Twenty-two families run the country, or so they say. The word “feudal” is often used. But Pakistan’s economy is in fact a unique mix of the up-to-date and the under-developed, and offers all sorts of opportunities for Indian business and investment — if that were possible.
The neighbours one year ago re-started negotiations to lower trade barriers and free up cross-border trade. The idea, if all goes well, is to boost commerce from a tiny $2.7 billion in 2011, of which India had the lion’s share, to $6 billion in 2013-14.
Even if trade barriers do come down and stay down, Indians will be entering a market that is not well known to them. In Pakistan — as anywhere, only more so — it pays to know the right people.
Here are five of the right people. They include Pakistan’s best-known and most influential business leaders, and the right man in government. Some of them do belong to the fabled 22 families...
Secretary Commerce, Government of Pakistan
In a lecture in Washington a month ago, commerce secretary Zafar Mahmood described the history of Pakistan-India trade relations. Trade moved freely until 1965, he said, after which war brought the shutters down. But the opportunity is there, he said — and now this negotiator is working with his Indian counterparts to allay business and political doubts on both sides so that trade restrictions can be lifted.
Mahmood concluded thus: “Pakistan’s trade with India is expected to gain momentum, especially if there is movement on other bilateral issues holding up improvement in political relations. If this happens, the stage will be set for a well-integrated SAFTA [South Asian Free Trade Area] region which would in turn, economically and commercially integrate with the neighbouring ASEAN region. For Pakistan this will be the time to finally take advantage of its geo-commercial location rather than suffering from it.”
ALI S HABIB
Chairman, Pakistan Business Council
The head of a Khoja Shia dynasty whose history of enterprise stretches back to 1841, Ali S Habib was recently elected chairman of the Pakistan Business Council, the advocacy group to which Pakistan’s biggest companies belong.
The House of Habib is a conglomerate, with 10,000 employees and interests in cars, tiles, chemicals, computers, retail and banking. Among the Habib companies are Indus Motor Co. Ltd, Thal Engineering and Habib Bank, Pakistan’s largest private bank.
Banking and insurance were the areas in which this Gujarati Muslim family business first grew significant in the 1800s — though the start was a utensil factory in Bombay. After Independence, M A Jinnah invited the then head of the family, Mohammed Ali Habib, to shift the Habib Bank to Pakistan.
Ali Habib has the international perspective, overseas technology tieups, and a presence in sectors in which Indian enterprises may be interested in investing.
MIAN MUHAMMAD MANSHA
Chairman, Nishat Group
Pakistan’s first official billionaire ($5 billion in 2011) and richest man, Mian Muham-mad Mansha was born in 1947 to a family from Chiniot. Chiniotis are known as clever traders. Mansha’s father had a business in Calcutta, so the family came to Pakistan after Partition. Already well off, his father started a textile mill in Faisalabad in 1951.
At 22, Mansha took over. He still runs Nishat Textiles, now the top cotton clothes exporter, but has diversified into power, cement, insurance and banking. He purchased the Muslim Commercial Bank in 1991. MCB Bank is one of Pakistan’s largest and best-run banks. Mansha says he pays no bribes; however, questions were raised about the MCB acquisition. The Nishat Group is Pakistan’s biggest private employer. Mansha has been called “Mr Pakistan”.
In 2008 Mansha told a magazine: “I say let [India] come and invest with us. I’m one of the few Pakistani entrepreneurs who believes the best way to expand is to open our borders with India. There are people here who are afraid of competition from over there, but [...] we have ports that are much quicker, with better infrastructure, and much cheaper, than India. We need a bigger market and more competition and they need the same.”
SIKANDAR MUSTAFA KHAN
Chairman, Millat Group
Lahore-based Millat Tractors Ltd is one of the world’s largest tractor-makers. Some 2.6 lakh of its machines are used in Pakistan — a market share of 50 per cent. Other Millat Group companies, like Bolan Castings Ltd, Millat Equipment Ltd and Millat Industrial Products Ltd, make parts for cars as well as for agricultural and industrial vehicles.
Some time ago, Millat Group chairman Sikandar Mustafa Khan told a Pakistani paper that the tractor sector faced a “lack of proper design, sub-standard engineering and production facilities, low technical skills, non-availability of specified material and components at the retail level and the lack of testing facilities”. He told an Indian paper that “there are great opportunities for both the neighbouring nations for the exchange of various automobile parts, which we could import, and export on cheaper price to each other’s country.”
Khan is also vice-chairman of the PBC, a past vice-president of the Lahore Chamber of Commerce & Industry, and president of the Pakistan Foundry Association. He is on the Habib Bank board. His company sponsors golf tournaments and supports the Lahore University of Management Sciences (LUMS), Pakistan’s best business school.
ABDUL RAZAK DAWOOD
He runs Descon, the largest engineering and construction company in Pakistan. His group has entered fertiliser, energy and infrastructure, with sizeable investments, including overseas, for instance in Bangladesh. He has been chairman of the PBC, Rector of LUMS, which he helped set up, and director of the State Bank of Pakistan. He has taught business administration for years. He has been on the board of a cancer hospital and research centre in Lahore. He belongs, like others on this list, to Pakistan’s tiny core group of wealthy and powerful families (even though he was, at the age of 6, one of the many Partition refugees who made their way to Pakistan from India with their families). For three years, from 1999 to 2002, he was Pakistan’s minister for commerce, industries and production. It is not possible for one man to be better connected than Abdul Razak Dawood.
In the long term, Dawood has said, trade liberalisation between India and Pakistan is inevitable. Earlier this month he told a Pakistani newspaper that “I am concerned about the short term; how to start moving in the right direction.”