SPECIAL Investment Facilitation Council (SIFC) National Coordinator Lt General Sarfraz Ahmad on Thursday laid out a roadmap to make the economy competitive by substantially reducing the corporate tax burden, cutting down interest rate and having a pragmatic exchange rate. Addressing participants of the Dialogue on Economy, organized by the Pakistan Business Council (PBC), he urged all stakeholders to agree on an export-led economic growth model that can end reliance on protection and subsidies.
The remarks of the National Coordinator indicate that the authorities concerned are alive to the challenges facing our economy and are determined to take required measures despite severe constraints including excessive interference of the International Monetary Fund (IMF) in policy and decision-making processes. Pakistan is so miserably placed that it cannot even think of announcing even a single relief measure for the business community or people of Pakistan without a nod from the creditor. With the exception of the same old approach to the issue of exchange rate, the path highlighted by the Coordinator has the potential of attracting investment, which is a prerequisite to ensure export-led growth and financial stability. It is a welcome development that the government was seriously looking at reducing taxes on the corporate sector and abolishing the super tax. Correction of the excessive taxation system and lowering of the interest rate from the existing 11% level will surely bring down the cost of doing business and motivate local and foreign investors to initiate ventures in different sectors of the economy. The goal to double the FDI to $2.5 billion per annum is appreciable and hopefully the authorities would try their level best to attract investment in manufacturing and not on mere acquisition of state-owned enterprises. As for the exchange rate, it has become a fashion to talk about a market-oriented framework, which invariably means further depreciation of the rupee. This is despite the fact that the massive devaluation of the rupee during the last three/four years brought no economic or financial advantage to Pakistan except to complicate woes of the people, who witnessed super-inflation. The notion that devaluation leads to an increase in exports proved as wrong in the context of Pakistan as the argument that the energy rate should be hiked to eliminate the so-called circular debt. The government jacked up electricity prices to unbearable limits in the hope the approach will solve the problem of circular debt but the strategy miserably failed. There should be no further experimentation that could add to the miseries of the people without generating any worthwhile benefit for the country.
