"Consumer is the king 'is a phrase often used by firms focusing on developing brand loyalty to quality products. Yet, the consumer is the gainer only if it is a buyers' market.

In a developing economy like Pakistan, the consumer does not enjoy the benefit of free market competition nor is he protected by in-operative existing laws. The laws need to be updated.

The implementation machinery requires to be overhauled. Yet, the consumer's importance cannot be denied. On the expenditure side, private consumption provides eighty per cent of Gross Domestic Product.

The consumer is also a pivot of the changing development strategies, a paradigm shift from "government-led growth model supplemented by a corporate and industrial sector" to a consumer- led domestic driven economic growth. The most populous countries like China and India are now witnessing the fastest growth and are a preferred destination for foreign investment.

" Any move to boost private consumption will have a much larger impact on the GDP growth than any other measure" says Dr Ishrat Husain, Governor of the State Bank. The central bank has taken a series of measures to boost consumer financing.

The government-led growth model is becoming redundant because of continuing fiscal deficits and declining official foreign bilateral and multilateral assistance in real terms.

External credits for financing industrial development has almost dried up. It is the size of the market based on the level of prosperity of the consumers that determines the inflow of private foreign capital.

Economic growth in the United States is consumer-led and not export-led, though it is the largest market economy in the world. In South East Asia, economies which opted for export-oriented policies plus consumer-focused growth achieved much higher rate of economic growth than those that opted for export-led growth. Hong Kong suffered last year because it did not have a two-legged approach.

In Pakistan also, some progress has been made towards consumer financing to create demand for goods and services that has boosted production of import-oriented industries.

The State Bank figures upto end- June 04 show that consumers accounted for eight per cent of the total bank credit that equalled to the overall credit given to agriculture.

The break up of total bank loans, percentage- wise for other sectors are as follows: Corporates got 53, SMEs 18, commodity finance 7, staff loans and others 3 per cent each. The IMF estimates that bank credit reached 15 per cent of all agricultural farms and SMEs obtained only 7 per cent of their needs from banks and financial institutions.

A State Bank status report on consumer financing on July 6, 2004 points out that the "positive experience of auto financing" raises hopes that the middle class will access consumer durables through banks, boosting manufacturing of TVs, air conditioners, VCRs, washing and drying machines, deep freezers etc. It says that credit and debit cards are also gaining popularity.

Mortgage financing is seen as a key factor of private consumption. In developed economies, investments in housing far exceed those made in the stock exchanges which are often stimulated to manage economic recovery from an economic downturn.

SPB figure show that mortgage loans have grown rapidly but their volume still is quite low at Rs4.1 billion- less than one per cent of the total loans. As on December 2003, the banks had extended consumer loans amounting to Rs65.6 billion of which 60 per cent consisted of credit cards and personal loans. To minimize default risk, customers of relatively higher income brackets were targeted.

Despite "the recent surge of mortgage loans, the total lending in this area remains low and there remain significant obstacles" says an IMF report on financial sector assessment. Some obstacles, such as weaknesses in property and security rights administration, are more deeply rooted and will be difficult to resolve.

If the policy makers continue to focus on the consumer financing for boosting economic growth, it would also be appropriate to protect the consumers' rights. Rising prices and the soaring rate of inflation can erode into the savings of the consumers and make them default on loans.

The problem of premium on car prices and delayed delivery has not been resolved. Many shopkeepers and restaurant owners in posh localities complain that their sales have fallen (by 15 per cent in the past one year in case of ready-made clothes) because those who borrowed money from banks to buy cars have cut on their expenses to service their debts.

Market reports also indicate that loan applications for house building are being withdrawn from banks because rising cost of land and building materials are getting out of reach of the middle income groups.

If consumer- led growth strategy is to be made successful, it is imperative that the consumer rights are protected. Addressing a seminar on "Lack of Consumer Activism" jointly sponsored by The Help line Trust and National Forum for Environment and Health held here, provincial Minister for Food, Agriculture Arif Mustafa Jatoi admitted that "unfortunately, we have lost confidence on government, laws and institutions for getting worse". The silent majority of consumers should be activated for its rights, he counselled.

Speakers at the seminar urged the government to ensure strict implementation of consumer protection laws and take appropriate action against manufacturers and traders for sub-standard, adulterated and counterfeit products.

They also demanded setting up of consumer courts. Chairman of the Help line Trust Hamid Maker lamented that the country had become a dumping ground for semi-expired food products.

Privatization policies are affecting consumer rights by creating unemployment and price hike of products", said Dr Shahid Siddiqui, head of a research organization on Islamic banking. However, the rights of the consumers is generally perceived in the context of farm and industrial products when the role of the commodity producing sectors in an economy is being constantly reduced.

The share of the services in the GDP now ranges between 51-52 per cent. For example, consumer financing requires that the rights of the borrowers should be protected in the same manner as that of the lender specially when the bankers are now empowered to repossess mortgaged property without resource to courts. To sum up, the right of the consumer should have an appropriate priority in building a consumer- based economy.