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been protectea against foreign competition for thirty years will produce a
political backlash if undertaken too rapidly. On these grounds, if no other, it was
urged that reform be focused on domestic
deregulation first. "To lose jobs to
domestic competition is painful, to lose
jobs to foreign competition unacceptable",
seemed to be the message here. But, in addition, it was urged that at the least, selective relaxation of domestic regulations be
made in areas where the expansion of industries was likely to prove profitable in
a less controlled environment. This seems
crucial, if only to permit the emergence
of a constituency with a vested interest in
sustaining the liberalisation process.
As to the ultimate role of the state, an
interesting dichotomy emerged as to
whether the current policy should be
perceivedas no more than 'fiddling at the
edges' versus one of major reform. Certainly because the current policies have
not been presented as a single, coherent,
co-ordinated package, a number of critics
perceive the process of reform as being
piecemeal. Some participantsfelt that this
OF CHANGE
ECONOMIY
(6) POIATICAL
August 1, 1987
The two sectors that are most dominated by MNCs in Pakistan are pharmlaceutical and tobacco. In the pharmaceutical sector, a handful of foreign
companies control more than 70 per cent
of the market.Advancedtechnology,better
selling techniques and more money to
throw around are amongst the factors that
havegiven these MNCs the edge. Not only
do they produce most of the drugs in the
country, but the extremely high prices
(especially compared to India and Sri
Lanka)guaranteeexorbitantprofits. Their
Lunchecked
growth and the free hand given
to them by the Pakistan government has
destroyed any hope of an indigenous
group taking the initiative in setting up
units in this industry. Remittance laws in
Pakistan a(re lenient compared to those
of India and transfer-pricing, especially
in the case of pharmaceuticals, permits
the transfer of a fair amount of funds.
The South magazine ranked Pakistan
Tobacco Company as Pakistan's seventh
largest company based on sales. In 1984
it had a turnover of $ 240.3 million. The
company is 63 per cent owned by the
British-based British-American Tobacco.
L-aksonTobacco was ranked 16 in the list.
This company is 30 per cent owned by
Rothmans of the US. Pakistan Tobacco
and Lakson together control over 70 per
cent of the cigarette market in the couintry. Apart from the pharmaceutical and
tobacco sectors, numerous other companies which dominate certain sectors also
exist, Lever Brothers, a subsidiary of
Unilever,Siemens, General Tyreand a few
other internationally known companies
play an important role in their own sectors. But despite all this, the control or
dominance by the west through the MNCs
is not very significant. For that, other
avenues exist.
The most important, powerful and thu.s
effective weapons to dictate to and control Pakistan'seconomy are the two interEconomic and Political Weekly
August 1, 1987