Association of Chartered Certified Accountants
Pakistan hosted a research and insights event in Faisalabad, attended by
representatives from local businesses for a panel discussion moderated by ACCA
Regional Head of Policy (MENASA), Arif Mirza.
The panelists included Dr Abid Ali-CFO Rafhan Maize , Imran Ghafoor- CEO
Sitara Peroxide, Muhammad Zeeshan Abid -Partner Parker Randall, Suleman Zahid
Jamil Chairman- Zahid Jamil & Co and Taha Hussain Director FGS.
Arif Mirza,
speaking on the occasion highlighted that “circular debt is a cold example of
the devastating consequences prolonged late payments can have on an
economy. Circular debt and the
concurrent energy crisis plays a pivotal role in depressing the Pakistani
economy, our economic growth( based upon real GDP) is nowhere near that of our regional emerging
markets.”
The CFO of
Rafhan Maize gave a laudable presentation about the payment policy of Rafhan
Maize as compared to the Sugar industry.
He highlighted Rafhan’s strong commitment to pay suppliers as soon as
possible without any exploitation, even though a large portion of their suppliers
are small farmers without any bargaining power.
The result has been spectacular, with corn production in Pakistan rising
from 3000MT (metric tonnes) in 2009 to 5000MT in 2014. In contrast, the Sugar
industry is notorious for late paying farmers.
Just recently, nine sugar mills were seized by the Punjab government
because of large outstanding dues to farmers.
Educating
the Pakistani business community about the repercussions caused by habitual
late payments is perhaps the most important tool to counteract this detrimental
cultural influence on corporate decision making. The government will also need
to play a more active role, with stricter regulatory action against offenders
who persist on willfully exploiting their suppliers. Although some progress has been made in this
field, there is still a long way to go in finding a pro-active solution.
