Had the private sector developed a road map for business expansion, it could have surmounted all odds and succeeded in creating the critical mass essential for rapid capital formation by upgrading and expanding the industrial base, for Pakistan, blessed with immense human and natural resources, is waiting for its full potential to be harnessed.

Many in industry attribute the de-industrialisation and massive spurt in trading and services to the liquidity crunch, smuggling, technological backwardness, primitive governance practices, energy and infrastructure deficit, law and order and political uncertainty.

The fact is that corporate Pakistan has so far not been able to offer strategic and workable solutions to its persisting problems or making quick adjustments to fast changing business environment. A study of pre-budget proposals to the government by innumerable trade bodies and sectoral business organisations seem to be focused on getting subsidies and concessions and are devoid of innovative long- term solutions that could serve to gain scales to compete in the modern globalised world on the strength of merit and competitiveness.

The situation on the side of the government is no better. In the name of creating enabling environment for business, it has pampered the elite , sometimes at the cost of other business segments and stakeholders. There is no dearth of examples to prove the point. It is not possible to list details of all SROs and policy statements of tax/duty concessions that the government has been doling out to appease different business interests at different points in time under all governments. There have been loan write-offs, duty-free imports and premium for exporters. It should suffice to state that the government has been generous in doling out subsidies to industry. Not everybody got all they wanted but a majority of successful business houses benefited at one point or other over the last so many decades.

Why then the contribution of industry to the GDP in Pakistan has dwindled from above 25 per cent in 1980s to less than 20 per cent currently? In many parts of the world including the Saarc nations, the industry’s contribution to the national wealth has consistently been increasing at varied rates. The growth is faster in services but industrial base has not shrunk over the same period in competing economies. It is crony capitalism that has thrived at the cost of competitive capitalism in Pakistan.

“Here patronage is the name of the game. No one thinks big; they all look for doles. Their aim is to get a free trip with some official delegation or some concession over and above others to save themselves the trouble of increasing industrial and business efficiency and acquiring competitive edge”, said a businessman from Lahore.

“While businesses on the other side of the border (India) have set their eyes on stars, in Pakistan we spend time in locating the leads to people in power. There is a dire need for the private sector to take capital formation seriously and invest in industry or it would not be possible to sustain the growth momentum. The trade bodies are more of a post office that forward recommendation letters to the government. Most office-bearers in trade bodies are go-between the authorities and the private sector and act for personal gains; they are not true leaders of the business community, a disgruntled leader who wished anonymity commented when approached by Dawn.

“The simple answer is that economy rewards short-term trading better than long- term investment in industry, so the money over the past few years was diverted to capital market, real estate and trading”, said a young businessman from Karachi critical of the role of the trade bodies.

These arguments carry weight when one compares the work culture and mode of operations of Federation of Pakistan Chamber of Commerce and Industry to that of Federation of Indian Chamber of Commerce and Industry.

Dr Amit Mitra Secretary General of FICCI told Dawn in a chat in his office in Delhi that his organization, by adhering to highly competitive professional management practices over the last twenty years, has graduated from total disconnect between business and the government in 1980s to a situation of total connect in 2007-08 between the two. A change that has helped both business and the government was instrumental in making India the fastest growing economy after China. India happens to be a democracy that investors find a lot more predictable and appealing than the raging dragon as China continues to be centrally directed.

“We proved our worth by providing quality input in the process of economic policy formulation. Today when we speak people in the government listen”, he said. He said the change in the attitude of the government towards FICCI is not because of personal connections but rests on a solid base of informed creative solutions developed by their highly competent staff.

There are over 200 Phd. economists working in 38 sectors at FICCI focusing on 79 different countries with potential of closer economic relations with India. He gave several examples from opening up of insurance business to corporatisation of entertainment industry where FICCI played its role and helped in extending the horizon for Indian business. The promotion of corporate marriages with overseas companies has transformed the corporate governance culture and improved transparency in the economy, making it still more attractive for overseas investor. The trade body provides leadership to its constituency by identifying opportunities and markets, the secretary told Dawn.

Left to its device how many years would FPCCI needs to catch up with its counterpart is anybody’s guess.