Sunday, September 7, 2014

Munabao-Khokhrapar: Dilemma of Distrust

Majyd Aziz

The process of trade liberalization between Pakistan and India is akin to being on the Space Mountain roller coaster ride at Disneyworld in Florida. Those enjoying this ride are not sure about the horizontal and vertical movements of the ride because it is in a dark environment. Although the ride is only for few minutes, the thrill is mind-blowing, but when the ride ends there is this dampening of the spirits. Exhilaration and then disappointment. This, in short, is the scenario in the sub-continent and is more relevant in the context of opening up the facilities for the Munabao-Khokhrapar trade and people movement. The decision on opening up of the Munabao-Khokhrapar route is another victim of a security cul-de-sac.

The perceived national security concerns, in whatever ways and means, are the major hurdles in this matter. There is another mis-conceived notion floated around that Indian goods would flood the domestic markets if allowed through the Munabao-Khokhrapar route. The frequent borders skirmishes also negatively impact upon the possibilities of opening of more entry/exit points apart from Wagah-Attari. There are twelve such points (4 in Punjab, 1 in Delhi, 2 in Rajasthan, and 5 in Gujarat) but any and all decisions related to opening up of other points are suppressed as soon as they are brought up for decision making. As stated above, there is this self-generated fear that Munabao-Khokhrapar would enhance people-to-people contact and movement and this would be detrimental to security considerations.

There is an added front loading of the cost factor due to defense concerns. The security driven technologies and procedures have escalated the transaction costs and are burdensome for many businesses, especially the SME and cottage industrial sectors. It is ironic that undocumented cross-border trade is routinely facilitated but when it comes to official cross-border movement of goods, there are all kinds of blockades. Pakistan and India are not the only two countries that have, or should have, cross-border trade. This is no Kabbadi match or a wresting bout. This is a win-win situation. Thus, anger-jingoism or patriotism should not be deciding factors, especially in this context.

Whenever the issue of Munabao-Khokhrapar pops up at various fora, the opponents or naysayers characteristically come up with two basic arguments to defuse the debate by asking what are the items of trade that Pakistan could export and that this route would make Indian goods cheaper. At the outset, it is important to understand that enumerating sectors, items, products or services that would be more facilitated if Munabao-Khokhrapar is open for trade is really short-sightedness and reflects a myopic concern for the trade mechanisms. Trade follows the best, quickest, cheapest, and safe route and it is plain economic sense that doing business does not mean wastage of time, money, and opportunity.

At the present moment, Pakistan only allows 137 Indian goods to cross Wagah despite the negative list of only 1209 items that are stipulated in SRO No 280 (I) /2012 issued on March 22, 2012 by Pakistan’s Commerce Ministry. These 137 items are in many cases a catalyst for undocumented informal trade either through the borders, in connivance with corrupt border security, or are channelized through third country route. Of course, the blow hot, blow cold attitude by Pakistan towards granting Non Discriminatory Market Access to India further complicates the fragile liberalization process. India has now hinted that it would allow mobile phone connectivity for Pakistani cellphones. One very positive move and a real Confidence Building Measure, no doubt. It is hoped that Pakistan would reciprocate too.

The decision to open up Munabao-Khokhrapar as an alternate to Wagah-Attari is not palatable to many quarters as it is a fact that once this route is made operative, most of the Indo-Pak trade and people movement could be done through this route. However, the significance of Wagah-Attari will not diminish nor would this route be unfeasible. The future lies in opening up more entry/exit points and thinking of trade and investment under the SAARC umbrella instead of just Indo-Pak trade. Opening up of Munabao-Khokhrapar will be the harbinger of economic regional integration that is a prime objective of the people of South Asia, in general, and Indians and Pakistanis, in particular.

In 2003, the then Indian Foreign Minister, Jaswant Singh, recommended the re-opening of the Munabao-Khokhrapar railway service. In February 2006, the Thar Express commenced operations after being in limbo for over 50 years. It is imperative that this second active rail connection between the two nations, after the Wagah link in Punjab, is designated as the primary channel for goods and people movement within Rajasthan, Gujarat and Sindh. The Thar Express would usher in a process of connect rather than the prevalent atmosphere of divide.

Although this matter is usually shoved beneath the carpet under the notions of provincial harmony and cohesion, the bare fact is that there is a sense of resentment when it comes to the importance of Karachi as the business and financial hub of Pakistan. The importance of a place or person is directly related to the critical mass present in that place or person. Karachi is business oriented, Karachi pays 67% of the Pakistan’s revenue, and Karachi is truly a metropolitan city and Pakistan’s melting pot. Karachi also happens to be the home for most of the people who migrated after Independence in 1947. Policies have generally been formulated where Karachi would get the least direct benefit. Despite all such actions and decisions, the importance of Karachi maintains its growth and its velocity.

The dilemma is that there seems to be an inherent distrust about the citizens living in Karachi or in Interior Sindh by certain elements in the corridors of power and this has also been the overarching factor in conjuring up flimsy excuses to delay the opening of the Deputy Indian High Commission in Karachi. The Indian DHC was renovated and made ready some years back for Consular and other diplomatic activities. Today, it is again showing signs of neglect and ruin. Indecision and misplaced concerns about trade and investment liberalization, facilitation, and encouragement would also lead to the continuation of a fear mindset instead of defusing tensions and facing challenges, thus deferring the desired objective of regional economic integration.

Alexis Tocqueville very rightly hoped that “Trade is the natural enemy of all violent passions. Trade loves moderation, delights in compromise, and is most careful to avoid anger.”

Munabao-Khokhrapar: Economic Gateway

Majyd Aziz

Munabao-Khokhrapar is not just a destination or the ultimate in liberalization and facilitation of movement of goods, services and people across the Indo-Pak border. It is neither a political issue nor is there a national security concern. The fact of the matter is that the opening up of this corridor has a strong bearing on enhancing the economic and social aspects of the bilateral relationship. Stakeholders, primarily trade and industry, and also the denizens of Southern part of Pakistan who need to reduce travelling time, are more inclined towards the opening up of this pivotal route. 

Munabao is a village in the Barmer district in Rajasthan in India bordering Pakistan. Khokhrapar is a border town situated in Tharparkar District, Sindh. The distance between the two is about 2300 km. Khokhrapar is only 147 km from Karachi. According to Wikipedia, “Khokhrapar railway station was established in 1870. Before the partition of India, the Sind Mail ran between Hyderabad, Pakistan and Ahmadabad, India via Mirpurkhas, Khokhrapar, Munabao, Barmer, Luni, Jodhpur, Pali, Marwar and Palanpur. After partition Khokhrapar was the last railway station in Pakistan on Hyderabad, Pakistan - Jodhpur, India railway line and used for customs and immigration till it was closed down after the 1965 war. In February 2006, Mirpurkhas-Munabao railway line reopened after the conversion of meter gauge railway track to broad gauge.”

There is also the zero priority accorded to completing the access road to the border at Khokhrapar. According to the information available, about 50 km road needs to be paved and made usable for traffic. There has been no allocation for this project in the Sindh Budget 2014-15. The political representatives of the area are also not pro-active in preparing project proposals to address this road issue.

It should be noted that the major trading partners of Indian businessmen are based in Karachi and then in Lahore. The single source of land route is Wagah-Attari where India has set up a multi-billion Rupees Integrated Check Post. Karachi or Interior Sindh based businessmen have to incur high trucking costs to utilize the Wagah-Attari facility. At this present moment, Pakistan has a severe shortage of upto 100,000 trucks of all sizes. During peak fruit season or during an excess demand for trucks for goods under the Afghan Pakistan Transit Trade Agreement, the inter-city rates for trucks shoot up. These severely impact on the transportation cost and are detrimental to trade enhancement. Therefore, for goods from Karachi destined through Khokhrapar, the shorter distance is feasible and there could be dedicated trucks for this route.

Indian and Pakistani textile related items could be transported through this route at less cost than taking the longer Wagah-Attari route. Powdered milk, pulses and other commodities can be cheaply transported too. There is strong demand for Pakistani cement in India. At present, cement is transported through Wagah-Attari or by ships. A direct channel can be established through Munabao-Khokhrapar route and in this way Pakistan can increase cement exports to India, especially to Southern India, where there is demand but the cost via Wagah-Attari is very prohibitive. Recently, the Pakistani High Commissioner again reiterated the possibility of electricity and oil imports from India. Moreover, Pakistani and Indian teams are negotiating the supply of Liquid Petroleum Gas from India into Pakistan.

There is demand for Pakistani Chrome Ore by Ferro-Alloy plants based in West Bengal and other cities in Western India. Pakistan has become a major Chrome Ore exporter. Indian Chrome Ore exporters can concentrate on China and through swap agreements with Pakistani counterparts have a common marketing strategy for China while Pakistanis can ship via land route to West Bengal etc. This is just one item but it is a manifestation of how to take favorable advantage of distance proximity.

More importantly, Pakistan has enacted the Special Economic Zone Act 2012. An India SEZ could be set up on Pakistan side of the border at Khokhrapar in which Indian investors could set up their plants to produce goods not only for Pakistani markets but for export either back to India or to Middle East, Afghanistan, and Central Asia. Indians are big-time investors and many mega names in India such as Godrej, Adani, Mittal, or Ambani, etc have evinced interest in investing in Pakistan. Joint ventures could also be possible in the SEZ.

The Sindh government has often raised the subject of Munabao-Khokhrapar and there have been instances of debate and questions in the Sindh Assembly. However, a planned, concrete and workable position paper has not been formulated yet that would provide the required impetus to decide on this sensitive matter. The business community has often tried to persuade the Sindh government to set up a Task Force to generate a campaign to open up this route for trade and people movement. This issue will be taken up soon at a detailed meeting with the Sindh Chief Minister, concerned Provincial Ministers and Members of the National Assembly from Sindh. This issue would be part of the Comprehensive Action Plan that is visualized to enhance trade and investment between Sindh and Rajasthan, in the first phase, and Sindh and Gujarat, in the latter phase. At the same time, businessmen from Mumbai and Karachi would be interacting in December to move the process faster. The Mumbai Chamber of Commerce and Industry and the Karachi Chamber of Commerce and Industry have already signed a MOU to set up the Mumbai-Karachi Joint Chamber of Commerce and Industry. Moreover, KCCI has already hosted and facilitated five exhibitions by different Indian organizations in Karachi.

The provision of facilities, the setting up of any projects, or the commissioning of any trade activity would always achieve full potential or maximum usage once they are in place and in operation. Every such initiative requires time, money and patience. The dynamics of the family and social relationships across the border are such that once a liberalized and free environment is achieved, people would then very comfortably and profitably take maximum advantage. This would also promote secondary benefits and attract economic activity along the route. In fact, the Munabao-Khokhrapar link may compel authorities on both sides to allow the setting up of Border Haats (common markets), such as those established at the India-Bangladesh border. This would be a boon for the area and increase the sense of camaraderie between people on both sides of the border. Notwithstanding all these positive features, the underlining fact is that unless the visa regime is liberalized and made people-friendly, all other initiatives would be long shots. The most prominent and paramount Confidence Building Measures are the liberalization of the visa regime, cell phone connectivity, and the opening of the Indian Deputy High Commission in Karachi.

There is a need for both India and Pakistan to revisit their focus on Munabao-Khokhrapar because the overall process of trade liberalization, future cross-border investment, relaxation in people movement, and the magnitude of fast track global trade have created urgency in removing bottlenecks and roadblocks. 2014 is vastly different from the narrow single-mindedness and parochial thinking of the 1990s. The moment to come out of the time warp is now.

Dale Carnegie pontificated that “Most of the important things in the world have been accomplished by people who have kept on trying when there seemed to be no hope at all.”

The Ajrak Corridor

Majyd Aziz

In days of yore, the Indian sub-continent was the citadel of trade, culture, innovation, and spiritual way of life. The area that today is demarcated as Rajasthan and Gujarat on the Indian side and Sindh, in Pakistan, although divided by a border, has many commonalities that should be formed into a core part that could be instrumental in encouraging a formidable trade base, a cultural foundation, and a significant source of people assimilation and convergence. A visionary initiative can be simultaneously undertaken in Jaipur, Gandhinagar and Karachi to achieve this objective, in effect, agreeing to establish what should be known as The Ajrak Corridor.

There is a need to understand the past history and then to formulate a modernistic, rational, and functional strategy to ensure the success of this proposal and to facilitate momentum that would eventually connect Mumbai (although in Maharashtra) and Karachi. The rationale behind this approach is that the Mumbai-Karachi mercantile pragmatism would generate the desired impetus to achieve the objective of regional economic integration. The full potential of the Munabao-Khokhrapar link route and a strategy to link Rajasthan, Gujarat and Sindh would become a reality if the three Chief Ministers, Shrimati  Vasundhara Raje, Shrimati Anandiben Patel, and Syed Qaim Ali Shah meet at a focused conclave that would also include the business community, noted politicians from these states, and experts from various sectors. The outcome would be The Ajrak Corridor.

The situation at present is that whenever the business representatives or government officials of both countries hold parleys to discuss trade and investment, the emphasis is primarily on the Most Favored Nation (or Non Discriminatory Market Access as promoted and parroted nowadays to counter the misleading Urdu connotations of the term MFN) or on the imperative need to remove the restriction of allowing only 137 items from India through the Wagah-Attari route. The Munabao-Khokhrapar land route, the development of physical infrastructure, especially on the Pakistan side of the border, the increase in frequency of the Thar Express passenger train between Munabao-Khokhrapar, the setting up of an Integrated Check Post for truck movement at Khokhrapar, and the oft-delayed opening of the Deputy High Commissions in Mumbai and Karachi are seldom topics of broad awareness, mutual understanding and decision-taking, especially at the official level. In short, conveniently ignoring The Ajrak Corridor.

A flurry of activity has been witnessed in recent times in the relationship between Pakistan Punjab and East Punjab. The well-located facility at Wagah-Attari enables closeness and easy movement of people and goods. The denizens of Balochistan and Sindh are handicapped by many factors that impact on their trade, trips, and contacts across the border. There was a time when three fourth of Pakistan’s exports to India and nearly forty percent of imports from India were through the Rajasthan-Sindh land route. Today, except for undocumented cross border trade, there is virtually no officially registered trade through this route. The advantages are manifold, whether medical tourism, whether religious pilgrimages, whether access to educational institutions, whether linkages for coal, oil, gas, technical skills development, and whether business of ethnic handicrafts and textiles, to enumerate certain sectors.  Thus, it is imperative that there should be The Ajrak Corridor.

The situation is also disturbing for citizens who have family or relatives across the border, especially residents of Rajasthan, Gujarat and Sindh. Those citizens living within the ‘Dhat’ region, an area of about 400 km on both sides of the border between Jodhpur in Rajasthan and Umerkot in Sindh have traditional religious, social and ethnic ties. The restriction in cross border people movement imposed after the 1965 war that has affected those living on both sides of the border can be eased with the establishment of The Ajrak Corridor.

The situation on the Gujarat-Sindh border is depressing too. In the olden days, there was considerable movement of goods and services between these two states. Here too, the cultural, economic and ethnic linkages and traditions were paramount and were enabling factors. There is an overbearing sense of compatibility between Gujarat and Sindh, especially the presence of business-oriented ethnic communities such as Memon, Khoja, Bohri and Vohra who have a strong presence and significant importance in trade and industry, especially in Karachi and some cities of interior Sindh.  This is a potent asset that could be utilized to develop trade and investment in and through The Ajrak Corridor.

There is this deep-rooted opposition to opening up any more entry/exit points since monitoring and controls are comfortably executed at Wagah-Attari point. There is this misconception that a Rajasthan-Sindh-Gujarat nexus would usher in rampant imports from India with a further complication of people movement, primarily of Sindhi Hindus and of those families and their progeny who migrated from India after Independence in 1947. Even today, there are no direct road, air or rail linkages between Sindh and Gujarat. The possibility of connecting important cities through a road network that could also be extended to Rajasthan could enhance trade and people movement on a fast track. This strategy could also be considered for the Munabao-Khokhrapar rail that could be extended to Gujarat too. The lack of a direct shipping service is also retarding trade. It is proposed that since more goods are being imported from India than being exported from Pakistan, the governments of both the countries could allow an Indian shipping line to commence a feeder service between Sindh’s Karachi Port or Port Qasim and Gujarat’s Kandla or Mundra Ports. This grand initiative can increase the importance of The Ajrak Corridor.

The election of Narendra Modi, a Gujarati, as the Prime Minister, has been acknowledged as the re-birth of the traditional relationship between Gujarat and Sindh. In fact, despite hard-hitting statements emanating out of his political party leadership, and at times by his own scathing pronouncements, there is hope that a new beginning would be made, and that the political leadership in Gujarat and Rajasthan would especially prefer to develop a Para-diplomacy equation with their Sindhi counterpart. The encouraging aspect is the open support and lobbying of the business communities of Sindh, Gujarat and Rajasthan. More importantly, the direct benefits of these efforts would be a blessing for all citizens living in these areas. These are the very essence of the success of The Ajrak Corridor. A very poignant couplet often recited at Indo-Pak meetings of stakeholders is worth mentioning: ­Aik shajar aisa lagaya jaye / Jiska hamsa’ay ke aanghan mein bhi saya jaye.

Monday, July 28, 2014

Trade Unions: Dying Breed

Majyd Aziz

Trade Unions in private sector in Pakistan, by and large, can be aptly described as in-house unions, pocket unions, or fill-in-the-blanks unions. Radical labor leaders have gradually been eased out and there are more moderate and sensible workers’ representatives now who base their future on practical economic solutions, who adhere to the concept of industrial peace, and who utilize human skills of negotiations and consideration to hammer out agreements rather than resorting to strikes and other anti-labor tactics to achieve their objectives.

Today, efforts are being made by social and human rights activists to send out motivating signals to the “dying breed” to learn from the global initiatives undertaken by various labor federations who, in recognizing the effects of globalization on the working class, are banding together in an effort to resuscitate the terminal patient. Interestingly, the various global unity groups, having a focused agenda, have not been able to bring about a renaissance within the disarrayed and disorganized labor movement in Pakistan. Although these global programs do have members and linkages in Pakistan, nevertheless there is no display of a trickle-down effect among either local unions or the general workforce. 

Some activists cite the 2014 International Trade Union Confederation Global Rights Index of the World’s Worst Countries for Workers, that depicts Pakistan as ranked near the bottom at four on a scale of one to five. ITUC identified Pakistan as one of the 30 countries at risk “experiencing a profound failure to guarantee laws that ensure fundamental rights for all workers.” Notwithstanding this penchant many activists have for highlighting only the negativity against Pakistan, the Index also includes USA, Argentina, Hong Kong, Indonesia etc in the same category. What these activists also fail to underscore is that in the bottom at five are those countries that do not guarantee rights and in this list of the worst countries in the world to work in and where workers have effectively no access to these rights and are therefore exposed to autocratic regimes and unfair labor practices”, ITUC has included China, India, Bangladesh, UAE, Turkey, Greece among such 32 countries.  It should be noted that China, India and Bangladesh are Pakistan’s regional competitors, especially in textiles.

How is the survey for Global Rights Index done? According to ITUC, it “sends the questionnaire in an electronic and word format to its affiliates asking them to share it broadly with their membership. Furthermore, five regional meetings are conducted with regional human and trade union rights coordinators where the questionnaire is disseminated, explained and then filled out. In addition, the ITUC contacts unions directly by phone and email when it becomes aware of violations to confirm relevant facts. Violations are only recorded if unions can provide relevant facts. Anecdotal references and mere statement of opinions are avoided thereby increasing the reliability and comparability of the information.”

Pakistan is not the only country violating many of the labor rights. However, what some activists complain that “the government and/or companies are engaged in serious efforts to crush the collective voice of workers putting fundamental rights under continuous threat” is nothing but opprobrium usually heard at May Day rallies. The employers or the governments are not principally responsible for the union movement to lose steam. The business dynamics have changed, especially when a massive inflow of migrant workers started coming into urban cities like Karachi, Faisalabad and Lahore. The power of union leaders proportionately diminished when laborers accepted the conditionalities of working as contract workers rather than so-called permanent employees. Their concern was the current paycheck rather than gratuity, bonus, leave encashment, etc. Nowadays, workers don’t want to hear about EOBI, Social Security, NIRC, etc. Furthermore, with more entrants in the labor market, the bargaining power of the laborer correspondingly reduced too. Unskilled workers are available at even less than the guaranteed minimum wage as ordained by the government. 

Pakistan faces another labor problem too. While skilled or technically competent people are also in demand in foreign countries, there is scant scope for the unskilled, with low literacy quotient, to obtain higher paying jobs. The housing sector would be the new booming industry in Pakistan and the dilemma is that there are few skilled workers even in this sector. The trade bodies related to construction and housing, such as ABAD, do not have a game plan to deal with the expected upsurge, especially in low-cost housing. To make matters worse, even the fifty plus industries that depend on housing and construction are also deficient in developing or having a skilled workforce. Here too, even the unions have not demonstrated any attempt to encourage unskilled workers to learn new skills.

Fortunately, today there are some moderate and erudite labor leaders who are well-versed in labor laws, who are involved in intensive lobbying for amendments in various labor related legislation, and who have a respectable command of the working environment. However, certain work-related issues often escape their focus. There is limited attention towards motivating workers to enhance productivity, to maintain hygiene at workplaces, to improve punctuality, to ensure education and health for workers and families, and to promote the orientation of safety and disaster management procedures. Sadly, there are some labor leaders who still continue with their trite litany about “appointment letters” and inflation or resort to long-winded rhetoric even at focused meetings. 

The power of trade unions, as stated above, has diminished primarily because of the labor leaders themselves and less due to employers asserting their influence or the government turning a blind eye. The salvation for labor probably lies in per force implementation of 27 Conventions, that also include labor related, if Pakistan is to enjoy the fruits of the EU GSP Plus status for the next decade. What labor leaders seemingly failed to achieve, European Union will ensure that laws, rules and conventions are assured, understood and implemented. Winston Churchill, the great statesman very rightly said that “some see private enterprise as a predatory target to be hunted, others as a cow to be milked, but few are those who see it as a sturdy horse pulling the wagon.”

(Part 2 of 2-part series)