Indo-Pak business can provide cushion to relations: Mansha

Mian Mohammad Mansha, who owns and runs Pakistan’s biggest conglomerate, the Nishat Group, speaks to India’s The Tribune on how business relations between Pakistanand India can improve bilateral relations.

(Q) The Pakistan economy has been stagnant, growing 2-3 per cent over the past couple of years. What has been the impact on the country?
Just as in India, when growth falls below 5 per cent there are serious reservations about the country’s multi-party and coalition governments. In today’s world, I think if any developing country starts growing less than 5 per cent, you will have huge issues in terms of provinces being divided and not getting along. These are all symptoms of countries that are not doing well. This is what is showing in Europe also, and these issues are coming up because the economies are not growing. These things create huge problems and pressure.

(Q) What would you recommend to put Pakistan on the path to high growth?
The key issue is that our public sector organisations are losing humongous amounts of money and these are also creating a ground for corruption. An airline or power sector run by the government becomes a matter of patronage for politicians to give out jobs. So the system is broken down to an extent. And if we privatise these, and put them in the hands of people who are beyond the purview of the government, then we may be able to eliminate corruption to a great extent.

(Q) Which are the areas the government should move out of?
There are many: like the procurement of commodities such as wheat and sugar. Why should the government come into play when this leads to corruption, and corruption leads to a point where people who should not be elected get elected.

(Q) What would be the bold decisions you expect the new government to take?
We have already taken those bold decisions — we privatised our telecom sector, banking, and freed up the import and export sector — there are no sanctions to put up any project in Pakistan. So we have the experience of taking bold decisions successfully. Now we need to take them further. The power sector is the biggest loss-making sector, and our railways runs very badly. There are so many entities that the government needs to get out of. The estimate is that our economy has over Rs 1,500 billion worth of leakages in this system.
The balance of payment situation is precarious and the new government may be forced to approach the IMF. In the short term, the IMF is a solution, but we really need to fix the economy. For example, India did not have much reserves in 1991, and then FDI started. If we get our act together and set the governance issue right, then we can get a lot of FDI. We also need to open up trade with India. That is not only because it is beneficial for both the countries, but it also gives Pakistan a credit rating we desire. There are so many people outside who want to invest in this country but only after they are sure governance will improve. We might need help from the IMF in the immediate context; otherwise we can handle things ourselves.

(Q) You mentioned doing business with India as a key initiative. Trade between the two countries has remained well below the potential. What are the reasons?
There are lots of people who want free trade with India and there are as many who do not want this. It is the same in India also. Sometimes we are more willing to do it, but India is not. My own companies are also trying to do some business with India but there are so many non-tariff barriers that we face. The Prime Minister of India and the Union Minister of Commerce and Industries are very keen to do it, but there are other people in India who are sabotaging it. We send consignments to India and sometimes all kinds of things come out of our consignments, like narcotics in cement. But in other countries where we export, including Africa, we find nothing like that. It is all managed, I can tell you this.
(Q) What is the way out to improve trade between India and Pakistan?
What we need is to open many more border points, and not one. It’s all choked up and we need to have more routes, including by air. Air India does not fly to Pakistan and the reason they give is that it is not viable to fly between Pakistan and India. If India start the flights, the business will pick up. No flight ever makes money for the first two or three months. We need a consultative body where some Indian businessmen and some of us could sit together and do certain things so that we create our own linkages independent of the government, so that if something happens like the recent jail deaths then we could provide that cushion. I hope the new government will take this up forcefully. But I am worried: if both countries end up with weak coalitions, then it will not be good.

(Q) Earlier Pakistan used to feel its business would be swamped by India if trade was opened. Also, politicians felt a greater linkage would dilute their emphasis on the Kashmir issue. What is your own assessment?
We don’t believe that we would be swamped by Indian business. We, in fact, have stronger institutions, like banking, which is one of the healthiest in the world. It was privatised a while back, while India has still not opened up the financial sector. We have certain logistic advantages too, like for cement production we have limestone. On the manufacturing side, if we are at a disadvantage, then we can fix it by sitting down with India and telling them that certain tariffs will gradually come down in five years to give our people time. In the meantime the Indian market can be opened to our business. Please try to remember that every time trade is opened up between countries, it is the smaller that benefits — in Mexico, Canada and Europe we have seen the same thing, as with India and China. I feel we need to compete more in the interest of our consumers. Maybe we can get Indian partners and investment.
(Q) And the Kashmir issue…
Kashmir is a serious issue. But I think the only way you might have some solution on Kashmir is to actually get closer. You know when we start moving freely from one place to the other, we may become a borderless country. Today who cares if you are in France or in Germany in Europe? We are moving to a situation where in 20 to 30 years people are going to be global citizens. You could be an Indian working for a Russian company living in Australia. So who are you? The old formulae or thought does not hold good anymore.

(Q) What can be done to improve trade between the two Punjabs?
That’s a very good point. It would benefit both the Punjabs. It happens all over the world. Look at the Americans, some parts of the US and Canada are more intertwined than others. Similarly, I am one of the few people who advocate looking at Gujarat too, which at present we really don’t care about — who runs it and what is happening there. Mr Modi has done a miracle with 11 per cent growth rate. I would suggest we get closer to Gujarat and learn what they have done. Some day, if certain concessions need to be given to Pakistan and Mr Modi is the Prime Minister, chances are he would be in a position to give more because he has always been viewed as a hardliner. So whatever he does people would not question it. I think we need to reach out to our neighbours.

(Q) When you talk of attracting investment from India, the security situation in Pakistan is a matter of concern. How much impact has that had?
It is not as bad as it is made out to be. Today the bad news is only that people want to see the new TV channels. There is a new world that has emerged. I think bringing in foreign investment can actually provide jobs for people. That is one way of reducing the problem of terrorism in this and other parts of the world. And I really think it is in the interest of India that Pakistan should do better. Can you imagine a country of 200 million people in constant turmoil; and Afghanistan is on our border. How will it affect foreign investment coming in to India? We need to do things that make these two countries appear like one, and I think the security issue is an over-blown matter. Once our relations with India get better then it becomes a mirror image for other countries to see.
There are lots of people who want free trade with India and there are as many who do not want this. It is the same in India also. Sometimes we are more willing to do it, but India is not. My own companies are also trying to do some business with India but there are so many non-tariff barriers that we face.