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State trading vehicles

Third World countries are finding it increasingly difficult to find markets abroad for their products. Growing protectionism among the developed countries is seriously affecting the capabilities of the Less Developed Countries (LDCs) in meeting their debt obligations, economy sustenance measures, potential for development, etc. Caught in a vortex of despair, many countries have had to assume financial role models ill-suited for the genius of their people. This is compounded by the fact that their own leaders have below average capabilities in economy management. Without discussing threadbare the logic behind mixed economies, one can safely say that each Third World country has to have its own make, the mix of private industry and public ventures being in suitable ratio in each separate case. Countries like Pakistan need to have their prime commodities under state control. What oil is to Saudi Arabia, raw cotton and rice is to Pakistan. Saudi Arabia can afford to put some of its oil into private hands but does not do so simply because oil is the prime (and almost only) economic sustenance of the Kingdom.

One of the better conceived plans of the last PPP regime was to create the Rice Export Corporation of Pakistan (RECP) and the Cotton Export Corporation of Pakistan (CEC). Despite many aberrations (mostly due to bureaucratic inefficiency), these two Corporations have performed relatively spectacularly in an extremely bad economic environment. The major stumbling-block has been the appointment of bureaucrats to run the affairs, however nobody can deny that Mr Riaz Naik of RECP and Mr Nusrat Hasan of CEC were superb technocrats, managing the Corporations during their terms of office effectively and profitably. These were exceptions to the rule, Mr Saleem Abbas Jilani, another exceptional technocrat, not having spent enough time at either RECP (or Pakistan Steel) to leave a lasting corporate identity. Because of CEC and RECP, Pakistan cotton and rice have respectively made a niche for themselves in a strongly competitive international market, a case of nationalisation being good for the country rather than the usually held reverse view. It has taken many years of sustained marketing to reach these exalted heights. Privatisation is not going to benefit anyone but a few traders. In Bangladesh, where raw jute trade is privatised, it has got an official price (and a market price), the market price being usually 30% or more below the official price the balance being remitted to buyers under the table. In this way the world market price of raw jute is undercut by Bangladesh itself — since the economy of Bangladesh is almost totally dependant on raw jute, this is a horrendous Catch-22 situation. It is further compounded by the fact that jute goods manufacturing, previously under Government management, has been partly privatised, net result is that Bangladesh has seriously compromised the prime facet of its economy, under the relentless pressure of IMF for de-nationalisation. It has taken us many years to become a major force in raw cotton and rice, the process of privatisation will drive us right back from where we started and this has to be thought out well before further implementation. What has to be done is to improve the quality of the Corporation by inducting better manpower, not an impossible task given better service conditions. Only by inducting efficient and knowledgeable personnel, particularly at the higher echelons from the business community, into these trading units will we be able to compete internationally. While industry needs to be de-nationalised across the board except for certain critical areas vital for the country, the trading of raw cotton and rice must remain exceptions.

Under the Federal Ministry of Commerce (MINCOM), the Trading Corporation of Pakistan (TCP) was the first trading vehicle. It was formed in the late 60’s to handle the developing Barter Trade with COMECON countries such as China, Sweden and Finland but the raison d’etre for its existence was assumed very early on by MINCOM itself for reasons still totally unclear but which definitely had personal profit motivation as one of the major guiding factors. TCP then became an import oriented organisation under the PPP regime, acting as a market conduit for essential items some of which came under the category of proprietary basis, e.g. palm oil, MS Billets, sugar, etc. Needless to say, the bureaucracy profited by this and the general public lost, the tender process was further subverted after 1977 till it reached a crescendo of malfeasance under the last Chairman of TCP, Mr S. Habeeb Husain. In fact TCP’s own performance has been rather roller coaster, mostly dependant upon the bureaucrat sent to head the organisation. As regards the Barter trade, it is still handled by MINCOM, though with nudging from THE NATION over the past two years, some of the commodities have started to filter back to the TCP, e.g. palm oil, most reluctantly and under sufferance. In the early 80’s TCP, as befits the prime trading vehicle of MINCOM, started to have some ambitions for export. As we all know, in the financial model drawn up by IMF, we export or perish. In 1983, TCP started exporting in earnest under the then Chairman TCP, Mr Mohammad Yousuf, our ex-Federal Information Secretary. However in 1986, as aberrations go, Mr S. Habeeb Husain was sent in, before retirement, to undo Mr Yousuf’s work in this respect, particularly in Countertrade, and true to his salt, before he proceeded onto greener pastures (not of the ultimate kind), he destroyed TCP’s export capability with ill-concealed vengeance and reduced it to living off the commissions from imported urea fertiliser (purloined from the Federal Directorate of Fertiliser Imports) and sub-standard sugar. The PM’s Inspection Team found enough muck not to rake it away but when you are the talented brother of a senior World Bank personality and have a Finance Minister without political conscience hoping for a world financial bureaucracy career, you do not get punished, you are brought back as a Director of a nationalised bank, probably with your status symbol red BMW intact.

We need to be extremely positive about effecting meaningful changes in the corporate structure overseen by MINCOM. First, all the trading vehicles need to be organised under a holding organisation, probably it would be easiest to convert Export Promotion Bureau, presently a meaningless entity, into an umbrella organisation structured to provide the necessary coordination required to be inherent in such an arrangement. The three trading vehicles, TCP, RECP and CEC can then be better coordinated than being done now. The TCP should open up exclusive commercial offices abroad to market Pakistani products, ranging from rice to rice-husking machines. Personnel from the private sector must be inducted into the various corporations on contract and pay/service conditions must be made commensurate to international standards, at least what Third World countries can afford. There can be no doubt that we can create commercial technocrats very much on the Japanese, Korean or COMECON models and get the same dividends in the field of commerce. Structural changes are very necessary in the present bad economic environment. We must find markets abroad, the State trading vehicles need to be immediately re-invigorated so that our export potential is properly realised. The PPP regime must realise that the major problem the masses are facing are economic, unless productivity is increased by export development no major relief is in sight. The MINCOM’s trading units can act as a FORCE-MULTIPLIER for a broad range of exports, emphasis being paid on meaningful Special Trading Agreements (STAs) with Third World countries like Bangladesh, Sri Lanka, Iran, Turkey, etc. and on Barters which are truly sovereign i.e. reciprocal trade where goods and commodities flow to each other’s countries rather than to and fro third country destinations. The MINCOM’s trading units are one of the most important cogs in the machinery of economic development. The pragmatism displayed till now by the PPP hierarchy need to be sustained in the field of commerce and must lay great emphasis on this issue at the earliest.

Or, horror of horrors, we may get Dr Haq back to lead us into further economic miseries based on his latest theoretical penchant (mostly subject to the appearance of the moon) — and it will be business as usual down the slippery slope into an economic abyss.

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