PRESS CONFERENCE BY COUNCIL OF KARACHI'SINDUSTRIAL ASSOCIATIONS HELD AT PEARL CONTINENTAL ON MONDAY, MAY 10, 1999.

Ladies and Gentlemen: Welcome to this important Press Conference organized by Council of Karachi's Industrial Association. A separate paper is with you which outlines what CKIA is all about. The purpose of this afternoon's luncheon meeting is to meet you, to express our views, and to highlight some of the problems and difficulties faced by Karachi's 15,000 industrial units.

CKIA believes that circumstances have been created and are in the blueprint of certain forces to downplay the contribution of Karachi's industries and t ensure that progress is systematically impeded. CKIA is of the firm belief that never in the 52 years after independence have so many business community-related people been major partners in any Government and that never in the past 52 years have Karachi's industrialists and businessmen faced that many problems, difficulties, and discrimination.

CKIA is, therefore, bringing to the forefront FOUR major points of discussion this afternoon and we are ready to expand our point of view through a Question-Answer session immediately following this statement. I will cover the basic points that can then be further elaborated by my colleagues and other senior industrialists. These four points are: DISCRIMINATION AGAINST KARACHI, WATER SHORTAGE, POWER LOAD SHEDDING, and GENERAL SALES TAX.

DISCRIMINATION AGAINST KARACHI

Karachi is generating about 72% of the nation's revenue and over the past many years, in spite of the constant stream of the constant stream of steps taken to downgrade the potential of this mega-city, the government coffers are being replenished and fattened with the contributions from Karachi. The situation has continued to turn dismal for the citizens of Karachi, especially for those whose businesses and industries are paramount in Karachi. The relevant questions that need to be answered are:

• Why are Karachi industrialists subjected to so many visits from government officials that so much so we estimate that about half of our time is wasted dealing with government minions. This is an officially organized Bhatta racket and it has assumed menacing proportions. From the labor department to the sales tax personnel, from revenue stamp petty officials to civil defense officers, and from income tax people to infrastructure crowd, they all come like hornets, suck our blood, and disturb our workings.
• Why are Karachi industries paying more for power than those on the WAPDA grid. A medium sized textile spinning mils pays nearly one crore rupees per year more than a Punjab-based mils just in electricity. Why? Don't we have equal petrol rates from Karachi to Khyber even though it should be cheaper in Karachi because of the transportation costs?
• Why is the Maximum Demand Indicator in Karachi for only 15 minutes when it is 30 minutes for WAPDA?
• Why is WAPDA supplying to KESC at 15% more rates than a comparable IPP rate and that also as a "favor" to Karachi?
• Why are Faisalabad exporters getting Sales Tax refunds faster than Karachi exporters? The cases are refunded up to February 1999 while Karachi cases of even August 1998 are still pending?
• Why are Karachi roads not being renovated while in Lahore the Chief Minister has the wherewithal to get FWO to work round the clock to got roads widened and renovated?
• Why are Karachi's flyover being constructed at snail's speed and funds not released while motorway are being built in Punjab on war-footing basis?
• Why are Karachi's industrialists arrested by Sales Tax Collectorates even though all avenues of appeal have not been exhausted while in Lahore, the parliamentarians threaten the government with all at their disposal if an industrialist is even sent to a police station?
• Why is there too much emphasis to squeeze every penny out of Karachi's traders and industrialists at Customs stage while there is blatant corruption prevalent in Lahore, Faisalabad, and Sialkot Dry ports?
• Why are Karachi's industrial estates under a water quota system whereas this is not the case anywhere else?
• Why heads of Karachi's infrastructure providing agencies acting like colonial masters instead of understanding the need to solve problems?
• Why is there no representation of Karachi in the Federal Cabinet when Karachi has four well known and capable business leaders as MNAs or Senators?
• Why is there feet shuffling for when it comes to introducing mass transit system in Karachi?

WATER SHORTAGE

The perennial water shortage in Karachi has aggravated ever since Hub has been drying up due to no rain. The situation is so severe that there could be dangerous riots if water is not available to the citizens of Karachi. However, thanx to the Army and to the extra-ordinary decision powers exercised by the Hon'ble Sindh Governor, the Khawaja Ajmer Nagri pumping stations were completed and commissioned in a record time and at less than the estimated costs. This will, to a large extent, provide enough water to the residential areas. Notwithstanding this fact, the major problem lies in providing adequate water to run the industries. In this scenario. The KWSB, under the mercurial Brig. Mansoor Ahmed, has been a high example of indecisive, dictatorial, and anti-industrial policies. He has never been a friend of industry and he has always fought against the interests of the prosperity of Pakistan and supporting only World Bank dictates. No wonder that today, the industries are deprived of water just to sustain their meager production.

CKIA demands that either the Brig and his subordinates provide water immediately to the industrial estates or he should be sent to the barracks and a determined officer be appointed who can deliver the water so that the wheels of industry move towards achievement of the export targets. SITE, Korangi, Federal B Area, and North Karachi industries will turn into graveyards if water is not provided on an emergent basis.

LOAD SHEDDING

Karachi's industrialists have been clamoring for years that there is something fundamentally wrong with KESC and it has become a nest of corruption, inefficiency, and mismanagement. The bloated workforce is more interested in minting money, in electioneering, and in making life miserable for the citizens and the industries. The Ministers seldom listen to the complaints and they become mouthpieces for KESC. All thru these years, the KESC officials have been abject failures in solving our problems. the resort to load shedding has brought the country to the brink of disaster. It was only due to some support from IPPs that we are surviving. WAPDA does not care about Karachi and its publicized figures of 2000 mw surplus is just poppycock otherwise it would routinely supply 350-400 mw to KESC to ease the power problems. Unfortunately, this is another typical example of discrimination against Karachi.

CKIA is grateful to the Prime Minister for ordering WAPDA to provide 350 mw to KESC daily and we hope the WAPDA officials will obey the orders of the Prime Minister. CKIA also demands that ways and means be found to enable HUBCO to provide 500-600 mw daily directly from source instead of KESC getting from WAPDA.

CKIA reiterates that the following matters be solved as some are pending for ages:

• CKIA also demands that KESC should maintain rate equality with WAPDA and that even though it's application is pending with NEPRA, it would equalize rates with effect from the date WAPDA reduced rates, i.e., March 27, 1999.

• CKIA also demands that the Maximum Demand indicator that represents maximum average power demand over a pre-determined interval should be 30 minutes as in WAPDA and not 15 minutes as is the practice in KESC.
• CKIA also demands that KESC should fix a lower tariff for those industries that want to utilize power during off-peak hours i.e. 2300-0800 hours. This is prevalent in WAPDA.
• CKIA also demands that bonus be given to consumers who have installed Power Factors in their meters. KESC has not done it but WAPDA is doing it.
• CKIA also demands that load regularization be done on an immediate basis and that any deviation in meter variations should not be charged to the consumer.

GENERAL SALES TAX

The present General Sales Tax system has been brutalized by the Collectorates personnel and it has been transformed into an anti-Pakistan tax. The current system is completely and utterly a burden on the nation's exporter. The patriotic exporters were lured into the scheme by guarantees of prompt refunds, or in case of late refunds they would get interest on the blocked funds, and that it would be an simple system easy to adopt and really industry-friendly.

Alas the exporters soon realized that their very survival was at stake and if the system continues in its present mode, it would sound the death knell for Pakistan's export regime. Unfortunately, lip service has prevailed and the exporters are earnestly waiting for refunds of even August 1998. The exporter working capital is blocked in Sales Tax and they are having tremendous difficulties in running their factories and executing export orders that are so vital for the country's revenue base. Gold category exporters are not getting refunds even when it was declared that they would get refunds within 72 hours. We wold like to know which exporter in that category got refunds in the stipulated time. Not even one.

Moreover, because of the missing links in the chain form ginning to textile made-ups, such as in weaving and processing, there is lot of pressure on exporters to maintain proper documentation and all Invoices become subject to intense scrutiny by the auditors of the Collectorates. The exporters have become hostages to the whims of the auditors and this has impeded the growth of exports of the country. Corruption is endemic and there seems no way to control this menace. CBR is presenting a deaf ear to the cries of the exporters.

The genuine grievances of the bona fide manufacturers and exporters span from registration to refunds, to audit procedures, and to chronic delays in processing of the cases. The Prime Minister should take personal interest in GST and either saves the system from the clutches of the departmental officers who are out to destroy the scheme of cave in to these officers and abandon this system in toto. The excise-minded officers should be shunted out and progressive-opinionated officers be appointed to salvage this scheme.

EPILOGUE

Ladies and Gentlemen: Let me be just a little bit blunt and tell you this statement of caution. There has been a distressing increase in the number of those who have committed suicide. This harsh step is always taken when people have become fed up with their problems and as a last resort, they decide to end it all. The way things are going, there is an increase in factories closing down or turning into warehouses. This is what we call "industrial suicide" and this has to be averted if the nation has to survive in the globe village. This is imperative we are to provide a decent lifestyle to our citizens. This is crucial if we are to have our desired status in the comity of developed nations.

The future depends on total commitment by all concerned and by gradual elimination of all bottlenecks that hamper industrial activity. The jehad for a systematic end to corruption must be initiated from today. The jehad for substantial export grown must begin from today. The jehad for introducing national cohesion must start from today. The jehad for ending the insulting attitude towards industrialists must commence from today. These are true ways for the nation's salvation and for the country's mainstay. Let us become Pakistanys again for our destiny today a super Pakistan.

Thank You