empowerment of people through public-private sector partnership
is our main objective'
most important objective for the Commonwealth Business Council (CBC)
is the economic empowerment of the people that can be achieved if
most of the countries have higher economic growth rate but that
for us can only be achieved by increasing the role of the private
sector, so feels Dr Mohan Kaul, Director-General &
Chief Executive of the Commonwealth Business Council.
In an interview with Amitabha Sen, Dr Kaul said: "We
are trying to achieve that by creating environment for greater flow
of investments, by greater mobilization of internal resources and
by creating conditions for promoting foreign and domestic investments".
About the forthcoming Doha meet he strongly hopes "to see real
progress in debt cancellation. There will be definitely some different
movement on market access for the developing countries" and
unlike in the past, "the aid may not be linked to some policy
changes that some of the donors are asking at this time". About
the role of Indian IT industry in the execution of CBC's ICT Plan,
Dr Kaul said that the "Indian IT sector is very much part of
our work to reduce the digital divide that we are working on".
Sir, you have "set
a goal of achieving economic empowerment for shared global prosperity
through the enhancement of private sector contribution to social
and economic development". To what extent this dream is fulfilled
so far, since you took over as Director General and CEO of CBC in
Since last seven years we have really made progress but one would
have liked to make progress at a much higher pace. If you look at
54 countries (of Commonwealth), 13 of those at this time have their
economic growth higher than Europe. These are the fastest growing
economies-all are the Commonwealth countries. That was not the case
before and the role of the private sector in many of these economies
either was minimal or negligent. We see now a real change. If we
look at just 30 years or 25 years, most of the Commonwealth countries
including Britain were centrally managed economies. The public sector
then played a major role in those days. If we look at what has happened
in last 30 years, then one would see most of these countries were
market economies. In last six years significant changes have taken
place. CBCís aim was two fold: one was to see that Commonwealth
countries adopt market economy policies so that they can open up
their market to private sector. Second was to create a better climate
for investment and help the governments to create atmosphere for
better governance. Many of the countries had the problems in governance
areas. We are in the right direct direction. We have made progress
but we have still miles to go.
What, according to you, are
the three most important and immediate objectives you (CBC) plan
The first and most important objective for CBC is the economic empowerment
of the people that can be achieved if most of the countries have
higher economic growth rate but that for us can only be achieved
by increasing the role of the private sector. CBCís overall mission
and goal is the economic empowerment. We are trying to achieve that
by creating environment for greater flow of investments, by greater
mobilization of internal resources and by creating conditions for
promoting foreign and domestic investments. We are doing everything
we can do to attract investments into Commonwealth countries- from
within Commonwealth as well as from outside into the Commonwealth.
second objective is to help the developing countries increase their
share of the global trade. We have seen countries who have liberalized
their trade policies have reaped benefits whether it is India or
UK or Malaysia or Singapore or even China. More we do for liberalizing
trade by increasing the trade flow, more it increases the share
of developing countries in the global trade. That will bring more
jobs, more wealth to those countries.
third objective is to create environment for good governance, good
corporate governance. We are working closely with the governments
and private sector in creating better corporate governance and in
creating better governance in government itself.
Closely linked with this
is the issue of globalization which now seems to be the sine qua
non for market economy that you are talking about. How would you
like to see globalization in developing countries like India where
public sector played a major role in building up its economy or
in less developed countries?
In India the public sector played a major role in skills development,
in creating and brining in technology in the forefront. Same thing
happened in other countries also. It happened in UK, it happened
in Canada in a big way, it happened in South Africa and in other
countries.The public sector at a particular point of time played
an important role. I think that role will still be played in some
selective way but much more benefits will be achieved if we get
some of the public sectors managed in private sector way so that
private sector is involved.
But what about those PSUs which are making huge profits, which are
considered as industry jewels?
There are two issues in public sector: one is profitability and
ownership and other is the management capacity. The ownership is
not a major problem. I would like to look at it in a slightly different
way. In Singapore, for example, many of the public sectors are not
privatized still because the interference by government or political
interference there is much less and therefore they are able to manage
their public sectors in a much better way. If that was the case
in other countries, then the ownership or privatization issue would
not have come up.
second issue is ownership. In some cases we say why the government
should be in public enterprises when it is not their core business.
It was their core business probably 20 years ago because that time
it was creating a capacity but it is not the case now. Secondly,
if the companies are very very profitable, I think what the governmentís
choice is to use those profits for the social and economic developments
of the country. If a particular public sector unit is profitable,
if I am running it profitable I want to sell part of it to use that
resources for economic development now that is on education and
health so that I can get the same prosperity few years down the
line. I think thatís the choice we will have to make and the choice
is very clear for the government. It is not that because some of
the public sector is making huge profits therefore they should remain
in the government. It's questionable. Because we are making profits
we probably should use those profits somewhat differently.
Are you in a way suggesting
that the government should not be in the manufacturing sector and
primarily it should play the role of a strategist?
The government should be out of manufacturing, should be out of
tourism, should be out of service industry for its not suited for
that. It should definitely be in strategic areas, if it chooses
to be. But the process of disengagement of the government from these
sectors have to be managed. It is a process of management which
is more important than the disengagement because in the process
the jobs are involved, the capacity is involved. Questions is that
do we have the local capacity versus international capacity and
many such issues are involved. As a goal, as a strategy, the government
should disengage itself from non-strategic sectors.
While talking about globalization,
donít you think that there is basic difference between countries
like India and UK, USA or Singapore where issues like poverty, unemployment
etc are not quite concerning one?
It is not only in India and other developing countries, unemployment
in Europe too was a concerning issue. In terms of unemployment India
is in a much better position at this time statistically. It is not
that bad today but the main issue is whatís the best way for economic
development. In no country government alone can make the change
in development. This year there is going to be a UN conference on
reviving the Millennium Goals for Development. Those Millennium
Development Goals are unlikely to be achieved on the time table
that the governments have set for. Why is that? In some cases because
of lack of efficiency, lack of resources, they are not able to bring
economic development. Therefore the best thing is to get the development
by good public-private partnership, because the private sector is
able to exploit the human skills in a much better way and productively
so that the people benefit.
India people are very entrepreneurial and skilled. If we give them
the skills and bring them more into economy, there would be much
more wealth generated as a result of economic liberalization and
partnership with the private sector. Countries like India have nothing
to fear because they have people who are entrepreneurial and skilled.
All that we need is to break those shackles and give them the opportunities
to work in a liberalized way.
definitely globalization has not really been equal. Itís not the
case in India alone, itís everywhere. The people have become richer.
Poor is not becoming poorer but the benefits of globalization was
not even. No system is fair, not even the previous system. The question
is which of the systems brings most prosperity to a larger number
of people. Thatís what we have to debate. The same is debated in
China, in India, in Europe.
To achieve economic empowerment
of the people, you emphasized on sharing of resources and prosperity
and to achieve that goal you are trying to draw the attention of
G-8 nations also. What is the latest scenario?
We are working very closely with the British government and other
governments particularly in the area of trade, debt and aid. Particularly
in the area of Africa, the Africa Commission which has been set
up by Mr. Tony Blair. The meeting of G-8 in July is going to be
a landmark meeting. You will see real progress in three areas.
will see real progress in debt cancellation, I think there would
be definitive movement on reduction or getting the debt waived by
the the debt giving countries so that resources can be spent on
health and education.
would be definitely movement on trade. The UK govt. is trying its
best to influence G-8, predominantly the European countries and
the US, about market access for developing countries. So I think
there will be definitely some movement on market access and particularly
this meeting is quite important in the light of next Doha meet.
There will be definitely some different movement on market access
for the developing countries.
will be movement on aid also. Countries will try to put more money
on aid to reach the UN stipulated guidelines of 0.7 percent of their
GDP. The second thing about the aid which is important for some
of the countries is that the aid may not be linked to some policy
changes that some of the donors are asking at this time. Some donors
want the aid be linked with the areas specified or earmarked by
them and cannot be used for any other sector.
are also hoping that this would be a good catalyst and stimulus
for more private sector involvement in developing countries, particularly
in infrastructure. One of the major problems in India and in many
other developing countries, is poor infrastructure which needs much
higher level of investments. Both private sector and international
finances either through agencies or the private sector investment
flows, will have to be looked at. Our aim is to get those investment
flows, the aid flows in the favour of developing countries. Our
aim is to work with the developing countries that they take the
advantage and exploit those opportunities for their benefits. Some
are able to do it, some are not.
While talking about Doha meet
this December, do you think it would be a litmus test for developing
countries led by India as expressed by the European Trade Commissioner
European Union is looking towards leadership from India. In international
trade there is a developed block and there is also a middle block
comprising countries going towards development like India, Brazil,
South Africa, China, Malaysia which are going to have a much higher
part in the trade flows to increase their share. These are going
to be important segment of international trade. As India has always
been in the forefront of talking about the case of developing countries,
the developed countries are expecting a role from India which does
not mean it should give up its main principles what it has been
propagating. They are expecting a change in Indiaís strategy, change
in rhetoric. We would like India to be more pro-international trade
rather than react. We are expecting a change in Indiaís strategy,
tactics and rhetoric so that it will have a much better effect on
how other developing countries will look at. That does not mean
one should give up the negotiating power of getting the best out
of the developed countries. It needs change in tactics, strategy
and rhetoric and the way things are presented.
But it seems Agriculture has become the major focus at Doha meet
for developing countries led by India.
Yes. Other issues like services, things are moving. In textiles
things have moved a lot. The main thing remaining is agriculture.
For developing countries like India, agriculture plays a crucial
role. For Africa, it plays a very very crucial role. Eighty percent
of the people in that country live on agriculture. Itís a question
of investment into agriculture, how do we liberalize and take advantage
of international technology. Some countries like India are able
to do it on their own, some countries need help. If tomorrow all
agricultural products are liberalized, itís not sure that some of
the countries will be able to take opportunities right away because
there will not have the capacity to do it. Some will need investments
for agriculture processing to value add some of the products. Lot
of works have to be done to create capacities to take on the incentives.
Agriculture is definitely the major issue for Doha talks although
other issues like trade facilitation etc might figure in the discussions.
So far CBCís bilateral relations with regional bodies like SAARC
and NEPAD is concerned, to what extent CBC could achieve its objectives?
With NEPAD we have a very strong relationship. We lead the NEPAD
Business Group. We are the contacts for the international NEPAD
group. When we develop this kind of relationship, we have something
in mind and that is we would like to use the diaspora from those
countries which is best to the advantage of country like India .
That was our main theme of developing relationship with SAARC Chamber
of Commerce. We have a memorandum of understanding with SCCI.Our
main theme in developing relations SCCI is to use the net work of
businesses from diaspora from the South Asia which is very strong
in Britain, US and other countries and use that to develop business
opportunities in the region of South Asia and also in other regions.
One of the areas where we are developing this relationship is not
only to look at the companies who are international companies but
also to develop a strong link up with diaspora . We hope to create
South Asia Trade and Investment Network (SATIN), which is basically
of companies of South Asian diaspora and work with them and see
how we work with South Asia- India, Pakistan, Bangladesh, Sri Lanka.
Our objective is to create regional network there using the regional
or diaspora businesses in the UK and other countries.
Information Technology today
plays a crucial role in economic development of a country. CBC has
chalked out an ICT perspective plan. Could you throw some light
on this important segment of economy?
We strongly believe that the development will be lot dependent on
the technology, adaptability of technology, access to technology
and use of technology. If we have to propagate globalization, we
have to do globalization in a way that it benefits all. We will
have to work along with the countries which are on the other side
of digital divide to see how do we reduce the gap of the ICT. One
way of looking at it basically is the private sector solution. We
have a working group on e Ėgovernance. Many of the Indian IT companies
are on that working group. We are working very closely on private
sector solution on government and also on technology. We are also
looking at community solution like providing access to the computers,
help countries who do not have technology by providing low cost
technology, getting ICT access to either small businesses or people
etc. Thatís how we are trying to reduce barriers to connectivity
and access to technology.
How you plan to coordinate the implementation of the ICT plan?
For that we have created an agency called CBC Technologies. We are
hoping to enhance the reach of ICT companies to other countries.
We facilitate their contacts, we provide information on to them,
we get them nearer to government, collecting lot of information
on companies which could be outsourcing destinations. Commonwealth
has another advantage. It is only the Commonwealth countries because
of the English language, have become the destinations of BPO. It
is India, South Africa, Canada, Australia, Singapore, Malaysia.
We found there is a good advantage for us of working with Commonwealth
companies because itís only those companies which are providing
the services. So we work closely with the government and private
sector to facilitate that.
What role you would envisaging
for India as a global software giant in CBCís ICT plan?
Indian companies have lot to offer to the rest of the world in terms
of their services and technology. The US market is where these companies
are going. The UK market is expanding. We look at UK as an entry
to the rest of the Europe. Europe is expanding and we are working
with the Indian companies to come to the UK. We are facilitating
their interaction. We look at countries like Malta and Cyprus which
are now part of the Europe. Malta, for example, is only one hour
flight from Libya , Algeria and Tunisia. They are very keen to get
Indian companies into that Island so that they can service North
African countries from that Island. They can still remain in Europe.
We are working with these companies. We can work with these Indian
companies in a way of giving areas of expansion of their activities.
we are using expertise of these Indian companies. For example we
have a working group that is working with countries like Zambia.
We have a group of private sector persons helping the Zambian government
to develop a good economic strategy for development. One of the
members is an IT person from India. We are using Indian IT knowledge.
They are part of the working group to provide information to the
government, to the private sector on what can be done on community
initiatives etc. So Indian IT sector is very much part of our work
to reduce the digital divide that we are working on.
Launching India Trade and Investment Forum early last month, Indian
Commerce Minister Kamal Nath said "India in 2005 is a different
India -- with its burgeoning middle-class, human resources, economic
indices, India is in the departure lounge, ready to take off."
How would you like to see India to day and in 1997 when you took
charge of CBC?
The difference we see in last few years is that the political message
that is coming from the Prime Minister, Finance Minister or Commerce
Minister is very consistent saying that India wants foreign investment,
the country wants more of it and not less of it. 'India is open
for you, India is doing everything to attract foreign investments'.
This much of direct message was not earlier. Earlier people were
making guarded messages and were not as open to say about it. This
has made a difference in creating a confidence level.
message which is again a political message is that India is for
globalization but we want benefits to go to lower rung of the society,
the poor people. India is not doing very well in development sector,
It has to do more on health and education. 'We want investment,
we want globalization, we want liberalization but we also want investments
for poor people' and that is appreciated by others outside India.
Donít forget, people abroad, investors and others want the standards
of life of all Indians to go up because it is in their interest.
Those kinds of messages are good for India. More investment in education,
it is better for outsiders because they want more numbers in the
middle class sector.