Much is being said amongst the business circles on how the present Punjab leadership – now in the sixth year running at the provincial level - has failed to impress so far as its industrial and economic management is concerned. Time and again the present performance is either compared to Shahbaz Sharif’s earlier stint back in the 90s or more importantly with that of his predecessor Parvez Elahi; on both scales it measures up short. By any stretch of imagination the duration of this on-going tenure of the present leadership is going to be long: 10 years by the time this term finishes and given how democracy is usually played out in the Pakistani arena it will be no big surprise if the present lot gets re-elected again in 2018. Critics say that such long tenures in themselves tend to be the main problem. A chief executive becomes likelier to succumb to vanities the longer he stays in the job as he gets to people fawning over him. In fact one of the most popular courses these days at the Harvard Business School deals with how leaders should guard against obsession with short-term successes and how the whims of the man at the top can cause damaging depression or sycophancy below. According to Clayton Christensen, the conductor of the course, an obvious sign of a boss or a leader ‘breaking bad’ is grandiosity. He attributes any success wholly to himself, is reluctant to delegate, fails to form a competent team around him comprising of good professionals and indulges in endless self-promotion!
The real problem though in Pakistani style of democracy relates to mixing politics with governance. More often than not critical decisions relating to economy, businesses and industry are taken by decision makers who either have no expertise in the area or are just short-sighted; out to seek cheap popularity even if it comes at the expense of long-term damage to a province’s or state’s economic prospects. In good corporate management - which one reckons would be the counterpart of ‘good governance’ in the political sphere - there is no room for decisions based on popularity. In fact when it comes to the attributes of a successful corporate leader he is often regarded as unpopular who has the courage to take difficult decisions, which may upset individuals but are in the best interest of the organization. Likewise, managers are appointed based on merit and not because they happen to be the most popular guys amongst their peers! However, when it comes to parliamentary decision-making at home, since there is no institutional framework that involves open debate between stakeholders and lawmakers, most bills in the provincial parliament are tabled by a member who may or may not have a grip on the subject matter. And if he/she happens to be from the treasury benches the bill soon becomes law without being subject to any type of professional scrutiny cum thorough analysis.
The Punjab government of late also presents a case where the economic and industrial decision-making bears no correlation to practical prudence. What the decision makers need to understand is that while direct cash grants or youth employment schemes can be good catalysts or supplemental endeavors the real employment generation only comes about by providing a conducive environment for the industry per se. That is to operate freely without the fear and nuisance of excessive governmental oversight packaged with corruption and extortion. Instead of undertaking micro-level structural reforms what one sees of late from the Punjab hierarchy is unleashing of enhanced bureaucratic interference in day to day running of the industry. This, if not checked will surely over time result in eroding the industrial base of Punjab, especially that of the SME (Small and Medium sized Enterprises) sector. Post 2008 financial crisis and the resultant global recession, the developed world is learning the hard way that letting manufacturing slip was a mistake they should have avoided during the course from 80s to 90s and it will be sad if we instead of learning from their mistakes blindly adopt the same very route where the industriousness of the West collapsed. At a time when countries like Spain, Portugal and the US are revamping labor laws we in Punjab are going back in time by re-allowing direct industrial access to labor departments? Whereas, emerging economies like India, China, Brazil and Bangladesh are battling to first firmly establish an industrial base before adopting the later stage environmental laws, we are busy graduating to the levels of ‘Green’ that are simply not sustainable at least for the time being? Without a sustainable strategy that indeed has its direction right, but at the same time also based on a gradual and prudent implementation pace, the elastic of the industrial wheel will simply snap. The challenge is to come up with a strategy that on one hand, works its way towards meeting environmental goals while on the other allows the industry the necessary time and guidance to meet these objectives. Other regional competitors have also followed the same course.
For example, according to the London-based think tank Legaturn Institute, after measuring multiple variables about economic performance, entrepreneurship, governance, health, education and security, Bangladesh, the once proverbial economic basket-case is today outdoing its BRICS-branded neighbor, India, on the “prosperity index”. According to Amartya Sen, the economist and Nobel laureate,: “In terms of many typical indicators of living standards, Bangladesh not only does better than India, it in fact has a considerable lead over it”. One of the main drivers of Bangladesh’s success is large-scale, export-oriented industrialization. Of late, more known for the consequences of its excesses - like the catastrophic collapse of the Rana Plaza factory – it has nonetheless been the ticket out of poverty for millions of Bangladeshis. Low-end manufacturing isn’t the stuff of dreams. Bangladesh’s tiny minimum wage that highlights the desperate utilitarianism of mass industrialization and its cost to workers and the pollution caused by its leather industry that now brackets Hazaribagh into one of the most polluted places in the world (Blacksmith Institute) are factors that certainly cannot be ignored. However, the answer to these concerns does not lie in shutting down factories, but in the need to manage them intelligently, because, like it or not, industrialization is the only sure-shot cum proven step for achieving economic growth.
According to the University of Cambridge economist Ha-Joon Chang, few if any countries have achieved first-world economic status without it. And no one catered to this reality better than the Chinese leadership back in the 80s. “Every nation at some point in time has to grow the old fashioned way: by industrializing to create low-level jobs for the masses” ~ Deng Xiaoping.
A cursory look at the evolving of States’ power across the border in India tells us how the turnaround stories of some of the Indian states are primarily based on improving competitiveness and attracting investment in manufacturing. Gujarat and Bihar worked diligently on cutting the red tape and providing a minimized window to businesses in their dealings with the state’s bureaucracy/departments - curbing corruption and rent seeking.
Further, framing friendly laws for taxpayers is yet another area where the leaderships of these states excelled. States as we know are leading the way in India’s drive to shore up its tax to GDP ratio and not only do they collectively account for nearly 40% of the total revenue collected in India, but the growth in state tax revenues now exceeds that of the centre. Taxation is invariably easier to collect closer to home provided the local tax framework is healthy. People are comfortable paying to sources they can identify with and usually if the provincial governance is good the reciprocity can be felt right at the taxpayer’s doorstep and that too in relatively quick time.
Sadly, here in Punjab a visionary provincial tax framework has been lacking and too much emphasis has been laid to knee-jerk actions like luxury tax on real estate, excessive vehicle taxes, driving revenues by arbitrarily increasing collection targets of governmental departments like Social Security, EOBI, etc., all of which do scant little to establish a sustainable and productive tax culture and instead hurt wealth creation, distort equitable asset distribution and unnecessarily burden the industry. The real underlying danger from short sighted policies or misplaced focus is that the damage in principal occurs below the surface and by the time it is detected it gets to be too late since most of the destruction has already taken place – like a cancer that spreads unnoticed and fatal by the time detected. What are required are policies that truly understand the nature of the home industry and help in developing the industrial base instead of stifling it. Sound management policies tend to cultivate awareness and provide a proper balance – The famous triad: Failure to focus inwards leaves a sector rudderless, failure to focus on the outcome leaves it clueless and a failure to focus on global/regional competitiveness leaves it blindsided!

 The writer is an entrepreneur and economic analyst.

Email:kamal.monnoo@gmail.com