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Rasheeda Bhagat

Mr A. Razak Dawood

Recently in Lahore

A VOTARY for better Indo-Pak trade ties, Mr A. Razak Dawood, former Commerce Minister in the Musharraf Cabinet (1999-2002), and Chairman of Descon Engineering, told Business Line in an interview in Lahore that during his ministerial tenure he did not turn down a single request from a Pakistani businessman to import any item from India.

Excerpts:

After Aug. 1999, my last visit to Pakistan, I find an economic confidence that is surprising. Your comments.

In October 1999, we were in a very depressing situation. We had barely $600 million (foreign) reserves and we were very worried of defaulting. And the IMF was very, very critical of us. We told them we'll do the right things; help us. They said `No, we've heard this from Pakistani governments enough number of times. You do it and then come back to us. So we had internal meetings and said it is humiliating of course, but we have no other option. And we were able to get out of a tough situation. And, Gen. Musharraf ran the country like a corporation.

I find great admiration for him; normally people curse army generals.

Yes, he ran the government well. He had a good team and many people say that his Cabinet was perhaps the best or the second best ever. At first, people were very sceptical and said the country is in a mess and you can't do anything. But the perception changed in six months. The first thing that came out was.. hey, there are no rumours of corruption.

How were you persuaded to leave your business and join the government? I realised that we have a window without political pressure. But my only regret is that we could have done more.

So what prevented that?

Inexperience.. it took us time to clean up. Also, we were on the learning curve.

Give me an example.

We could have done far more tariff reforms. We lost the first Budget; whatever we did in the second could have been done in the first. The duty structure could have been rationalised more as also trade reforms inside Pakistan.

Can you give us some concrete examples of the difference you people made?

For 54 years in Pakistan the wheat trade was completely controlled by the government, which bought, sold, stored, transported and imported. We made two attempts and de-regualted it in the third one. As soon as it was done.... in April 2001, I held a press conference, where the food department officials said you don't realise what you're doing. There will be food riots on the streets. I said we know what we are doing. We had too much of wheat. We began exporting which we had never done.

To which countries?

Iraq, Egypt, Sudan, Yemen, Dubai and such countries. Obviously when you're entering the market for the first time, you'll not get the top markets. We're exported nearly 2.5 million tonnes. When we deregulated the wheat trade, 260 flour mills in the Peshawar area closed down. The owners came to me and said: You are the minister for industry and do you know you've closed down 260 flour mills?'

So I said, `Yes, I'm happy. If 360 mills close down, I'll be happier. Because all of you are cheating and I don't like it. I am a businessman and I cannot believe that a factory that runs two days a week can make money. Aap log mil gaye hei...(there is hanky panky) and the food department is also in this. I'm sorry I cannot change the rules. The other day I was thrilled to read that the farmers would rather sell to the private sector than the government.

How was it working with Gen. Musharraf?

He was a very good listener, never interfered in our work. In taking tough decisions he stood by us. We tried to get the government out of several areas... wheat, cotton and the like and let the market system take over. I'll give you an interesting example. Once, at a Cabinet meeting, a Minister said I want to question the Commerce Minister about his policy. The farmers of Baluchistan are upset that their onions are not being sold and he has allowed onions to be imported from India. I'd like a clarification. That created a furore. Why are onions coming from India when our farmers are being hurt... blah, blah... this and that.

So in the heat of the moment, the best thing to do is to form a committee, which I announced. At the end of the Cabinet meeting I told Gen. Musharraf there is nothing wrong in it. Yes, there is a surplus, but the system will take its course. And if some onions do come from India and stabilise the prices here, what's the problem. He said your decision is correct and forget about the committee! In a couple of weeks the problem was solved.

So it must have been a good feeling?

Oh yes, things have now started to move. Exports are moving, our reserves are much better. The growth rate is 12 to 20 per cent in so many areas... particularly in manufacturing. Television sets have shown a growth rate of 59 per cent growth and refrigerators 24 per cent compared with last year.

How do you read the Indo-Pak developments in the context of trade and business?

I met your Prime Minister when I was in India for a WTO meeting in Aug. 2001, just before 9/11. He asked me what I thought about trade and I said I was positive. When I went to Brussels I found that Belgium's trade with its neighbours accounts for 90 per cent. Europe as a whole has a 65 to 70 per cent trade. We are below 10%.

I can tell you that whenever any Pakistani businessmen asked me to put any item on the list for trade with India, within one week it was done. You have a huge refinery (Reliance) in Gujarat. Our people came to me and said parazylene, a basic raw material for the chemical industry is not available here and we want to import it from India. So I said do it. If importing something from India makes our product more competitive, what's the problem?

How do you look at the latest Indo-Pak initiative?

I am cautiously optimistic. It will take time, anywhere up to two years. We should not rush into it. It will be better if both sides take their time. Let's identify the tough issues and then try to find a balance. But it'll take time.

If we solve our problems, how do you the two countries moving forward economically?

As I told your Prime Minister, we should gradually open up. Let us take the step by step approach, we can't suddenly open up everything as both sides will have problems and the pressure will then build up. There are several ways of skinning the cat.

Suppose we said that on both sides as a starter all the raw material is now free. Once we start going to India and they come here for business, things will change.

At what sum do you put our bilateral trade?

We always say official and unofficial figure will be $1 billion.

What is the potential?

Huge, I would say $2 to 5 billion.

How do you see the economy of Pakistan in the coming days?

I am quite hopeful that things will continue to be good and with Gen. Musharraf keeping a strict watch, up to now all indications are that our economy will grow... we have to get our GDP growth back to 7 per cent. This year it will be 4.6 per cent, next year between 5 and 5.5 per cent and so on.

How would you rate the performance of the economic ministries?

At the moment that degree of momentum is not there.

Have they reversed any of your policies?

Not really.. not reversed them, but they're tinkering with it.

The story is the same everywhere.

But I do sympathise with these politicians. They've got to give time to the party and they've got to give time to their constituencies. We never had to do that. I never had to give one day to anybody.

And you worked gratis?

Yes. Allah has been very kind to all of us.

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