Innovation is bringing a new idea to solve a problem and getting the same implemented to improve things. Innovation can be an entirely net new unique idea or invention, or it can be using an existing or tested solution used in a different situation and modifying it to resolve issue at hand. The most commonly used and a slightly lower degree of innovation can be to learn from others’ successful experiences and taking advantage by modifying, localizing and adding value to these solutions.
Truth be told. We should be proud of our consecutive governments of initiating big and ambitious infrastructure projects such as motorways, metrobus, orange line, green line, new train services, power plants etc. etc. These projects add immense value to Pakistan’s existing infrastructure and are and will be very beneficial to common Pakistanis. These are big ticket projects and require tons of money, foreign exchange and local, lots of machinery and equipment, and provide lots of employment opportunities to skilled and non-skilled people. Hence not only these projects improve country’s basic infrastructure but also help the economy.
I am sure that head of relevant ministries, their secretariat and relevant project managers use a lot of innovation is prioritizing these projects, getting the financial and human resources, arranging the necessary machinery and equipment, acquiring the needed approvals and getting the projects executed and implemented. No complaints. Credit gets due and should be given to all involved for all this good work. However, the name of the game is continuous improvement, and that where we need to use a little bit more innovation to our benefit.
What has bene observed in a lot of these projects is that major part of machinery, equipment, hardware and software needed for these projects is imported. And the irony in a lot of these cases is that this machinery, equipment, hardware and/or software is already being made or can be made in Pakistan. Would it not be more cost effective and beneficial to Pakistani industry and overall economy to use local products rather than imported? Even if there are technical and/or capacity limitations, is not there more value to address those technical and or capacity issues rather than importing even if these issues costs slightly more and take slightly longer time. The advantage of using these projects to catapult the production ability and/or capacity of these machinery, equipment, hardware and/or software is that the projects already offer a demand, good time dependent justification, motivation and funding. Mind you that part of the funding that was planned to import the good can be utilized to address the technical, production and/or capacity related challenges. Can we use some creativity here?
Lots of industry development in several western countries happened during the world wars which ironically provided a demand and motivation. Everyone can imagine the financial, resource and time crunch those country must have been at that time. Can we use some creativity here?
One may argue that the nature of conditional financing arranged for these big-ticket projects warrants us to buy products from the financing country. And the challenge here is how to get financing that does not have foreign products/services attached. To meet the objectives of saving foreign exchange, helping local industry and increasing employment opportunities, and improving skills of local resources, we need to use a little bit more creativity in such situations.
The easiest way of getting big projects implemented is by reaching out to foreign governments for help. These foreign governments have an obligation to their own country, not to Pakistan, hence are willing to provided financing but on conditions such as their nominated consultants, products and services from their country and so on. Not only these consultants charge exorbitantly, fully knowing the conditional financing situation, they generally select suppliers of goods and services for the project from the same country, who also charge premium and at times we need to compromise on quality as well. Money decides. Result is that not only the project cost gets significantly higher but also does not help Pakistani economy a lot. Our governments, short sighted as they are, take this easy route and boast on the completion of these common-people-benefiting projects. No one, however, talks about the missed opportunities.
One should accept that considering Pakistan’s limited financial resources above is the only way some projects can get implemented. Good or bad, things at least get done. Same is not applicable on all projects though.
- For larger projects if the financing is conditional to buying foreign products and services, contracts should be negotiated for training local resources for operations and local vendors for support and maintenance once the project is complete and is operational. Also, though we cannot obligate the foreign companies/suppliers to buy local products and services, we can definitely incentivize them for doing so. In these contracts an attractive incentive should be offered to foreign companies/suppliers for adding local component. Every business is profit oriented and incentives help reducing costs and increase profits. It may not work in all situations, but we have nothing to lose and everything to gain if someone utilizes these opportunities.
- If the size and nature of the project is such that the contract does not necessarily need to be awarded to a foreign company, instead of seeking international bids the government can seek local bids on BOO basis with a certain level of foreign component allowed while offering an incentive for local component. In these situations, the turnkey contracts can be awarded to local companies who can work as project managers, consolidators on integrators while arranging finances on their own from the private sector. These local companies can also negotiate finances with their foreign suppliers. These projects would not only cost significantly less overall but would also save lots of foreign exchange and would contribute more to the local economy in terms of production, employment and taxes. Since the finances get arranged from the private sector such projects may have a higher cost of financing but that can be more than justified by the other more important and longer lasting positive impacts they make on the local economy.
- For all other government projects of any size and nature legislation should be passed and very strictly implemented, no exceptions, to hire only local personnel, and to buy only local products and services. Local experts to use their creativity to customize and localize solutions that have a proven success in other countries, specifically in our region, in every field of life. Localization and customization are the key here as best of the best solutions, products or services may fail without localizing and customizing and no one knows our needs, resources, preferences and culture better than someone who is part of the same.
So, for Pakistan to grow it may look for solutions globally but produce the same locally after adjusting to local people, culture and work environment. It should learn to be creative in finding solutions to its problems that can be multi-faceted but may have multiple benefits if found locally. Similarly, Pakistan should learn to have confidence in its own professionals, ideas, solutions, products and services rather than looking outwards.
December 22, 2019