LAHORE: Trade associations in Pakistan lobby for favorable tilt in economic policies for their respective sectors but only a few powerful associations succeed because, unlike the majority, they benefit from the services of highly-paid lobbyists, who have influence in power corridors.
A study of the trade and economic policies of successive governments in Pakistan shows that facilitations have regularly been showered on sugar, basic textile, auto, power, and cement sectors. The sponsors of these industries are powerbrokers belong to the richest or politically influential elite. These sectors almost always get preferential treatment. In fact some businessmen and economists regularly advise government to look beyond textiles for export facilitation.
There is no doubt the basic textile sector has engaged the government functionaries quite effectively to get concessions regularly. They engaged the government with well-thought-out strategies and tactics. The basic textile association has hired the services of some of the top retired bureaucrats and technocrats of the country. For instance it engaged a retired Pakistan Electric Power Company (PEPCO) chief to resolve its power distribution and supply issues.
The former power company head easily gets most of his employers’ complaints addressed rather quickly with a little help from his former subordinates still working in the power utilities. Unfortunately his services are no longer available to the textile tycoons as National Accountability Bureau has sent him away for a long period.
In the same way a top Sui Northern Gas Pipelines Limited retired officer, who was engaged at the height of gas crisis, has been instrumental in easing the supply pressures on basic textile units. A retired high cadre Federal Board of Revenue (FBR) functionary looks after the taxation and refund affairs of the spinners.
An expert, who had worked with donor agencies and the federal government, lobbies for favorable export policies on the association’s behalf from its Islamabad office. All such services cost over Rs1.5 million per month. The smaller associations do not have resources to engage high-salaried lobbyists.
Sugar mills do not need any lobbyist. Almost every sugar mill owner enjoys huge political clout. More than 90 percent of the sugar mills are owned by political families on both sides of the political divide. The politicians may differ on every national issue but they are comrades-in-arm when it comes to protect their interests in sugar sector. This is perhaps the only industrial sector that regularly gets huge subsidy to export its high-cost surplus production. This year a subsidy worth Rs9 per kg was provided to this sector to export a fixed quantity of the commodity.
The millers extorted this subsidy by threatening that they would not purchase the next sugarcane crop if not allowed to dispose of their stocks at the price of their choice. However, even after the subsidy was provided, all the mills inordinately delayed crushing of sugarcane, forcing the Chief Justice of Pakistan to take suo moto action, ordering the mills to lift the crop at the price fixed by the government.
Furthermore, the independent power producers (IPPs) engaged a former FBR chairman to take up their payment matters with the government. The IPPs owned by the richest segment of society enjoy guaranteed high rate of return on their investment and regularly pressurise the government, whenever it tries to audit their operations.
The lobbyists also act as peace brokers to defuse the tensions between the traders and rulers. The fact that these IPPs are smoothly operating shows they are not under financial stress they claim to be in.
Car manufacturers have, for long, operated as a sort of monopoly. The three main manufacturers, all from Japan, successfully kept car-makers from other countries at bay. Each manufacturer has been enjoying a niche market of its own through strong lobbying.
Similarly, cement manufacturers regularly increased the cement rates on low cost mining concessions they got decades back. They cite increase in global rates of commodity, which in fact was because of decline in rupee value. The prices of raw materials they extract from the mines have not changed much but their clout in power corridors gives them immunity. They have even successfully delayed the court verdict on billions of rupees penalty imposed on them by the Competition Commission of Pakistan in 2007.
Trade associations that lack resources try to convey their concerns on economic policies through press conferences or press statements. They also get poor press coverage, which is why the policymakers do not respond to their genuine grievances.
