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BR Research

KCCI losing its relevance?

Published September 20, 2011 Updated September 20, 2011 12:00am

The Karachi Chamber of Commerce and Industry (KCCI) prides in being the countrys most influential bastion of the interests of local industrial and commercial stakeholders. But if the current impasse between these two groups worsens, it may shrink KCCIs membership, significantly.
Recent changes in the countrys socio-economic landscape have exposed deeply entrenched differences within the camps of the chamber, which had hitherto appeared a solidly knit platform for the spectrum of business owners from textile tycoons to corner store owners.
Contentions caught the limelight when Karachi Tajir Ittehad and Karachi Traders Action Committee lashed out against the KCCI, alleging that influential industrialists are using the Chamber for personal business interests while ignoring the plight of smaller businesses.
However, a quick recap of recent interactions with the government and other stakeholders sheds a different light on the issues behind the rhetoric and slew of allegations.
The intended implementation of RGST was the first fissure in relations between industry and trade. Many large, organised industrial units are already registered with tax authorities and the proposed tax would not entail a huge financial burden on them after input-output adjustments. They would, at best be charged with collection of RGST from their buyers and documenting their purchases.
However, for thousands of shopkeepers and small business owners, the implementation of RGST would have taken a spanner to Pandoras Box. Not only would RGST have forced many unregistered businesses to declare their revenues and turnovers; it would also in turn have forced the owners of these businesses to pay income tax and report their wealth.
So when various associations of industry came out in support of RGST, traders took to the streets themselves blocking roads to block legislation.
With the RGST set aside, it appeared the divide between these groups would be bridged. But power loadshedding in Karachi acted as another irritant to relations between small businesses and industry. After negotiations with industrialists, KESC exempted the citys industrial areas from loadshedding. However no such perks were negotiated for markets, shopping centres and business districts.
Finally, the spate of kidnapping and killing of shopkeepers who refused to pay up in the face of threats from the hatta mafia seems to have driven the final nail in the coffin of cooperation between these groups.
KTI, KTAC as well as associations representing different markets of the city pressed KCCI to take a hard stance against the government for its apparent inaction against rising incidents of crimes. But while they were perturbed by the lawlessness in the city, the current management of the Chamber chose to refrain from issuing ultimatums to government.
Traders and shop owners argue that they are most at-risk from street crime given the fact that their businesses are primarily situated in public areas. They contend that shop owners are also more likely to become victims of extortion, compared to large industries where top dogs are largely shielded from violent elements.
Sentiments aside, it is hard to ignore the pressing need to enhance the countrys tax net; in part by documenting trade. Similarly, facilitating industry through sustained supply of electricity has been rightly prioritised. But regardless of the economic rationale, it is but natural for various groups of stakeholders to campaign for their respective interests. And given the expansive differences in the interests of industrial and commercial stakeholders, it is fathomable that KCCI is not the relevant platform for all kinds of businesses, any more.

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