Baverage, Shandy Cola

Take vertical actions to arrest inflation

MD Shandy Cola, Ahmed Arif expresses his concerns over negative growth of LSM


By Azhar Bukhari


The country’s economy direly needs wholesome measures to arrest fast increasing inflation as surge in inflation has eroded the purchasing power of masses.
Everyday rise in the inflation could only be controlled by enhancing productivity and by putting curbs on undue expenditures.
Ahmed Arif, Managing Director, Shandy Cola expressed these views in an exclusive interview with The Post.
Ahmed said that the situation had turned so bad that industry has no money to pay the salaries and utility bills, as the steps should be taken on war-footing to avert mass lay-offs. He added that a large number of industrial units had already closed down their operations due to acute shortage of electricity and gas while the remaining were on the verge of closure.
The MD Shandy Cola expressed his grave concern over negative growth in Large Scale Manufacturing Sector (LSM) saying that rationalization of duties are the steps to bring the LSM sector out of mire but despite repeated request no attention was given.
He added that the decline in LSM sector that has shown a negative 7.7 per cent growth is an eye opener and there is a dire need to identify the root cause of this meltdown.
He said that the most worrying factor in the overall scenario is that the growth rate of 2 per cent is the lowest in the region, as Bangladesh had a growth rate of 5 percent, India 4.5 percent and even Sri Lanka experienced a growth rate of 2.2 percent.
He maintained that there was nothing wrong with the policies but the poor level of implementation deteriorated the industrial production. “Had a little attention been given towards the proper implementation of policies the situation would have not been so bad.”
He urged the government to take immediate and concrete measures to control deteriorating law and order situation which is hurting the whole business atmosphere and nobody would be ready to put money in any new venture if the situation remains the same.
Ahmed also suggested the government to take steps to cut rate of markup, ensure continuous supply of energy to the industrial sector, wear off inflationary pressure, improve law and order situation and above all steps need to be taken to bring political and economic stability.
Elaborating his suggestions, he said that the existing high markup rate was not only hitting the country’s competitiveness in the global market but was also coming in the way of industrialization which is a prerequisite to progress and prosperity.
He added that at the moment when the rate of interest was showing downward trend in most of the developed and developing countries including US (0.25 per cent), UK (1.5 per cent), Canada (1.5 per cent), Australia (4.25 per cent), Japan (0.1 per cent), China (5.58 per cent), India (5.5 per cent)and Bangladesh (7.61 per cent), the interest rate in Pakistan has jumped to 13 per cent in November 2008 to 15 per cent plus banking spread up to 8.3 per cent that is putting a very negative impact on industrial sector.
While quoting the example of GDP growth in China and India, Ahmed Arif said that the government should provide level-playing field to Pakistani manufacturers so that they could be able to earn much needed foreign exchange for the country.
“If immediate measures are not taken the situation would get out of hands and economic turnaround would become a dream,” he observed.
“There is no doubt in it that the government is seriously monitoring the economic situation and taking appropriate measures but it should convene a meeting of representatives of all trade bodies to ensure proper implementation of its policies,” he added.
He stressed the need for strengthening of institutions for being a prerequisite to economic stability, progress and prosperity. He maintained that only strong institutions could guarantee good governance. He cited the example of the United Sates where the economy is still on the wheels despite unprecedented economic recession and credit goes to a strong institutional framework over there.
“Had their institutions been not strong enough, the American economy would have not sustained the shocks it has received.” He said that weak institutions mean weak system and no country could achieve its targets with weak system.
“High inflation has chopped down the purchasing power of even middle class, as the crisis would not be over until and unless the government would introduce trade friendly policies to decrease cost of doing business,” Ahmed observed.
However, he strongly condemned increase in power tariff adding that it would be an anti-trade step and could add to economic woes.
“Another hike in power rates means more troubles for the common man and the industry,” he observed.
He said that it was beyond the understanding of the businessmen that despite cut in oil prices in the international market, why the government was reluctant to pass on the benefit to the people while the electricity shortage was going up with every passing day.
Such decisions, he said, would not only create unrest among the masses but would also hit the entire industrial sector even harder.
“Things would hardly take any positive turn unless and until both short term and long term policies are evolved,” he maintained.
He said that trade sector already passing through a very critical period. Power shortage has broken the backbone of industry, thousands industries have been closed leaving a large number of workers jobless.
He said that electricity prices in Pakistan are already very high and posing several challenges for businessmen and economy.
He urged upon the government to come out of the influence of International Financial Institutions, stop following their orders and make efforts to enhance the cheap electricity production.