close
Friday March 29, 2024

‘Increased public, private interaction critical to growth’

By Erum Zaidi
August 13, 2022

KARACHI: The Public-Private Dialogue (PPD) is a crucial tool for economic growth and development, the State Bank of Pakistan said on Friday, calling for increased public-private cooperation in the design and implementation of economic reforms.

In order for local trade organisations (TOs) to achieve their intended goal of enhancing the business climate and promoting the nation's economic growth and development, the SBP has also highlighted several gaps that need to be filled.

“In addition to various structural impediments to sustained economic growth, there is a need to increase public-private collaboration in the planning and implementation of different kinds of reforms,” the SBP said in a half-year report for FY2022 on the State of Pakistan’s Economy.

To this end, regular PPD plays an important role for economic growth and development, especially as the government planning around the world has become participatory, collaborative, and market-oriented in nature, it added.

A special section of the report titled Role of Trade Organisations in Economic Growth and Development: Understanding the Dynamics in Pakistan, states that TOs are engaged by the public sector through a variety of mechanisms in the country. For example, the Ministry of Commerce consulted some TOs for the purpose of drafting the Strategic Trade Policy Framework 2018-2023; the ministry also sought policy suggestions from textile TOs to improve the sector’s competitiveness in the early waves of Covid-19. In addition, TOs are consulted by the Federal Board of Revenue on taxation affairs. The Planning Commission also recommends implementing access to finance programmes for SMEs in collaboration with the TOs.

Similarly, the leadership of TOs is ex-officio members of the boards of several government bodies, such as the Punjab Board of Investment and Trade, and Board of Approval for special economic zones, whereas international donors also engage TOs as part of their technical sectoral policy assistance to federal and provincial governments.

“The SBP Banking Services Corporation in partnership with various TOs has started working under a new mechanism in which, in addition to awareness sessions, it facilitates businesses and their employees to apply for bank loans under various concessional credit schemes,” the report said.

The SBP, citing a 2010 study, said TOs in Pakistan had weak organisational capacity with the staff lacking necessary analytical skills; dormant committees initially formed to analyse and advocate policy reforms; and lack of consensus among leadership of TOs.

“TOs in Pakistan have been engaged in PPD. Some TOs also further the cause of the business community and contribute to achieving a desirable economic outcome for the country. An example of this is the efforts of the Surgical Instruments Manufacturers Association in response to restrictions on Pakistani-made surgical imports by the US Food and Drug Authority in 1994,” it said.

“The association, with aid from the government, hired a US-based quality assurance firm for the technical training of local manufacturers. As a result, by January 1997, 75 local firms became certified by FDA, allowing them to export to the US,” it added.

There are other instances of local TOs’ positive contribution to the private sector's interest by employing advocacy tools and facilitating business-to-business (B2B) events.

However, in certain areas, such as research and development, evidence-based policy advocacy, alternative dispute resolution mechanisms, and resource pooling for the common benefit of members, TOs lag behind international best practices. The underlying reason for this is the lack of professional staff.

The 2013 Act provides for the regulator in the Director General Trade Organisation (DGTO) and an apex body in the Federation of Pakistan Chamber of Commerce and Industry (FPCCI), whose members include all the trade bodies registered with DGTO. It is important to note that all bodies within the ninety days of getting the licence from the DGTO have to incorporate as a non-profit company with the SECP. The law along with a mechanism to form associations and chambers also allows for establishing separate chambers for women and small traders on the basis of voluntary membership. As of January 2022, 227 trade organisations are members of FPCCI, including 21 women chambers and 12 chambers for small traders, according to the SBP's report.