If we believe that private sector growth is the key to development, we have to accept the reality of corporate profit. We cannot treat this to be an ugly and obscene object. There is no such thing as tremendous profit. The important thing is that whether the corporation in making ' tremendous profit' is complying with the laws of the land, sufficiently compensating its various stakeholders like its employees, its consumers and its regulators and contributing to the overall nation building. There is no conflict of interest between the development of the economy and the soaring corporate profit. Only the important issue is whether the distribution mechanism is working fairly with everybody. However, in the name of resolving the unfairness of the distribution, destroying the wealth-generating machine will be tantamount to the killing of the 'golden goose'. This will ultimately hurt those stakeholders most for whose benefit it is supposed to be driven and will benefit those who are incompetent and require unfair protection to survive.

Let us not be pretentious and admit upfront that the present distribution mechanism is not working and, we cannot deny the existence of many unlawful practices in our business dealings. We observe that most businesses do not pay taxes as they are required by the law to do so. Most businesses hide their income and wealth in the financial statements. Some businesses pay bribe and enjoy unlawful benefits. Often many businesses take illegal connection of electricity, gas and other utilities and deprive the public exchequer. The list can go on further. The bigger issue is that not only these illegal activities are prevalent, but also that the corrupt persons are never punished. In many cases, the unlawful practices have become the general norm. The lack of governance puts the honest businessmen in trouble.

While admitting the lack of corporate governance, most business leaders blames it on the government, the politicians and the over all system. While there is great deal of truth in that argument, the business community cannot just take shelter on that and avoid responsibility. Business leaders would have to realise that for their own sake, they would have to enhance the level of corporate governance. They simply cannot just point fingers towards government and politicians and wait for the system to change. They have to bring in self-regulating gestures and contribute towards creating an environment that is transparent. Their effort to bring corporate governance will not only create trust in public eye, but will also help the private sector. Business leaders of our country must realise that our private sector is no longer at an infancy stage. It has been almost three decade that the private sector has flourished. While in the early stages, it may have been acceptable to consider some deviations, now the business entrepreneurs simply have to grow up. They need to take leadership in enhancing their corporate governance. Without adequate corporate governance, not only they will lose the credibility in public eyes, but also will be unable to facilitate their future growth in the next trajectory. In this circumstances, our businesses will only move around the vicious circle of mediocrity and continue to be mistrusted by the general people at large. This is not at all good for our economic development.

A common aspect of the propaganda against private sector and 'obscene corporate profit' is to demonize foreign investments. One of the arguments that have been raised against foreign investment is that, foreign companies take away large dividend in foreign currencies, which reduces our foreign exchange reserve. The accusation is mainly against those companies who do not earn foreign exchange like the mobile phone operators (though they also earn some foreign exchange out of roaming facility and borrow a hand some amount in foreign currency for capital expenditure since local market can't meet up their appetite for funds, not to talk about their continuous equity infusion). First of all, the statement that these foreign companies are taking away huge foreign exchange is quite exaggerated. Nothing as yet has been reported that they have repatriated any foreign currency illegally. Secondly, when anybody invests in any project, it is only natural that the investor would want some dividend. If we cannot accept this basic idea, we should be moving away from market based economic philosophy. If we are really committed to market based economy, we should be focusing more on how much incremental economic activity the investment is bringing in, how many employments are being generated, whether the company is adequately complying with all the laws of the land. In our experience, we have seen most foreign companies pay their taxes and adhere various government regulations to the letter and spirit. However, the same cannot be told about many local companies. Now, if we try to penalise those investors who are efficient and honest corporate citizens and protect those who are not, we shall be sending a very wrong message across the market, which will have long-term detrimental effect.

Another accusation that has been raised against the foreign investors is most foreign companies' apparent unwillingness to get listed with stock exchanges of Bangladesh. This is an important issue and we all agree that to vitalise our capital market we must ensure maximum participation of foreign investors, for that matter successful investors both foreign and domestic, in our bourses. However, we must not resolve the issue with arbitrary imposition, but try to understand that whether the companies actually can gain economic benefit by joining the capital market. A lot of profitable companies-- both local and foreign -- find capital market not very attractive despite some tax advantages. In the stock market, general expectation from a good company is 25 percent dividend, whereas the same good company can borrow from the banks at much below 15 percent to finance its operation. This apparent disincentive works as a strong barrier for companies to become enthusiastic about capital market. We have seen many local companies with annual turnover of more than US$ 50 million and who enjoy long tax benefits not opting for capital market. We must raise question that how much tax the steel industry which is entirely controlled by the local private sector pay and why there is no pressure on them to get enlisted with the capital market? We should also raise the question how much tax the local cement companies' pay compared to the foreign ones, while this industry segment is shared between foreign and local owners on 50:50 basis? Our analyst friends must be aware why our local land phone services could not flourish, while there is a boom in cell phone segment. Why our local entrepreneurs could not implement (with one or two exceptions) even small 20-40 MW power plants, not to talk about another Meghnaghat or Haripur power plants. Why there is no significant participation from our RMG or textiles industries in the local stock market, though they are the `centre of the plate' for our economy. Our fiscal experts must be aware that there is no tax incentives between listed and non-listed companies in Pakistan, but the capital market there is one of the most vibrant ones in this part of the world and gets regularly mentioned by international financial media.

We must realise that we have a serious problem in our distribution mechanism. To improve the situation we need to improve our governance issue significantly. Otherwise, just by targeting the 'corporate greed' or the `foreign investment' we shall not be able to provide a solution to the crises. We will move around aimlessly around the vicious circle of poverty, poor governance, failure to generate wealth and widening rich and poor gap. We want to get rid of the past legacies and move forward as a sensible nation, keeping track of what is happening around.

The writer is a banker