LAHORE: Volatile exchange rate and higher inflation are the key challenges for the businesses, said Mian Nauman Kabir, president of the Lahore Chamber of Commerce and Industry.

“Volatile exchange rate is a big challenge. Usually, shipments are received months after placing import orders. Change in the exchange rates squeezes profit margins and in many cases results in losses. The State Bank of Pakistan should take measures to safeguard the interests of importers and exporters relying on imported raw material,” he said, while talking exclusively to BOL News.

“Yes, inflation is a global issue in the post-Covid-19 scenario and Pakistan is no exception. But the depreciation of the local currency has doubled the impact. The industry is the first victim. Inflation has considerably increased the cost of doing businesses,” Kabir said.

Mian Nauman Kabir is a successful entrepreneur who took the family business to new heights through excellent management skills and innovative marketing practices.

In recognition of his services he received the “Entrepreneur of the Year Award” in 2005 from the then prime minister of Pakistan.

An MBA (marketing) degree holder from the Punjab University, he formally joined the family business in 1994 and achieved unprecedented success through a number of initiatives. Earlier, he graduated from the Government College Lahore (now a university) after completing Senior Cambridge from the Aitchison College.

NSM Marketing and Sartaj Polysacks (Pvt) Limited’s Chief Executive Officer Kabir is a humble and down to earth person who believes in strictly following the business ethics, giving due importance to welfare of the employees and helping fellow colleagues.

He has been in the trade politics for the last 23 years. Prior to holding the lucrative post of the LCCI president, he had served as senior vice-president, executive committee member and chairman of various standing committees of the traders’ representative bodies.

As a role model entrepreneur and a business community leader, he is determined to play his part in the ease of doing business and facilitation of fellow colleagues.

Kabir had served as the livestock, transport, labour and human resource minister in the last caretaker set up in Punjab.

He is also part of the board of directors of the Punjab Board of Investment and Trade. He also remained the Punjab Mineral Development Corporation chairman, Quaid-e-Azam Industrial Estate board of management president, Lahore Township Industrial Association president and member of the board of directors of the Punjab Industrial Estate Development and Management Company.

Following are the excerpts of a rendezvous with him.

What was your first venture?

After completing my education, I started business in June 1993. It was a big success. Sartaj Polysacks is now a leading polypropylene woven bags manufacturing unit. Having worth over Rs500 million, it is fulfilling packaging requirements of leading national and multinational organisations.

Similarly, NSM Marketing has the distribution and retail rights of companies such as Philip Morris, Unilever Pakistan, Dankotuwa of Sri Lanka and China Mobile.

How we can bridge the trade deficit?

There are no short- or long-term plans for overcoming the economic woes of the country. Macroeconomic instability is the major cause of decline in the foreign direct investment. Our embassies are also not taking measures to attract FDI. There is a need to discourage import of luxury items such as cars. Our problems will persist unless we reduce our reliance on imports and boost exports to earn foreign exchange.

The government should take short- and long-term measures for bridging the ever-increasing trade deficit. There is a need to discourage unnecessary imports, reducing the input cost of export-oriented industries, diversification of products, value addition and exploring new export destinations.

How do you see interest rate hike?

An increase in the markup rate has enhanced the borrowing cost of businesses. Now, it is more difficult for the cash-strapped Small and Medium Enterprises (SMEs) and the cottage industry to manage their businesses. The SBP should reduce interest rate and bring it at par with the regional countries to provide some breathing space to the businesses.

Do you think rupee depreciation has helped increase exports?

The rupee depreciation has actually increased the trade deficit. Most of the export-oriented industries rely on imported raw materials. As such, the high landing cost of imported raw materials has enhanced the cost of doing business and rendered our products uncompetitive in the global market.

Moreover, we import oil/gas for fulfilling our energy needs, we even import agro-based products such as oilseeds. We are in trouble due to the global inflation and depreciation of the rupee.

How do you see the IT sector and e-commerce growth?

The IT sector growth is really heartening. The IT sector contributes around $3 billion in the country’s total exports of $25.5 billion. The survival of our economy lies in the IT sector growth and getting due share from the trillion-dollar global e-commerce industry. The entry of Amazon and Alibaba in the Pakistani market is a good omen. The development will motivate other such companies to enter the market and local players will focus on improving the quality and service delivery.

What are the reasons for less industrialisation? What should we do?

We have failed to develop our agriculture sector. Even today, a major chunk of our manufactured exports consists of agro-based products such as textiles and leather. We are importing agro-products such as oilseeds, despite being an agrarian country. We need to develop agriculture and give due attention to other sectors for putting the country on the right track.

What do you suggest to improve the business environment in the country?

The environment is not good both for the new entrants and the existing players. High input costs, volatile exchange rate, high interest rate, multiple taxes and bureaucratic hurdles have affected the businesses. The government should devise policies after taking stakeholders onboard. There is a need to provide a one-window facility and tax exemptions to new entrants.

Controlling inflation, reducing input costs, checking double taxation, reducing markup and stabilisation of the exchange rate are necessary for a conducive business atmosphere.

What is the future outlook of the overall business environment in Pakistan?

Pakistan has enormous resources and talented human resources. The government should take concrete measures to provide a conducive and enabling business atmosphere to the new entrants and existing entrepreneurs. There is a need to give due attention to agriculture, engineering, services and IT sectors instead of continuing the decades old practice of focusing on large-scale manufacturing and that too only the textile sector.

There is a need to boost SMEs and the cottage industry, which are the backbones of any economy.