Structural impediments to GB economy | By Mir Afzal

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Structural impediments to GB economy

Indeed, the people of Gilgit-Baltistanhave progressive minds, a tendency toward education, a civilized lifestyle, hospitality, and patriotism.

Above all, the region is rich in natural resources, adjacent to China, and is the gateway for the CPEC.

However, economically, it is a beleaguered part of Pakistan, ranking at the bottom of the pyramid among all other provinces in terms of GDP, annual budget, and private investment; resultantly, poverty, unemployment, stunted growth, and food insecurity prevail widely – a sad story.

Its economic machinery has structural flaws and also no enabling and conducive working environment to perform potential work.

We will discuss in the passage the factors that have crippled the machinery of the economy in more detail.

Dis-connectivity is the primary problem of the region.Roads have pathetic condition.

The KKH is the only route that connects it with the rest part of the country– a lifeline for human and goods mobility.

It being highly prone to natural disasters with rainfall and earthquakes, the roads often block, especially on the KKH.

The indigenous people, as a result, badly bear the brunt with many severe implications. For instance, the availability of goods is greatly affected in local markets causing a shortage of goods with the disruption of the supply chain, and prices start skyrocketing.

On the exports side, agriculture and horticulture are the main constituents of the economy sold to other provinces and are severely affected especially perishable fruits.

Furthermore, the poor condition of the road adds to the fatigue of passenger, increase the cost of transportation, and become a cause of human capital losses.

The loss of students and working-class lives on this route is common that is attributed to poor road conditions and natural disasters that hit them on their way.

Severe climate condition is another drawback for the region. The agricultural sector is not diverse and very limited due to harsh cold weather; hardly one crop is cultivated in most of the districts.

Some earning sources come from horticulture selling fruits: apples, apricots, and dry fruits. Moreover, people don’t have warehouses to store fruits for marketing to make a good amount in the offseas on.

They, instead, sell to the local dealers at low prices and hence are unable to earn a handsome amount.

Also, they are not financially sound to start large-scale farming and, therefore, leave up with small-scale farming meant to fulfill personal needs only which is reflected in their lifestyle with poor conditions.

Moreover, the market size is very limited which is contributing to massive unemployment, especially among youths.

Marketsize is determined by the number of consumers and sellers. At least one force- either huge demand or huge supply, should exist for the expansion of the market.

However, none of the forces does exist in GB.Regarding demand, it has a low demographic density population of 1.5 million, which is discouraging for the market.

Moreover, on the supply side, the region faces liquidity constraints. The most unfortunate is that the saved money by locals deposited in scheduled banks and insurance companies is not invested and circulated in the local economy; instead transferred funds to other provinces, crippling the local economy.

As a result, a capital class does not exist and the market is characterized by small-scale businesses.

On account of the narrow market, big companies do not invest, and, hence, employment opportunities are not created on a large scale.

Most business class is doing retail business, and a few are connected to China with small-scale trading.

The banking, education, and NGOs sectors only employ the educated youth to some extent; the remaining take migration to Punjab and Sindh for better opportunities and services: education, health, and jobs.

Furthermore, with no motivation for entrepreneurship, youth prefer government jobs. Additionally, the GB government is not financially sound, since it doesn’t collect any taxes except fines, and fees in property transfers.

The federal government finances developmental and administrative expenditures with no fixed share in the NFC.

Political leaders are not much competent to bargain with the mainstream parties in the center and unable to cash internationally sponsored projects.

The government is also not making a conducive environment for foreign investment by creating easy procedures and providing facilities.

Moreover, the region is a non-constitutional part of Pakistan, hence hindering international investors to come there.

However, in the recent future, major developments have occurred in transforming the economy.

Firstly, a new wave of domestic tourism has been formed in a few districts namely, Gilgit, Hunza, and Skardu.

Thus the hotel sector is flourishing and thriving there.But other districts are not active due to poor infrastructure, despite having equal potential.

Tourism is the only sector of the region that brings and injects currencies into the local economy and creates employment in tandem with an inclusive economy.

Massive jobs are generated during summer in the leading tourist destination.Now, national companies have started investing in the tourism sector, i.e.

PC hotel is being built at Attabad Lake Hunza, which is welcoming for economic prosperity and economic growth.

A competitive environment for tourism has recently emerged in many districts of Gilgit Baltistan.

Youth are actively engaged to explore their respective cultures. People have started celebrating their old customs, traditions, and festivals to promote tourism in their region.

Also, at the community level, people discover new tourist points and make tracks on a self-help basis, realizing the importance of tourism.

Secondly, information technology has also taken roots in Gilgit-Baltistan with the establishment of IT parks and this become possible with the support of the state.

A culture of entrepreneurship has emerged among youth, especially females starting their businesses.

It is creating new employment opportunities at their doorstep and contributing to the country’s foreign exchange earnings.

In short, the region’s economy is confronted with structural problems, poor road infrastructure, severe climate conditions, low demography, and financial constraints to private and public sectors, failing, causing issues in flourishing the local market.

To deal with the elephants in the room, a targeted intervention is needed with the collaboration of government and civil society.

State machinery is needed to be revamped, increasing its earning capacity and working efficiency.

Civil societies must take steps to promote cultures to make GB a tourist hub. China being a neighbor of ours is a blessing; prosperity can be achieved in a short period through trade expansion.

—The writer is Research Associate, Institute of Policy Studies, Islamabad.

 

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