Interview with Mian Nasser Hyatt Maggo, President Federation of Pakistan Chambers of Commerce & Industry (FPCCI)
Hailing from a Chinoti business family, Mian Nasser Hyatt Maggo was raised in Karachi. After completing his formal education, he ventured into the intricate world of business and established Al Riaz Group, an indenting company in Pakistan. The company’s phenomenal success can be attributed to Maggo’s sheer hard work, passion and commitment. Today, Al Riaz Group is recognized as one of the most reliable company in Pakistan dealing in Petrochemicals, Textiles and Steel sectors. Mian Nasser Hyatt Maggo Possesses excellent management and leadership skills and is actively involved in business and community affairs, regularly contributing his time and effort for the benefit of business community of Pakistan. He served as President Karachi Chamber of Commerce and Industry KCCI (2002-03). He also served as an Acting Chairman of Pakistan-China Business Council and Senior Vice Chairman of Pakistan-Turkish Business Council of FPCCI. He is a life Member of SAARC Chamber of Commerce and Industry and has also served as Executive Committee member of FPCCI for several years. His commitment to national interests, economic and trade development, profession, and humanitarian pursuits, combined with impeccable knowledge of international trade, Industry, finance and economy has resulted in numerous accolades and achievements. Mian Nasser Hyatt Maggo’s professional acumen and remarkable understanding of complex trade, finance, economic, social investment and industrial issues are his forte, which not only earned him wide acknowledgment, but also helped him earn his spurs as a thorough professional.
PAGE: What is your perspective about the home remittances during the current fiscal year?
Mian Nasser Hyatt Maggo: Indeed it is very encouraging that overseas Pakistanis are continuously supporting the country during this hard time when dollar is flying high. This is historic that during July-September Pakistani received home remittances of US $ 8.03 billion. On an average overseas Pakistanis are remitting over US $ 2 billion. Pakistan received US $ 2.025 billion from the Kingdom of Saudi Arabia. I am optimistic that the recent visit of Prime Minister Imran Khan to Saudi Arabia and meeting with high officials will definitely open new opportunities and it is expected that there would be more financing and other source of inflow from Saudi Arabia. Similarly, overseas Pakistanis in United Arab Emirates remitted US $ 1.5449 billion, inflow of remittances from United Kingdom was recorded US $ 1.115 billion during the same period and US $836 million from USA. Remittances from combined EU nations are US $ 889 million (US $ 0.889 billion) and from other GCC Countries (Bahrain, Kuwait, Qatar, Oman) US $ 880.7 million. As far as the growth in remittances is concerned, this year home remittances grew by 12.5 percent as compared to the same period last fiscal. During the fiscal year 2020-21 remittances surpassed volume of Pakistan’s total exports. Remittances were US $ 29.4 billion while foreign exchange earning from exports of Pakistan was US $ 25.29 billion. While inflow of foreign direct investment FDI was just US $ 1.8 billion. I am hopeful, as the world is opening for economic activities after control over COVID-19 impacts, more economic and trade activities will create employment opportunities and opportunities for Pakistani labour that will ultimately enhance current trend in remittances. Remittances serve as catalyst to macroeconomic stability and its inflow improves the socio-economic well-being of the people. Remittances to Pakistan also play an important role in the stability of the economy. The flows of remittances helped cushion the economy against a severe balance of payment and current account deficit.
PAGE: Your views about the depreciation of Pak rupee on the business activities in Pakistan:
Mian Nasser Hyatt Maggo: Fluctuation and depreciation of Pakistani Rupee against US dollar creates uncertainty and slowdown in the business environment. Our exports are heavily dependent on imports of raw material which is the basic requirement of our industry, i.e. chemical plants, machinery, textile sector input materials etc. When rupee depreciates our purchases of raw material become expensive and cost of doing business goes up and thus makes Pakistani exporters less competitive. If a rupee devalues against dollar it leads to cost driven inflation. Devaluation also raises the cost of servicing our external debt and discourages investment.
PAGE: How would you comment on the impact of rupee-dollar parity on exports?
Mian Nasser Hyatt Maggo: The value of Pakistani rupee is continuously depreciating and devalued at Rs. 175.60 against a dollar. Since Pakistan is negotiating with IMF, the exchange rate is fluctuating upward. Exchange rate was Rs. 157.48 on 2nd July 2021, then Rs. 159.1 on 15th July, Rs.162.39 on 2nd August 2021, Rs.164.9 on 16th August, Rs.166.4 on 1st September, on 16th September rupee dollar parity was Rs.168.9 against a dollar and on 1st October 2021 Rs. 170.43 and then one dollar reached Pakistani 175.60 rupees. Under the modern era, the industries and economies are interdependent that is for stance exports of a country contain a large proportion of imported inputs. Imported inputs therefore become more costly for any given exporter and are not necessarily substitutable with domestically-produced products. Usually, exporters lock their deals in advance and deliver their orders after some months. A sudden change in the value of currency will dent their profitability. Specifically, small and medium-sized exporters face solvency issues and go bankrupt.
PAGE: What is your take on the bottom line of the national and multinational organizations in the wake of dollar appreciation?
Mian Nasser Hyatt Maggo: Despite fast moving towards liberalizing policies to attract investment through the growth of multinational companies, Pakistan has insignificant number of MNCs. Private Sector particularly MNCs are the important source of providing employment through functioning of their industrial operation and purchase raw material for the operations from the country of operation. However, these MNCs also face challenges and opportunities in the wake of exchange rate parity. When rupee depreciates or in other words for MNCs dollar appreciates, it affects the cash flows and therefore the values of internationally active firms. Currency appreciation usually reduces inflation because imports become cheaper and the lower prices lead to lower inflation. It makes imports more attractive, causing the demand for local products to fall. Local companies usually have to cut costs and increase productivity so they can remain competitive. Multinational firms expand sales, assets and investment subsequent to depreciations, while local firms show little change or a decrease in operating activity. Local firms are more vulnerable to financing constraints after depreciation. Changes in national firm financial constraints induced by depreciations (appreciation of dollar) cause the different investment performance of national firms relative to multinational. Multinationals are able to receive equity infusions from their parent companies after depreciation.