INTERVIEW WITH MR. BADAR FAKHRI, MANAGING DIRECTOR GALADARI CEMENT (GULF) LIMITED.
PAGE: TELL ME SOMETHING ABOUT YOURSELF AND YOUR COMPANY PLEASE.
BADAR FAKHRI: I am Fellow of Institute of Cost and Management Accountants of Pakistan. I have been President of ICMAP in 2002 and President of South Asian Federation of Accountants in 2004.
With over 35 years experience in Cement Industry, I am currently working as Managing Director in Galadari Cement (Gulf) Limited. This company was registered in 1980 but unfortunately due to litigations on lands, which were acquired in 1981, it took nearly 10 years to get the suits settled through the Supreme Court in 1991.
In the meantime, the leasehold lands acquired in 1983 were terminated by Government of Balochistan. It took very long to get the mining leases restored. The sponsors, however, in 1994 succeeded in getting a French loan of FFr190 million from a consortium led by Societe Generale Bank of France. The machinery arrived in 1998 and while the civil works were being carried out at the project site in Hub, Mr. Abdul Latif E. Galadari (Sponsor) expired in 2002. Mrs. Farah Naz Galadari, the widow of the deceased has been trying to complete the project since then. Her husband had made an equity investment of US$38 million before his sudden demise in 2002. Mrs. Farah Naz managed to make a fresh equity investment of over US$11 million out of the inheritance of her minor children.
In order to make the revival of the project viable, the banks in Pakistan have granted several concessions and the government of Pakistan also restructured their loan which was converted from French loan by virtue of Paris Club Agreement signed in 2001.
National Bank of Pakistan, Habib Bank Limited and United Bank Limited have approved fresh loans for the completion of the project. The Government of Pakistan is expected to clear the hurdles, which were coming in the way of completing legal formalities in securing their loan. As soon as required approvals are accorded, work on the project which is already 70 per cent completed, will be restarted immediately. On its completion the project will not only generate employment, but will also contribute billion of rupees to the national exchequer in the form of excise duty, sales tax and income tax etc. The project will also be earning foreign exchange by exporting cement to Africa and other countries.
PAGE: HOW WOULD YOU COMMENT ON INVESTMENT FROM UAE IN PAKISTAN?
BADAR FAKHRI: There is certainly a great potential of investment from UAE, particularly after the crisis of 2008 when property prices crashed in UAE. The investors of UAE do not find further avenues of investment within their own country and are looking forward to good opportunities elsewhere. Unfortunately, under the existing adverse circumstances of our country, fresh investment from UAE in Pakistan looks difficult.
PAGE: YOUR VIEWS ON INVESTMENTS IN MANUFACTURING SECTOR FROM UAE IN PAKISTAN.
BADAR FAKHRI: Apart from law and order situation, electricity, gas and water shortages, the legal system in Pakistan is also one of the major obstacles in investment in manufacturing sector. As I told you, it took ten years to settle the land disputes and the investor had to go to Supreme Court for justice. You will find that still thousands of cases are lying in High Courts and Supreme Court for many years. Further, there are no sufficient incentives to motivate an investor to invest in Pakistan in the manufacturing sector. The gestation period in manufacturing sector is usually very high. The existing political and economic instability does not offer prospects for investment in manufacturing sector wherein the returns are spread over a longer period.
There are also no incentives like tax holiday and similar other incentives which usually attract foreign investments. Governments should seriously consider offering substantial investments to foreign investors to invest in manufacturing sector not only for numerous economic benefits but also to provide employment opportunities to jobless youngsters who are frustrated and if not engaged soon will become vulnerable to resort to unlawful activities to survive in the adverse circumstances.
PAGE: YOUR VIEWS ON FUTURE OF UAE INVESTMENT IN PAKISTAN.
BADAR FAKHRI: Unfortunately, I do not see light at the end of the tunnel as far as UAE's investment in Pakistan is concerned for reasons highlighted above. However, if the government comes up with substantial incentives in the upcoming budget if may attract foreign investment in Pakistan for UAE, if not from Europe, Far East or USA.
PAGE: YOUR COMMENTS ON BUSINESS POSSIBILITIES FOR FINANCIERS FROM UAE IN PAKISTAN.
BADAR FAKHRI: With so many negative factors, it will be highly unrealistic to expect investment from UAE in Pakistan for different businesses, although there are tremendous business opportunities available in Pakistan with a population of more than 180 million. We will have to bring political and economic reforms in the country to bring stability, besides changing the mindset of the people in the political and bureaucratic hierarchy to realize that foreign investment in the country will bring employment opportunities, substitution of imports, creating exportable surplus, thus improving the economic wellbeing of the people in general and the country at large.