Blog

WHY IS THE GOVERNMENT FAILING THE LOCAL MANUFACTURERS?

Imagine countries that drive economic policy towards foreign direct investment and industrialization, while at the same time crippling incumbent and high potential local industries by putting them at a disadvantage to imports. Unfortunately, in Pakistan that is a reality for some local industries.  In fact, Pakistan’s wires and cable industry faces severe challenges owing to inconsistent Government policy.  

MYTH vs. REALITY:

Myth: Government policy is aligned to boost and create opportunities for local businesses.

Reality:  The local cable industry is being suppressed by current policies. Imports of wires and cable have more than doubled from USD 56 million to USD 124 million in the span of two years.  This is an outcome of so-called measures taken to ‘facilitate’ FDI and CPEC projects through special exemptions, granted exclusively to importers, which are otherwise not available to local manufacturers.  

Today CPEC, Greenfield, Power Generation and Transmission projects get special exemptions from sales tax and duty on imported wires and cable. Owing to which importing the products is cheaper than buying its locally manufactured counterpart. Local manufacturers, on the other hand, are subjected to sales tax and duty on raw materials (whether they supply to projects with exemptions or not). The Government has created an imbalance that is giving imports between 15% - 20% cost advantage over local cables. 

To the Industry’s dismay, the recently passed Finance Supplementary (Second Amendment) Act 2019, carried sweeping exemptions for all “Greenfield Projects”.  This by default, incentivizes any new industrial project to opt for importing cables and thus resulting in a retrogressive impact on our industry.  

CASE FOR SAFEGUARDING LOCAL INDUSTRY:

According to an estimate, the local wires and cable industry employs over 3,000 households and generates a combined revenue of over Rs 40 billion. Unfavorable policies adopted by the Government have only resulted in declining profits and an overall slowdown in demand through increasing imports. Signs of a decline in the growth of large-scale manufacturing, especially in the construction sector, are evident.  

While I understand the Government’s agenda for harboring industrialization and bringing in new industry, should it be at the expense of a pre-existing developed industry? 

Other benefits of developing local industry are: 

1.    Creation of jobs, development of higher level of skills.

2.    Innovation and transfer of knowledge in industry

3.    Self-reliance and saving on FOREX by fulfilling our needs through local goods  

4.    Enhancing “Made in Pakistan” by incentivizing local products to compete internationally with world class quality

 At a time when Pakistan needs maximum support in building its electrical infrastructure, its policies are set out to destroy rather than protect or nurture the local industry.  Successive Governments have failed to document the shadow economy that continues to affect the manufacturing sector via rampant counterfeits, smuggled goods and the unorganized sector. The local industry’s sheer resilience have kept it going until now.  The All Pakistan Cables & Conductors Manufacturer’s Association (APCCMA) has met all key policy makers on issues crippling the industry but the Government’s patronage remains much awaited.

THINK GLOBAL, ANYONE?

Our country’s engineering base has huge potential and the cable industry has a role to play in it. With industry friendly policies, backed by a suitable economic environment, the wire and cable industry can become a major contributor to exports for Pakistan.  Our policy makers need to learn from Turkey where supportive government policies have resulted in making Turkey the 5th largest cable exporter in the world. 

Considering the numerous socio-economic challenges, which local manufacturers encounter, an encouraging response from the policy makers should have been part of the Government’s Vision 2020.  The Government’s recent decision to tap CPEC opportunities by establishing a business forum is a welcome sign. It still requires a measurable and transparent action plan. Above all, it needs a buy-in from those local manufacturers who remain at a clear disadvantage.   

The domestic cable industry is keen to work with all relevant departments within the government to create a level playing field for itself thereby creating import substitution and also to generate revenue through exports.  After all, isn’t a reduction in the current account deficit a burning priority in terms of the government’s mandate?

Read more...

Why Ethics in Business Still Count …

You may find it strange that someone needs to reinforce the importance of ethics in business, especially in a post Enron and Arthur Andersen era. After all, the collapse of the two giants in 2001 forced companies around the world to revisit their commitment to best practices and implement firmer controls to ensure transparency and foster an ethical work culture.  

So when recently, the CompetitionCommission of Pakistan (CCP) imposed a total penalty of Rs18 million on 18 electric cable makers for deceptive marketing,  one is forced to wonder  why the business community is not waking up to the responsibilities we owe to all stakeholders including the communities we serve?

The CCP has directed the accused cable manufacturers to clearly print incentive details on the packaging, which buyers are entitled to on purchase of the product.  The practice employed by these 18 cable manufacturers did not disclose rewards; hence, the end-consumers often were not aware that the boxes included cash prizes for electricians and other influencers.  The cost of the rewards were built into the price and the consumer would pay for the rewards without necessarily benefiting from them. 

Offering instant cash rewards / tokens as an incentive to buyers has been a norm for many years in the wire and cable industry, along with other industries such as paints. Cash coupons are offered by numerous brands within the organized and unorganized sector.  Consumers end up installing brands that may appear inexpensive but may also pose a graver risk to life and property, as they do not conform to international specifications. It is in the consumers’ interest to be aware of promotions / incentives that are offered by product manufacturers. This ensures that intermediaries are not able to influence the decisions made by end consumers just on account of rewards, while having no regard for the consumers’ safety or wellbeing.

In my view, any business that is established with the intent to serve communities, respects the fundamental notion of freely sharing relevant information with stakeholders. The sooner businesses embrace this reality, the sooner our industries transforms for the better. 

According to one estimate, fire incidents kill 16,500 and cost Rs. 400 billion annually. Rescue 1122 reports 124,854 fire incidents between 2004 – 2019 in 37 towns and cities of Punjab alone. This means over 8,300 fire incidents annually in the listed 37 towns and cities of Punjab. A number of reported cases of household fires are owing to short circuits. Faulty wires and outdated electrical systems are often the main culprits. The Regent Plaza fire or more recently the Jamshed road fire in Karachi claimed human lives. 

While Pakistan waits for its Fire and Safety Act, the Pakistan Engineering Council (PEC) and the National Disaster Management Authority (NDMA), prepared a “Building code” to prevent fire hazards in buildings, which was approved by the President of Pakistan, Mr. Mammoon Hussain, in 2017. Enforcement is direly needed. Weak implementation of the fire safety laws and building codes is an opportunity for manufacturers to lead from the front with the consumers’ interest and protection in mind and win not just brand loyals but the respect of industry players.

Another challenge is the large segment of the cottage industry comprising of counterfeiters. Counterfeit cables are those that sell under false pretenses, essentially falsifying that they are compliant with safety and performance standards. Counterfeiters go unchecked and the segment continues to thrive in all major cities of Pakistan, particularly Punjab and KPK belts. 

To safeguard consumers’ from counterfeiters and protect their interests, Pakistan Cables® introduced an SMS based Product Verification system that results in giving control to the consumers and allowing them to authenticate products directly. 

In its 65 years of pioneering wires and cables in Pakistan, Pakistan Cables® has long served its customers across generations. We have only been able to do so because of our deep-rooted commitment to ethical practices. We do not deter from taking unfavorable commercial decisions if it requires us to violate the internal resolve of conducting business ethically.

Such hard decisions come at a price; however, the reward has been utmost respect and admiration from our business partners and unwavering loyalty from consumers. The two enable us to sustain profitably in the end.  We remain a true leader with an intent to serve not deceive, lead from the front and not back down in face of surmounting challenges. 

Read more...

Ramzan Retrospection

We are almost midway into the Holy month of Ramzan, a month that brings with it countless blessings for all Muslims around the world. 

Don’t get me wrong, I have no plans of delivering a sermon on the do’s and do nots of Ramzan. All I want to do is simply identify a great opportunity that otherwise gets lost in the clutter of our deadly routines i.e. the grind. 

Ramzan brings a rare opportunity for us to introspect and reflect on our chosen way of living. We all know that reflection is key before setting out on any mission. Just as the leadership teams in companies revisit the company’s mission and vision statements from time to time, we also need to invest time contemplating our life-missions. Introspection gives clarity and fuels will power. Every day we fight battles, be it in a marketplace, at the office or any other facet of life, and we all know that the last one still standing is the one with the strongest will power. 

·      Alexander III of Macedon or commonly known as Alexander the Great, earned the epithet “the Great” due to his consistent success as a military commander.  Driven through determination and willpower - he never lost a battle. His conquests and exploits are admired all around the world.

·      Quaid-e-Azam Mohammad Ali Jinnah’s determination gave Muslims of the sub-continent Pakistan. 

·      Countries such as Finland and Iceland transformed themselves by practicing a collective will power stand as role model countries for being the cleanest and safest respectively. 

·      Corporate giants such as Apple, IBM, Star Bucks, General Motors all have made some of the most dramatic comebacks. 

There is no straight formula for success; but each of the examples listed above indicate that a selfless intent fueled by strong will power can shape a destiny.  

While companies are driven to attain hard-core business success, some companies are going beyond the one dimensional financial approach. These companies are including communities that they serve and work with. It’s heartening to see how local companies in Pakistan have made tremendous strides on the Corporate Social Responsibility (CSR) front over the years. In Pakistan, the Overseas International Chambers of Commerce and Industry (OICCI) members alone invested Rs. 20 billion during the FY2018 in CSR initiatives, a major portion of which was dedicated to human development and health. When companies commit to social causes and drive sustainability through CSR initiatives you know it’s a step in the right direction, simply because not only is it giving back but it’s also investing in future generations. 

No alt text provided for this image

Pakistan Cables® association with philanthropic initiatives is as old as the company itself. We have a history of supporting development in areas of education, health, social development, and gender equality. A more recent addition was supporting the cause of art and urban development when we sponsored the Public Outreach initiative of the Karachi Biennale Trust during 2017 through Reel On Hai.A dedicated 2.5 percent of our profits after tax to charitable causes is a policy we have practiced for many years as we have always believed in serving the communities we live and work with. Another heart rendering cause we have supported for two years consecutively is providing solar lamps to the miner’s community living in Dukki, Balochistan in collaboration with HELP Balochistan. Over 3,000 households have directly benefited and have access to light for the very first time! We are also committed to supporting education and have sponsored gold medals at various top engineering institutions. Our CSR approach is evolving with changing dynamics and we are committed to ensuring that we have a holistic approach to CSR, which involves the company and engages its employees on an ongoing basis.

No alt text provided for this image

This Ramzan we unveiled our digital campaign #NoCompromiseOnKindness which is a simple way to remind ourselves that the smallest gestures of kindness can make a big impact. 

The road to betterment is never ending. Successful businesses and thinkers are entities that invest in introspection. They move coherently on the evolving needs of the communities around them. Similarly, our lives should not be any different. Irrespective of how many risks one takes or how cautiously one treads, setbacks hit you hard. However, it is all in one’s own hands to ensure that no matter how hard the times are, it’s never too late to start again and rebuild for the better – be it a business or a community and as far as I see it, the two go hand in hand.

Ramzan Kareem everyone from all of us at Pakistan Cables Limited. 

Read more...