Pakistan is passing through an unprecedented crisis and being a Third World Country it is impossible to control the pandemic with the available government means. In a time of such devastation, entrepreneurs of goodwill and generosity should get united, regardless of their differences with the government policies and divert their total allocation for Corporate Social Responsibility (CSR) in their company’s 2020-2021 budget, exclusively to fight COVID-19 instead of other initiatives like environment, education, clean water etc. Since the outbreak of the coronavirus (COVID-19) is threatening our economy, it is high time for the corporates in Pakistan to rise to the occasion and address their responsibility.
According to a report published last year in Dawn, Multinational Companies (MNC) in the country contributed over Rs20 billion towards CSR during the calendar 2018. The same report, presented by Ifran Wahab Khan, president of the Overseas Investors Chamber of Commerce and Industry (OICCI) added that OICCI members’ contribution towards CSR reached out to over 60 million direct beneficiaries throughout the country by a direct investment of Rs6 billion in financial terms and of 1.2 million of human hours. If the MNCs can contribute Rs.20 billion in the year 2018 they can easily contribute Rs.50 billion in the year 2020-2021.
It may also be mentioned here that Securities and Exchange Commission of Pakistan (SECP) has also advised all companies to divert their CSR activities and budget to prevention, detection and cure of COVID-19, specially for their employees. Since all the MNCs provide comprehensive health care to their employees, the amount set aside by them for CSR should be given to the government’s COVID-19 fund. An addition of Rs.50 billion in the government’s health budget will indeed be a very big support from the private sector.
It may also be mentioned here that CSR is an integral part of Central Depository Company’s (CDC) culture. Being the sole depository of the country, the organization has realized its national and moral obligations with a strong sense of responsibility. Its philanthropic outreach program includes the following areas: education, healthcare, employable skill development, special children and orphanage. CDC contributes 2.5 percent of profit before tax towards corporate philanthropic activities. If CDC also, for the time being, stop funding other sectors and utilize the entire amount for healthcare, it would not be much easier for the government to fight the COVID-19.
[ads1]
Since there is no set rule the companies operating in Pakistan allocate 1 to 2 percent of their profit for CSR initiatives. India is the first country to legally mandate corporate social responsibility. The new rules in Section 135 of India’s Companies Act make it mandatory for companies of a certain turnover and profitability to spend two percent of their average net profit for the past three years on CSR. It’s the right time for the Government of Pakistan to pass an Act making it mandatory for companies to set aside 2 percent of their net profit for CSR initiatives.
It may also be mentioned here that the central bank of Bangladesh has instructed banks to ensure the full and proper spending for the health sector under their CSR initiatives to fight coronavirus pandemic. According to the existing rules, the health sector accounts for 60 percent of the allocation of the CSR budget of banks, followed by the education sector at 30 percent and climate change risk mitigation efforts at 10 percent.
On the other hand Bangladesh Finance Minister AHM Mustafa Kamal, recently addressing a press conference said, “Every government owned enterprise has a responsibility to people, so it’s high time that instead of placing 19 profit-making Public Sector Entities (PSEs) on the active list of 32 PSEs for privatization, they may be asked to deposit their surplus fund to the government exchequer after setting aside the operational cost, additional 25 percent of the operational cost as emergency funds, money for general provident fund and pension. These PSEs may be asked to deposit the accordingly calculated funds to the state coffers within three months after the end of each fiscal year.”
According to a report among top ten profit making companies, OGDCL clinched first position by making profit of Rs59.971 billion and National Bank of Pakistan (NBP) earned profit of Rs22.752 billion and stood at second position. The remaining profit making entities included Wapda, Parco, Government Holding Private Limited (GHPL), PPL, PSO, Gepco, NTDCL and Pak-Kuwait Investment Company. The government must understand that there is no other alternative except to utilize the surplus fund of public agencies for healthcare. Companies usually put their idle funds in interest bearing deposits with banks and thus do not offer best and productive use of the public money. So the best use, for the time being, is of course diverting this money to healthcare.