Investment hindrance

LAHORE: Breaking laws, rules, and regulations is not taken seriously by our entrepreneurs. In fact, by continuing to bypass laws for a long time without being apprehended, they consider violations as their right. This attitude is hindering foreign investment in Pakistan.

The laws are made to attract genuine investment. These laws bind the investors to follow procedures that do not impact the environment or have a negative impact on workers and society. These laws bind the producers to provide approved quality products to the consumers. The manufacturers are bound by law to dispose of their effluent after proper treatment in the water channels. The producers are required to comply with the tax laws of the country and also fully obey its labor laws. Investors have to spend resources to comply with these conditions. If some investors bypass these rules and regulations, they enjoy a huge advantage over the investors that are fully compliant with and operate according to the law.

Our trade associations and chambers protest strongly whenever the state tries to force law-evading businesses into compliance. They protest if authorities seal factories discharging poisonous effluent into clean water channels; they come out in the streets if raids are conducted to confiscate smuggled goods being openly sold in markets. They resort to a shutter-down strike if revenue authorities confiscate sales records of traders to match it with the tax they pay (or do not pay). They are up in arms if substandard products or drugs are destroyed through constant raids. They term all these actions as hurting the investors’ sentiments. In reality, it is the other way around.

Genuine investors in Pakistan stay away from businesses where bypassing rules and regulations is the norm. They command respect not only in Pakistan but also globally where they serve. Any adverse remark on their practices would be harmful to them globally.

Foreign investors stay away from the Pakistani market despite the fact that there are very lucrative sectors to invest in. This is because they dare not violate laws, but with the violation of rules a norm in many sectors, they prefer to invest in countries where the margins might be lower, but they enjoy a level playing field. Foreign investors do not exploit the workers with low wages and withholding their perks and privileges.

In fact, it would be a great service to the workers of Pakistan if all enterprises are forced to strictly operate within the law. At least the workers would get the minimum wage, which hardly 10 percent of the total workforce get now. After assurance of a level playing field, we could expect genuine local investors and many foreign investors to establish new concerns in our country.

To give an example of the state of mind of the local trade leaders, a business chamber recently asked the drug authorities to go soft on raids on pharmaceutical units and pharmacies as this is hurting ‘investors' sentiments’. The drug authorities during raids have unearthed many factories operating without registration and producing substandard or fake drugs. They also confiscated smuggled drugs worth millions of rupees and many fake drugs which were not produced by the original manufacturer. The raids are going on. What have the drug authorities done to hurt investors' sentiments? Taking action against unscrupulous elements will bring a good name to the country.