Khyber Pakhtunkhwa industry’s blues

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Industry: Stalled at the start

Industrial sector in Khyber Pakhtunkhwa looks for relief in the budget 2011-2012

By Tahir Ali

Industrialists and traders in the Khyber Pakhtunkhwa, terming the federal budget as jugglery of words, have rejected it for having no package for the revival of the militancy-hit industrial sector in the province.

Industrialists had hoped the federal government would come to the rescue of sick industrial units in Khyber Pakhtunkhwa by announcing province-specific incentives and package, expanding the duration of the relief package and suggesting several mega hydel-power generation projects. They were disappointed.

The only thing they welcomed in the budget was the lowering of sales tax rate from 17 to 16 percent which, according to them, would decrease inflation a bit. The budget, according to them, had no long-term plan and, therefore, lacked the potential to ensure a robust economic and industrial growth.

The industrial sector in Khyber Pakhtunkhwa, mainly comprising the marble, furniture, pharmaceutical, match and cigarette and hospitality industries, has been badly affected by high power/gas tariffs, load-shedding, low voltage, insecurity and insufficient infrastructure besides long distance from seaport which increases cost of production and makes them less competitive.

Factories working in the iron, marble and furniture need latest training for capacity-building of their workers and machinery, marketing, and technical support from the government. The budget failed to provide any workable plan and programme for these problems.

Industries should have been given incentives such as discount in power and gas tariff, rescheduling of loans for two years, or suspension of mark-up thereon, rebate in other taxes and duties, and halting of audit of businesses and industries for two years. New investors should have been given tax exemption for a few years and relief in duties on import of machinery. All these issues have been neglected in the budget.

Soft loans, preferably interest-free ones, and separate industrial estates with modern machinery pool and common facility centres for different clusters and value addition, especially the mineral and furniture, are some steps that should have been taken.

Sharafat Ali Mubarak, president Markazi Tanzeem-e-Tajiran Khyber Pakhtunkhwa and former president of KPCCI, says prolonged power/gas load-shedding and terrorism have not only scared new investors away but also forced existing industrialists not to expand their businesses and many have shifted to other provinces.

“The extent of the damage to industrial sector in the province could be judged from the fact that off the 2200-plus total units working here, only 572 are functional these days and the number of industrial labour has decreased from around 200,000 in 1996 to a dismal 20000-plus these days,” he says.

“A couple of years ago Prime Minister Yousaf Raza Gilani had declared the province a war-hit zone and announced a relief package for industries but it, unfortunately, was not implemented in a letter and spirit. Bureaucracy continues to create hurdles in its implementation. For example, we had been exempted form general sales tax on electricity but it is being collected in the bills in clear violation of relief package. Industrialists and traders waited for another package or extension of the earlier one for a few more years but there is no roadmap for the revival of sick industrial sector in the province,” he complains.

“The problem of power-shortage, that has been afflicting the sector for quite some time, has been ignored once again and no emergency plan and mega projects have been suggested for the purpose. The target could be easily achieved by public-private partnership schemes in the sector,” Mubarak adds.

According to him, “We have over 40000MW of hydel-power potential which can be utilised by constructing power plants here. The government has unfortunately allocated around Rs50 billions for the Benazir income support programme. If funds form this and other wasteful initiatives are diverted to build power infrastructure, this would boost the economy and generate job opportunities, a requisite for permanent prosperity. Some mega projects for hydel power generation, gas exploration and exploitation, development of human capital and technology transfer must have been included in the budget for long-term sustainable economic growth.”

“Khyber Pakhtunkhwa produces about 4200 mega watt of electricity from Tarbela dam alone and its peak consumption is around 2300MW but it is subjected to 12 hours of loadshedding. Similarly, 341 million cubic feet (MCF) gas is produced here while its total requirement is 227 MCF. If Punjab is not ready to supply its wheat to other provinces unless its own wheat needs are met first, we have also right to demand non-stop and cheaper supply of gas and power before others,” he argues.

Usman Bashir Bilour, president of Khyber Pakhtunkhwa Chamber of Commerce and Industry (KPCCI), says that being adversely affected, the industrial sector in the province deserves a comprehensive package or at least, the package announced by the prime minister should be extended for another two years.

“The State Bank reports that industrial growth rate has been as dismal as 0.01 percent this year. The government should ascertain why most of the industries are closing one after the other. We have sent to the government a detailed strategy paper for the revival of industries but no one has bothered to contact us so far. We need to sit together to chalk out a 10-15 years’ plan for revival of industries in the province,” he says.

According to him, their businesses are ruined and the government is contemplating the imposition of reform general sales tax. “We would never tolerate it as it would increase inflation and overburden the people. The government had announced it will expand direct taxation base but it has once again reneged on this commitment. Special relief orders are regularly announced that exempt certain industries from taxes while other industries are subjected to additional tax burdens intermittently. This should be avoided and all those who earn money be brought into the tax net — there should be minimum tax but maximum taxpayers,” Bilour says.

“Credit is the basic requirement of industrialists but it has been made difficult for us as all leading banks have shifted their head offices to Islamabad. One will have to travel hundreds of kilometres to get a loan of even Rs10 million. How can we modernise our industries in this backdrop,” he asks.

Khyber Pakhtunkhwa is rich in oil and gas reserves. Official estimates suggest it has one billion barrel oil and four trillion cubic feet gas reserves, which, if utilised, will meet energy requirements of industries for a long time and give fillip to provincial and national economy.

Marble reservoirs in the province are estimated to be at four billion tons found in 30 varieties in the province. But most of the 2000 marble factories in the province and tribal belt, besides the factors cited above, suffer from use of outdated techniques, inconsistent supplies of raw material, lack of proper infrastructure, absence of value addition and of public-private cooperation.

Khyber Pakhtunkhwa is an ideal place for summer and winter tourism, adventure tourism, eco-tourism, culture/heritage tourism, spiritual tourism and sports and commercial tourism. This sector also needs hefty funds and public-private coordination to build tourism infrastructure and strong media campaign to attract tourists but no such thing has been announced despite promises in the 2009 tourism policy draft.


Strategy for revival of tourism in Swat

PTDC Motel at Swat, NWFP, Pakistan. Image by M...

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Formulating a viable strategy to revive tourism
The middle class will have to participate in tourism promotion campaigns, but the slump in businesses and decline in incomes coupled with security fears have been responsible for the people to not visit tourist resorts of late

By Tahir Ali Khan

With summer at hand and peace established in Swat, the provincial and federal governments, Pakistan Tourism Development Corporation (PTDC), Sarhad Tourism Corporation, local hotel/tourism industry and private tour operators should make joint concerted efforts to revive tourism in the region. To regain its erstwhile glory, tourism however needs some drastic measures and initiatives on part of all the stakeholders.

In collaboration with the private sector, the government should immediately conduct a need assessment survey to ascertain the different steps and facilities needed for attracting tourists in potential areas. But, obviously, the government cannot do all the things on its own. Therefore, public-private ventures are also the call of the hour to boost the tourism industry.

Revival of tourism is a prerequisite for eliminating extremism in the country as millions of people are jobless and thus indulge in such activities. A large chunk of the population is directly or indirectly dependent upon the sector. It, unfortunately, has suffered from the indifference of government and lack of sufficient involvement by the private sector.

The Ski Gala event which took place this winter and last year’s peace festival organised by the Provincial Reconstruction, Rehabilitation and Settlement Authority (PaRRSA) in Swat had attracted many tourists to the picturesque valley and rekindled hopes for reviving the tourism sector. But it requires a strong commitment and increased funding on part of the government to build the tourism infrastructure and public and private sectors’ coordination to achieve the milestone.

Khyber Pakhtunkhwa should hold such festivals each year and arrange other amusing programmes in Swat. And the festivals should be given sufficient coverage in print and electronic media to attract tourists from both in and out of the country.

The middle class will have to participate in these campaigns, but the slump in businesses and decline in incomes coupled with security fears have been responsible for the people’s decreased desire to visit tourist resorts of late. This necessitates introducing certain incentives for tourists belonging to the middle and lower-middle classes.

Pakistanis are great lovers of cricket. There is a beautiful ground near Kalam where a small-scale national cricket tournament can be organised. Hotels are there in plenty. The appetising local fruit and vegetable as well as the famous mouth-watering Swat trout-fish would add to their pleasure. This would also send positive signals to the world about the people in Swat and Khyber Pakhtunkhwa.

The government should repair and widen the roads damaged by floods in the area, construct new roads, construct walking treks at various locations and hotels. An international wildlife park at the world’s biggest plain Deodar forest at Kalam should be established.

Gabinajabba near Kabal, which is covered by snow even in peak summer, still has no road to go there. Hotel and the chairlift facilities in Malam Jabba Ski resort and other potential areas would have to be ensured. The government can develop a ski resort at Bishay Kalam where there is a natural miles long track. It should arrange a chairlift facility to go there from bazaar.

Communication facilities should be improved. Early restoration of Swat airport and helicopter facility to travel to/from Swat and between different areas of Swat will be welcome. Special transport facilities with discount in transport fares to the area could also be arranged by making a special request to the private transport companies.

There are 14 beautiful lakes in the valley such as Kondol Lake in Uthror Kalam. Several of them are unfortunately unknown and unattractive for tourists due to lack of roads and hotels.

The government should not only rejuvenate the PTDC motels and announce relief for tourists in its transport, lodging and cuisine services but also ask the private hotel industry to support the initiative with subsidised services to visitors. But is the latter in a position to do so in the wake of huge losses caused by floods and militancy?

“Apart from conducting several programmes for promotion of tourism like the peace tourism festival last year and Swat Peace Ski gala this year, we have also provided both in-kind and in-cash grants to 265 hotels amounting to millions of dollars with the help of USAID the FIRMS Project in Malakand to make them competitive and profitable,” Shakil Qadir Khan, the Director General of PaRRSA informed.

But more such steps need to be taken which will enable the badly-affected local hoteliers to provide better and cheaper services.

In a special package, the government, with the help of international donors and community, should immediately offer incentives to hotels, motels, restaurants and allied businesses. Besides, tourists’ information centres at several places must be established. Publication of literature in foreign languages, simple visa facilities like desks/counters for foreign tourists at airports will also greatly help revive tourism.

Swat has over 400 Buddhist sites. The government can prepare a special package/programme for the people of Japan, Thailand, and Sri Lanka to visit these places.

Swat, known as the Switzerland of Pakistan, is an ideal place for summer and winter tourism, adventure tourism, eco-tourism, culture/heritage tourism, spiritual tourism, sports tourism and commercial tourism. Lots of TV dramas are being shot in foreign countries. Why cannot these be filmed in local areas which can go a long way to make the world familiar with the beautiful landscape of the area?

The government and private tour operators would do well to establish links between communities and enabling institutions, such as banks, line departments, foreign embassies and donor agencies to revive tourism in the region.

Malik said there would be no restrictions on the tourists to visit any place in Swat. Security situation has indeed improved in the area but the tourists’ apprehensions regarding fool-proof security need to be removed and more facilities should be provided to them. To restore tourists’ confidence, the government should arrange army-supported tours to Swat. The ministries of foreign affairs, interior and Pakistani embassies abroad should jointly work for promotion of tourism with regional and friendly countries.

The sector that fetched billions to Khyber Pakhtunkhwa from Swat alone has ceased to be a source of income anymore. It is estimated that Swat’s hotel industry has suffered losses of billions of rupees so far. The shrinkage of tourists has had an adverse impact on various tourism-dependent sectors like hotel, transport, cuisine, horticulture and handicrafts in the area rendering millions jobless.

Reviving Agriculture and Tourism

Malakand, now

Plans and projects still need to be worked out to address many issues facing the division

By Tahir Ali

(The News, 23-01-2011)

Despite federal and provincial governments and international community’s efforts to revive agriculture and tourism in Malakand Division, some problems are impeding the process.

Soon after the return of displaced persons to the region in 2009, the Provincial Reconstruction, Rehabilitation and Settlement Authority (PaRRSA) began planning for early recovery and was about to start reconstruction efforts in the militancy-hit area but unprecedented floods interrupted the process.

“The finances and other resources had to be diverted to flood-affected areas across the country. This diverted the attention and resources of both the government and the international community from conflict-hit areas to start relief work for flood affectees,” says Adnan Khan, spokesman of PaRRSA.

But that was not the only problem. Locals think that lack of coordination between stakeholders, security and communication problems, lack of funds, provision of substandard farm inputs, negligence of remote areas in Swat in the distribution of free agricultural inputs and flawed distribution of hotel compensation money also slowed the process.

Various local and international non-governmental organisations are giving cash and technical support to farmers in the region but for absence of necessary coordination with farmer’s bodies and government departments, free farm-inputs and livestock in the militancy/flood-hit are being consumed by undeserving people.

President of model farm services centre Swat, Muhammad Naeem, appreciates the role of NGOs, “They are providing seeds, urea, DAP and agriculture tools and livestock to farmers. But in some cases commodities are being given to those who are neither farmers nor tenants. The agriculture and revenue department, the MFSC and the farmers’ association should be there in the apportionment and supply process of these inputs,” he says.

“The problem is that working of NGOs and government officials is restricted to the suburbs of Mingora and the far-flung areas like Kabal and Matta are not getting due support,” he adds.

Bakht Biland Khan, general secretary of Kissan Board Swat, says village organisations (VOs) might have been formed and given inputs by NGOs. “I cannot confirm or deny whether any inputs, support and training have been given to VOs in other areas but the VO in my village Dagaia, Kabal has received nothing for the last few months. Also, most VOs were already functioning in villages. VOs comprising of genuine farmers need to be formed,” he says.

Other insurgency-hit districts in Malakand division: Dir, Buner, Shangla, etc, also seem to have received scarce attention, resources and projects.

As per the Damaged Need Assessment (DNA), the agriculture, including the livestock and horticulture sectors suffered losses of Rs57.4bn, mostly in the Malakand division. The post-flood damages in agriculture and horticulture stand at Rs4.5bn. The forest sector lost Rs20bn, bulk of it in Malakand. The losses to Swat’s tourism industry stand at Rs731mn in infrastructure and of Rs2.29bn in revenue, according to the USAID.

To a question as to what PaRRSA has done to revive agriculture, livestock and tourism and what precisely are its achievements thus far, Adnan Khan says PaRRSA has done its due, “An Italy-funded Rs800mn Early Recovery of Agriculture and Livelihood Programme (ERALP) is being implemented by PaRRSA in agriculture. It will support 80,000 households and 638,000 beneficiaries in various subsectors of agriculture. 33 percent funds of another $21mn foreign funded project is being spent in the area under which immediate support is being provided in the form of provision of seed, fertilizer, animal feed and rehabilitation of water channels,” he says, adding, “Besides, PaRRSA is also implementing some other USAID-funded economic growth projects in Malakand division”.

“Another 8,800 households are benefitting from the cash for work activities under ERALP. Support to 22 Trout Fish Farms is being provided with a USAID project of $1.2mn. Under the Livelihood recovery program of $1.8mn, 7200 families have received micro-grants to increase their incomes in both the farm and non-farm sectors,” the official adds.

Besides, approval of the following projects is still pending with USAID. As for coordination and support from the federal government, international donors and non-governmental organisations, Khan says “the federal government and international donor community has taken keen interest in addressing needs of the individuals in almost all the sectors, however, the magnanimity of the damages still calls for more support. The international community had made several pledges for different sectors in the area but most are yet to be fulfilled,” he informs.

There have been no commitments from the international community for irrigation, livestock, forestry, energy and in mines and mineral sectors. In the agriculture sector, only Rs0.8bn have been provided as against the need of Rs2.2bn for post militancy reconstruction projects.

According to Khan, out of the total $4.3mn USAID-funded project for tourism, $0.56mn has been disbursed so far among 265 Swat hotels. Zahid Khan, President All Swat Hotels Association, believes the programme in its present shape might not serve its purpose. He criticises the survey and categorisation of hotels and says it has led to local rivalries.

“Most of the money is allegedly being consumed in security, transportation, remuneration and other expenses of project staff with little money being left for the affected hoteliers,” he claims.

Media advisor of USAID, Shahzad Badar, says categorisation has been made under relevant laws and there was no question of nepotism at the time of gradation of hotels. Though he agrees that the survey might be reviewed if there were still genuine reservations on rating of hotels but fails to reply how much of the money is required to be consumed by the project’s staff and how much will be left to the hotels.

The destroyed or deserted government hotels and motels, like the Malam Jabba PTDC hotel, should not have been left out of the project. Also, hotels seem to have been categorised on the basis of the number of their rooms and status of the building and not on the basis of the losses suffered by each one of them due to militancy and floods. Malakand accounts for 34 percent of plums, 95 percent of walnuts and 82 percent of provincial apple yield. It also accounts for 32, 22, 64 and over 50 percent of the provincial production of maize, wheat, rice and vegetables and fruit respectively.

Development and rehabilitation of agriculture and tourism is important as around 80 percent of the people are dependent on the sectors, directly or indirectly.

Pakistan has received billions of dollars in Coalition Support Fund. The province, being the hardest-hit, deserves most of the funds but under the enhanced partnership agreement, Khyber Pakhtunkhwa is to get only 11 percent ($124.3 million off the $1.442 billion funds this year).

“Donors are attaching two more conditions and asking for unnecessary explanations which will certainly cause operational delays. They also want too many things done with meagre funds. Instead of spending on small schemes, funds should be spent on major projects,” says an official who does not want to be identified.

USAID-funded Swat hotel package

Call to review compensation package for Swat hotels

DAWN January 10, 2011


By Tahir Ali Khan

WILL the US-funded compensation programme for Swat’s militancy-hit hotels help revive the local hotel industry while its representatives are questioning the flawed mode of grant distribution?

The lack of coordination between the industry and the Firms Project and the controversy over the categorisation of hotels through an “incorrect survey” may not serve the purpose for which the funds are being provided, complain hoteliers. The USAID media advisor says the project managers are ready to review the survey if there are still some reservations over it.

Zahid Khan, president of All Swat Hotels Association (Asha), welcomes the $4.5 million help for the Swat hotel industry but thinks that the programme would not revive the tourism industry.

He criticises the survey and categorisation of hotels. “The categorisation is the basis of distribution of money and hotel accessories. The categories A (3 star hotel), B (2 star) and C (1 star) will be provided Rs0.65million, Rs0.3million and Rs0.11 million in cash respectively as compensation. Each hotel will also get accessories worth Rs1mn, Rs0.85mn and Rs0.51mn in that order. But the categorisation of hotels by the Firms Project was flawed as many hotels have been assessed wrongly. It has been conducted on the basis of favouritism. And the coming phase of offering hotel paraphernalia is also flawed,” Khan complained.

“A brick and a cement bag, for example, that cost Rs9 and Rs300 in the market have been projected at Rs27 and Rs690 respectively. The prices should be brought down and the hoteliers should be asked to take their dues,” he said.

Also, it seems that hotels have been categorised on the basis of number of rooms and status of the building and not on the basis of losses suffered by each of them because of militancy and floods.

Mr Khan added that though the programme was started with around $4.5 million, much of the money was allegedly being used for the security, transportation, remuneration and other expenses of the project staff.

“Initially the hotel association was taken on board but was kept aloof from the survey. We have sent our views to the Firm Project but our reservations have not been addressed. The survey needs to be reviewed for fair distribution of the compensation amount. There should have been close coordination between the surveyor and the association,” he added.

Media advisor of USAID Shahzad Badar said hotels were categorised in line with the Pakistan Hotels and Restaurants Act of 1976 and other relevant laws/directories.

Asha had provided a list of 22 hotels which in their opinion were neglected, misclassified or incorrectly rated. All hotels were accounted for, necessary corrections were made and subsequent working grants were issued to them, he said. “On September 16, 2010, we provided the hotel association with complete responses and justification for each.

However, hotels owned by government, hotels converted to other businesses during the census period and those who didn’t participate in the census were left out as they didn’t meet the requirements. Some of the hotels were occupied by the army and the surveyors were not allowed to collect complete census data of these hotels,” he said.

He said the question of favouritism by the surveyor didn’t arise as the survey was completed before the grants programme was even designed or known.

“The Firms Project had kept the hotel association abreast of the survey and resultant grants to hotels. Asha had promised its support for the successful implementation of the programme. The president and office bearers of Asha participated in various programme activities from May to December 2010,” he said.

“The Firms Project is mandated to work with the provincial government and is taking their guidance on the best means of restoring the hotel industry in Swat and bringing revenue back to the area,” he said.

As to the ‘inflated’ security, lodging, transportation and remuneration expenses of the project personnel, Mr Badar said Firms Project had been implemented in accordance with the scope of work and budget approved by the USAID.

“The operational cost, including transportation and remuneration expenses of staff and their security arrangements, was kept at reasonable rates so that the bulk of money could be spent directly on revitalising tourism in Swat,” he added.

Mr Badar, however, failed to specify as to how much of the money was estimated to be consumed by the project’s staff and how much would be left for the hotels.

As far as prices of items in the survey forms are concerned, he said, the average costs on these include transportation costs for hotels located in Swat Valley including Kalam. These are for the purpose of estimation only.

The actual cost of each item and their transportation cost will vary from hotel to hotel based on their distance from the location of vendor’s shop,” he added.

He agreed to review the survey if there were any reservations on inclusion or rating of hotels. “The Firms Project intends to update the hotels census/survey soon to include all such genuine hotels that were left out in the first phase due to their unwillingness at that time or due to an oversight on the part of surveyors and to capture post-flood updated information of Swat hotels,” he clarified.

According to an estimate, the tourism industry in Swat suffered a loss of Rs8 billion in last nine years in various tourism dependent sectors like hotel, transport etc.

Revival of tourism in Swat is pivotal to rehabilitation of people there as millions directly or indirectly depend upon the sector but it requires robust funding to build the tourism infrastructure and improve law and order.

With the government hotels and motels, like the Malam Jabba PTDC hotel, in the area also destroyed or deserted, these also should have been restored but these have been left out of the project.

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