AsiaNet-Pakistan Premier Editorial Content and Press Release Distribution Service
Karachi, January 29, 2014 (PPI-OT): The Pakistan Institute of Corporate Governance (PICG) held a conference on GSP (Generalized System of Preferences) Plus – Opportunities Through Good Governance at Marriott Hotel, Karachi on January 29th, 2014.
The conference was sponsored by Habib Metropolitan Bank with Summit Bank Limited as co-sponsor. Participants included representatives from Swiss and German consulates as guests, and senior management, CEOs and Chairmen from the textile, leather and chemical sectors.
The event started off with Mr. Fuad A. Hashimi (President and CEO – PICG) delivering the keynote address. He welcomed the participants and guests to the conference, and on the occasion explained to the participants the significance of Corporate Governance in their respective organizations.
He was followed by Mr. M Yasin Siddik (Chairman – All Pakistan Textile Mills Association (APTMA)). Mr. Siddik focused on the importance of the GSP Plus for Pakistani exporters; he stated that Pakistan’s inspiration in this regard was Bangladesh which had gained the GSP Plus status years before Pakistan.
The APTMA Chairman said that prior to this status, Pakistan was not provided a level playing field in the global arena and most of its good were subjected to 6-18% duty which took Pakistani exporters out of the competition. Mr. Siddik said the global textile trade stood at a humungous $725 billion out of which only $13 billion of global textile trade belonged to Pakistan.
He said that the GSP plus status was ‘tricky business’ which required Pakistan’s private sector to illustrate high levels of compliance; he added that if things moved in the right direction Pakistan’s textile sector could clinch almost 2.8% of the global textile trade almost doubling the textile sector’s export revenue to increase it to $26 billion within the next three years.
Mr. Siddik pointed out that the biggest issue Pakistan faced was the energy crisis; he explained to the participants that the cost of energy was going up every three months, while adding that an average textile factory like his own required 8 Megawatts (MW) of electricity to operate, and that installing a 1 MW electricity plant required $2 million to be built.
He added that the textile sector would not be able to undertake such costs, hence the government and private sector is required to work together as a coalition to rid themselves of the energy crisis. The APTMA Chairman was soon followed by Mr. Tariq Ikram (Former minister of State and CEO of the Trade Development Authority of Pakistan (TDAP)) who further built on Mr. Siddik’s stance.
He explained to the participants two primary reasons why Pakistan was previously not eligible for the GSP Plus status; he stated that Pakistani exports were more than 1.5% of the European imports and that Pakistan did not qualify as a least developed country (LDC) due to its higher per capita income. He said some European countries like Germany vehemently advocated Pakistan’s case, which convinced the European Union to grant the GSP Plus status to Pakistan.
Mr. Ikram stressed that the agreements signed between the EU and Pakistan greatly stressed protecting universal human rights including preventive measures for racial/sectarian/political genocide, gender or racial discrimination with respect to salaries, child labour and environmental degradation, amongst various others.
He stressed that the GSP Plus status hence in reality was aimed at enhancing the socio-economic conditions of LDCs. He stated that the West greatly possessed most of the world’s the buying power and that GSP Plus enabled the LDCs to make most of this opportunity.
He however added that in return it required recipient countries to open up for audits and all forms of social and economic compliances. He also urged that the mindset of entrepreneurs related to the textile industry needed a revamp and they needed to focus on producing more value added products.
Mr. Ikram stated that Pakistan lacked depth in its exports basket, while also stressed the need for Pakistan to diversify its exports and look towards non-traditional exports in sectors such as information technology, fisheries, jewelery, chemical products, meat products, furniture and several others.
He said that as of now, there was a dire need to formulate the National Export Strategy, which took into consideration geographic diversification focusing on regions like Africa, South America and Australia. He concluded by saying that exports was the only sustainable way forward if Pakistan aimed to exponentially boost its foreign reserves. Following Mr. Tariq Ikram’s highly informative address, Mr. Haroon Askari (Deputy Managing Director of the KSE) then took the stage on behalf of the Karachi Stock Exchange (KSE).
He said that in 2013 Pakistan’s total exports generated a revenue of $25 billion of which 53% was contributed by the textile sector. He informed the participants that since China’s textile sector was reduced by $30 billion to $270 billion due to rising production costs, it was hence forced to directly invest into Pakistan. He said that China’s appetite for Pakistani cotton yarn was expected to increase exponentially, while adding that this trend coupled with the GSP Plus status would tremendously help the textile sector.
Mr. Askari was then followed by the CEO of Tameer Microfinance Bank Mr. Nadeem Hussain who gave an insight to the participants about the financial capital available to Pakistan SME’s sector. He said that the SME sector was the driving force of economic and social stability in Pakistan. He however questioned the sustainability of the financing framework, while commenting that regional distribution of capital within Pakistan was adversely skewed.
He said that no province outside Punjab and Sindh used more than 9% of their own deposit base for lending within their domain. He said that the SME portfolio at risk dangerously jumped from 16% to 35% between 2008 and 2012.
Mr. Askari was soon followed Mr. Imran Iqbal Panjwani (Executive Director, Securities Market Division of the Security Exchange Commission of Pakistan) who stressed the need for Corporate Governance in the private sector, and the need for protection of shareholders from expropriation so that their rights were safeguarded.
Mr. Panjwani’s highly informative session was followed by a Panel Discussion headed by Mr. Tariq Ikram (TDAP CEO) which concluded the conference. Panelists included Mr. Gulzar Firoz (CEO Firoz and Co.) Dr. Tilo Klinner (Consul General Germany), Mr. Sirajuddin Aziz (President and CEO Habib Metropolitan Bank), Mr. Iqbal Ibrahim (Chairman Orient Textile Mills Ltd. and former Chairman APTMA) and Mr. Ateeq-ur-Rehman (Advisor Banking and Insurance Committee of the Karachi Chamber of Commerce and Industry (KCCI)). Mr. Rehman greatly appreciated PICG’s efforts to organize this conference, while urging it to organize more events related to the governance aspect of the GSP Plus status. The event was well received by the participants.
For more information contact:
Pakistan Institute of Corporate Governance
Suite # 316, the Forum,
Khayaban-e-Jami, Block-9, Clifton,
Karachi-75600
Phone: (92-21) 5306673-74,
Fax: (92-21) 5306672,
E mail: info@picg.org.pk