Saturday, October 3, 2015

Smuggling impact of APTTA

Majyd Aziz

Afghan Pakistan Transit Trade Agreement, a facilitation accorded by Pakistan to Afghanistan, is also a contentious issue. Pakistani industrialists are more concerned about APTTA than other stakeholders are. The misuse of the original APTA was widely reported and accepted by even the respective governments. Despite the inclusion of safeguards and presumed tightening of the monitoring process, the fact is that APTTA is still a matter of consternation for Pakistani manufacturers as well as importers. Moreover, since many safeguards have not been properly implemented, the unscrupulous traders dealing under the APTTA regime as well as the clearing agents, truckers, government officials and politicians have continued to take illegal, favorable and lucrative advantages of the facility.

The bare truth is that no independent or reliable study has been carried out to determine whether the quantity of the different products imported under APTTA are in conformity with the actual demand of the products or commodities. This is the highlighted fact. The excessive imports are made to misuse the facility and transfer the products and commodities for domestic Pakistani utilization and consumption.

The government usually gives lip service when there is hue and cry over the misuse of APTTA. These lead to high-level meetings and important decisions are given. However, most of these decisions fail to see the light of the day. The primary reason being the large monetary stakes involved in facilitating the supply chain. The issue is further compounded when this laxity is allowed because the political, diplomatic and security compulsions outweigh the ramifications of the APTTA.

Tea is a major item of concern. About 50% of Pakistan's requirement is met through the APTTA and this has been documented by Pakistan Tea Association on a regular basis. A visit to Peshawar or Chaman would immediately lend credibility to this tea business. Tyre and tubes for vehicles are another prime source of blatant smuggling. Again, no efforts are made to control the movement of these products. Electronic items are regularly imported under APTTA and most of these are destined for the Pakistani markets. Moreover, although they do not fall under the ambit of APTTA, cement, livestock, and wheat are openly smuggled into Afghanistan from Pakistan.

Afghanistan generally has an import duty of 5% on most of the imports. Furthermore, truckers and Pakistan Railways give preference to goods destined for Afghanistan. This has a negative impact on goods transport within Pakistan. Domestic customers of trucking industry and Pakistan Railways are compelled to pay a premium to book wagons or trucks for their needs. There is a perennial shortage of wagons and, at the same time, Pakistan needs nearly 100,000 more trucks to cater to local requirements and to ply on the Pakistan-Afghanistan route. This is a double whammy for Pakistani users since the transport cost becomes exorbitant and unfeasible. They are always dependent on the whims of the Railways officials or the truckers and thus corruption becomes the justifying factor whenever wagons are requisitioned. The goods and commodities under APTTA are charged duties at destination and when these goods are diverted either before crossing the border or even after entering the Afghanistan territory, the overall expenses are much lower than if officially imported into Pakistan.

The volume of smuggling is huge. The irony is that official exports to Afghanistan are reducing every year while informal trade has exhibited a marked increase. Individual truckers are buying cement from local market and transporting it into the depots inside Afghanistan, bypassing the manufacturers and intermediaries. This has led to a decrease in official exports of cement from Pakistan although locally, the sales have maintained a steady increase. At times, there is a wheat shortage in Pakistan but flour as well as wheat make their way across the border. The Pakistani consumer pays a higher price due to this artificially created shortage and loose controls at the border. If there were no increases in local production of vehicles, then most of the tyre manufacturers would have closed down or faced colossal losses due to the smuggling of tyres under the APTTA. Imported fabric is available in nearly every cloth market because it is cheaply brought in under APTTA. This has severely affected local production and, today, even most of the producers of lawn use imported fabrics for the Dupatta for their sets.

The dynamics of Afghanistan give impetus to reliance on smuggling and informal trade. Negative factors include corruption, the diversion of aid money into financing informal trade, weak financial controls, huge profits due to narcotics, and the subversion of money from natural resources being used to finance terrorism as well as enhancing informal trade. A case in point is the substantial smuggling of Chrome Ore that is channelized into Pakistan and exported, mostly, to China as Pakistani Chrome Ore. There are over 1000-1300 illegal mines in Afghanistan that are controlled by warlords, corrupt officials, and other non-state stakeholders. Another damaging example is narcotics. More than 35% of it is routed through Pakistan and this enables dishonest stakeholders to circulate the cash through procurement of products and commodities through the APTTA.

The Middle East, especially Dubai, is the focal point for money laundering, imports and exports under APTTA, and investment in real estate. These are used to finance products and commodities that are sent to Afghanistan or for Pakistan under APTTA and in this way, the informal traders and financiers rake in exorbitant profits as well as gaining influence and thus they can maneuver politicians and government officials and get political and official support for their activities. The parallel economy operates with impunity and all roadblocks in its way are removed or paved. Hawala and Hundi system are used openly and this paper financing come into the system because the profits are alluring. The amounts mentioned ranges from $50 to $100 billion and there is no end to it. Of course, since most of the transaction is in cash or non-banking paper, the terrorist and extremist organizations have also entered the game to finance their activities.

No illegal or informal activity can be supported without the connivance of the corrupt government officials. The manpower at the borders is actively involved in this racket and, it is said, the personnel pay a premium to obtain posting at the borders. The withdrawal of the ISAF Forces would result in heavy reduction of external assistance to Afghanistan. The country would need $15-17 billion every year for its expenses and development. However, the government is hard-pressed to source funds. Notwithstanding this factor, the government has not put into operation an Action Plan to reduce smuggling, narcotics, misuse of APTTA, or containing terrorism and extremism. This is basically due to the overarching influence of the warlords and people with access to the corridors of power.

The underlying concern is that the possibility of stagnant or gradual reduction of official imports and exports between both the countries would be prominent, and off-books availability of finance would continue to be the norm. Monitoring and control are technically in place but loopholes and lax action enable informal trade to flourish. Bringing sanity is an onerous task and, frankly speaking, governments in both countries lack the critical mass to enforce the laid down systems.

Tuesday, September 29, 2015

I survived Mina Stampede 1994

Majyd Aziz

The writer wrote this narrative on the day of the Mina Stampede, recalling his own experience. The figures of victims are of that fateful day. Moreover, blame game had still not created a storm.

Haj 2015 confronted two tragedies. September 11 was the day when a huge crane belonging to the Bin Laden Group involved in the expansion of the Masjid Al Haram fell due to a severe windstorm. Some 117 pilgrims inside the Grand Mosque died while scores were injured. Then, September 24, the day after Haj, over 720 pilgrims died while in excess of 800 were injured, many critically, during a stampede in Mina where pilgrims perform the ritual of stoning Shaitaan (Devil). Initial reports focused on the area where predominantly the Algerians were based. The figures given are at 6 pm, Pakistan time. The exact casualties may increase by the time all are counted and reported.

This day, being the first day of Eid holidays in Pakistan, I was hooked to the television, watching channels keeping me abreast of the latest figures and showing the visuals. This tragedy brought back memories of 1994 when I accompanied my mother, spouse, and eldest daughter for my second Haj. Our group was fortunate to have our hotel just a block away from the Jamarat, where the three Shaitaan were located. On the first day, we had managed to reach Mina quite early from Muzdalifah after performing the religious requirements at Arafat. There was no rush at Jamarat and we performed Rami (stoning of Shaitaan) at ease. 

I was not comfortable with the bathroom facilities at our hotel, and thus, decided that after the Fajr prayers, I would hire a taxi and leave for Makkah, sleep a couple of hours, shower and hire a taxi for my return to Mina before the Zuhr prayers. On the third day, when I returned to Mina, there was a tremendous rush of people leaving for Makkah after performing the Rami. The cab driver informed me that it was not possible to reach my hotel by taxi and all I had to do was traverse the bridge at Jamarat and walk to my hotel.

I was casually walking on the bridge when I saw a huge crowd running and coming towards where I was walking. I quickly crossed over to the perimeter of the bridge and what I saw was frightening. It was a real charged crowd, shouting, shoving, and going wild. I froze, and for a few moments did not know what to do. After a few deep breaths, I weighed up my options. The first thought that entered my mind was to run towards the crowd and find a gap. That was easier said than done. The other alternative was to run along with them but that was also a difficult choice. The third option was to attempt to go further down on the bridge and gather strength to jump from the bridge and land on an ice-cream truck maybe 20 or 25 feet below. Dangerous, because I was no stunt actor and the fall could injure me or I may lose balance and fall from the truck onto the road.

I looked down from the bridge and saw 35-40 pilgrims lying on the road. Firefighters, police and other pilgrims around them. I had no idea that they were dead and instead thought that they had fainted due to the unbearable heat. There wasn't a moment to lose. I had to make an instant decision. Jump from the bridge. No choice. Miraculously, I saw enough space for me to edge sideways with my back to the perimeter wall. I moved on. The roar of the crowd and the speed of their rush were horrific. I was continuously reciting the Darood (an invocation that Muslims make by saying specific phrases to compliment the Holy Prophet Muhammad [PBUH]). Images of my mother, spouse and daughter worrying about me were on my mind. 

With full faith in Almighty Allah, I picked up speed and, keeping the sideways posture, I commenced my walk. The stampede just would not end. Suddenly, I saw a gap between others and me. I ran as fast as I could. In a few minutes, the unruly crowd had passed by me. I did not stop and kept on running till I reached the stairs and came down on the road. I glanced around and saw the bodies lying on the ground. I saw my hotel and dashed towards it. I entered the building and did not stop till I reached the room where my family was waiting for me. They were relieved to see me and I narrated what had happened.

The stampede scenario occurs every now and then during Haj at Mina. I would not blame the Saudi government because the authorities take steps to avoid any mishaps and tragedies. Today, the facilities are admirable and strategies are in place to deal with emergencies. The real issue is that the over two million pilgrims of different nationalities, sects, and attitude are not properly oriented in behavior, in customs, in etiquette, and in dealing with emergencies. It seems, ironically, that civility and consideration is missing most of the time among the pilgrims. 

The first reports on the Mina stampede 2015 disclose that some aged and infirm pilgrims fainted due to the excessive 44 degrees heat and people trampled over them. This triggered a rush and developed into a stampede. Rapid rescue efforts by over 4000 emergency workers and civil defence personnel and 220 ambulances controlled the situation. Meanwhile, other pilgrims went ahead to perform Rami and other prescribed prayers. Haj 2015 will always be remembered for the two tragedies. Come Haj 2016, another two million will be the fortunate ones arriving in Saudi Arabia to perform the fundamental obligations of being true Muslims. For sure, the facilities would improve and be more safe and tragedy-free. Hopefully, the pilgrims would have learnt lessons from the tragedies too. I did.

Tuesday, July 7, 2015

Concrete Transportation

Majyd Aziz

The Construction Sector in Pakistan has undergone a dynamic transformation in the past some years. Gone are the days when it took years to complete a project because the modes of construction were outdated and inefficient. Reliance was on rule of the thumb estimation of the mason or the supervisor. The shuttering was a hotchpotch of uneven and overused wooden planks nailed together. There was hardly any futuristic vision in presenting attractive designs and facade of the buildings. TV commercials were ear-splitting loud whereas the actors played their roles as rookie amateurs. Truth-in-Advertising was alien to most of the builders and developers. Needless to say, many citizens were unjustly gypped by the black sheep in the construction sector and the connivance of the various regulatory agencies and bodies was highly apparent and damaging.

Gradually, a new breed of developers and builders made their way into the sector. A new thinking evolved and is now evident in the modernistic high rise residential and commercial complexes, optimal utilization of efficient machinery and equipment, employing adequately trained skill workforce, presenting sophisticated advertisement and publicity  profile, and ensuring that all inputs and items are of state-of-the-art quality. All these have made a difference between what are standard construction methods of today and the rough and ready modes that were practiced for decades. 

Construction industry is not just building apartments or plazas. It encompasses a whole gamut of sectors, including physical infrastructure such as road network, ports, airports, dams, energy utilities, and social infrastructure like educational institutions and medical facilities. Efficiency, both in time and money is crucial. With costs escalating frequently, the emphasis is on quality, affordability, and delivery. It is with these factors in perspective that builders and developers depend on fast track and proper supply of raw material as well as availability of equipment and manpower.

Ready to use concrete facility has become essential not only for large projects but also for a host of medium-sized endeavors. The cement mills and large construction companies have collaborated to provide this service. This is very advantageous because the construction company can order concrete as per the requirements of the project, thus ensuring the usage of prescribed specifications such as strength, durability, versatility, affordability, and efficiency. Another benefit is that many materials have no damaging effect on concrete. Moreover, being established companies and mindful of reputation, the concrete producers actually provide an extra yield margin to make sure they aren't short-changing their customers. This is highly unlikely when basic modes are used at construction site where mixing is done out of experience and where human error is possible.

The advantages of using quality assured concrete are to give more strength to mega projects such as dams, bridges, tunnels, and high rise structures. Moisture and mould do not impact negatively while concrete structures are safe from natural disasters like earthquakes or hurricanes. Concrete is also fire-resistant and this is crucial because in Pakistan, fire incidents have destroyed many structures. Another quality worth mentioning is the energy savings, something that this nation desperately lacks.

Concrete is transported through specific vehicles and are affordable within the proximity of the concrete supplying plant. It is in transportation of concrete in Pakistan that the ruinous impact is evidently visible and blatantly harmful. The standard operating procedures manifest strict control over the vehicle and its equipment, and it is mandatory that safety features are installed and implemented. Lack of controls, sloppy monitoring, and casual mindset of the vehicle operators have been detrimental to the roads as well as on people and property. 

It is obligatory on the plant managers as well as vehicle operators to ensure that concrete granular material does not spit out of the high resistance mixing steel drum during transportation as this becomes a major road hazard as well as it damages the road surface instantly. Concrete mixers are being used all over the world for transportation without causing any harm to the environment. Whereas, it has been observed on Karachi roads that the operator of the vehicle seldom closes the latch properly on the tank and thus concrete is spit out at every junction, speed breaker or bump on the roads during vehicle movement.  After discharging of the concrete, it is mandatory to rotate the tanks in the opposite direction so that the residual granules do not remain inside the tank and find their way out during transportation. 

These residual granules fall on the roads resulting in visible damage to the road surface. Moreover, these granules can become lethal like bullets if fast moving traffic move over them as these can fly in various directions and become injurious to the health of people or damage to property along the roads. Since there are no laid down rules of safety assurance or material movement, the ensuing consequences are, and can be, dangerous. 

It is proposed that the competent authorities, in consultation with Pakistan Engineering Council, Association of Builders and Developers, All Pakistan Construction Association, the Traffic Police, and transportation experts and consultants, must develop a Code of Conduct to ensure safe handling and transportation of concrete from plants to the construction sites. Pakistan is on her way to massive construction activity especially with the advent of projects under the China Pakistan Economic Corridor. Pakistan is also poised to commence huge low-cost housing projects all over the country. Therefore the rules must be stringent, ensured and implemented. Moving into the next phase of construction boom requires changing the mindset and elimination of shoddy practices and nonchalant attitudes. Pakistan is financially starved of resources and faces a menacing unemployment scenario. Construction industry can be the game changer. Today’s construction industry is increasingly challenging in economic, social and environmental terms. It is imperative to optimize resources and use them safely, effectively and efficiently.

The stakeholders must now get their act together. The process of transporting concrete is an extremely focal and fundamental step for the success of a large construction project. It is necessary to run an effective and efficient transport mechanism to ensure that the concrete reaches its final destination, is properly discharged, and the journey is hazard-free because lives matter more than the construction projects. Don Allen Holbrook, a world renowned economist, advised that “Change in inevitable, but progress is optional.”

Monday, June 8, 2015

Businessmen’s Perspective on AfPak Bilateral Dynamics

Majyd Aziz

The post-2014 Afghan scenario is the outcome of two interrelated trends: reduced attention to Afghanistan by world powers, and as a consequence, its transition into a regional channel. The vacuum formed after the withdrawal of the main US/NATO coalition forces is giving impetus to regional states, China, India, Pakistan, Iran and the Central Asian Republics, to speed up their exposure in that country. This, in turn, increases competition between them for spheres of influence in Kabul, with each side seeking to advance its own national interests.

The narrative is quite clear. Stability in Afghanistan will also be very significant for stabilization and enrichment of the whole region. Afghanistan has huge potential, rich resources and has location advantages. The past years have reflected the courage and determination of the Afghan people. Post-2014, Afghanistan is facing and will face monumental internal and external challenges, such as security, political and economic. Moreover, it is an onerous task for Afghanistan’s future business development, attempting to integrate the economy in the region and harnessing her inherent potential.

The post-Karzai government set-up has ensued into a new cooperation matrix where Pakistan is attempting to bring about a fresh and positive approach in the bilateral relationship with Afghanistan. The encouraging response by President Ashraf Gani, especially during his historic visit across the Durand Line in November, further emboldened this relationship. The highly publicized role of Pakistan Army COAS General Raheel Sharif and the frequent visits of DG ISI Lt. Gen Rizwan Akhtar are manifestations of this new thinking. Recently, Prime Minister Nawaz Sharif took a high-powered delegation to Kabul that has further reinforced the relationship.

The feel-good signals emanating out of these interactions, although reflecting hope, are still dependant on the future course of actions of both the governments and should be planned in view of the events, policies and strategies of other regional countries that are eagerly in a rush to enhance their connections in Afghanistan. Hence, Pakistan-Afghanistan bilateral relations now encompass various regional and global factors that must be judiciously addressed by both countries.

To ensure a win-win situation, to facilitate extensive and favorable cooperation, and to take maximum advantage of the new regional dynamics, it is imperative that Kabul and Islamabad develop a broad-based strategy and trust so that both nations and their citizens enjoy the dividends of political, diplomatic, military, energy, trade, investment and, most importantly, peace initiatives. Therefore, for Pakistan, the new paradigm entails a holistic approach rather than addressing these from an individualistic neighbor-to-neighbor position. Thus relations with Afghanistan are now at a crucial stage because this paradigm would be the catalyst for regional cooperation, trade facilitation and national security.

Pakistan and Afghanistan have to tackle the issue of terrorism and extremism. The launching of the Zarb-e-Azb operation by Pakistan Army and the huge success of this operation has also improved the trust factor that haunts both the countries. Consequently, it has given impetus to Kabul to intensify its own efforts to deal with terrorists and extremists in Afghanistan. However, these terrorists are well-entrenched and continue to have a powerful presence in many areas of Afghanistan. In fact, terrorism on both sides has been a millstone around the necks of the two governments.

Moreover, the economies of both the countries are feeling the negative impact of fighting the war against terrorists. Both countries are dependent on massive injection of considerable foreign financial resources for their budgetary support, more so at the cost of allocation of funds for the welfare of the populace. The macro-economic fundamentals of Afghanistan are fragile, and Kabul would need in excess of $15 billion annually for implementation of its various programs. All in all, both countries have to strategize their survival policies through prudent utilization of financial resources.

Ashraf Gani is a respected economist and his foremost plan is focused on maintaining and improving the status of the country through an economy-led strategy. His first foreign visit was to China before he landed in Pakistan and then India. The easy access accorded by him to Pakistani businessmen and his standing invitation to businessmen to visit Kabul and interact with their counterparts as well as government personalities, including him, is proof positive that he has his priorities chalked out.

Ashraf Gani has to ensure that his government continues depending upon support from Washington, albeit a substantially reduced amount. The over-arching concern is that the withdrawal of NATO/ISAF forces would drastically reduce financial inflows hence depending on foreign loans and assistance would be a tall order.  It is therefore, in his scheme of things to look for external sources to run his government. He is looking for heavy investments from China, India, Japan and Turkey to rebuild his nation. Pakistani construction companies lack the critical mass to undertake such projects as well as arrange financing. It would be a pragmatic approach to dovetail on Turkish construction companies as sub-contractors. This is the prime reason why Gani has embarked upon a process to attract massive Chinese and Indian investment in the minerals sector. Chinese companies have a $4.4 billion contract to mine the Aynak copper mines and would be investing around half a billion dollars in the oil sector. Kabul has awarded India mining rights for the country’s biggest iron deposits. Afghanistan expects $25 billion in foreign investment over 30 years in mining and energy with over $10 billion from India. An Indian investment consortium is negotiating the building of Afghanistan’s first steel mill costing $8 billion, plus a power plant and facilities for ore extraction and processing. Once the process is put in motion, Afghanistan is placed to receive huge investments and the accruing royalties. Afghanistan is loaded with minerals such as lithium, chrome ore, iron ore, coal, soapstone, copper, and gold, to name a few. China has a huge appetite for such minerals. The Japanese battery industry requires lithium and is keen to invest in this field.

A worrying factor is the lucrative narcotics sector. Afghanistan cultivates 95% of the total opium poppy crop and is a major producer of narcotics where illegal profits run into billions of dollars annually. The influence of the militias of the warlords cannot be easily discounted. The margin of profit is enormous and it is for this reason that many are demanding the legalization of narcotics. Another detrimental factor is the shortage of educational institutions. Thousands of schools and colleges are immediately required to bring about an education revolution. The youth bulge is intimidating too, especially when there is scarcity of meaningful employment. Denial of job opportunities could lead the youth into camps of terrorists and extremists. A fact of immediate consternation is food security since Afghanistan is importing most of its food requirements such as rice, wheat and tea. Notwithstanding the challenges, the Gani government has already won kudos for handling the affairs of the state. An air of optimism for a better future is pervasive despite the arduous task at hand. As Chairman Mao Zedong once said, “There is great disorder under the heavens, but the situation is interesting.”

In the past, Afghanistan stressed the distrust viewpoint but is today cautiously warming up to Pakistan’s overtures. Pakistan has suffered the blowback of a long, devastating Global War on Terror. The motivating factor that can play a vital role to achieve a huge peace dividend is if trade relations are strengthened. When countries trade with each other, people develop an interest in maintaining peace, so that the flow of goods and services is not disrupted. When countries are trading with each other, they tend to avoid conflicts. If there are any disputes, as is likely to happen, they use dialogue to resolve them.

While people in the corridors of power are involved in enhancing the efforts on the diplomatic front, the business community is making its own strides. A game changer has been Pakistan Afghanistan Joint Chamber of Commerce and Industry, comprising of Chambers of Karachi, Sarhad, Chaman and all the Afghanistan Chambers. The personal rapport developed between PAJCCI and President Ashraf Gani has been very encouraging.

The priority accorded by Ashraf Gani to Pakistan over India is a manifestation of the new thinking in Kabul. Ashraf Ghani very confidently remarked after his visit to Pakistan: “We have a shared vision to serve as the heart of Asia, ensuring economic integration by enhancing connectivity between South and Central Asia through energy, gas and oil pipelines becoming a reality, and not remaining a dream. The narrative for the future must include the most neglected of our people to become stakeholders in a prosperous economy in stable and peaceful countries as our faiths are linked because terror knows no boundaries. We have overcome obstacles of thirteen years in three days and we will not permit the past to destroy the future.” Both countries must realize that and move beyond the negativity towards a promising future that is crucial and important for their citizens.