WHEN was the last time a trade group released a public statement that contained something other than an angry assertion of their righteous position? Probably not any time in recent memory.
When did we last see a trade body put out a quality research report that provided any useful, quantitative information on an industry? An unlikely prospect. When has a business association ever come together to promote a higher standard of self-regulation or ethical behaviour? Seems like a real stretch of the imagination.
So what are the hundreds of trade bodies and business associations really good for? Little, it would seem, other than infighting and promotion of vested interests. The result: Many of the trade groups tarnish the image of the otherwise smart business community.
Recent history offers plenty of examples. During the ongoing sugar crisis, the only offer to the public from Pakistan Sugar Mills Association was a bitter statement in which the entire blame was heaped upon the government and anonymous middlemen. Election time within trade bodies also brings a customary bout of public mudslinging. In 2003, the Federation of Pakistan Chambers of Commerce and Industry, the country’s biggest trade group begged for government intervention to save it from its own members. Around the same time, the All-Pakistan Textile Mills Association traded a series of vitriolic accusations and then pleaded to then Finance Minister Shaukat Aziz for intervention. The matter ultimately ended up in court. Around the same time, the Karachi Chamber of Commerce and Industry also marked elections with an acerbic exchange of words and a spiteful battle for power.
Chambers of commerce and other types of business associations are meant to serve as role models for businesses in their communities. The US-based Center for Private Enterprise says these groups do much more than promote and advocate the interests of business. They also strategize on how to attract and retain business, spearhead leadership development, consult and advise government about draft laws and regulation affecting trade and industry, develop strategies to prepare the labour force, create economic development initiatives, establish codes of conduct and promote an entrepreneurial climate for growth.
Measured against that definition, the hundreds of trade associations and business groups don’t stack up too well. The only productive roles these groups play is submitting proposals for the budget and trade policy every year. Even these are largely myopic in vision, focused on tax exemptions, incentives and protection. Lobbying the government and working on advocacy may be important but clearly they need to do more.
First, these groups need to revisit their role as adversaries to the government and see themselves more as an invaluable resource to the state. This means providing both the government and the public with accurate, timely information which will help in promoting best business practices.
After all, the unmatched volume of data accessible to these organizations must be leveraged to widen and deepen the scope of their impact. That’s the only way these groups can use their collective strength to serve their members better.
Then, associations should work to promote the concept of market-based competition in their industries rather than supporting collusion and cartel-style behaviour. Businesses, after all, are members of society that owe fair practices to consumers. That would mean the masters of market manipulation such as the Pakistan Sugar Mills Association, the Pakistan Cement Manufacturers Association and others would have to change gears. They’d have to focus on free competition, fair trade practices and zero government intervention rather than resorting to hoarding and seeking for government bailouts when the market environment does not suit their bottom line.
Next, all trade groups should become vehicles for the promotion of ethical business practices. Surely, like other responsible members of society, corporates too should develop a system of self-imposed accountability. This is especially true today when most regulatory bodies are severely depleted of institutional capacity and independence.
While businesses are quick to blame the government for the menace of corruption, what have the representatives of private enterprise really done to set an example by practicing transparency themselves? If associations take on this role, then only can they become useful watchdogs for the government’s move towards a deregulated marketplace.
The National Association for Entrepreneurs in Ecuador, for example, successfully created in the late nineties, a research and advocacy programme targeted at eliminating some of the main opportunities for corruption. Through this initiative, the group was able to identify and then change a large number of overlapping, unclear and contradictory laws that created an environment of legal chaos, leaving enforcement to the discretion of bureaucrats.
Business trade bodies have also failed to develop a single research cell worthy of note. As a result, businesses are typically unprepared for regulatory and environmental challenges and have little or no access to collective resources that can be used to promote development. Even though research wings exist on paper within some chambers, they have produced just a handful of largely useless data and reports. During the push towards globalization, for example, not a single business association provided useful sectoral data to their members to aid them in the transition.
Similarly, these groups must also play a critical role in training and education to help develop the human capital in their respective industries. Even though top executives complain of the dearth of expertise in their fields, little has been done by trade bodies to help improve the capacity among students and young professionals.
Training programmes for employees working within a particular sector should be a major objective of business associations and trade groups. These bodies should work to develop liaison with business universities, help adapt their curriculum to the changing business climate and work with students at an early stage to prepare them for the corporate world.
Next, as the wealthiest members of society, the business should also collectively contribute through their representative trade bodies towards social development. While individual philanthropic efforts are made, associations have scarcely made the effort to improve the lot of their own communities through any formalized infrastructure development.
Lastly, business groups must become formidable engines for the active development of entrepreneurship. This is especially relevant in an economy where the industrial and services sectors are in need of greater diversification and sophistication. The Young Entrepreneurs Association of Jordan, for example, succeeded in the late nineties in identifying and organizing entrepreneurs into a successful group which collaborated on training and the promotion of innovation and eventually pushed forward the process of private sector-led reform and served as a catalyst for the implementation of good business strategy.
At a time when business repeatedly stresses the need for private-public partnership, trade bodies should first ensure they are prepared to do their bit. These groups should be revamped to function as effective partners with the government in the overall developmental process. But this can only happen once the powerful players who hold these groups hostage put aside personal gain in favour of the development of their area of business.
So far, this change seems nowhere in sight. The Commerce Minister has repeatedly stated that trade bodies need to be overhauled. Not-for-profit organizations are also being established to look into making trade bodies more effective. But none of these measures will yield effective results until the representatives of business themselves accept the need for change.
