budgetary support, and debt relief. While request for greater access was accepted in principle, it was opposed by the US business interests and some of the EU member countries. Further, more market access would help only if the individual importers would be willing to continue to place orders with us. So, while more aid and debt relief were sought to ease the forex crunch, none of the above measures would address the predicament of the small exporters directly in the immediate future.
Consequently, we have a situation wherein APTMA fears a shortfall of $700 million in exports this fiscal year. Similar situation is found in leather garments, carpets, software, hotels, and travel industries. Bulk of the capacity in export industries has been rendered idle. The Export Promotion Bureau (EPB) set up a Special Cell late-October to deal with the situation. The EPB has tried to reach out to the foreign buyers through Pakistan embassies in the US and the EU countries to communicate that situation in Pakistan is normal and that contracts would be honoured. While the effort should be appreciated, is EPB’s response adequate? The actual outcome of EPB’s effort or the lack of it would answer the question.
Clearly, there is a lot more needed than merely relying either on the EPB or the federal ministries of industries and finance. While the EPB obviously lacks the resources to instil confidence in the importers, their reliance on Pakistan embassies itself shows how promising the effort would turn out to be. That is, if at all the embassies abroad choose to make an effort worth the name. Embassies known for their ineptitude in handling trade-related matters should not be expected to produce results in this area. As for the ministry of industries, their focus has been on handling the issue at a higher order level which they are doing. That is, pursuing more market access through tariff reduction and quotas’ enhancement when the latter measure will not be tenable under the WTO agreements. Also, tariff reduction may help the existing players more than the ones that have faced the brunt in the aftermath of September 11. Industries ministry is more concerned about restoring the overall level of exports than about the woes of individual exporting segments. And, the ministry of finance is too engrossed in mobilizing forex resources to stay afloat. The specific issue faced by the individual exporters, therefore, remains inadequately addressed.
And, the specific issue revolves around cancellation of orders and absence of fresh orders which is too serious an issue to be either generalized or to be dealt with at a level that is ill-equipped to do so like the Pakistan embassies. This is a case of rectifying the information distortions that impelled the importers to divert their orders to other sources. This could best be taken up at the level of chambers and trade associations. We must keep in mind the kind of cooperative interaction that took place between the exporting and the importing interests which helped the Pakistani textile exporters get around the anti-dumping issues many times in the not-too-distant past in Europe.
It is this kind of a working relationship between exporting industries’ associations and the importers’ associations that is required to allay the fears of the importers. The goal would be to show the real situation and thereby the feasibility of delivering on the orders received for exports. It would require frequent contacts and regular interaction to turn that situation around which exists in the minds of the importers, inter alia, due to a certain hyped up image of the post-September 11 situation in Pakistan.
A parallel effort would then need to be made more at the level of the ministry of interior than that of finance. The exporters’ associations need to also make the ministry of interior see a correlation between the lost export orders and the ‘minority’ sentiment allowed to give vent on the streets. This is, however, subject to the condition that the exporters see street power as one that represents minority groups. If they are themselves being represented on the streets, then there is a good enough reason for the importers to be wary of us. For, if they view us as a whole nation aspiring for war; then in that case, the importers would be responding strategically by diverting their export orders. Exporters will then have to make a choice between a desire for a “holy” war and doing business with the world. If they can clearly opt for the latter, then they should have little difficulty communicating the same to their trading partners abroad and the ministry of interior within.
Intense parallel efforts should then be mounted at winning the trading partners back and at the interior ministry’s level. For, the ministry of interior should ensure that the view and image they allow to be promoted on the streets is not remembered as the only one view of the population of Pakistan. For, the latter situation has brought business losses to the country which the interior ministry should help avert just as much as the ministries of industries and finance or the EPB are expected to help.
As for rectifying information distortions indulged in by world media, a truly business-oriented and resourceful business community might consider throwing up their own electronic network with worldwide coverage. While this might sound far-fetched and before it is dismissed with scorn or humour or both, the post-September 11 events have adequately demonstrated the impact of information, distorted or otherwise, on business performance. The importance of information remains at the heart of managing a business strategically. That is, without acquisition and analysis of information, both internal and external, a business remains ill-equipped to steer itself in dynamic external environments. So, ideally, developments should be anticipated and response thought out in good time. And, the level of organizational cohesiveness and internal informational networks should be so developed that an effective response is made to external factors in case they could not be anticipated. The United Parcel Services Inc. (UPS) delivered the parcels satisfactorily in New York despite the disaster of September 11. The UPS did it to the satisfaction of its customers who expected it the least in a chaotic situation thus demonstrating effective response to turbulence.
Important questions asked in this context are whether all of such environmental factors can be anticipated. As for the UPS, it could have anticipated an attack in New York in general and the World Trade Centre (WTC) in particular. The WTC’s vulnerability was displayed not too long ago when an earlier attempt was made to bomb it from the ground and some dissident groups in the world were held responsible. Possibility of a second attempt could not have been ruled out and agile businesses remain alert to such events that cause turbulence in the areas of economics and/or politics with ramifications for businesses. Many corporations, therefore, equip themselves with both business economists and political scientists who relate economic and political scenarios with business prospects/performance. Businesses thus gear up for making effective responses to the external environmental factors. Business schools abroad include business-government relations, business history, and international political economy as important and not marginal courses in their MBA curricula. Business graduates are thus equipped to work with external factors with ease and grace. Some business schools are also offering joint degree (JD) programmes in MBA and International Relations (IR). In these JD programmes, IR graduates are recruited and trained in business administration to produce super business graduates who would have the knowledge, skills, and vision to remain on top of external factors. Diversity in training is preferred to steer businesses successfully not merely in ever changing markets but also through ever shifting political, economic, and social environments.
In Pakistan, unfortunately, myopia governs business education which restricts emphasis to the traditional functional areas that are a necessary but not a sufficient requirement to lead businesses through volatile environments. When business education itself lacks the necessary vision in the country, there remains a paucity of concepts disseminated for practical utilization in the field. It might be argued that an average Pakistani exporter cannot afford the luxury of specialists in politics and economics so as to predict events. The scale of operations may not, however, require specialists. For, if the modern management concepts are disseminated far and wide, the level of anticipation required might not necessitate having specialists on the payroll.
As events moved in Afghanistan from the dismantling of Buddha’s statues to the arrest of eight white NGO workers on charges of proselytization, the situation could be seen building into a serious scenario. While the precise nature of the scenario could not be predicted, the gravity of the situation could certainly be seen as intensifying. This was not difficult to perceive as business is currently being run by generations that have cut their teeth on issues of international relations and politics. However, politics ought to graduate from our idle drawing room pastime to a factor that should be influencing business decisions. The vulnerable business groups could then have closed ranks in good time for a timely campaign against adverse publicity in the importing countries. If the mindset changes as above, businesses will be in the driving seat instead of asking for small mercies as a front-line state. A transformed view of business management would make it assertive and self-assured. And as business would take charge, the worries of our finance and industries ministries would also reduce.