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Kicking the tyres

Kicking the tyres

Kicking the tyres
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LAHORE: Volatile exchange rate and illicit trade are major challenges for legal businesses both in the manufacturing, as well as trade/import sector, said Awais Saeed Piracha, chief executive officer of Trinity Enterprises, a major importer of variety of tyres from two- to four-wheelers to trucks, buses and industrial and agricultural machinery.

“We give 80 to 90 per cent products to dealers on lengthy credit. Usually, shipments are received months after placing import orders. A change in [the] exchange rates squeezes [the] profit margins and in most of the cases results in losses,” he said.

“We know [the] government cannot directly intervene in [the] affairs of autonomous State Bank of Pakistan; however, measures can be taken to safeguard [the] interests of legal importers,” Piracha said, while talking exclusively to BOL News.

“[The] local currency cannot be left on the mercy of speculators. The SBP should come up with policy interventions to keep the exchange rate at the real level,” he said.

“Illicit trade is not only damaging [the] legal importers but also depriving the government of [the] much-needed revenue. Though protecting a long border is an uphill task, the government has taken practical steps to check smuggling. Still there is [a] need to do more to protect legal businesses. Bridging demand and supply gap and rationalisation of import duties could help check illicit trade.”

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Awais Saeed Piracha is a successful entrepreneur who took the family business to new heights through innovations and good management/marketing practices.

A graduate of Queensland University Australia, he formally joined family business in 2003 and achieved unprecedented success through a number of initiatives like collaborative manufacturing of variety of automotive vehicle tyres for local market, as well as exports.

Trinity Enterprises chief executive officer and director of other sister concerns such as Shafqat Auto Impex and Shafqat Automobiles, Piracha is a humble and down to earth man who believes in strictly following business ethics and giving due importance to the welfare of employees.

Having interest in trade politics, he has served as the Lahore Chamber of Commerce and Industry executive committee member, Pakistan Tyre Importers and Dealers Association (PTIDA) and Pakistan Automobile Spare Parts Importers and Dealers Association (PASPIDA) central vice chairman.

For the last two decades, Piracha has been heading the LCCI standing committees for giving valuable input for the welfare and betterment of fellow colleagues. As a role model entrepreneur and a motivational speaker, he believes in capacity-building of fellow businessmen and providing them guidance to excel in respective fields/sectors of the economy.

Following are the excerpts of a rendezvous with him.

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What was your first venture?

During my degree in finance and management from Queensland University Australia, I started a job as an accountant at Victoria Motel Melbourne. Eight-month long stay there was a wonderful learning experience that helped a lot in the days to come.

On returning to the motherland, I did Masters in banking and finance and further specialised in international trade from the Punjab University Hailey College.

After formally joining family business, I started looking after collaborative manufacturing with famous Indian and Indonesian tyre manufacturing companies. We used our own innovative engineering tools and designs for product manufacturing, import for local need and export the surplus quantity to the neighbouring country and Africa through our own office, as well as mediators. About seven years ago, we added a well-established Turkish company to our portfolio for importing tyres for agricultural and industrial machinery.

Your take on volatile exchange rate and its impact on businesses?

The volatile exchange rate has negatively impacted the businesses, in general, and legal imports, in particular. Different exchange rates at the time of placing orders and reaching shipments have caused huge difficulties for the legal importers. The situation is really difficult for the tyre importers, as the product was already given to dealers on lengthy credit period of 90 days or more. Squeezing profit margin is not an issue, as more than bearable difference could lead to huge loses.

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This is not good even for the export-oriented industries relying on imported raw material. High energy tariffs and higher landing cost of imported raw materials have considerably increased the cost of doing business. As such our products are not competitive in the international market due to increase in the input cost.

Though, the government could not do anything after the autonomy given to the State Bank of Pakistan, it could devise and implement doable policies and take measures for checking speculation.

How can we bridge trade deficit?

There is a need to take short- and long-term measures for bridging ever-increasing trade deficit. The government should take measures to reduce the input cost of export-oriented industries, diversification of products, value addition and exploring new export destinations. It should also encourage industrialisation for enhancing exports on long-term basis.

What is your opinion about the illicit tyres trade?

There is a need to ensure product quality, as tyres are a necessity and not a luxury. Truck Bus Radial (TBR) dominates illicit trade, owing to the lack of local manufacturing. Quality is compromised during the effort of smuggling maximum number of tyres in one go. Those involved in illicit trade fold number of tyres and place them inside one to ensure shipment of maximum quantity. The use of once folded tyres (not road worthy) could lead to road mishaps. There is a need to check such dangerous activity for the safety of humans, vehicles and goods.

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The solution to this problem is intensive measures for controlling smuggling, encouraging local manufacturing and rationalisation of import duties to bridge the demand and supply gap.

How do you see interest rate hike?

An increase in the mark-up 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 State Bank should reduce the interest rate and bring it at par with the regional countries to provide some breathing space to the businesses.

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

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 due consultation with the stakeholders. There is a need to provide a one-window facility and tax exemptions to new entrants.

Controlling inflation, reducing the input cost, checking double taxation, reducing mark-up and stabilisation of exchange rate are necessary for a conducive business atmosphere.

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

Pakistan has enormous potential. The government should take concrete measures for providing a conducive and enabling business atmosphere to 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 the Small and Medium Enterprises (SMEs) and the cottage industry, which are the backbones of any economy.

Why did you join business politics?

I entered business politics to give something to my fellow colleagues. My politics is aimed at capacity-building of entrepreneurs and giving them access to the policymakers and executors.

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