Asad Umar is the President of Engro Corporation Limited, Chairman of all Engro subsidiaries and joint ventures, and Chief Executive Officer of Engro Fertilisers Limited. Mr Umar sits on the Boards of Pakistan Business Council, Karachi Education Initiative, Pakistan Institute of Corporate Governance, and State Bank of Pakistan.
He is a trustee of the Lahore University of Management Sciences and Chairman of Pakistan Chemical & Energy Sector Skill Development Company and also chaired Young Presidents' Organisation, Pakistan Chapter. He has previously served as director of OGDCL, Karachi Stock Exchange, Pakistan Centre for Philanthropy, Pakistan State Oil and Port Qasim Authority. He's an MBA from the Institute of Business Administration.
Few industry leaders are as vocal against untargeted subsidies, incentives and rent-seeking as Asad Umar. The Engro Corp boss, and also the current chairman of the Pakistan Business Council, the country's leading business policy advocacy forum, points out that out of 1000 children in Pakistan, 85 die before reaching the age of two; 50 percent of Pakistani children don't enter school. "Any expenditure that the state makes has to compete with that as a priority".
Citing another example of ill-prioritised state expenditures, Asad rebukes the Rs 300 billion power sector subsidy given in the name of poor, when in fact, "the most destitute, the bottom 40-50 percent of population don't even have access to electricity".
Sticking to the topic of development, understandably the discussion moves to urban-rural disparity and how successive governments have preferred to provide benefits to urban folks at the cost of rural ones.
"The direct and indirect costs that the farmer is paying because of gas shortages is more than the feedstock subsidy he is getting from the government," explains Umar. He adds that the differential between the feedstock and fuel gas prices is about Rs 350/bag, whereas in recent years the industry has raised per bag prices by Rs 375 pre-GST and Rs 400-450 post-GST due to gas shortage. In addition, the dealer is also charging an extra Rs 150-200 on account of the shortage, and therefore the farmer is paying Rs 625 extra against a feedstock subsidy of Rs 350.
"Since gas demand is greater than its supply, the choice that you make is to assess which consumer should get gas and which not. And the choice that the government is making is that the urban consumer is more important than rural consumer; therefore, the rural consumer is paying the higher price," says Umar.
His argument holds ground, considering that in recent gas management arrangements fertiliser industry that serves the rural industry will get for 2.5 days, whereas all other industries - whose output is consumed in urban areas -- will get gas five days a week.
MEDIA'S BIAS
Before one could even think about blaming politicians for the growing urban-rural divide and lack of political will to correct this trend, Asad aimed his guns at the media. "The media is very biased in the issues that are highlighted; whether intentionally or unintentionally, it picks the issues which affect the urban middle class and gives them more prominence than other issues," Umar asserts.
A four percent increase in petroleum or CNG prices makes it to the front page banner headline of a newspaper; whereas a 90 percent increase in fertiliser prices, which millions of farmers in Pakistan use, gets a single column ill-projected space in the inside pages, he argues.
Well, guilty as charged, Asad, but then you can't expect the media to loose rating points because it's essentially the urban sector that feeds media firms' revenues. "I am not asking any individual media outlet to do it; you have to have some kind of collective decision-making to be able to do what is required in society without losing out commercially," he said.
The second aspect of Asad's criticism against the media is that "it does not give enough credit to policymakers when they make right decisions". "The incentives that you need to create, for policy makers, are imbalanced. The media is extremely vocal in criticising the wrong decisions but it does not support the good decisions enough," he said while referring to the recent proposals of gas price rationalisation made by the ministry of petroleum, which he thinks as just the kind of decisions that are needed to revamp the economy.
MANAGING ECONOMIC VICES
Something very close to incentive management is also necessary for rooting out corruption from society. "There is a combination of two fundamentals that drive the right economic behaviour: greed and fear...and these have not changed for thousand of years," says Asad. He says that while there is plenty of opportunity for greed in the country, there is no reason to fear. "Economic equation is totally one-sided in this situation. Create fear! Stand down on some high visibility cases".
Obviously, given this kind of explosive stance, the man is not in favour of amnesty schemes. "No, they are absolutely useless". "We need to convict the top 100 high profile people involved in corruption or tax evasion or whatever it might be. Throw them in jail and let them rot for two years and then bring these amnesty schemes to make them workable," says Asad.
He contends that the country needs stronger parliamentary committees which should have much greater access. "We need to empower the citizen through effective implementation of the freedom of the information act; then, people will hold the authorities accountable using the latest technology," he said.
SOCIAL HORRORS
Of course, reducing corruption is not the only way to bring Pakistan on the road to prosperity. "There is no way we can have sustainable economic growth of this economy, unless we invest in education," says Asad. How that should come about is spelled out in many government documents and in other private sector suggestions such as the National Economic Agenda prepared by the PBC. But why must educational reforms come about on an urgent basis is well-explained by the following social horror story.
"The working-model of our state is flawed; there are 4 different educational systems in this country where the biggest education system is 'no education', Asad says emphatically. "Then you have a big chunk sitting in standard Urdu-medium matric system, and then you have a big chunk in the Madrassas with a very thin slice in the O and A level system". "These four systems not only create different kinds of skilled labours, but also four different mindset and world views. And when you have different world views you are effectively a different nation; so effectively we have created four different nations by design," he added.
Asad expressed his lament over this model where "only the thin slice of O/A level educated control the state, who think that whenever there is ethnic or religious rebellion in the rest of the three systems, it can be resolved by sending in tanks and gun ships". "Does this seem like a reasonable business model that will sustain itself in the long-run? Of course not, it's a completely self destructive model," he said.
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