Economics
Reversing the Foreign Exchange Flow
or almost last three decades, the repatriation of money earned by our blue and white-collar workers in foreign lands, known as home remittances, has been a major factor in narrowing the critical gap in our foreign exchange requirements. Through legitimate banking channels we have averaged US$ 2 to 2.5 billion. Whereas the figure through “Hawala” or “Hundi” is much higher, the foreign exchange remains outside the channels, in fact adds to inflation. On May 28, the ill-conceived action of the Mian Nawaz Sharif government of freezing foreign currency accounts (FCAs) put almost a dead stop to remittances through the acknowledged routes and a reverse flow developed, so much so that banks in UAE, particularly Dubai, were alarmed at the surplus cash suddenly coming in bucketfulls from Pakistan. It is conservatively estimated that in the weeks following May 28, at about the time we needed a positive net inflow, as much as US$ 3-4 billion could have flowed out of Pakistan.
In 1975, before Indian PM Indira Gandhi imposed the emergency as much as 70-80% of foreign exchange remittances was made through “Hawala”, at that point of time only 30% of Pakistani home remittances was through “Hawala”. Indira Gandhi put most of the illegal money changers engaged in “Hawala” in jail, and froze their accounts. Thousands of people lost the money they had sent through the “Hawala” route. Since the net spread is only about 8-15%, the returns for this route was taken to be very risky and the net result is that “Hawala” to India is almost non-existent. On the other hand before May 28, 60-70% of workers remittances were through “Hawala” to Pakistan, now the ratio has gone up to almost 95%. On the other hand, for countries like Bangladesh and Sri Lanka, which had almost 100% net inflow through “Hawala”, the ratio is 80% through official channels for Bangladesh and almost 100% for Sri Lanka, i.e. “Hawala” is non-existent. Similarly Philippines has developed a modus operandi that has replaced the previous extremely bad system by investing in new technology.
To give an example of how much the “Hawala” system has taken over, if one makes an enquiry about how the Ambassador to UAE down to the lowest peon in the Embassy have sent part of their pay to Pakistan. Not only do they use the unofficial route themselves, they have full details and knowledge of who the main players in the “Hawala” game are, where their accounts are and who operates the accounts on a day-to-day basis. Enquiries have revealed that the Chief Managers of some nationalised as well as privatised Pakistani banks with lots of branches in Lahore and Peshawar have full knowledge of these accounts in their domain and how they are being operated. To a slightly lesser extent this is also happening in Karachi. In this age of computerisation, massive inflows of funds in and out of accounts in any Branch of any bank are available at the press of a button on the desk of currency managers every morning. As such for anyone to deny that full knowledge of the “Hawala” or “Hundi” runners is available is telling a blatant lie.
The main reasons for freezing all the foreign currency accounts on May 28 were (1) there was no money left in the FCAs, the successive governments, mainly Ms Benazir’s, having spent almost all the US$ 11 billion invested there (2) to avoid declaring bankruptcy, the only way to stop foreign exchange being withdrawn was to freeze the accounts. Having taken such a draconian step that destroyed forever the credibility of not only any succeeding government but that of Pakistan as a sovereign state, the Mian Nawaz Sharif government in a mind-boggling exercise allowed the foreign money changers to operate. In essence while keeping the official FCAs locked up, the government tacitly allowed foreign exchange to be repatriated illegally. Why in God’s name do we need foreign exchange money-changers when there are scheduled bank branches by the hundreds available? Money changers are not required for inward remittances, only outward flows. The movement of money illegally out of the country is bad enough in normal circumstances, in the present economic environment it is a dire threat to national security. Knowing this dangerous aspect some people very influential in the government and close to the seat of power are actively engaged in conniving that Pakistan be drained completely of foreign exchange. At best this could be because of lack of knowledge, at worst collusion to sabotage the economic stability of the nation. Not only are funds flowing freely out of Pakistan, it is in turn encouraging a large “Hawala” market run by these unscrupulous scoundrels to operate without any check. That artificially keeps the difference between the official and “Hundi” rate high, as such today at Rs. 10 per US Dollar, at times as much as Rs 18 to the US Dollar.
If the government is really serious in reversing the foreign exchange flow, Pakistan has to take some concrete steps, viz (1) to restore sovereign credibility and the confidence of those who repatriate money to Pakistan, the FCAs must be de-freezed immediately while requesting FCA depositors not to withdraw more than 10% for the time being in the national interest as well as allowing the FCAs as collateral for loans as was being done previously (2) those who withdraw foreign exchange anyway, to be paid at the “Hawala” rate of the day as available in the money market (3) future remittances to be given Pakistan Rupees at the going “Hawala” rate (4) any bank branch manager and his superior keeping accounts illegally of any money changer/”Hawala” person to also be jailed, special foreign exchange courts be set up in this regard as normal courts will be unable to cope (5) economic intelligence to be beefed up so as to know the new Hawala players and their modus operandi (6) all foreign money changers to be banned and their accounts frozen (7) anyone not complying to be jailed under the emergency as a threat to national security (8) the Philippines system to be studied and investment made in technology, electronic means to be established by the Banks as a Consortium so that money is transferred i.e. debit/credit to the accounts is made simultaneously electronically and money is available to the recipient within minutes if he wants to withdraw any amount and (9) arrangements be made for delivery of money to individual in their houses, if and when necessary.
According to a Swiss Bank survey as much as US$ 100 billion belonging to Pakistanis is on deposit in individual accounts whereas US sources place the figure as high as US$ 75 billion. That is more than double the national foreign exchange debt, why can’t we encourage our people by a mixture of carrot and stick to invest/deposit foreign exchange in Pakistan? If the government of Mian Nawaz Sharif has the will, there will always be a way out of the foreign exchange quagmire.
Black Holes in Revenue Gathering
A recent survey conducted by a research company assisting in the TV Licence Fee Campaign 1998-99 PROJECT VIEWFINDER is very revealing. In the first two months of the campaign, 27% of the people belonging to low-income group area had purchased TV licences whereas 14% of those classified as middle income group and less than 6% of the affluent group had done so. In areas like Defence Housing Authority Karachi, out of 50 houses on one street, nearly every house having a Dish Antenna, only 2 had obtained TV licences and even they had not paid for the Dish Antenna. Amazing as it may seem but those who can afford to spend Rs 250 for a single sandwich at one of the mushrooming fast food outlets are averse to paying Rs.250 as annual fees for a TV licence. On the other hand, at the other extreme the poverty stricken, and this includes the rest of the middle class in the present economic environment, are far more responsible with respect to their public obligations. If you study the proportionate value of the licence fee to the annual earnings of the low-income group and compare it with that of the affluent, the factor of greed and indifference to civic responsibilities among the well-to-do is unimaginable. Analysing the wide discrepancy the company concerned came up with some startling findings, among them viz, (1) those on the poverty line are very concerned about socio-economic facilities, as such they tend to fulfil their obligations far more than the higher income group who take it as a God-given right, their conscience feeling no responsibility towards paying their dues to the State and its agencies (2) the poor income group fear the threat of court summons and police involvement whereas the affluent have no fear of either (3) for the poor the TV licences is another piece of documentation as proof of ownership and occupation of their house while the rich want to avoid such documentation and (4) the prize draw scheme attracts the poor but causes little or no excitement for the affluent who already possess whatever is on offer. These observations are a shameful reminder of the sad lack of social conscience among the affluent. As the last day before penalties and surcharges are applicable approaches, the announcements on TV and print media, encouraging TV set holders to purchase licence, have become slightly tougher in tone. One of the solutions proposed by the collection agencies is also revealing, lists of defaulters are being prepared which are intended to be published in local newspapers. Court summons are also being readied to be sent in an inverse ratio to purchases, affluent income group 10, middle income group 3 and 1 for low income group. Most of those who default, particularly in the affluent group, will probably end up paying even 10-15 times more than the original sum other than the embarrassment and the unnecessary time consumed between court, bailiffs, police station and bank. That experience should be a powerful enough incentive to dissuade them from avoiding taxes and duties in the future, at least the dues against utilities.
Most of this country’s problems stem from the fact that those who have gained most from the largesse of the State do not want to pay taxes but evade them by relying on “bribes and connections” to escape the clutches of the law. The fact that only 1 million or so souls are registered as taxpayers, mostly the salaried class, is a disgrace. At least 3-4 million more taxpayers are evading registration, every one million taxpayer means Rs 100 billion approximately to the exchequer. This is a staggering Rs 300-400 billion direct loss to the public exchequer, more than the debt repayments, defence expenditure and cost of running government all put together. Similarly as regards Sales Tax registration and Central Excise Duty, the evasion is staggering. In Rawalpindi Sales Tax Region alone, over 9,000 units of coal mines, stone crushers and brick manufacturers are not registered, each capable of paying Rs 100,000 annually at the very minimum. This amounts to an evasion of Rs 9 billion. However with the active connivance of tax enforcers, Rs.7,000 per month per unit for NOT registering (a cool approximate Rs.60 million a month or Rs.72 crores per year), very few of the units, if any, are registered and those that are, hardly pay 5% of what they should. The present GST issue is an outrage perpetrated by the PM’s favourite constituency, the retailer business community. Retail shops in all the markets are stocked full of goods, to survive the smallest shop must sell not less than Rs 1,000 per day, in Liberty Market Lahore sales are nearly Rs 3-4 million a day. Similarly jewellery shops sell as much as Rs 5-6 million a day, if not many multiple amounts more. Yet these traders refuse blatantly, not only to pay a fraction of what is actually leviable but refuse to get registered at all. Brazen-faced about their defiance, they are holding the PM and the country to ransom by holding strikes regularly, denying consumers access to necessary consumer items. Rather than succumbing to threats and blackmail, the government should withdraw “law and order” cover from those who do not get registered as well as banning issuance of arms licences to them. If their shops and houses are looted or vandalised, their FIR should not be registered at any Police Station if they are not registered as GST payers. Furthermore one can only assess the amount looted if the GST declaration gives an approximate value. In the same manner what is the proof you own a TV set or VCR unless you have a valid licence? Without the requisite licences they cannot be included in the list of stolen items. This may seem an invitation to loot, anyone who does not subscribe financially to the public exchequer towards maintaining of police cover does not deserve to be secured or protected by the State and that also at the expense of others who pay their dues. The State may well look after them as private citizens but as professionals and their place of work thereof can only fall under the ambit of the State when they start paying their taxes. Moreover the citizenry should be encouraged not to purchase any item from them unless they are registered —and paying GST.
Glimmer or Mirage?
While the pall of dark economic gloom continues to hover over us, some short-term indicators have started to twinkle. We continue to face a horrendous economic situation, deepened by a chronic shortfall in revenues. The magic revised figure of Rs 305 billion is still almost Rs 100 billion away in the last quarter, there is the glimmer of hope that the worst may have bottomed out and we may finally be on the road to the elusive economic recovery.
For the common man there is no issue more sensitive than food, followed by water and electricity. Last year, due to faulty projections the last elected regime defaulted on adequate imports of wheat stocks on time, with the Caretaker regime maintaining the status quo of inertia, there were “atta” riots as wheat stocks plummeted. Some PML stalwarts in Sindh took advantage of the situation to turn “atta” into gold. Wheat in tons went across the border, primarily into Afghanistan but also into other adjacent regions. This time around, the government was taking no chances and fully 4 million tons of wheat has been imported to add to the surplus stock held because of last year’s excessive import. Add to this a bumper crop this year and we are fairly wallowing in wheat. This bumper crop has been due to policy initiatives in agriculture, where the agri-credit was raised from Rs 12.5 billion to Rs 30 billion, allowing farmers a 1:2 ratio of DAP to area instead of 1:4 ratio they previously used. With support price raised, this has resulted in 12-13% increased production with 4% increased average, a 2 million ton increase. To this add the success of the Canola crop in reducing our edible oil imports by an additional US$ 300 million last year and almost US$ 150 million this year. With a world-wide slump in textiles, our domestic cotton off-take has been reduced and we have an importable surplus, enough at least to keep feeding our traditional markets. Even though our textile made-ups have gone down considerably, it has been somewhat made up by a sizable spurt in the manufacturing sector, up by almost 16%, almost 60% of it policy-related. The most significant manna has come from heaven as oil prices have crashed the world over, saving the foreign exchange earmarked for this purpose. If “el Nino” holds back in Sindh where the wheat harvest has already started and any rains would play havoc, things may well look up considerably.
Tripartite Trade Talks
The three nation South Asia tripartite talks in Dhaka on January 15 will be long on rhetoric but terribly short on substance. More than Pakistan and Bangladesh, it is India that needs to augment her trade within the sub-continent to give a choice of economic amelioration to her teeming millions. Pakistan and Bangladesh do get residual benefits but not on the same scale as our large neighbour. While Prime Minister Hasina Wajed’s excellent initiative to get us talking on such lines must be appreciated it must also be clearly understood by all concerned that there are two major inhibiting factors that will govern the future of trade and commerce in the South Asian sub-continent, viz (1) the core problem of Kashmir and (2) the fear that India’s industry may overwhelm that of its neighbours because sustained protection over the years and economy of scale because of numbers makes its products much more competitive.
History is witness to the fact that not only was the South Asian sub-continent the crossroads of commerce but its raw material and products provided for the shifting of the focus of industry to the western world. Strange as it may seem now, Bengal, which encompasses modern Bangladesh and India’s west Bengal, was once the granary of the sub-continent and for many East Asian countries. The Sultan of Istanbul would get the hull of his warships made in the islands of Hatiya and Sandwip. The commerce was so frequent that piracy flourished in the Bay of Bengal as Dutch and Portuguese pirates joined in with locals to make the islands of the coast as safe havens from where to operate. Piracy was only less frequent in the Arabian Sea, off the coast of what is now Pakistan and that only because of the strength of the Arab naval forces in the area. To the exclusion of the rest of South Asia, the historical silk-route passed through territories now comprising Pakistan. As everyone knows crime only flourishes off lucrative targets and there was no more lucrative target than the trade and commerce off the coast of the South Asian sub-continent and in the mountainous areas of the North. This situation has now been totally reversed, from a net outflow of goods and produce there is almost a one-way inflow of goods and produce. Because we were mercilessly exploited by the British, who denuded us systematically of our resources (and our skills), for the past fifty years after independence the countries of South Asia have been playing catch-up with the rest of the world. Because of a myriad number of reasons we got left behind in the throes of the Asian miracle. Now with the Tiger economics becoming pussycat, it may not have been a bad thing after all. The unfortunate fact remains that the peoples of South Asia need to cooperate to better their economic conditions very much as other regions have done or else we will be left so far behind the civilized countries might as well put a “CHINA WALL” around us to contain the anarchy that will ensue and become the order of the day. Already we are showing signs of that savagery in refusing to live as amiable communities.
1998 – Reason to Hope?
Having lived through a traumatic 1997, do we have reason to hope for a better 1998? If we continue to repeat the mistakes of the past year then 1998 will certainly be far worse. If our political leadership learns from their own mistakes as well as those committed by their predecessor PPP coalition and the Caretakers who followed them (albeit for a short period), we certainly have reason to hope. One can live on the fountain of hope, one cannot survive on hope alone. There has to be positive activism with a constant check kept both on the style and content of governance that will feed our hopes and aspirations. Given parliamentary brute majority, PML candidate Justice (Retd) Rafiq Tarar was duly elected and sworn in as President. The Courts have still to pass judgment on his alleged contempt of court. One does not see him evading disqualification, condoning his remarks may set an unhealthy precedent for the judiciary future. The PM will be far better off if the President survives only shortly otherwise he will remain a focus of controversial attention that will distract the functioning of the government to alleviate the economic sufferings of the people of Pakistan. If Justice Tarar survives as President, Pakistan will be hard put to survive Tararism.
The country desperately needs macro and micro reforms across the broad spectrum of the whole structure in Pakistan. The macro reforms must follow a comprehensive national census, the most important being, viz (1) local bodies elections (2) majority vote, run-off elections (3) proportional representation and women participation (4) direct elections (5) dovetailing education with population planning (6) smaller government (7) reducing and decentralization taxation (8) direct linkage between taxation and spending and (9) accountability/justice at grassroots level. With respect to micro-reforms, the most important are viz (1) restructuring the police station and the police (2) bringing private sector participation in all the service sectors and (3) private sector monitoring of all government functions. A myriad number of other reforms are needed but these must take precedence.
Read His Lips, No New Taxes!
The best from the finest must come at a critical point at the worst of times. The very believable economic survey that preceded the Federal Budget was scary, the sustained economic crisis it portrays in 1976-1977 equals if not surpasses the political crisis that broke the country in two in 1971, coincidentally almost 25 years apart and coming during the Golden Jubilee Year when we should be celebrating development and progress since independence. 1971 was the year our leadership across the broad spectrum failed us at a critical moment of truth, for all purposes till Friday June 13, the year 1997 was economically going down the same tube despite some glimmer of hope with the advent of the Mian Nawaz Sharif regime. With the chips really down, this government has risen to the challenge. By enunciating a pragmatic supply-sided no-new-tax budget, Mian Nawaz Sharif’s regime has confounded critics and believers in status quo. The acid test of leadership is to choose your managers with care, the right person for the right job, as well as the courage and ability to take calculated risks. In putting confidence in Senator Sartaj Aziz and going with the overturning of traditional logic in budget-making, Mian Nawaz Sharif has come up trumps.
The gameplan inherent in the Budget proposals is simple, decrease taxes per capita and thus encourage increasing of volume on the whole. The idea was to give relief on both ends of the spectrum, to the common man as well to business and industry. By reducing the burden on industry, manufacturing costs would become lower, within reach of the additional funds available for spending by consumers. As the Leader of the Opposition grudgingly conceded, it is an incentive-oriented, relatively tax-free budget, but as she peevishly did not concede, it is a brave, innovative and challenging set of budgetary proposals to meet a very bleak economic picture. The business community that was anticipating belt-tightening, is virtually speechless, as one newspaper put it, agog. The Opposition, armed to the teeth with statements about the anticipated increase in taxes, has been set adrift spluttering with frustration. To put it bluntly, they have no case to propound.
Recovery of Illegal Wealth
Making money illegally has become institutionalised. To break that cycle, a concerted effort must be made to recover illegal wealth so that the acquisition of wealth illegally attracts exemplary punishment. Wealth that is not declared is illegal, or whether it be held in one’s own name, relatives, proxies, nominees, dummies, etc or in the name of individuals/groups, business entities, etc. For any wealth declared there has to be a source of income, an income on which commensurate tax must have been paid. For wealth traced out that is not declared, there can be only one rule of law, confiscation by the State without recourse to any caveat. Illegal wealth is usually kept either in a real estate within the country, though abroad it is mostly in numbered accounts or under the cover of offshore companies in UK and elsewhere. After years of fruitlessly chasing after people in the traditional way of searching for assets of the rich who had the money to finance the use of smart tax lawyers and accountants to keep money in safe tax havens, the US Internal Revenue Service (IRS) has now switched over to collecting information about the lifestyle of individuals and calculating tax thereof. This change in modus operandi has made it increasingly difficult for people to enjoy their wealth without coming under the censure of the tax-man. Theoretically this could be possible in Pakistan but our Income Tax Department which has checking of tax evasion as their primary reason for existence has more individuals within the department with illegal wealth than any other commensurate group of individuals, except maybe in comparison officials of Customs and Excise and/or Immigration. Without fear of discovery retribution thereof, the show of wealth is so blatant that one tax man displays at least four “Chughtai” miniatures prominently in his house, each painting worth over Rs.2-3 lacs. Obviously we cannot expect our tax-men to blow the police whistle on themselves or on whom they consider their own (for a price, of course).
There have to be priorities in the chasing of illegal wealth. Illegal wealth must first be classified into (1) mega-wealth, ie. those who have acquired wealth far in excess of their declared income, above US$ 12.5 million (Pak Rs.500 million approximately), (2) super-wealth, between US$ 5-12.5 million (Pak Rs 200 million to Rs.500 million) and maxi-wealth, upto Rs.200 million ie. US$ 5 million. A few are in the super-mega class ie. US$ 1 billion and beyond. Illegal wealth within Pakistan will rarely be in bank accounts or either in one’s own name. It will invariably be held in real-estate, stocks and shares, in industries, etc. A far greater amount is invariably held abroad through various sleight-of-the-hand structuring, however Pakistanis (and Indians and Bangladeshis) tend to keep a substantial amount in banks and other financial institutions in numbered accounts. Many corrupt bureaucrats lost their ill-gotten life-savings when BCCI crashed. Different teams must go after priorities set, within Pakistan and abroad. In Pakistan, the FIA made an excellent headway in tracing out the wealth looted by the cooperatives, finance and investment Companies in the 80s but the poor depositors did not get even a fraction, most went into the pockets of corrupt FIA officials. The lifestyle of our Income Tax, Customs, Excise and Immigration staff can be assessed from the real estate records in the posh areas in Karachi of KDA Schemes 1 and 5, PECHS, Defence, Bath Island, etc. One will find an inordinate amount of property in the names of females and children. How can they justify the type of income that can afford such valued real-estate ?
Calculated Risk
After crucial discussions last week between the Finance Minister Senator Sartaj Aziz and the Head of the Fund Mission Muhammad Al-Eryan, the IMF official went back to Washington and made a presentation to the IMF Executive Board that in essence stated that Pakistan’s radical proposals for the revival of the economy was a “risk worth taking”. The major element of the calculated risk is based on the proposed size of reduction in taxes. As such the IMF team has recommended that talks be started with Pakistan to switch-over from the costly Stand-By Arrangement (SBA) to the low-interest Enhanced Structural Adjustment Facility (ESAF). In effect while expressing concern over the proposed massive tax reforms IMF seems to have bought the argument of the Pakistan side that SBA would add to the debt and in effect we would be running in place without any forward movement whereas once the “ball and chain” of high taxes was removed from our legs, our progress would be slow but sure. The logic of the Finance Minister’s arguments, buttressed by the position papers of 11 Task Forces composed of businessmen and senior government officials set up by the PM, impressed IMF that this time Pakistan meant business. We must recognize that the future lies in facing the obvious and determinedly tackling it, not in “fudging” statistics to fool others. In the end not only did we manage to fool ourselves but we had a date with economic disaster that only Presidential action, and subsequently the Herculean efforts of Shahid Javed Burki, managed to avoid.
The reduction in taxes means that there will be a commensurate shortfall of revenues. Senator Sartaj Aziz has taken Pakistan down this road of a calculated risk in the logic of “Supply Side Economics”, made famous in the 80s by President Reagan. In effect this strategy is based on the premise that lowering of taxes will in turn stimulate production and the resultant increased production will mean additional taxes, which being lower, will encourage all concerned to pay. This is an excellent logic because higher taxes meant increasing the cost of the product, putting it beyond of the reach of the consumer to purchase and thus making production stagnant as stocks remained unsold. This lack of demand resulted in most of our industries coming to a dead stop, there was immediate need to revive them by taking pragmatic measures which would increase demand and lead to increased production. The business community must now respond by paying its due taxes.
IMF Conditionalities versus Economic Realities
The major reforms that the Bhutto government is depending upon to bail out the economy and the country from its present state of crisis are IMF dictated strictures such as (1) controlling of expenditures (2) increasing revenue collection (3) imposing financial discipline in public sector financial institutions (4) imposition of farm taxes (5) extending General Sales Tax (GST) to cover every product and (6) reduction of defence expenditures. It is only due to the existence of our very vibrant parallel economy that we remain alive and well despite being supervised by the most atrocious team of economic managers that this country has ever known. Since almost all social and political aberrations have origin in the economy, the social divide and political crisis we are immersed in can be said to be caused by the partial failure of the economy, directly attributable to mismanagement.
Whereas most of the reforms sought by the IMF are neither uncalled for nor surprising, at least one does not reflect geo-political ground realities. Almost all governments are guilty of excessive expenditures, mostly because of lack of control or deliberate misuse of funds earmarked for (1) entertainment (2) travel (3) telephone calls (4) transport and fuel (5) medical and (6) personnel. Arguing how to control all this would be futile, let us simply “privatise” the concept of bureaucratic perquisites (“perks”). To provide transportation and fuel, the Government should select a standard economy car (Suzuki Alto, Khyber or Margalla or equipment depending upon the Grade) for the public servant and lease it out at 50% of the lease cost, the government bearing the balance, giving the public servant a fixed amount for a driver and fuel, on a sliding scale depending upon the city classification (whether expensive, average or low cost). Let the bureaucrat contribute to medical insurance from a government approved panel, the government paying for the insurance premium. As regards using government employees as household servants, this should be forbidden except in the case of few public residences such as the President’s, PM’s, Governor’s, Supreme and High Court Judge’s and Minister’s. For telephone calls, give the bureaucrat a fixed amount for local calls and have him justify each long distance call before reimbursement i.e. if it could not be done by E. Mail or courier, if it was that urgent. Elected representatives who become public servants (i.e. Ministers, Advisors etc should have a little variation as aforementioned e.g. their vehicle can come from a small staff pool — and no more than one vehicle, an economy model at that).
Trade with India
An intense debate is going on within Pakistan, orchestrated mainly by government and trade circles about conferring the Most Favoured Nation (MFN) status to India in reciprocation in the implementing of the new World Trade Organisation (WTO) Accord which has replaced GATT. Pakistan reached an Accord last December (1995) with the South Asian Association for Regional Cooperation (SAARC) Trade Agreement (SAPTA) identifying 226 items for preferential treatment in import trade between the member countries. Customs notification giving India preference in 106 items and Pakistan in 35 items have been issued. Along with business colleagues throughout the country, the Federal Commerce Minister, Choudhry Ahmed Mukhtar, is campaigning for full scale trade with India, the commercial-minded see only pots of gold at the end of this rainbow in utter disregard of any other considerations.
Pakistan Steel is presently importing iron ore from Goa and the emergency import of 200000 MT sugar by TCP is likely to be repeated. The greatest advocate of a strong two-way trade with India is the All Pakistan Textile Mills Association (APTMA) whose members look with some anticipation at the cheap machinery in place of the expensive machinery presently being obtained from western sources. It is believed that all the five committees sanctioned by the Government of Pakistan (GoP) to examine the opening of full scale trade with India have recommended an early resumption of such trade.