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Privatisation strategy will lead to higher savings, investment and grwoth - Dadabhoy.

Privatisation Strategy will lead to higher Savings, Investment and Grwoth

Economic Review: Nooriabad is no more treasure Island of Sindh. Having your own industrial unit in this area how do you face this situation? Mohammad Hussain Dadabhoy: Nooriabad had a tremendous potential if there had not been a premature withdrawal of fiscal concessions extended to this area. Of course, deterioration in the law and order situation also acted as a disincentive for investment. Currently the law and order situation is quite satisfactory. In terms of fiscal concessions, however, Nooriabad should be at par with industrial estates in other relatively under-developed provinces like NWFP and Balochistan. We are normally carrying out our operation in Nooriabad. As a matter of fact, we are currently embarked in an expansion programme of our cement factory.

ER: Whether Pakistan will be able to export cement in 1993. MHD: Certainly Pakistan can export cement if the output can be increased to yield a surplus after adequately meeting domestic requirements. In the current fiscal year cement output is expected to be around 8 million tons. This does not offer much scope for export because domestic demand is also at this level. If however, for any reason domestic demand slackens, the government should permit the export of this item. The cement demand in the country is increasing at an annual rate of 7-8 per cent. According to a survey conducted by the State Cement Corporation the demand for cement will rise to 9.633 million tons in 1992-93.

As government is the dominant producer of cement, its pricing policy has crucial significance for the current viability and future growth of the cement industry and its export capability. The price policy of the government must ensure that private cement manufacturers are able to obtain a reasonable return on their investments and have an incentive to promote the further expansion of this industry. Unrealistic pricing policy guided by short term populist considerations would not only impose a burden on the public exchequer but also cripple the growth of this important national industry and completely nullify, export prospects. It may even render imports necessary. The principles of market economy should be fully extended to the cement industry also to promote its healthy operations and sound future development.

ER: Are you satisfied with the privatisation strategy of the present Government. MHD: I greatly welcome the privatisation strategy of the present government. It will lead to higher savings, investment and growth. It will promote efficiency in resource use by imposing discipline of a competitive market. It will relieve burden on the public exchequer. It will promote the development of the capital market in the country. It will attract foreign investment. It will spur the creative talent and energies of our entrepreneurial class. It will also result in large opportunities for gainful employment in the economy.

ER: How many companies operate under your group? Are you satisfied with their performance? MHD: Eleven companies form the Dadabhoy Group. All of these are doing fine in their respective fields. Four of these are being looked after directly by me.

ER: What are your recommendations to boost industrialisation process in the country? MHD: For boosting industrialisation in the country we require a stable framework of fiscal, monetary exchange rate and commercial policies designed to ensure macroeconomic stability and offering fair incentives for saving and investment. The government has also to ensure the provision of adequate infrastructure such as electricity, gas, roads, water supply, sewerage, basic education and access to health care. The government does not have to produce all these services itself to enable their provision. In some cases it may be more appropriate, on efficiency grounds for the government to foster private sector provision and competition. Maintenance of law and order and an effective, stable legal system are also essential for the promotion of industrial growth. Adequate encouragement for research and development and policies designed to facilitate adjustments to external shocks will also significantly contribute to the quickening of the pace industrialisation.

ER: What is the future of Agriculture leasing companies in Pakistan? MHD: Agriculture leasing companies should have a bright future in our country insofar as agriculture is still the largest sector of our economy accounting for 26 per cent of Gross Domestic Product (GDP) and employing nearly 50 per cent of the labour force in the country. To maintain a respectable rate of growth in this leading sector of our economy it is crucial that we take steps to step up productivity of our small and medium sized farms through mechanisation and the provision of inputs like better seeds, insecticides and fertilizers aside from incentive support prices. Leasing can play an important role in the supply of implements and machinery to farmers and can thus accelerate the modernisation of our agriculture; in particular, it can enhance the productivity of small and medium farmers.

ER: What are the problems faced by the Real Estate business in Pakistan/What is the solution. MHD: The real estate business in Pakistan at the moment is subject to unnecessary controls and interference by the Government. The Government should only provide an appropriate regulatory framework for this sector and should leave the rest to the private sector. The government should not involved itself in actual construction activity.

ER: The labour policy is to be announced soon. What should it likely to contain? MHD: I, like other enlightened industrialists, would welcome a labour policy which ensures just rights for labour and makes them a contended lot. There should, however, be safeguards against subversive activities and practices which retard productivity. There should be a provision for linking wages with productivity. Industrialisation can not attain speed and proportions without a contented, motivated and adequately trained labour force.
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Title Annotation:growth; opinion of Mohammad Hussain Dadabhoy, a business executive in Pakistan
Publication:Economic Review
Article Type:interview
Date:Jun 1, 1991
Previous Article:Incentives for rural industrial development.
Next Article:Privatization: a viable policy option.

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