Year of the Economy
The past year has seen a pragmatic approach to the handling of the economy by the PPP Government, it has succeeded in at least slowing our abysmal slide towards economic apocalypse. Ms Bhutto was voted into power by a mixture of positive and negative support generated by her undeniable charisma, enduring adulation for her late father, widespread resentment against the years of martial law and the economic aspirations of the people fed on populist slogans. However, early on in her administration she modulated the known stance of the PPP manifesto and resorted to judicious airing of populist slogans for mass audiences only. To select audiences mainly entrepreneurs petrified at the memories of the earlier PPP regime’s penchant to nationalise everything in sight, she made known her rightward shift in ideological preferences, sweet manna from heaven for entrepreneurial ears, a shot in the arm for private enterprise.
Ms Bhutto’s clear enunciation of her privatisation policy did much more for the economy than any other single measure. While tight fiscal control and an austere monetary policy has brought inflation down to within acceptable limits, her 180 degree turn as regards nationalisation restored investor confidence in her government, lacklustre and cynical at first but definitely picking up steam as her policies solidified into sincere intent about privatisation. Happy Minwalla, Ambassador-at-Large, is happily at large arranging foreign expertise in the proposed share offerings, still very much in the future. The PPP, a socialistic party in name only, is going the way of democratic socialism tinged with large amounts of capitalistic fervour.
Most remarkable of all has been the quantum of increase in home remittances. With adept economic handlers V.A. Jafarey and AGN Kazi around, the economic turnaround may have been slightly more than minuscule, in absolute comparison to the hopeless situation we found ourselves a year or so ago, the pro-rata effect has been considerable if not exactly remarkable. The problem with Third World countries like Pakistan is that anything short of remarkable is not a good enough economic scorecard and PM Ms Benazir knows that she will have to initiate a miracle of sorts to really set Pakistan going economically.
The time has come for Ms Benazir to abandon the consolidation stage and go the whole hog for radical reform, the prime requisite for freeing the economy being the shackling of bureaucracy. Until and unless, the PPP Government removes all restraints imposed by bureaucracy, small instalments in the modicum of freedom will hardly allow the economy to flourish in the manner that we need. In effect she must free the economy, allow Pakistan entrepreneurship complete rein to exercise their judgment. While we hear a lot of lip-service paid to ONE-WINDOW operation, in actual practice this is in vogue only in the Export Processing Zone Authority of which Karachi is the only present site. The only real progress has been made in Gadoon Amazai, unfortunately it has already become controversial because of relocation of some industries from Karachi, thereby reducing job-availability in an already job-starved city. The thing to do is to open up a hundred Gadoon Amazais but care must be taken that all are new industries and not just shifting of the old to better tax havens.
In this context, Ms Benazir must open up the Pakistani coastline to economic exploitation. The ports of Gwadar, Pasni and Ormara provide for tremendous opportunity in all senses of the word. We must have Export Processing Zones in these three ports, providing not only energy and water but also the infrastructure for maintaining blue and white collars workers like housing, transportation, educational institutions, etc. Commercial business will only add to the economic force-multiplier effect. All this does not need large sums of public funds but does need an unambiguous intent of the government in allowing complete economic freedom, in essence permission to the private sector to create new cities, without any restraint whatsoever. The development of these port cities will not only create an economic boon for these areas but will also divert the constantly migrant population from strangulating Karachi. The reduction of prevailing ethnic tension needs no elucidation, as much as anything a good law and order situation is a must for a conducive economic environment.
Ms Benazir must call for radical ideas from the private sector to rejuvenate the economy. She can try till kingdom come but will not find the answers from the bureaucracy which is historically reluctant to loosen government controls, the answers will come from innovative individuals and groups from the private sector. Government functionaries invest public money (it does not belong to them), without any real care, reason or logic in its use whereas private enterprise makes every penny pay its way and spends wisely in only those projects which it feels are economically feasible. One of the oddest practices prevalent is the submission of feasibility reports for approval to bureaucracy by private entrepreneurs, how can anybody who has no practical knowledge, expertise or personal fortune committed to a project sit on judgment on somebody who does? On the contrary, it must be remembered that since projects require investment, banks have the necessary expertise to sort out matter from chaff and are wary about loans to schemes that are not economically viable. Market forces rather than bureaucratic fiat must decide economic issues.
To bolster the economy, industry needs energy, water, telecommunications and where possible, gas. There is no doubt about the priorities established by Ms Benazir’s government as regards energy, the Hub River Xenel Project has finally seen the light of day despite a year of deliberate foot-dragging by bureaucracy. The New Year has seen a WAPDA-inspired round of load-shedding extending all over the country, this does not bode well for industrial or agriculture production but highlights the need for sanctioning of power projects in the private sector on an emergency basis. Unless the energy crisis is tackled on a war footing all economic efforts will flounder on acute electricity shortage.
Thank God for the revolution in Eastern Europe, possibly now we shall be rid of all the Barters that have been acting as leeches on Pakistan’s economy for over two decades. The face of socialistic inequity has been ruthlessly exposed in each of the countries that we have Barters with, Poland, Czechoslovakia, Bulgaria and Romania. What should be of great interest to Pakistan should be the trial of communist economic and trade managers accused with corruption. In the public disclosures of payments made to Third World bureaucrats, Pakistan should figure quite prominently and we will come to know the long-term moles employed by the COMECON countries within the bureaucracy, both past and present. Free market forces have created a viable alternative in Countertrade (CT), an experiment that Ministry of Commerce briefly flirted with in 1985, it is time to pursue the CT option with vigour abandoning the Barters forever. The people of Eastern Europe have done us a tremendous favour by freeing us from this straitjacket.
Investment Banks (or companies) have started seeing the light of day in Pakistan, duly vetted and cleared by GoP. This will act as a tremendous fillip to the economy, Ms Benazir would do well in allowing dozens more, only by mobilising resources from the broad mass of the private sector will the funds be available for industry and services. The people must become active participants in the rejuvenating of the economy, the masses must become small-shareholders. This will inject many billions of rupees into the production sector. True, the State Bank of Pakistan must plan checks and balances to ensure that the general public is not fleeced by unscrupulous operators as has been done twice during the last martial law. The blame must be laid at the doorstep of elements within the Ministry of Finance who conspired to stop the process of sanctioning investment companies and thus allowed bogus entities to proliferate in the vacuum, both times allowing chicanery by not clamping down in time, allowing poor, gullible investors to lose billions of rupees in hard earned money. With proper insurance cover not only as a safeguard but as a requirement, future problems may be avoided.
This must be declared the year of the economy, indeed why not the decade of the economy? The masses expect that their leaders will spend more time in thinking-up/implementing schemes to ameliorate their economic lot, rather than bickering endlessly about inconsequential things/prevaricating about non-essential things. One expects that given a full-blooded effort in cleaning the bureaucratic house and the ridding of myriad controls of various nature the economy will boom. Our population increases are directly proportional to our expectation level, in a sense we are fighting a losing battle at the moment with population expansion, our economic growth being only slightly ahead, at great cost to the state’s infrastructure. Supply must not only outpace demand but quantitative increase should be marked with qualitative improvement. The highest priority must be given to the economy, an elected government one year into its rule can hardly pass the buck anymore. Ms Benazir must bite the bullet and take effective action.
Did you enjoy this post? Why not leave a comment below and continue the conversation, or subscribe to my feed and get articles like this delivered automatically to your feed reader.
Comments
No comments yet.
Leave a comment