- Karachi business community must work as one for the growth of a city
Interview with Muhammad Farooq Afzal — President/CEO, ITN Group of Companies
[box type=”shadow” align=”” class=”” width=””]Profile:
Muhammad Farooq Afzal is a dynamic and a profound professional in the realm of Textiles, Information Technology, Business Consultancy, Tourism, and Event Management. He is pursuing his entrepreneurial ambitions for last 21 years, locally & internationally. He had been playing an instrumental role in promoting trade and business ties between Pakistan and other countries since 2004. Farooq has been continuously putting in his multifaceted efforts towards the cause of promotion of bilateral and multilateral trade. Farooq has also been participating in TV talk shows regularly to speak about the economy, promotion of bilateral and multilateral trade based on the business opportunities lying in respective countries. Farooq holds a Master’s degree in Business Management from Philippines and Bachelor’s degree in Commerce from University of Sindh, Pakistan. He is also a Doctor of Homeopathic Medicine. He is Founder President of Pakistan Turkey Business Forum and President/CEO of ITN Group of Companies.[/box]
PAGE: How would you comment on the problems encountered by the business community of Karachi?
Muhammad Farooq Afzal: Karachi is the commercial hub i.e. Commerce and Industrial center and economic engine of Pakistan. If Karachi gets disturbed, it means that Pakistan’s economy gets disturbed. It is the 8th largest city of the world consisting of an ethnically and religiously diverse population of more than 22 million, but unfortunately city has very serious issues of infrastructure which is badly needed for further economic growth of Karachi in particular and Pakistan in general.Karachi is the most business-friendly city in Pakistan.
Karachi accounts for the lion’s share of GDP and revenue, generating over 67 percent of the total national revenue and producing about 42 percent of value added to large scale manufacturing and 25 percent of the GDP of Pakistan. While Karachi ports handle 95% of its foreign trade. However, the economic engine of Pakistan still lacks proper infrastructure which is a very serious problem for the business community.
Considering the current circumstances of the financial capital of Pakistan, economic issues and their resolution are a major challenge for every government. Neither Federal nor Provincial Governments have the will to resolve the issues of Karachi being faced by the business community of Karachi. For dilapidated infrastructure of Karachi, Sindh government has been sitting idle for last 13 years. These disruptions in the revenue engine of Pakistan will continue to bring serious economic difficulties for the country. There is dire need to stop these disruptions, so as to put the economy back on track and ensure sustainable growth for the entire nation.The major issues being faced by the business community are severe shortage of gas, power, communication, transportation, roads, water, sanitation, unavailability of skilled labor, corruption of concerned government departments associated with the businesses and industry and lastly critical harmony between diverse social, religious and ethnic communities.
Above all the big problem lies within business community which is also not interested in taking the ownership of the Karachi. Associations such as FPCCI, KCCI, KATI, NKATI, FBATI and many more based in Karachi having many influential individuals within their ranks butas long as their own businesses continue to operate and prosper, they are least bothered with the conditions of the roads, public utilities and general infrastructure of the city. They are self-centered and do not strive for the collective interests of the business community in particular and Karachi in general.
Karachi’s issues can never be resolved until the business community of the city comes together on a common agenda to stop the deterioration and work to improve the quality of life for its citizens. Instead of blaming the government at all levels, it is time to take ownership and engage in collective action with the specific goals like improving mass transport, water and sanitation, public utilities, environment and air pollution, quality and conditions of labor, health services and many other aspects of life.I humbly request business community of Karachi to please get united and now they must think and act wisely by taking ownership of the city. They must strive for the collective interests of the business community of Karachi.
PAGE: Your views about the availability of energy for the industry of Karachi:
Muhammad Farooq Afzal: Karachi’s power demand is between 3,000 to 3,400 Megawatts during the summer and even sometimes due to heat wave it crosses 3,400 MW. As per K–Electric, they generate about 2,500 MW with installed capacities and the rest is being taken by the IPPs and WAPDA to fulfill the requirement. KE gets subsidy on the electricity from the national grid and SSGS provides them Gas on priority basis at the cost of the public and private sector.
Despite that it is a controlled and managed privately. KE gets special concessions from the Government, but unfortunately, it has terribly failed to cater not only to domestic users but industry as well! Due to line losses and very poor management of KE, industry of Karachi still faces load management and load shedding which is hampering the industrial growth and also increasing cost of power while using self-generation of the power by the private sector.It is not only Karachi but in general Pakistan has been facing serious crises of the shortage of energy and that is affecting economy and other segments of the society. The demand for energy is increasing day by day with the increase of population and industries. But production of energy is not proportionate due to outdated infrastructure, lack of planning and mishandling of resources. Procedures used by the authorities to overcome these problems are very expensive. As a result, we generate very less energy at a high cost.
We encounter this problem in the form of load shedding and increasing prices of basic needs. Pakistan produces about 81 percent of its electricity through oil and gas, which costs about $9.4 billion.Pakistan is rich in resources that could be used for energy production. These resources include both renewable resources like hydropower, solar power and agricultural biomass and non-renewable resources as gas, coal and petroleum products. The government should replace oil and gas power plants by thermal power plants. Government should start campaign for awareness about energy saving, constructing new dams, hydro power plants and also use alternative energy resources like wind power, biomass and solar energy.
PAGE:Your views on the impact of inflation on business:
Muhammad Farooq Afzal:Â Inflation has very strong impact on business and positively related with economic growth of the country. Inflation is a key indicator of a country and provides important insight on the state of the economy and the sound macroeconomic policies that govern it.
A stable inflation not only gives a nurturing environment for economic growth, but also uplifts the poor and fixed income citizens who are the most vulnerable in society. Inflation has serious implications for GDP growth.
In Pakistan, following are the main reasons of increase in inflation:
- Increase in Money Supply (The major cause of increase in the price level is an increase in money supply)
- Non-productive Expenditures
- Corruption & Black Money
- Deficit Financing
- Local and Foreign Loans
- Massive devaluation (Rupee/dollar devaluation has always contributed towards inflation in the economic history of Pakistan)
- Interest rate (Another folly committed by the PTI government was the steep rise in interest rate.)
- Heavy taxation
- Mafias and scams
Inflationhas discouraged investment in projects that raise the economy’s productive capacity. Businesses started focusing on projects with short-term returns, or transactions in foreign currency. Efforts to minimize inflation to a very low level (or zero) are likely to adversely affect economic growth. However, attempts to achieve faster economic growth may overheat the economy to the extent that the inflation rate becomes unstable.
The real challenge for the government of Pakistan is to achieve a growth rate which is consistent with a stable inflation rate, rather than beat inflation first to take it to a path of faster growth. Pakistan must need inflation for growth, but too fast a growth rate may also accelerate the inflation rate.Policymakers throughout the world during the last decade or so have recognized that lowering inflation is conducive to improved growth performance. So, the goal that the government of Pakistan has to achieve is of keeping inflation to single digit, or close to single digit.
PAGE:What is your take on the business sentiment during 2021?
Muhammad Farooq Afzal:Â I think that Pakistan really progressed well in the year 2021 and was able to achieve GDP growth of 3.94%, which is really a big achievement as we compare with the year 2020 @ – 0.90%.
Due to pandemic, it was still a good performance as compared to many worlds’ advanced economies.Pakistan received highest ever foreign remittances from the expatriates i.e. $29 billion and was able to increase exports by 29% and decrease in imports by 30%. Overall business situation was very good, and many new businesses started and many expanded to enhance their respective capacities.
I am expecting a very good business and economic year for Pakistan in the year 2022.