Islamabad blues: why capital calling is bad business

Having a strategy that relies on favours from the government is a recipe for disaster

Has anyone ever taken the 7 am PIA flight from Karachi to Islamabad? If you have, you would see a line of businesspeople and corporate executives holding files (or laptop bags) boarding the plane. Rubbing their eyes and barely being able to stay awake they are all going to Islamabad to attend meetings with one ministry or the other. They board the flight in the hope that they will achieve their objective of making their case to someone important.

However, the 7 pm return flight to Karachi actually tells the story of their day. Those who make the return journey the same evening do so with dishevelled and dejected looks. They return realising they had just spent a wasted day similar to many such days in the past and probably many more to come. They will often repeat the same exercise the following week and the week after, endlessly taking their woes to Islamabad in the hope of getting this or that person to listen to their cause. The action speeds up with the onset of the budget season in April and May every year.

This saga has been going on forever in Pakistan and there seems to be no change in the modus operandi from one government to the other and from one company to the next. While there is a moral and business ethics question to be raised in this context, I would like to leave that aside in this piece and instead focus on the effectiveness and impact for the policymakers and the businesses themselves of this entire merry go around.

This is certainly not a good way to make policy for the government and is demeaning and wasteful for businesses. In my view, Pakistan’s current rank at 136 in the World Bank’s Ease of Doing Business global rankings, amongst many other indicators, can only be improved if Islamabad and businesspeople learn to deal with each other from a distance.

To start with, somehow Pakistan has ended up with a system which ensures that all things happen via the ministries and other powerful offices in Islamabad. Even though the days of the license raj are supposedly behind us, the powers in Islamabad behave in the same old-fashioned way. Whether it is the bureaucracy, politicians or other influential functions of the state or the business community itself, they all believe that solutions to their problems lie with this interface.

There is nothing wrong with a ‘consultative process’ as such but when it serves no other purpose than to tick the box it is a futile exercise. Our bureaucracy has perfected the art of doing this – meetings are called, discussions take place, agendas and minutes are issued but hardly anything ever gets done. Even when decisions are taken, stakeholders who are negatively impacted will not accept the verdict and will continue to run after Islamabad in the hopes of a revision, failing which a legal battle will most likely follow.

While the government is not entirely to be blamed for this, they shoulder the responsibility of having limited capacity to do proper research and planning to undertake clearly spelt out, sustainable policies and execute these without fear of one sector or another.

For obvious reasons, the business community has always believed that their current and future bottom lines are linked to the favours they can obtain from Islamabad. No matter which sector they come from; energy, banking, chemicals, consumer goods, pharmaceuticals, automobiles – you name it and their business model is based on some statutory regulatory order (SRO) embedded in one of the blocks (A, B, P, Q, R, etc.) housing the various ministries at Pakistan Secretariat in Islamabad.

The problem is magnified when every individual part of an industry value chain has a different take on things but there is no one to provide a coherent perspective. Individual companies and sometimes their respective industry associations all fight to protect their interests, never realising that whatever they obtain from Islamabad today will remain vulnerable to change. It can change with a new government or a new minister or just with a different bureaucrat. Why would you then continue to invest so much time and energy in trying to ‘win’ in Islamabad?!

It is sad to see this phenomenon hold true for all sectors and industries in Pakistan. It is as if everyone has given up on trying to establish a business which can stand up on its own without any support from Islamabad.

I tried to wrack my brain to think of a sizable industry which does not depend on Islamabad and I only came up with the nascent IT and technology-based industry as ones being able to do so. However, this impression was quickly quashed when I saw in the media the leadership team of a recent technology success story being photographed with government advisers in Islamabad. Sadly, they have to flock to Islamabad even when their success has primarily been outside Pakistan.

Although lobbying is common in most modern economies (as promised, I have resisted the urge to delve into a moral debate on this), it is done in very different ways. In the United States and Britain lobbying is officially recognised and there are rules which need to be followed. Lobbyists or advocacy or public relations companies have to declare themselves as such.

More importantly, most of the influencing is done with Congress or members of parliament (and their staff) to impact legislation which can help a business or an industry. Although far from perfect, the process at least ensures that various sides of an issue being debated in a transparent manner and decided upon by representatives of the people. Unfortunately, in Pakistan, the parliament has been sidelined and is not known to debate issues pertaining to specific industries or sectors.

In my work as a strategy partner to companies, I sometimes inquire about how frequently the owners or the top management fly to Islamabad. I get strange looks until I explain the rationale and I suggest that they think about the impact a new strategy or a competent management team can make in a business which is so dependent on Islamabad. I find the younger lot to be more open to this idea although there are a small number of truly legendary older figures in business who have learned their lessons the hard way.

My advice to those who care to listen is to stay away from Islamabad as much as possible. Sure, indulge in photo ops if you must and travel to Islamabad to connect to the beautiful hills but not to venture anywhere near those ministries and power centres if you want to build a truly strong business.

Focus on creating value through innovation, high-quality management teams, good governance and most of all learn to operate in competitive markets and develop consumer-centric organisations. Next time, think twice about taking that flight to attend an ‘important’ meeting in Islamabad.

For the powers in Islamabad and anyone trying to work sincerely for the public, they must understand and deal with the fact that the capability set in Islamabad across all levels and functions is broken and is slowly and gradually making itself irrelevant to how the world works. One hopes that they will reflect on the country’s 136th position (in ease of doing business) and the role they have played in this and many similar constant under-achievements.

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