ISLAMABAD, 23 March 2007 — The government of Pakistan has set up the Competitive Support Fund (CSF) in collaboration with the USAID (United States Agency for International Development) with a matching grant of $12 million. With expected involvement of other donor countries in the fund, the total budget for the project will be $50 million over a period of five to six years.
Arthur Bayhan, a senior international economist and an expert on finance, capital market and competitiveness has been appointed chief executive officer of the project.
The CSF’s mandate shall be to show a direction of competitiveness to the country’s public and private sectors. This phenomenon will have to be implemented as a culture in both sectors by sourcing out their work with the objective of increasing productivity. As we know, productivity is a measure of competitiveness along with output, but better productivity is difficult to achieve without the two basic ingredients of competitiveness: innovation and investment.
The management of the CSF intends to chalk out different strategies to achieve its objective of helping Pakistani entrepreneurs to effectively compete for their products in global markets.
To begin with, CSF will identify research and development projects in different sectors of the economy, which have the potential of commercialization. This will be followed by a “project selection” with the active participation of the concerned stakeholders of the private sector. In this program, known as the “Business Incubator Program,” the projects or incubators selected shall develop themselves within the incubator and will be actively supported both financially as well as technically by the fund to make them self-sufficient enough to support their operations.
Once the projects become economically as well as technically feasible, they will move out of the incubator and operate independently. The process of the selection of projects will be a transparent one through a consortium of stakeholders, including the government, the private sector and academia by ensuring a viability of incubated projects through an intensive evaluation of their business plans.
The fund will also advise the government on evolving effective and complementary business legislation, like company matters, bankruptcy mergers, consolidation, intellectual property etc. Besides, it will also devise methods of making the country’s regulatory framework more business viable and corporate friendly by exploring ways and means to strengthen it.
Another area where the fund is mandated to work, is to introduce Pakistan manufactured products, both at home as well as abroad. In this connection, the fund, in association with the media, will introduce a mechanism to hand awards to new knowledge-based companies. The companies awarded will be introduced both at home as well as in foreign markets through a concept called “Made in Pakistan” in which Pakistani entrepreneurs would be made to feel proud of their Pakistan-made products due to their durability and competitiveness.
The concept of competitiveness in other countries began to take root as early as the beginning of 1980s. The USA created the “US Competitive Council” to effectively compete with Japanese products. An initiative that proved highly successful.
Soon many countries followed the USA by setting up similar bodies and in the process benefited from the concept. The importance of the concept of “competitiveness” can be gauged from the fact that the Paris-based Organization for Economic Cooperation and Development (OECD) in its 2006 report has advised member countries to invest in competitiveness.
Prime Minister Shaukat Aziz is a man of vision who, in his pronouncements over the years at different forums, has reminded Pakistani entrepreneurs that investments in innovation and competitiveness are vital for business concerns and in turn for the sustained growth of the country.
In fact, the era of “protectionism” is over, thus paving the way for competitiveness and innovation. If we look closely at the economies of different countries, protectionism came out as a big obstacle in development. Turkey is an example where initially small and medium sized corporations suffered badly when their markets were opened up. However, they became much stronger with the passage of time. Now Turkish producers are competing with some of the best products of the world with tremendous success.
Even in our own case, transformation to the market economy with stress on competitiveness and innovation has been quite successful. Our GDP is growing steadily over the last several years from 6.5 percent to 8 percent; per capita income has gone up to $850; foreign exchange reserves are $14 billion; poverty has been reduced from 32 percent to slightly over 23 percent; education enrollment increased to over 80 percent from 76 percent; exports registered phenomenal growth during the current year, and are expected to touch the $20 billion mark.
However, we still have big potential to catch up to developed economies, by reorienting the economic processes along the line of competitiveness and innovations. According to the World Economic Forum (WEF), the problem in Pakistan’s private sector is that it lacks medium and long-term strategies as well as focus. Consequently products suffer. Our entrepreneurs have to be visionary and action-oriented to compete in the global market.
On its part the government is pursuing business friendly policies to attract foreign investment by providing a level playing field to all businesses, putting in place a better infrastructure, providing skilled workers and trained professionals, and putting in place a business viable regulatory framework. CSF will definitely augment the government’s efforts to purge all bottlenecks and ailments of our public and private sectors and help in introducing the culture of professionalism and transparency.