Wednesday, 3 October 2012

Fear is what India, Pakistan need to defeat: Mian Muhammad Mansha

by Ajai Shukla
Business Standard, 3rd Oct 12

Mian Muhammad Mansha, Pakistan’s only dollar billionaire, heads the Nishat Group. He owns MCB, Pakistan’s most profitable bank, and has major interests in cement, textiles, power and insurance. Mansha’s three sons work with him; his wife, Naz, runs Nishat Linens, a key revenue earner for the group. Talking to Ajai Shukla in Lahore, Mansha argued for closer commercial ties with India.
BS.            The arguments for India-Pakistan trade that you often highlight --- geographical proximity, language, culture, etc --- are undeniable, but political antagonism comes in the way. Is that changing?
Mansha.            I see a major change here. Pakistan’s media has created a new awareness, changing thinking amongst our people, the foreign office, the security establishment and the political parties. No political party in Pakistan opposes trade with India. In India it is different; there is still opposition there. Also, opinion is more regionalized in India; a person in Madras or Bengal does not yet understand that the fruits of trade will go there also.
(India must think about) what will happen if Pakistan turns out to be like Afghanistan. What if there is turmoil in Pakistan? If there are huge problems here they will spill over into India too.
BS.            Who are the spoilers that oppose closer economic ties?
Mansha.            People who don’t want to change and who fear that their industries will be affected by opening to India. They use arguments like, “look what happened at partition.” There is a false perception that Indian companies will swamp us. Instead, I think they would complement us. Look at Standard Chartered Bank: it has 89 branches in India and makes $1.2 billion in profit, but in Pakistan they can’t compete with us. In the banking sector, we cleaned up our banks 10-15 years ago. I would love to have my branches in India.
BS.            What immediate steps could boost bilateral trade?
Mansha.            We need more border points (like the integrated check post, or ICP, at Wagah). We need them to become more efficient by fostering competition between them. Currently, it costs Rs 750/- to transport one tonne of cement from Lahore to Amritsar, the same as it costs to transport it to South Africa.
Cement is a price sensitive export. If I have to pay Rs 80/- to transport a Rs 300/- bag of cement across Wagah, then how can I compete in India? We need to reduce the cost of doing business. And we can only do that by opening more border points, forcing them to compete for business.
BS.            India and Pakistan signed three new commercial agreements last week to increase trade? Which industries would benefit?

Mansha.            We have important complementarities in cotton. Pakistan’s cotton harvest starts from June-July, and India’s from November. Why should Indian mills store cotton for a full year when they can buy four months’ stock from Pakistan and we can buy for the next few months from India. The cost of inventory will come down in both countries.
Monsanto has a plant in (Indian) Punjab that develops BT cotton seeds. They can also access the Pakistani market. India’s cotton-growing practices are excellent. In textiles, we are very strong in certain segments. Pakistan has good high street fashion at affordable prices, which India could buy. Pakistan’s textiles exhibition was sold out in three days in Delhi (in April). My wife is in the textile business and runs a chain of shops. We want to open some of our stores in Ludhiana, Amritsar, Delhi and Mumbai. On the other hand, Indian polyester plants are much more competitive.
We should be able to buy power equipment from India. If we need PETCO, which is petroleum coal, not natural coal, we should be able to get it from Gujarat. So far we have been getting it from Houston.
Pakistan’s cement factories are efficient because we have plenty of limestone and gypsum. We should be able to buy Indian petroleum products from the Bhatinda refinery. I believe the Indian pipeline is just 100 km from Lahore. Your ports should compete with Karachi port.
BS.            And you believe Pakistan is ready for all these openings?
Initially, our industry will resist. Change is always difficult. Maybe we need three years to adjust. Then nature will take its course. Fear is what we need to defeat. France and Germany had this problem after World War II, but (President) De Gaulle and (Chancellor) Adenauer resolved it together. We both need far-sighted leadership.
BS.            The new liberalized visa regime would ease business travel on both sides…?
Mansha.            It’s a good beginning, but we need to be bolder and take practical steps to ease business travel. Take my own case: I have a one-year Indian visa, but I can’t visit Amritsar because the visa is only for Delhi and Mumbai. These are bureaucratic hassles. Surely there are some businessmen on both sides who both governments think are clean! India and Pakistan should draw up a list of these people; we should have a white list for visas instead of a black list.
BS.            Could we see India and Pakistani entrepreneurs joining forces in the international market?
Mansha.            We should tie up with India’s entrepreneurs, who have demonstrated in several overseas markets that they can run businesses better than domestic companies. Indian and Pakistani entrepreneurs can have joint ventures in third countries. I have discussed with some Indian groups and we are looking at working together in Africa. Many African countries are getting their political act together; there are opportunities in countries where governance is good and corruption low.
BS.            Do you have any plans to invest in Afghanistan?
Mansha.            The Nishat Group is trying to set up a bank in Afghanistan. Chinese and western companies are taking all the big contracts there, but Indian and Pakistani companies could work together profitably. However, there is resistance in Pakistan to India doing business in Afghanistan --- some people opposed it firmly, while others support it. Certain sectors feel threatened. Years of misconception have to be dealt with, so we need to work on the public image.

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