Interview With President Of Pakistan’s ECO Chamber Of Commerce & Industry
At present Muhammad Adrees is President of ECO Chamber of Commerce & Industry, as well as President of the Federation of Pakistan Chambers of Commerce & Industry (FPCCI). He is Chief Executive Officer of Sitara Chemical Industries Ltd – the largest Chlor-Alkali Chemical Complex of Pakistan. He is a distinguished name in the business community at national and regional levels. He belongs to a well-known business group ‘Sitara’ engaged in the business of Chemicals, Textiles, Energy and Real Estate. Under his leadership, production capacity was grown to 610 tons/day in 2015 from 30 tons/day in 1984. He graduated from Punjab University and then went to England in 1982 for higher Business Management Studies. He also has innumerable professional qualifications at his credit from LUMS, Pakistan Institute of Management and Leadership course from Montreal Canada.
First of all tell us briefly about transition from RCD to ECO.
Regional Cooperation for Development (RCD) was a multi-governmental organization which was originally established in 1964 by Iran, Pakistan and Turkey, which were also the regional members of the Central Treaty Organization (CENTO), to allow socio-economic development of the member states. Although, the organization continued on a rather slower pace, it didn’t accrue the much desired results. After twelve unsatisfactory years, the three regional Heads of State held a summit in Izmir on 22 April 1976, making amendments to the 1964 declaration. The Treaty of Izmir was signed in 1977 as the legal framework for RCD. However, before the amended framework could be put into action, due to the Islamic revolution in Iran in the late 70s and the reservations of the new government in Iran, the organization was dissolved in 1979. It was many years later in 1985, that a new organization by the name of Economic Cooperation Organization (ECO) was formed by Iran, Pakistan and Turkey.
Since you have assumed the charge of President ECO what initiatives have been taken to ensure closer economic cooperation among the member countries?
ECO-CCI Presidency and Secretariat was shifted in Pakistan in September 2014 for three years. After viewing the three years performance it will be decided that in which country ECO CCI permanent headquarter should be located. The aim of ECO CCI is to promote the trade and investment among the member countries in order to improve the socio-economic development. To execute and identify areas where ECO can flourish and overcome its socio-economic lacking, FPCCI is preparing a comprehensive Action-Plan for the next three years. FPCCI has developed full-fledged secretariat for performing the duties of ECO-CCI which will provide a platform to private sector of Pakistan for strengthening economic ties and establishing business activities with member countries on a wide spectrum of industries for advancing trade-led economic growth as well as enhancing ECO intra-trade and investment. FPCCI also has a strong Research department which will provide policy advocacy for promotion of trade and investment among the ECO region. Moreover, FPCCI has Business Councils with all ECO members’ countries which are pro-active in the promotion of bilateral trade.
What sort of progress was achieved when RCD existed?
The aim behind the establishment of RCD was economic development of the region through increased cooperation by promoting intra-regional trade. Despite strong cooperation, the region did not establish any significant relationship. Practically; no major economic development took place in the region. There was neither improved intra-regional trade nor there was harmonization of economic policies.
What were the key hurdles obstructing closer integration of the economies of the RCD members?
In late 70’s, major political changes took place in Iran and Pakistan. The monarchy of shah of Iran was overthrown via Islamic revolution and in Pakistan martial law was proclaimed. The new governments had different priorities and policies; therefore in 1979 RCD became a practically defunct organization. In 1985, the organization was revived with a new name ECO. It came about as preferential trade agreement between Iran, Pakistan and Turkey. In 1987, the member countries signed Izmir treaty and gave ECO a formal organizational foundation.
What was the objective behind adding Afghanistan and Central Asian Countries?
The break-up of the former Soviet Union led to the independence of Republics of Central Asia and Caucasus. In their bid to open up to the outside world and as a manifestation of their urge to revive their historic affinities with the peoples of Iran, Pakistan and Turkey, six of these Republics; namely Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan along with Afghanistan sought the membership of ECO and were admitted into the organization. They have interconnected trade routes and mobilization of goods and services and the factors of production. Migration of labor and businesses among these countries was a common phenomenon in centuries old history of the region. The connectivity, cultural adoptability and migration of the peoples among these countries have established similarities in the culture, languages, and traditions in these countries. With its expansion ECO gained a new dimension and new role.
Most of the ECO member countries are rich in energy reserves but continue to suffer from inadequate supplies that affect their economic growth. What are key hurdles hindering utilization of these reserves?
ECO region particularly Central Asian is rich in energy reserves due to presence of hydrocarbons, crude oil and natural gas reserves. ECO region contains 11.62 % of the total crude oil of the world and 20.15 % of the world’s natural gas. The presence of significant amount of world fuel has attracted the attention of world powers in the region and the central Asian region of ECO has become the battle ground for new great game of oil politics. The large reserves of oil and gas can fulfill the huge requirement of ECO, but is adequate to export to other nations. Out of ten, seven countries of ECO region are landlocked and they depend upon other countries for the export of their oil and gas reserves. At present, the fuel is exported through Russia which is very expensive and lengthy route. The only cheap and feasible route is through Southern countries like Pakistan and Iran. Pakistan is facing problem of infrastructural bottlenecks and lack of interest while political sanctions on Iran don’t allow us to get the benefits of energy reserves.
What economic benefits were perceived prior to the expansion?
To begin with, geographical proximity, shared social and cultural characteristics, and diversity in economic structures all combine to make up a strong case for promoting regional economic integration in the ECO region. The member countries have diverse production structures with Turkey, Iran and Pakistan having strong manufacturing and services sectors and the Central Asian Republics in the process of transformation from centrally planned economies to market based systems. Liberal trade policies can result in trade creation among the member countries entailing several benefits including lower prices, more product variety and quality, and improved incentives for innovation. The benefits of regional economic integration can go far beyond trade creation.
Tell us about three major economic benefits that has been realized?
The ECO region too offers significant potential for a broader level of cooperation that is based not just on trade and investment but also on other avenues including infrastructure, information and communications technology, and exchange of technical personnel. The ECO member countries are at different stages of development with different infrastructure needs. Pakistan, Turkey and Iran are relatively more developed countries in the region whereas other regional countries are in the process of upgrading and modernizing their infrastructure. The construction and infrastructure projects offer opportunities for mutually undertaking such projects in the ECO region. The member countries can develop important partnerships by pooling their financial resources as well as sharing technical expertise in construction and infrastructure development. Such technical cooperation can be an effective vehicle for greater development and prosperity of the region.
Has the teething problems emerging from the expansion been overcome?
The region is facing problems of infrastructure bottlenecks, lack of institutions, language, low human capital formation, lack of technological advancement which created problems in the development of the region. Moreover, intra-region trade is very low compared to other regions. In this respect, the ECO member states should have to make efforts to promote intra-ECO trade and to take steps for improvement of regulatory frameworks and removal of tariff and non-tariff barriers in the region, as the intra-ECO trade situation is, however, far from satisfactory.
What are the most contentious issues facing the member countries?
ECO region are badly facing the severe consequences of terrorism. The types, causes and origins of the terrorism in this region are varied: sectarian, ethnic, or political. Regardless the causes of terrorist activities, the adverse effects hamper their economies in serious ways. Moreover, lack of investment in science and technological activities hampers the economic development of the ECO region.