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BW Businessworld

"India And Pakistan Can Learn From Each Other"

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The Management Association of Pakistan (MAP) was set up in 1964 to keep Pakistani corporations in tune with progressive management trends and practices. Its current President Kamal A. Chinoy was in India recently to sign an MoU with All India Management Association (AIMA) to collaborate on knowledge exchange.

Chinoy is also the CEO of Pakistan Cables, an affiliate of US's General Cable. A Wharton Graduate, he has deep family roots in Mumbai. His grandfather Sir Sultan M Chinoy was a mayor of Bombay in the 1930s. They were a leading business family and the distributors of General Motors, Chevrolet cars in India. Sir Sultan's brother Sir Rahimtoola Chinoy was the President of FICCI during that period. Chinoy met Pranjal Sharma to share his views on collaboration between Indian and Pakistani companies.

The Management Association of Pakistan has been credited with encouraging corporate governance in Pakistan. How were these changes received?
We work towards change in management, progress in management and capacity building in companies. Corporate governance in Pakistan was pushed by two sides. One came from organisations such as MAP, and the International Finance Corporation (IFC) funded Pakistan Institute of Corporate Governance. At the same time our regulator Securities Exchange Commission also announced a list of requirements for corporate governance about 5 years ago. Later, the Karachi Stock Exchange also set some rules for listed companies.  From voluntary best practice we moved to mandatory rules.

How difficult was it for Pakistani companies to adapt to these changes?
The toughest issues were disclosure, especially transactions between related companies. If you are moving money from a listed company to a private company then there is an issue. If you source your materials from private companies, then you have to disclose. Independent auditing companies were deployed. The post of Chairman and Managing Director were separated with clear responsibilities. But a number of companies, including some foreign companies, felt that they did not want any of this. Some companies including MNCs delisted from the Karachi Stock Exchange. Family owned companies were worried as they had to change a lot. Our company Pakistan Cables went the whole hog. While the family is at the helm, the board has become independent and professional. Some years ago our board even sent back our budget and asked the management to revise it. I do a lot of homework before each board meeting. Now our regulator and the exchange say that a certain minimum number of directors must be independent. So some domestic companies and MNCs are struggling to meet this requirement. Most MNCs fill up the board with executive directors. Now they will have to appoint independent directors.

What kind of relationship are you building with AIMA?
 We will profit in terms of learning. We will see best practices and programmers by linking into them. We will try and replicate some of the activities in Pakistan.  India and Pakistan can learn from each other on sustainable development since we have similar issues.

Do you foresee a situation where India and Pakistan move beyond trading links to manufacturing relationship too? Can there be joint ventures in the future?
 Undoubtedly. Once you open up, there are many possibilities. Indian companies are investing all over the world. An Indian company can set up a factory in Pakistan like any other MNC has done. The Mahindra Group could be in Pakistan the way Honda, Toyota and Suzuki have invested. Some Pakistani textile companies could invest and set up units in India. There is strength on both sides in different industries. Possibilities create more possibilities. You have IIMs here; we can transplant some aspects of these in Pakistan in collaboration with local organisations.

Do you see deeper affinity developing between Indian and Pakistani companies?
There is definitely a desire. For one it makes economic sense for us to source parts or sell products to each other. Then there is the cultural affinity. I can market a product to the Indian mentality better than I can to someone in Norway. In advertising, I have my material already in Hindi or Urdu. I can offer it across the border.  There is history between us. Where there is history, there is always a future.

There is talk of fear of Indian companies in Pakistan, the same way Indians feared Chinese companies. What can be done to mitigate such sentiment?
There is a protectionist mindset in some sections of the industry in each country. This makes it difficult. The question is: what is the leverage they have to influence national policy and international trade. Sometimes they do influence. But once the barriers break down, it will be good. The more competition you have, the more efficient you will have to be. As people see that the industry that opened up did not suffer as feared, others would be encouraged to open up too.