“Inflation, high freight charges and rupee depreciation are big challenges for the businesses. The situation has gone from bad to worse due to the prevailing political crises,” he said, while talking to BOL News.
“Yes, inflation is a global issue. Freight charges also increased due to the pandemic. But the depreciation of the local currency has doubled the impact. The scenario is really tough not only for the importers but also for the export-oriented industries relying on imported raw material. We know, after the State Bank of Pakistan (SBP) got autonomy, the government cannot directly intervene in its affairs but still measures can be taken to check speculation and keep the exchange rate at the actual level,” he said.
“Political instability has further aggravated the situation,” he said, while suggesting the leadership of political parties to sit together for early resolution of the issues.
“The prevailing chaos is harmful for the businesses and fragile economy of the country. Leadership of all the political parties should come forward and play their due role in normalising the situation as any delay could prove disastrous for the country,” he said.
Sethi is a self-made man who joined the auto parts retail outlet of a family friend after completing I-Com from the Punjab College of Commerce in 1996. After getting four years market experience, he started supplying auto parts to the retailers after getting the same from the wholesalers on credit. In 2002, he started a wholesale business of bearings with a seed money of Rs200,000. Now Ahmad Bearing Centre is among the top importers and wholesalers of bearings in the Badami Bagh Auto Market.
Having an interest in trade politics, Sethi is serving as the Lahore Chamber of Commerce and Industry (LCCI) Executive Committee member. He wants to play the role of a bridge between the policymakers and executors and his fellow colleagues.
Following are excerpts of an informal chat with him:
What was your first business venture?
I developed interest in business during my studies at the Punjab College of Commerce. I am the first and the only member of my family who entered business. I struggled a lot to get basic knowledge of business. After spending four years at a shop of a family friend, I started taking auto parts from wholesalers on credit and delivering the same to the retailers on a small profit margin. I set up Ahmed Bearing Centre with a seed money of Rs200,000 in 2002. Now this multi-million-rupee enterprise is a major importer of bearings from China.
Your biggest achievement?
I am a self-made man who achieved success through dedication and hard work. I owe my success to honesty and strictly following business ethics.
How political instability is affecting businesses?
Our businesses are already facing severe challenges. Political instability has further aggravated the situation. Those planning short- and long-term investment for business expansion would wait till normalisation of the situation. The same is the case with the foreign direct investment. This scenario is harmful for economic growth.
Leadership of political parties should come forward and play their due role for the normalisation of the situation, as the country could not afford prolonged political unrest.
Major issues of legal importers? What should be the way forward?
Assembling imported completely knocked down (CKD) items without adding any local material is a normal routine. Legal importers of assembled products cannot compete with them due to huge differences in Customs duty. The government should allow assembling CKD products only after addition of local material to give a level-playing field to the importers of assembled products. Similarly, Pakistan Single Window is usually dysfunctional. There is a need to take measures for ensuring proper functioning of PSW.
How will an interest rate hike affect businesses?
An increase in the interest rate has enhanced the borrowing cost of enterprises. Cash-strapped Small and Medium Enterprises (SMEs) rely on short-term loans for managing day-to-day affairs. The State Bank of Pakistan (SBP) should revise the interest rate and bring it at par with the regional countries such as India, China, Sri Lanka and Bangladesh to give some breathing space to the cash-strapped enterprises.
How can we bridge the trade deficit?
The government should take short- and long-term measures like import substitution through local manufacturing, diversification of products and looking for new export destinations. Due attention should be given to all the sectors, especially information technology, engineering, agriculture and pharmaceutical instead of continuing the decades old practice of focusing on large-scale manufacturing and that too only the textile sector.
How global inflation and high freight charges affected businesses?
Inflation and high freight charges in the post-pandemic scenario have badly affected all the businesses. The situation is really alarming in Pakistan due to the rupee depreciation.
Your take on volatile exchange rate and rupee depreciation?
Uncertainty due to a volatile exchange rate is harmful for the economy. Our export-oriented industries rely on imported raw materials, and as such, the high landing costs of imported raw materials has enhanced the cost of doing business. Our products are not competitive in the global market due to high input cost.
There is a need to take concrete measures for checking speculation and bringing stability in the exchange rate. The SBP should take measures for keeping the exchange rate at the actual level.
Possible measures for improving the business environment?
The government should provide a one window facility to the new entrants. Controlling inflation, reducing input costs, checking double taxation, reducing interest rate and stabilisation of the exchange rate are necessary for both the new entrants and the existing players.
What is the future outlook of the overall business atmosphere in Pakistan?
I am optimistic about the future due to enormous natural resources and talented youth. The government should take measures to tap natural resources and provide an enabling atmosphere to the talented human resource.
The government should also encourage and facilitate Small and Medium Enterprises (SMEs) and the cottage industry, which are considered the backbone of any economy.
Why did you join business politics?
I wanted to make my experience and expertise productive for my community. My politics is aimed at playing the role of a bridge between the policymakers, executors and fellow colleagues.