Corporate Pakistan
Twenty-eight years to the day (Dec 16, 1971) when we broke apart the finest experiment of nationhood in the expanse of time, the Chief Executive (CE), Gen Pervez Musharraf addressed the nation on Dec 15, 1999, mainly to outline the much-awaited “Economic Revival Plan” (ERP) at another critical crossroads in our history, far more economic than political this time. The brainchild of the Finance Minister, Shaukat Aziz, assisted by an Economic Advisory Board, the theme was credibility with creativity, poverty alleviation with corporatisation and a distinct bent towards supply-sided economics while meeting crucial obligations that a nation has towards its downtrodden masses. Stripped of rhetoric, the CE’s speech addressed quite a number of substantive issues positively. Earth-shaking the initiatives were not, yet they broke some solid new ground and gave hope that with sincerity in implementation, there may be light at the end of the tunnel after all. The simultaneous reading of the CE’s speech in both Urdu and English on different PTV channels was a plus point in reaching out to all the people.
Make no mistake, we enter the new Millennium as a Corporate Pakistan rather than as a Social Pakistan, fittingly the Head of Government is called the “Chief Executive”. The reduction of mark-up by 2% may not have been enough but still a good first step in trying to energise the business sector. The “Grameen Bank” concept is being introduced as a micro-credit bank belatedly but thankfully. After all, we must broaden the business-base by getting in more budding entrepreneurs at the lower end of the spectrum, particularly females, to eventually increase the tax yield potential as well as creating self-employment. This may not be as successful in Pakistan as in Bangladesh because we have a dominant feudal society and they do not have feudals. Nevertheless the idea to create conditions to reduce the gender gap is welcome, we must bring females positively into the economic cycle for mass economic emancipation. The idea of having a separate corporate entity to deal with sick industries is essentially sound. The proposals with respect to taxation were also sound, including taxing of agriculture income, however we missed this opportunity of simplifying the whole individual and corporate taxation process on a drastic manner that could have excluded endemic corruption among the taxmen. The General Sales Tax (GST) still needs to be sold to the broad mass of businessmen who hate documentation. That it will be passed on as inflation to consumers is very much a possibility. The CE’s emphasis on increasing our agriculture yield by substantive measures and for enhanced activity in oil and gas exploration was also very positive.
The voluntary cut in Defence expenditures by about Rs.7 billion without compromising on security is a welcome and symbolic act by the CE if only because the masses have been asked to make sacrifices across the board. Trimming will take one only part of the way in reducing deficits, what is required is wholesale surgery. From belt-tightening we come to “money whitening” with the tax amnesty till March 31, 2000. The availability of FEBCs to do the same without being called into account ensured that earlier “money whitening” schemes failed. The carrot along with the military baton just might work this time, one will wait and see. Some successes were already under the belt of the Finance Minister, at least US$ 2 billion plus in credit has been re-scheduled, there is progress in settling issues with the IPPs, Liberty Power was a landmark among the nine that have already reduced their tariffs, the shadows of Ebrahim Elawan and Brian Cheng notwithstanding. While shadow-boxing with Hubco is continuing, Shaukat Aziz has plenty of Saudi clout with Alireza and Co to pull it off in the next few weeks.
The CE apologised twice on behalf of the nation, once for the embarrassment caused by the Exit Control List (ECL) to those who should not have been on it and more important, to those who had made the mistake of depositing their foreign exchange in Pakistan only to have it frozen on May 28, 1998. However, he is not the sorriest man in town, that must surely be Naseem Saigol (no relation of mine) who has been held by NAB in conditions not worthy of the business magnate that he is and that also for reasons that are still unclear. Naseem Saigol has been one of the major power houses in the textile industry, an entrepreneur with credibility who has enlarged his business empire within Pakistan. He provides employment and employment opportunities, that means bread on the table for thousands of families. NAB’s draconian measures have caused apprehension and misgivings among the real-time business community that needs to be addressed lest the innocent suffer more than the guilty, it being commonplace that the guilty normally do not leave any fingerprints at the scene of the crime. Naseem Saigol’s predicament is acting as a disincentive to genuine businessmen who want to get on with their lives as entrepreneurs. According to reports in the financial institutions he was well on the way to loan repayments, maybe it is the Union Bank sale that is under question-mark. Whatever it is, it needs to be clarified because Naseem Saigol’s case is like an uncertain beacon for entrepreneurs throughout Pakistan, both existing and budding. Either NAB has a cast-iron case against him or they should ease off. In any case punishment should follow judgement, not the other way around. If he is judged by public perception to have been victimised wrongly then the country will be in more trouble than money-drain, brain-drain combined. The CE needs to read “Atlas Shrugged” by Ayn Rand, a fictionalised account of what happens when there is a drain of entrepreneur skills in the face of victimisation. That drain of entrepreneur skills is happening already and if it gathers momentum it would be catastrophic for this country, no one will ever be able to put Corporate Pakistan together again. Far more simpler would have been to put bankruptcy and foreclosure laws on the anvil, at least for loan default banks would have done the needful rather than NAB.
No doubt this military rule is straight from the heart, it is different. Press freedom has not been curbed, a very smart move, neither are jackboots and APCs in evidence on street corners anywhere. There have been no hasty decisions and as the CE had promised any mistakes that may have been inadvertently made have been corrected sooner rather than later. Even though the process has been deliberately thought out to instill confidence among the masses, the honeymoon won’t last. The public hunger for blood has to be balanced against the need to keep Corporate Pakistan going, ironically for the sake of the public. The CE and his staff may find themselves to be in a fine juggling act that will include matching domestic considerations against world opinion about justice and fair play, made more sensitive in an enhanced human rights world environment. The CE will not go wrong if he remembers that like himself the nation is synonymous with the Army in being middle class and generally having middle class values. The hopes and aspirations of “the great silent majority” of this country has only middle-class objectives. It is only when the rulers fall prey to elitist values then the trouble starts as it requires money (and lots of it) to be part of the elite, unfortunately temptations are strewn for the taking everywhere. The ERP catered for the workers by giving a relief package of sorts to them, a modest beginning maybe but a step nevertheless in the right direction. Rs.100 may be a pittance compared to the rise in fuel prices that is going to cause inflation but still the money is of symbolic if not material value. Corporate Pakistan cannot foreclose its social obligations to the poor, after all poverty alleviation is the centrepiece of economic amelioration of the masses. Burdening the masses to feed the exchequer is basically a bureaucratic idea, here it can be condoned because of inordinate rise in world oil prices.
The annunciation of the ERP confirmed that the CE’s choice of Shaukat Aziz as Economic Czar was nothing short of brilliant as the mature and deliberate unfolding of the economic agenda has shown. The Finance Minister rose from humble beginnings in Citibank to great heights on the strength of performance and personality. Shaukat Aziz has the reputation of being a team player par excellence as is apparent from the results so far, modest perhaps but positive and in the right direction. For now the Finance Minister’s main task will be to balance a budget, to make those liable for taxes to pay taxes, to curtail those tasked to collect these taxes from putting a major portion in their pockets. Increasing revenues, decreasing expenditures is the end game for the economic emancipation of the masses. There is still a long, long way to go but the portents are good and that is a plus point for the evolution of Corporate Pakistan.
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