Mapping Pakistan’s industrial growth through multinational’s context

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PO: Please tell us a little bit about yourself and how has your experience been living and working in Pakistan so far?
Ahmet Kursad Ertin: I have been associated with Coca-Cola Icecek (CCI) since 1998. I was given the opportunity to work within different leadership positions in various countries such as Azerbaijan, Turkey, Kazakhstan etc. I came to Pakistan, as the General Manager, earlier this year and I must say, Pakistan has a rich cultural heritage and one gets deeply interested to explore it. The knowledge, skillset, dedication and the desire to succeed that I have observed amongst the youth in Pakistan has indeed been very impressive.
PO: What is the background of CCI?
Ahmet Kürsad Ertin: CCI, mainly owned by Turkish leading conglomerate Anadolu Group, is a publicly traded multinational beverage company operating in Turkey, Pakistan, Kazakhstan, Azerbaijan, Kyrgyzstan, Turkmenistan, Jordan, Iraq, Syria and Tajikistan. We are the sixth-largest Coca-Cola bottler worldwide in terms of sales volume. With 8,500 employees and a total of 26 plants, we offer a wide range of beverages to 400 million consumers in 10 countries.
In Pakistan, CCI serves a consumer base of 208 million people with 6 plants located in Lahore, Karachi, Gujranwala, Faisalabad, Rahim Yar Khan and Multan. We provide direct employment to approximately 3000 employees and indirect employment to approx. 10,000 people.
PO: With CCI completing 10 years in Pakistan, how has the company evolved over the years and what major milestones has it achieved along the way?
Ahmet Kursad Ertin:: CCI Pakistan’s 10-year journey began in 2008 when the bottling operations in Pakistan came under the roof of Coca-Cola Icecek (CCI). We pride ourselves for being the largest and oldest private Turkish investor in Pakistan who has led the way for other Turkish investors to follow. Our investment of approx. $500 million till date in Pakistan is a testament of our confidence and commitment towards a prosperous Pakistan.
Since inception, CCI Pakistan has continued to identify and implement sustainable ways of doing business. Our main goal is to be recognized as one of the most responsible corporate citizen by all stakeholders. To reach this objective, we help build stronger communities, focusing primarily on water, women empowerment and youth development. For example, through one of our flagship CSR initiative – PAANI, we have set up 24 filtration plants in the underprivileged areas of Pakistan which are serving a population of approximately 1 million people per day with clean drinking water. With CCI completing 10 years in Pakistan, our unwavering commitment to our stakeholders, employees, suppliers, business partners, customers and communities to remain consistent.
PO: What regulatory and fiscal challenges does CCI / industry face and how is it affecting the business?
Ahmet Kürsad Ertin: The beverage industry has contributed significantly towards Pakistan’s economic recovery in the form of taxes and employment opportunities; however, it has been unable to realise its full potential due to continuous increase in taxes, lack of clear-operating business environment, coupled with sharp increase in cost of doing business that have not only taken a toll on industry growth but have also challenged business sustainability.
With an extremely high FED already in place (13%), in addition to 17% GST, highest indirect taxes of 30% on the industry, compared with other Countries in the region, is limiting capacity of the beverage industry to re-invest and capture growth. With such high taxes and inconsistent policies, it is not possible for CCI or in fact any company in the beverage industry to operate at optimum level, leave alone registering growth. If corrective measures are not taken soon, we will see players in the beverage industry registering negative growth subsequently leading to curtailed operations nationwide. We operate in a price sensitive market where any increase in price has a direct impact on sales and thus the Government revenue as well. I hope the Government of Pakistan will soon realise its due role in supporting industry growth through positive long-term financial policies in the interest of growing its industrial base.
PO: Where do you see CCI/beverage industry in next 10 years in Pakistan given the tough economic conditions we face currently?
Ahmet Kürsad Ertin: Given the tough economic situation, business is fighting for survival in Pakistan. Immediate intervention is required to turn this around. CCI Pakistan is one of the highest tax paying and regulatory compliant Company in the Country. As a good corporate citizen, we stand committed to fulfilling our corporate obligations. However, we also require support from the Government of Pakistan to create a sustainable business environment for us fulfil these obligations. High cost of doing business, rising operations cost coupled with highest ever tax rate in the region all pose a serious threat to the sustainability of our business.
PO: With CCI present in 10 countries in the region, how do you compare Pakistan market with other markets around the World in terms of ease of doing business?
Ahmet Kürsad Ertin: In terms of global ranking in ease of doing business, Pakistan has improved, however much more needs to be improved. Pakistan’s overall tax rate applied to the beverage industry is the highest in the region, making it difficult for business to operate and invest suitably. Furthermore, deviation from tax contribution by certain industry players is creating an unfair playing field. Another issue is that every Provincial Government has its own version of regulatory structure in addition to the Federal Government. There needs to be harmony amongst Federal and Provincial regulations to avoid undue financial burden on the industry.
PO: How do you ensure your product quality is in compliance with international standards of food safety and hygiene?
Ahmet Kürsad Ertin: Coca-Cola products are loved and admired globally. The quality of our products has always remained our top priority. We comply and adhere to all international and local applicable standards for our beverages portfolio. We are an ISO certified company and our operations are driven by latest industrial technologies and machinery, ensuring that the highest quality products make a seamless journey from our factories to our consumer’s homes every time.
PO: Do you plan to grow the size of investment in Pakistan and what support do you expect from the Government on part of a favourable business environment and corporate tax policy?
Ahmet Kürsad Ertin: CCI Pakistan till date has invested $500 million in Pakistan including USD 45 million for the most recent state-of-the-art bottling facility located in Faisalabad. These investments are a testament of our commitment to grow and expand our business operations in Pakistan. In this challenging environment, the Company’s Management remains steadfast in its business approach and is forced to maintain its focus on key controllable in short term to ensure we return to profitability first. In the long term, we will reevaluate our position under favourable business conditions.