Industry

Pakistan was carved out of those parts of the Indian Subcontinent, which had no industrial base, and no indigenous commercial or professional talent. Therefore, the Quaid-i-Azam invited Indian Muslim businessmen to set up a bank, an insurance company, a shipping company and an airline. He also asked Indian Muslim offi­cers working in departments of the Indian government to opt for Pakistan.

In August 1943, the Quaid-i-Azam sent M. A. H. Ispahani to Sir Adamjee, to form a Federation of Muslim Chambers of Comerce & Industry, which held its first meeting at Delhi on 18 April 1945 with Adamjee as its chairman. In June 1946, he asked Ispahani to discuss the establishment of an airline with Adamjee, and thus the Orient Airways came into existence, which was later converted into Pakistan Internantional Airlines with my uncle Zafarul Ahsan, ICS, as its first chief. The Quaid-i-Azam insisted that it was not enough that there was only one Muslim bank (Habib Bank), therefore he talked Adamjee and Ispahani into incorporating the Muslim Commercial Bank on 9 July 1947.

When the Indo-Pakistan trade war created an economic vacuum immediately after independence, they were there to fill it. When the Government of India withheld 55 crores from Pakistan’s share of cash balances, and the Government of Pakistan needed funds to pay its employees’ salaries, Adamjee presented a blank cheque. Hyderabad State announced the transfer of 20 crores worth of securities to Pakistan on 10 January 1948, and sent currency and gold to assist the new state. At the time of independence Pakistan did not have a single Ordinance Factory. All the sixteen factories of British India were located in India. A new ordinance factory was set up in Wah, with the Prime Minister of Hyderabad, Mir Laik Ali as Advisor.

The blueprint for the post-war development of Sindh issued by the Government of Sindh stated, ‘… conditions in Sind do not favour heavy industrialisation or any large scale development of cottage industries … Therefore the schemes for the industries department do not contain any scheme for development of a major industry’. However, under pressure from newcomers the Sind Industrial Trading Estate was planned in Karachi, and the Quaid-i Azam laid the foundation stone of the Valika Textile Mills on 26 September 1947, and performed the opening ceremony of the Bengal Oil Mills on 2 February 1948. Thus manufacturing became the fastest growing economic sector.

The migration of millions of educated Indian Muslims to Pakistan made available the talent necessary for economic development. ‘The great in-migration of talent and skills formed the critical mass for Pakistan’s first ‘great leap forward’ (Burki, 1984; 5). In this they had the full support of the political leadership, which wanted to disprove those who had agreed to the creation of Pakistan in the belief that it would not be viable without an industrial base, and would soon return to the Indian fold, and that the division of India would be a temporary affair.

Muhajirs continued to meet resistance in rural areas, but the same was not the case in urban areas where the Hindus had left a vaccum in the administration, professional and business sectors, which could only be filled by the Muhajirs. By gaining control over sectors previously occupied by the Hindus in the urban areas including the administration, the Muhajirs felt sufficiently secure to continue to settle in Sindh. Consequently, there was a net gain in the number of Muhajirs who settled in two southern divisions of Sindh.

In no time the Urdu, Gujrati and Punjabi speaking businessmen from Bombay, Burma, Calcutta, Delhi, Kanpur, Kathiawar and Madras brought about an industrial revolution. A list of the largest 22 business houses that controlled 66 percent of industrial assets, 70 percent of insurance funds, and 80 percent of bank assets, was published and publicised:

 

Name                     Net Assets      Family             Business

                               (in millions)   Origin              Origin

 

  1. Saigol 529.8 Chakwal          Calcutta
  2. Habib 228.0 Bombay          Bombay
  3. Dawood 210.8 Kathiawar      Bombay
  4. Crescent 201.7 Chiniot            Delhi
  5. Adamjee 201.3 Kathiawar      Calcutta
  6. Colony 189.7              Chiniot            Multan
  7. Valika 183.5 Gujarat           Bombay
  8. Hoti 148.6 Charsada        Charsada
  9. Amin 137.9 Bhera              Calcutta
  10. Wazir Ali 102.6 Firozepur       Lahore
  11. Fancy 102.4 Kathiawar      East Africa
  12. Beco 101.4 Lahore            Batala
  13. Hussain 81.7               Kathiawar      Bombay
  14. Gandhara 79.9 Kohat              Kohat
  15. Hyesons 79.4 Madras           Madras
  16. ZA Lari 77.2 U.P.                  Abottabad
  17. Bawany 69.3               Kathiawar      Rangoon
  18. Premier 56.1               NWFP             NWFP
  19. Nishat           54.3                 Chiniot            Lyallpur
  20. Gul Ahmad 52.3               Kathiawar      Bombay
  21. Arag 50.1               Kathiawar      Bombay
  22. Rahimtoola 49.9               Bombay          Bombay

 

Mr. Zulfikar Ali Bhutto took over as President and Chief Martial Law Administrator (1971–74) on December 20, 1971. He promulgated the “Nationalization and Economic Reforms Order (NERO)” on 1st January 1972, and announced the takeover of twenty industrial units on 2nd January 1972 from radio and television. His Finance Minister, Dr. Mubashir Hasan announced takeover of eleven more units on 31 January 1972 and came over directly from the TV station to our house to say how sorry he was to take over one of our units. But he said that Bhutto sahib wanted it. It was typical of Bhutto not to forget that we had taken his rivals the Khuhros as directors in our Larkana industry. Thus the government took over 31 major industrial mega-corporations, industrial units and enterprises belonging to 22 families. In the second stage he took over 13 major banks, over a dozen insurance companies, two petroleum companies and 10 shipping companies. In the third stage, he took over 2,000 cotton, ginning and rice husking units.

The nationalization policies had a disastrous effect on the economy and damaged the confidence of investors in the country. The result was large-scale export of manpower to the Middle East and Europe. The annual number of Pakistanis employed abroad through the Bureau of Emigration and registered employment agencies increased from “2,262 in 1970 to 16,328 in 1974”.

Nationalisation by Bhutto destroyed some of the major Muhajir industrial houses, which had already suffered heavily because of the separation of East

Pakistan. A number of industrial families and many young professionals left the country. Our friends Shaukat Fancy and his wife, Shahnaz, left for gulf where they met Salman Taseer. Salman like many foreign educated young men, had initially hobnobbed with Bhutto but later parted company with him because of his old fashioned pre-Keynsian ideas on economics and politics. One day Shahnaz arrived with a request from Salman for my notes on the dismemberment of the country, as Salman was proposing to write a biography of Bhutto and did not think that living in Bhutto’s Pakistan I would be able to write the true story of the events that led to breakup therefore I gave my file of notes, and Salman Taseer wrote his book on Bhutto sitting in the gulf, changing its orientation several times.

And many private entrepreneurs, both from agriculture and the industrial sector moved their resources to commerce and construction. Government service and construction then became the leading sectors. For the first time in the country’s history, the growth rates of both agriculture and industrial output fell to well below that of the economy’s average.

Bhutto also destroyed the established civil service structure, and instituted lateral entry to induct and em­ploy his supporters directly into government service. An opposition periodical identified more than 100 senior-level appointees as close relatives and associates of the members of Bhutto’s cabinet (Burki, 1980; 102). According to the NAP, the Bhutto government’s plan was to ‘raise an army of stooges, with all civil servants becoming the humble servants of the ruling waderas’. Further Mr. Bhutto added a proviso in the 1973 constitution which allowed a quota system, in place of employment on the basis of merit guaranteed by the constitution.

My uncle, Zafarul Ahsan, was one of the ICS officers who was thrown out by the first martial law regime of Ayub Khan. He went to the court but the Chief Justice laughed out his petition, saying that here was someone who had come for his rights at a time when the rights of the whole nation had been taken away. My uncle had a lot of experience and a lot of friends and admirers who were prepared to invest in him. However, Pakistan at that time was under the state licensed capitalism, which meant that you could not get a loan from PICIC or IDBP or foreign exchange from State Bank to set up an industry without a licence from the government.  And the government, having thrown him out, was not likely to give him permission to do any work in his own name. Therefore he got hold of a friend who happened to be Ayub’s brother, Sardar Bahadur Khan, who was leader of the opposition in the Parliament and critical of his brother for the imposition of martial law. My uncle applied with Sardar Bahadur Khan as chairman to set up Khyber Insurance Company Ltd., and Khyber Textiles Mills Ltd. in Abbotabad, hometown of the Ayub Khan, which the government could not refuse. To cover his lack of funds he created Lahore Investment Ltd., with seed money provided by my father to acquire holding shares in Khyber Insurance and Khyber Textiles, so as not to let them slip out of his hands. To gather foreign exchange to buy machinery from abroad he got Lahore Investment to start selling shares of his companies among Pakistani workers in the UK, and buying them off their relatives at bonus voucher prices in Pakistan; thus giving them more than the official rate at which the rupee was available to their families, if they were to transfer their money through the official channels. This was sufficient for him to import the textile machinery from abroad but not to run it. Therefore he applied to set up a new factory, and used the funds thus raised through sale of shares, advances and loans to run the earlier concern. This way a chain was built comprising Khyber Insurance, Khyber Textiles, Satrang Textiles, Allied Textiles, Indus Chemical and Alkalis Ltd. and Sun Publications. However, it all came tumbling down with the fall of Dacca, and Bhutto’s jiyalas occupation of Allied Textiles in Larkana, and his takeover of the Life Insurance part of Khyber Insurance, also of Indus Chemical and Alkalis Ltd., which was the biggest chemical concern to be established in Pakistan till that time.

On my return from Oxford I had started work as secretary of Lahore Investments Ltd., in which my father had invested money in my name. I also acted as legal and administrative overseer of all the concerns, and later took over as Managing Director of Khyber Insurance Company Ltd. However after the loss and fall of sister concerns it was not possible to keep it afloat; therefore I looked towards directors for help and tried to induct new directors; but I found them involved in their own problems, as Bhutto nationalisation had affected almost all of them. One day one of my directors, Mir Khalilur Rehman of Jang Newspaper, came to me in a distressed state, and said that his son had knocked down and killed a man on Bunder Road with his car. He calmed down when I told him that a car accident, although reprehensible is not a deliberate act of murder, and that what he should do was to call his crime reporter Saghir, who would sort out the problem with the concerned SHO and the heirs of deceased.

I made Ardeshir Cowasjee the chairman of the board in the hope of getting Parsi business, but as Afzal Khan of Pakistan Refinery had warned me that he would only create problems for me, which he did by coming late to the board meetings and insisting that everyone should wait for him, and so on. After the first meeting I started having meetings on time by electing a chair for that meeting, which annoyed him and made him rant and rave till he gave up and resigned. I only got a requests from my other director, S. S. Jafri,  for transport for the election campaign of his son-in-law who was contesting the election on a PPP ticket from Karachi, which he lost. Karachi had voted for Fatima Jinnah against Ayub Khan, and had not forgotten that Bhutto at that time was Secretary General of Ayub’s Convention League and one of his blue-eyed boys. One of my directors was the former Governor of the State Bank of Pakistan, Raschid, but as a Bengali he had lost all influence after the fall of Dacca. He was a nice man, who remained with me till Agha Hasan Abidi called him to London, to place him in a BCCI organ, which he had created for the pleasure of seeing celebrities on his pay roll. I wrote to him to take over my company also but I did not get any response from him. It was obvious that without life insurance and sister concerns it was difficult to run a general insurance business in Pakistan.

When General Zia seized power he handed back Ittefaq foundry to the family of his finance minister in Punjab. Therefore hopes were raised that other concerns nationalized by Bhutto would be similarly returned to their previous owners. Instead the General announced elections in nationalized industries for one elected director from previous owners on their board as against six directors who were appointed by the government. I was elected as director of Sindh Alkalis Ltd. I found that it was run callously by the government nominees. Therefore after every board meeting I wrote a letter to the production minister who was a general, criticizing the state of affairs in the company, and sent copies to the President, General Zia. Constant criticism of the way the nationalized industry was being run finally made General Zia pass a law to denationalize some of the industries, whereby the previous owners were given preference but were required to compete with other bidders. I made a bid along with court orders that I was the previous owner of the company but despite the law, the generals who had been unhappy with my constant criticism of their management did not give back the company to me. The result was that within a year the biggest chemical company set up by my uncle was soon in ruins, as in their anger with me they cared neither for the law nor the national interest.

There was another reason. Although whenever General Zia met me he said you must get your industry back but there was a price tag attached to it. He wanted to know if I would be of any help to him in Sindh. It was made abundantly clear to me in the last appointment I had with the President because when I arrived at the Presidency I was asked to see his deputy General Khalid Mahmood Arif, who sat in a very small room with a small desk clear of all papers and two chairs, and listened to me for over thirty minutes without uttering a word, except asking as to what advantage it would be for the government. Seth Ahmed Dawood, who was very close to General Zia who used to see him whenever he was in Karachi, used to drive himself alone to my house to persuade me to organise a Muhajir party. Seth Sahib was an interesting person. Although he was one of the richest men of Pakistan, he was very careful with his money. Once he took us for coffee to the Intercontinental Hotel, but when a family having coffee there waved to him, he promptly took us to join them, and later gleefully told us, how he had saved money on coffee.

When Akhtar Rizvi, the original ideologue of MQM, came with my friend and one of my directors, Ahsan Rizvi, both old Awami Leaguers and close to G M Sayed, to ask me to join him in organizing MQM I also disappointed them. I was soon proved right because a new breed of politician emerged who were interested in money and power rather than serving the country.

 

 

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