So you want to set up a factory?

Published on Sunday, July 5, 1998

You've been importing aluminium gizmos for a couple of years. Suddenly a Customs Appraiser decides that the price of each gizmo is three rupees, not one rupee (which is the actual import value).

You either pay me a rupee for every gizmo that you import, or you pay customs duty of three rupees on every gizmo, take your choice. So you think it's better to make the gizmos here instead of helping to make the Customs Appraiser a billionaire.

You get in touch with foreign manufacturers, and in a couple of years you have your own factory. Since the things are made in Pakistan, people don't buy them unless their price is at least half that of the imported ones, but you're only too happy to oblige. You're willing to run the factory without making any profit, since you're saving valuable foreign exchange and contributing to the national exchequer.

After a couple of months you find that the market has been flooded by imported gizmos which are available at half the price of your gizmos. You investigate and find out that some importers are cheating the government by declaring the value of each gizmo as half a rupee. Evidently the Customs staff is hand-in-glove with the unscrupulous importers. But the few honest Customs Officers call in the appraisers and warn them to be careful in future. So the unscrupulous ones stop importing gizmos and you're a happy man for a few days.

But then, the ingenuity of your countrymen is stupendous. This time they cheat the government again by declaring the value in rupees per box (not rupees per piece, which is the standard trade practice). You have to shut down your factory for three months. You again approach the few honest men you know and the appraisers are again warned.

The imported gizmos are sold out, and you resume production. You think your problems are over, but your rivals are clever. They set up companies in a border town of a neighbouring country, import millions of gizmos and remove them from the trucks that are passing through this country on their way to the border.

You go to the government and tell them that there is no gizmo consuming industry in the neighbouring country, but no one listens. Sadly, you realize that you should never have set up an industry in a country dominated by feudals. You know when you're beaten, you sell your factory and decide to call it a day.

Shakir Lakhani