Pakistan economy, complex but soluble
WORLD Bank other day in its report indicated Pakistan is at the verge of micro-economic collapse.
IMF in spite of taken care of by incumbent government though finalized staff level agreement has not issued.
The rupee has plummeted to lowest level with some gains. Political instability has pushed the day-to-day business to stand still.
Yet, the question is Pakistan that weak that it could default. The answer is no. There are two reasons, first Pakistan economy is 40% documented and the rest 60% is undocumented.
The remittances sent by the expatriate’s amount to around $3 billion in the banking channels.
It is estimated around 3 billion still comes through Hundi. There is massive subversive propaganda inside and abroad (especially India) that Pakistan is on the verge economic collapse.
No doubt economic situation is weak but manageable. In the first instance, Pakistan is a resourceful country and no way economically weak.
We fail in the use of resources. Our governance is the legacy of the British. The decision-making process is extremely complex and slow.
The relationship between the bureaucracy and the economy is like twin brothers. There is no doubt at the time of the creation of Pakistan the civil bureaucracy played a very vital role in establishing the stable government in Pakistan.
In the fermenting years Pakistan progressed well both in the governance as well as in the establishment of industry and trade.
P IDC and other Development corporations played a very vital role both in East and West Pakistan.
The malaise started in1973,the experiment to take over the industries cost the country heavily.
It resulted in the flight of capital from Pakistan to other countries. Till today Pakistan has never recovered from that shock.
The corruption in every segment is like cancer. It created; First, the resource scarcity. Second, country failed to grasp technological advances both in agriculture and industry.
Quick return or quick profit is the norm. The industrialists never hesitated use of unfair means. Agricultural also went down. Third, Pakistan never seriously implemented population control measures.
The growing population has eaten away the gains.The growing population is becoming a ticking bomb.No one is going to give you food and money forever.
Finally, the climate change has impacted very seriously on the economy of the Pakistan. The universities failed to come up with scientific research to improve the productivity of the crops with the global change in the climate and the seasons.
Heavy rains and disasters accompanied the climate change has also impacted the resource situation in Pakistan.
Further the governance and political instability have direct bearing on economic development.
It impacts on other elements of power like defence and foreign affairs. Way out?Pakistan is not a poor in resources but mismanaged (remarks of a foreign expert).
The people have the money but the government is poor. In the first instance study the Chinese, Korean or Singapore models.
These are akin to Islamic principles. The corruption is the major impediment in the development of the country, in Vertical and horizontal.
There should be zero tolerance for the corruption, nevertheless, to achieve that aim Pakistan must undergo two fundamental changes.
First structural changes in the legal and bureaucratic governance and the second, facilitate not only in day-to-day business but also provide ease of business.
For example, in Bangladesh a check list is provided in industrial zones, complete it and hand over to one window.
NOC is given in one day. The technology can be engine of growth. We have seen the last three years with use of technology improved the revenues of FBR.
The more we remove the human aspect in the governance replacing the technology, the chances of corruption will be reduced if not eliminated.
The lateral movements within services be, bylaw, immediately stopped, a major avenue of corruption.
Punishments for corruption to include sentences and confiscation of the properties. Second, the culture of simple living must be promoted amongst the rich and poor.
You cannot have two systems or two ways of life prevalent in the society where the rich enjoy everything and the poor suffer.
No society is completely balanced but a system can be devised to provide a level playing field for the population.
No socialism but more akin to Islamic principles. Like China; it is harsh but we should at least adopt 10 years of austerity.
The liberals will make hue and cry but it be enforced by law and persuasions. Personal example of leadership is the key.
The poor population should be provided commodities of life at subsidized rates and the balance of burden should be on the rich.
It will cut heavy expenditure on the import of luxury items and a balance be created in the balance of payment and also in the current account.
Thirdly, taxes should be low and balanced between direct and indirect tax and export driven.
The domestic industries which can compensate imported goods be provided; first electricity, second, petroleum products and thirdly gas into those industries, and for that Pakistan has to completely restructure its economic framework ensuring that we do not rely on IMF.
Generally, it is believed IMF is necessary to ensure creditworthiness of the state. We have to see seldom a country who have progressed availing IMF facility.
It is a geo political tool now. At the moment Pakistan’s debt is highest amongst its neighbours and many other countries of the world.
Time we should look into our own affairs and try to stand on our own feet without external support.
External assistance is always at cost. That means to live within the means. To stop the flight of dollar economic emergency be imposed. There is merit in it.
My personal experience dealing with due strategic affairs and get rid of them I have no doubt that the dollar is being sucked by our enemies through Afghanistan, Iran and Dubai beside local hoarding.
Banks and money changers are partners. To my mind dollar versus rupee, the dollar is overvalued. We must check this to ensure that the true value of rupee is ascertained.
Punitive measures and persuasion to be employed to stop this flight otherwise strict legal action be taken.
—The author is a senior decorated veteran of 1965 and 1971 wars and backed by 26 years of Corporate Experience. A senior TV Analyst opinion writer. He is member of Karachi Editors Club.
