Industrial infrastructure in Pakistan's Khyber Pakhtunkhwa province is crumbling, as militancy drives investors and owners away. Credit: Ashfaq Yusufzai/IPS

By Ashfaq Yusufzai
PESHAWAR, Pakistan , May 15 2014 (IPS)

Already saddled with a veritable catalogue of crises, Pakistan’s largest province, the Khyber Pakhtunkhwa (KP) now finds itself on the verge of industrial collapse, as extortion and kidnappings drive away all prospects for production or employment.

Sharing a border with the country’s Federally Administered Tribal Areas, or FATA, the KP has long borne the brunt of terrorism, its mountainous terrain providing a perfect refuge for insurgent groups that residents and officials say are making life impossible for ordinary people.

According to officials from the KP Chamber of Commerce, a third of all factory owners have received threats from militants, who demand huge sums of money in exchange for the freedom to operate a business. Those who have not been bankrupted by the enormous bribes have packed up shop and migrated out of the province altogether, leaving over 100,000 people jobless.

Zahid Shinwari, president of the KP’s Chamber of Commerce and Industries, told IPS that the departure of wealthy industrialists has created “an extremely precarious” situation in the region, with a total of 2,200 industrial units closing down as a direct result of extortion by militants identifying themselves as members of the Taliban.

“People are shifting their industries and investment to safer places like Lahore, Islamabad and Faisalabad,” he said, adding that police have a hard time tracking the culprits who flee to FATA, Pakistan’s semi-autonomous tribal region in the northwest, which offers easy passage into neighbouring Afghanistan.

From Subtle to Shocking

Unable to make the many payments demanded of him, Rasool Shah, a KP resident and industrialist, closed down his marble factory in September 2013.

“We had to pay money to several groups, which was not possible for us,” he told IPS. “One group received 100,000 dollars per month while another was demanding double that amount. We were suffering severe losses.”

The same is true for most of the 300 marble-manufacturing factories in the region, the bulk of which have closed down or transferred elsewhere.

None of the districts in the province have been spared. Of the 300 industrial units in the Gadoon Amazai Industrial Estate in the Swabi District, 200 have been non-operational for the past year, according to Shah.

The climate of terror has also created a dearth of trained workers and technicians, who are finding better opportunities in places like Dubai where they can exchange their skills for large salaries.

Threats range from subtle to shocking, residents say.

Usually, the militants start out by writing letters to factory owners demanding specific sums of money. If the targets refuse, they or their family members are kidnapped and the insurgents then demand a ransom of between 100,000 and one million dollars.

Earlier this year, on Feb. 16, militants threw a hand grenade into a factory located in the Hayatabad Industrial Estate when the owner refused to pay protection money. The very next day he closed down his match factory, following in the steps of the province’s roughly 20 match-manufacturing units, all of which had utilised local raw materials, hired local labourers and brought much-needed foreign exchange into the province.

According to Shinwari’s estimates, these factories had brought in roughly 800 million dollars per year.

Muhammad Anwar, who owns a pharmaceutical-producing plant in Peshawar, says lodging police reports about the threats and kidnappings is futile.

“If we inform the police, the militants kill the person in their charge. So people prefer to settle the ransom and secure the release of their loved ones,” he told IPS.

He added that nearly half of the 100 pharmaceutical factories in the region have ceased all operations.

Textile production has also suffered. Anwar’s friend and textile factory-owner Sharif Gul was making monthly payments to numerous militant groups until he decided two years ago to shift his entire operation to Faisalabad, a major industrial metropolis in the Punjab province. Prior to the influx of militants, some 22 textiles units in KP had earned the province annual revenues of roughly 130 million dollars.

Planning for the Future

While some are lamenting the demise of the region’s industrial infrastructure, others are forging ahead with plans for the future.

Police Chief Nasir Durrani told IPS his province had plans to establish separate police stations in each of the three industrial estates to protect them from terrorists.

“We are also installing devices to trace telephone calls from militants, so we can arrest them.”

Durrani says the police have held meetings with industrialists to put security measures in place, and stem the flow of business to other provinces. “The protection of industrialists is a high priority for the government because they [contribute heavily] to the province’s income,” he added.

Another strategy on the table is to expand the police force by hiring more people and deploying them solely to industrial areas, which will simultaneously increase employment and improve security.

Khyber Pakhtunkhwa Information Minister Shah Farman told IPS the government intends to establish six more industrial zones to boost production of plastic, steel, oil, pharmaceuticals, chipboard and ghee – all of which are plentiful in the resource-rich province.

Alarmed by the wave of migration – over a million workers have left the province since 2009 – Farman also vowed to create a “congenial atmosphere for employment” by refusing to bow to the demands of terrorists.

Despite being the country’s third-largest province, KP boasts a mere seven-percent share of industrial employment. “This has to be improved,” he stressed. In comparison, provinces like Punjab have recorded 60 percent industrial employment.

(END)

Textiles are one of the key sectors to benefit from the African Growth and Opportunity Act (AGOA). Credit: Kristin Palitza/IPS

By Ramy Srour
WASHINGTON, Oct 1 2013 (IPS)

With a key U.S.-Africa trade agreement up for renewal in 2015, advocates on all sides of the issue say current policies are rife with shortcomings that leave many African businesses out in the cold.

Since its enactment in 2000, the African Growth and Opportunity Act (AGOA) has sought to create trade opportunities for small- and medium-sized African businesses by helping them export their products to the U.S. market.“The greater challenge is to get those key commodities such as sugar and cocoa products to access the U.S. market.” -- Kimberly Elliott of the Centre for Global Development

But policymakers and activists alike are currently increasing focus on AGOA’s failures at empowering Africa’s poorer communities, and whether the act can be tweaked by 2015.

“AGOA has been successful, but only within its limited parametres,” Kimberly Elliott, a senior fellow and expert on trade policy and globalisation at the Centre for Global Development (CGD), a think tank here, told IPS. “The bill has been relatively effective in removing U.S. barriers to African trade, but it hasn’t addressed the fundamental competitiveness issue in Africa.”

And while U.S. exports to Africa have tripled over the last decade, “only as little as 1.3 million jobs have been created on the African continent since the enactment of AGOA,” Ambassador Michael Froman, the U.S. trade representative, recently warned.

According to the U.S. Department of State, “African exports under AGOA have more than quadrupled since the programme’s inception. In 2012, AGOA-eligible countries exported nearly 35 billion dollars in products to the United States duty free under AGOA.”

Limited reach

One of the obstacles to a truly successful outcome for AGOA has been its focus on only some sectors of the economy – including oil exports – to the detriment of those sectors with a more immediate impact on poorer segments of society. That includes the agricultural sector, the single most important for African communities.

“Outside of clothing and other few sectors, U.S. tariffs were already quite low prior to AGOA,” Elliott says. “The greater challenge is to get those key commodities such as sugar and cocoa products to access the U.S. market.”

So far, agricultural products have been excluded from the AGOA framework because of U.S. domestic regulations. This seems to be the biggest bump on AGOA’s road to decreasing poverty in Africa.

“There aren’t that many sectors benefiting from AGOA, apart from textiles,” Zenia Lewis, an analyst on economic development in Africa at the Brookings Institution, a Washington think tank, told IPS. “And unfortunately, the sector that has reaped most of the benefits has been the oil industry.”

According to recent estimates, oil exports cover nearly 90 percent of goods leaving African shores.

At the same time, AGOA has managed to open the U.S. market to the growing African textile industry. Many are today touting as a key AGOA success story the recent boom in Kenyan textile exports to the United States, to companies such as Victoria’s Secret and Macy’s.

According to the most recent estimates, Kenya was the United States’ 103^rd-largest supplier in 2011, with a total of 382 million dollars’ worth of imported goods, a nearly 23 percent percent increase from 2010.

“So far,” CGD’s Elliott says, “this has been AGOA’s best result when it comes to the poorer segments of African producers.”

Sheri Berenbach, president of the U.S. African Development Foundation (USADF), a federal agency, told IPS, “It is important to recognise that one of the most important constituencies of AGOA are the small local and marginalised communities. USADF has been very supportive of AGOA and trade, because a quarter of the producers that we support are small local groups that are now deeply involved with exports to the United States.”

USADF offers development grants to small African businesses seeking to access the U.S. market. Berenbach says such opportunities can have a direct impact on poverty. “Most of the work in Africa is about dealing with the weakest part of the African economy, the impoverished communities,” she says.

Deprivation

As the bill is set to expire, a broad cross-section of interests are looking to 2015 and providing recommendations on how to improve AGOA. They suggest that the bill’s ineffectiveness to date may not be entirely a result of hidden trade barriers.

“AGOA can’t reach those many African communities that aren’t involved in the production process, simply because of domestic restrictions and a lack of adequate infrastructure,” Mwangi S. Kimenyi, the director of the Africa Growth Initiative at the Brookings Institution here, told IPS.

A recent poll by Afrobarometer, an independent research organisation, finds that almost half of Africans still perceive themselves as being poor. Based on polls conducted in 34 countries, the survey shows that at least 20 percent of Africans still feel deprivation with respect to their most basic needs such as food, water and medicines.

One way to do address this, some suggest, would be to include a provision in the next version of AGOA that would provide assistance to small-scale African traders to build their skills at dealing with international trade concerns. USADF’s Berenbach calls this a “trade capacity-building”, or TCB, component.

“Including a strong TCB component would enable even the smaller producers to be more productive and trade effectively, so that we can really use trade to achieve development,” she says.

At the same time, Brookings’s Kimenyi notes that many see AGOA as doing very little for U.S. companies seeking to invest in Africa. Many corporate interests will thus be looking to the debate leading up to the 2015 renewal as an opportunity to change this aspect of the trade agreement.

Twenty-five-year-old Razia is one of 2,500 survivors of the factory collapse in Bangladesh. Credit: Naimul Haq/IPS

By AJ Correspondents
DOHA, May 23 2013 (Al Jazeera)

Those responsible for the Bangladesh building collapse that killed more than 1,000 garment workers should be given life in prison, a government-appointed committee has said.

The investigating committee, appointed by Bangladesh’s interior ministry, recommended life in prison for the owner of the five factories based in the building on the outskirts of Dhaka.

The Apr. 24 collapse of the Rana Plaza building, the deadliest garment industry accident in history, highlighted the hazardous working conditions in Bangladesh’s 20 billion dollar garment industry and the lack of safety for millions of workers, who earn as little as 38 dollars a month.

The committee found that the ground on which the Rana Plaza was built was unfit for a multi-storey building and the construction itself was “extremely poor quality”.

“A portion of the building was constructed on land which had been a body of water before and was filled with rubbish.” Khandaker Mainuddin Ahmed, the committee head, told the Association Press news agency on Thursday.

Ahmed said Sohel Rana, owner of Rana Plaza was “the main culprit, and because of him 1,127 people have died.”

The report found that Rana ignored construction codes by converting the originally designed six-storey building meant for a shopping mall and commercial space into an eight-storey factory complex where over 3,000 labourers toiled.

Khandaker said Rana, and the factory owners, four of whom have been arrested, forced employees to go to work on Apr. 24 despite cracks which appeared in the building the day before.

“They threatened the workers that they would be fired and that their salaries would be cut if they refused to go to work.”

The committee also said the owners used generators in upper floors, defying building regulations. Combined with other industrial machinery the weight of the generators triggered the collapse.

New safety reforms

A U.S. delegation is to arrive on Sunday led by Wendy Sherman, the State Department’s under secretary for political affairs. They will meet officials from the Bangladeshi government.

“They’ll talk about labour law reforms,” U.S, ambassador Dan Mozena said.

“They’ll talk about fire safety standards, a minimum standard for every factory, and they’ll talk about minimum structural soundness standards.”

If the proposals are accepted, “it will become the largest ‘better work’ programme in history,” Mozena said.

The Bangladeshi government has already pledged to tighten factory safety inspections and make it easier for workers to form unions and set up a panel to raise wages for the three million garment workers.

Mozena said there were still “some outstanding issues” to be addressed, without elaborating.

Poor wages and repeated fatal accidents have led to a string of protests in the main garment-manufacturing hubs, halting shipments and forcing some retailers to divert orders to other countries.

More than 2,500 people were rescued after the disaster and the committee has urged the government to provide them with free medical treatment.

*Published under an agreement with Al Jazeera.

The textile industry is suffering from the blackouts. Credit: Zofeen Ebrahim/IPS

By Zofeen Ebrahim
KARACHI, Pakistan , May 23 2013 (IPS)

Raheel Tauseef is feeling quite powerless this summer. Frequent power outages in the industrial city of Faisalabad in the Punjab province of eastern Pakistan, where the 29-year-old and his family run three hosiery factories, are taking a heavy toll on their business.

“The power outage is anywhere between 12 and 16 hours,” Tauseef told IPS. We do get a respite of some four hours, but even that is not at a stretch. Just as the machines get rolling, the power goes off.”

So bad is the situation that the family has had to lay off over a thousand workers in the last two months. “Many factory owners are now keeping workers on a daily wage earning basis and pay them only on the days when there is work,” he said.

Little wonder then that Mian Zahid Aslam, president of the Faisalabad Chamber of Commerce and Industry, was sounding frustrated when IPS caught up with him over the phone.

Having sat through three gruelling back-to-back meetings, all he could say was: “We are done with meetings. We want some action now, and quick.” Apparently, all that the various stakeholders could discuss at the meetings was how best to end the energy shortfall and revive the dying industry.

“The fomenting anger of the factory workers will spill out on the streets if something is not done on a war footing,” said Aslam.

Fearing precisely such violence, the provincial government of Punjab has directed the administration to avoid unscheduled power outages which have now reached up to 20 hours a day.

Meanwhile, many industrialists in Punjab have installed huge generators, run either on gas or diesel, to meet their export deadlines. But this is not without its problems either.

“Due to shortage of gas, we get it only for three days,” said Tauseef. In desperation, many factory owners have switched to diesel, but even that has become precious now. “Buying diesel from the stations is almost like begging for it,” he added.
Over 80 per cent of the 3.2 million people in Faisalabad, a city dubbed the Manchester of Pakistan, are linked to the textile industry. It is home to nearly half of Pakistan’s textile factories.

The national trade body All-Pakistan Textile Mills Association reports that the sector accounts for over 50 per cent of Pakistan’s total exports of roughly 25 billion dollars, and employs 38 per cent of the manufacturing sector workforce. That works out to about 3.5 million people.

According to experts, Pakistan is losing between 1.3 per cent and two per cent of its gross domestic product due to the energy crisis and an ineffective law and order apparatus.

And the summer has only made the situation worse. With the mercury soaring well above 40 degrees centigrade across the country, there is a shortfall of 7,000 mega watts of power. Of the total demand for 16,000 mw, the available supply is only 9,000 mw.

Power cuts were a problem all political parties acknowledged in their manifestos for the May 11 elections. The party which finally won – the Pakistan Muslim League-Nawaz (PML-N) – had, in fact, ranked it second after the economy on its list of important things to address.

Their leader and now the prime minister designate, Nawaz Sharif, promised in his election rallies to end load-shedding in two years if his party was voted to power. He also vowed to make Pakistan one of the top ten economies of the world and talked about expensive schemes like bullet trains and privatising the national airline and the railways.

Not everyone was impressed, though. Haris Gazdar, a leading economist based in Karachi, capital of Sindh province, hoped the new government would “rethink the bullet train business.”

“Our politicians promise us the moon,” said Tauseef. “Energy is indeed a big challenge and I have yet to see a plan of action.”

On its part, the PML-N plans to pump in two billion dollars to generate 10,000 mw of electricity in the next five years. Half of this is expected to come from developing the Thar coalfields in Sindh and setting up coal-fired plants in that southern province.

This meets the approval of Pakistan’s former science and technology minister, Professor Atta ur Rahman. The previous ruling Pakistan People’s Party, he told IPS, had “opted wrongly for oil-based power plants due to the huge kickbacks they received.”

Top priority should be given to converting all the country’s power plants to coal, he believes. “China and India both use coal as the major source of energy,” he said.

And before the environmentalists leap up in protest at his suggestion, he added, “We can employ cheap locally fabricated filtering devices to clean up the emitted soot.”
Rahman is hopeful the new government can “overcome the problems.”

His only caveat: “They must appoint competent and honest professionals and observe merit.”

The water and power ministry too has warned that unless corruption in the National Power Control Centre in Islamabad is curbed, no improvement in performance can be expected.

The PML-N government will have to take some tough decisions if it is going to tackle the energy challenge with any amount of seriousness.

“To overcome the energy crisis, prices will have to be raised and dues recovered,” said Gazdar, who is the director of the Collective for Social Science Research in Karachi. “Alternatively, they can allocate more gas for power generation at the expense of other consumers.”

Petroleum minister Sohail Wajahat H. Siddiqui has already indicated a price hike without which, he said, the sector would suffer “irreparable economic and efficiency loss.”

With the government providing as subsidy the gap of Rs 3.02 per unit between the cost of producing electricity (Rs 11.91 per unit) and the price at which it is sold to the consumer (Rs 8.89 per unit), the Pakistani consumer can expect a hike in tariff as soon as the new government takes over the reins of power.

By Zofeen Ebrahim
KARACHI, Jan 7 2013 (IPS)

Karachi, a sprawling city of 18 million, is the country’s economic hub. It accounts for 95 percent of Pakistan’s foreign trade and contributes 30 percent of national industrial production.

If power outages don’t interrupt the day’s work, then one of the many transport workers’ strikes surely will, delaying the shipment of products abroad. When the strikers get back to work, extortionists come knocking, demanding huge sums in “protection money” from factory owners.

“If foreign businessmen cannot visit Pakistan, see our products and (engage) in joint ventures, how will our industries thrive?” asked Yasin Siddiq, president of the Sindh and Balochistan chapters of the All Pakistan Textile Mills Association.

The many crises have pushed unemployment to roughly five percent, according to the World Bank’s most recent World Development Report.

The only bright spot on the horizon, experts say, is the potential impact of the European Union’s decision to grant Pakistan Autonomous Trade Preferences in 2013. The agreement allows duty-free market access to 75 textile items from Pakistan and is expected to boost production in this vital sector of the economy.

By Michelle Tolson
BATTAMBANG, Cambodia, Jan 3 2013 (IPS)

As one of the world’s 48 least developed countries (LDCs), Cambodia is afforded the most beneficial trade ranking to the European Union (EU) under the generalised scheme of preferences (GSP) known as the Everything But Arms (EBA) scheme.

The EBA allows those countries ranked as LDCs to export products duty-free to the EU, except arms and ammunition.

Cambodia’s largest exports to the EU are textiles, such as garments and shoes, comprising 89 percent of exports, valued at over 1.1 billion euros, according to a report released by the European Commission.

Agricultural products such as rice, sugar cane, fruits and vegetables, fish, peppers and cashews account for 5.8 percent of exports, valued at 75 million euros.

Introduced in January of 2011, the EBA has resulted in a 53 percent upsurge of exports to the EU from Cambodia in 2011, with the EU becoming Cambodia’s second largest export partner.

The intention of the agreement has been to elevate Cambodia from LDC status, encouraging the country to process its own products rather than have neighbouring countries benefit.

The trade treaty has boosted exports in various sectors, but experts have questioned the impact of increased trade on producers across this country of 14 million people. Of particular concern have been the rural peasants, considering that 92 percent of Cambodia’s poor live in the countryside.

For example, despite an increase in sugar cane exports to the EU, critics question the benefits to small-scale farmers, since land concessions to corporations have spiked and local farmers have been displaced from their land.  Activists have called for a sugar boycott to raise awareness.