Blog Archives
Vision, and the Lack of It
The last Federal Cabinet meeting saw the Chief Executive exhorting the Finance Minister to process proposals for water for Karachi on a “fast track” basis. Simultaneously he tasked the Ministry of Water and Power to solve KESC’s financial and technical problems so that Karachiites would not be subjected to the acute discomfort of 2-3 hrs of daily loadshedding at prime office time. The Chief Executive probably does not know that one member of his Cabinet made a historical “contribution” to the lack of potable water and uninterrupted electricity being faced by Karachiites in particular and Pakistanis in general.
Economic Wilderness
In keeping with the financial mismanagement of the 50 years plus of this nation’s existence, the economic numbers simply do not add up. To be fair to the military regime, the massive siphoning off of public sector funds into private sinecures has been contained at the macro-level while the quantum of leakage at the micro-level seems to go on unabated has even increased because of the “risks” of being “nabbed”. Pakistan is in a Catch-22 situation of obtaining more and more loans to make repayments, without having the means to avoid further slide into an ominous debt trap. The quicksand is of our own making, with no or little help from the obdurate policies of world financial institutions and the lack of a spine among our financial negotiators. Our Finance Ministry has been grovelling before the IMF both in public and private for measly amounts which the IMF dangles before us but does not disburse. The flight of capital has assumed alarming proportions, a mass migration of talent and expertise going to Canada, if this is not reversed no entrepreneurial potential will be left in the country. Thankfully, our Finance Minister is still smiling in the face of eminent financial apocalypse, maybe he knows something we don’t.
Budgeting Pakistan, Mission Impossible
Finance Minister Shaukat Aziz proposed the Federal Budget for the year 2000-2001 on TV and radio on Saturday June 17, 2000. As any former Finance Minister of Pakistan will tell you, Tom Cruise has it much easier in the two “Mission Impossible” movies he has starred in, moreover Tom Cruise has distractions of the third kind. PML(N) Senator Sartaj Aziz had a perennial smile when presenting the Federal Budget, the smile of a magician about to pull a rabbit out of a hat. In keeping with the present environment, Shaukat was far more grim, and looking uncomfortable in the trademark Pakistani bureaucrat white shalwar-kameez with black waistcoat outfit. Nevertheless the military regime’s civilian Finance Minister was optimistic in outlining his plans despite the fact that with the institutions of governance in the state of disrepair they are in, it is virtually a “mission impossible”. Shaukat in fact pulled a number of rabbits out of his hat, only time will tell whether the hat was deep enough to hold the rabbits and whether the rabbits were real and not illusions.
The Jeepney Experience
Unlike Kuala Lumpur’s traveller-friendly, architecturally beautiful and comfortably modern international airport, Hong Kong’s Chep Lap Kok Airport is a glass and chrome high-tech disaster. This futuristic eyesore will be very convenient for space travel 20-30 years from now. The remote airport check-in facilities at both Hong Kong and Kowloon are excellent, possibly the best one has seen, but even high-tech facilities need comfort as a prerequisite for passengers and it would be nice to have, among other things washrooms, not only in the proximity of the platform but on the train itself because of the 20-25 minute high speed ride to the airport on Lantau Island. The train, with a TV screen for every seat, is an Orwellian dream (or a nightmare without a washroom), the environment is squeaky clean. Both at the remote check-in facilities and the airport, modernity does not condone signposting. From the check-in desk to the train, we twice lost our way within the station, when we got to the airport and despite the rather ambiguous map on the back of the boarding card it took us 45 minutes of walking around in circles before making it to the Cathay Pacific Business Lounge, no help from airport or airline staff who looked as confused as us or probably acted that way, that being the accepted Hong Kong attitude. One was happy to note a PIA vis-a-vis CAA similarity in relationship, when asked why prominently placed signs did not indicate the way, the Cathay Pacific representatives lamented that the airport authorities would not allow it. Who says petty bureaucracy departed with the British in 1997? Except for honourable exceptions Hong Kong residents are generally ruder than ever before. In the “competitiveness” potential, they have rightly slipped from 1st to 6th place in the world. With mega-cities like Singapore and Tokyo, with Kuala Lumpur and Shanghai and a lot of other developed cities coming into line rapidly, Hong Kong will find it hard to stay the course ten years hence unless HK residents get over their severe attitude problem. In any case Shanghai is the future commercial capital of Asia as it once was, the new enclave of Pudong is a high-tech marvel, but comfortably so.
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.
Services Sector
As an agri-based economy it is easy to understand why easy credit was available early on in Pakistan in this sector in the 50 years or so of our existence as a nation. To ease the pressure on agriculture, large-scale diversion into the manufacturing sector was carried out in the 60s and 70s, embarking on a virtual industrial revolution that spent large amounts of money on textile mills as well as a whole range of small, medium and heavy industries. On the Harvard model as applicable in Japan, exports became the key. China and the four Asian Tigers followed the same model. Maximum credit was directed primarily to support industries churning out traditional exports of cotton and cotton-based derivatives and secondly to building up non-traditional exports. Whatever gains were made in the medium and heavy industries was wiped out by the sweeping nationalisation of the early 70s by the Bhutto regime, during late Zia’s regime both industrialists and agriculturists became entrepreneurs. Loan default became a business in its own right despite the authoritarian nature of the regime, there being a lack of street credit control with the advent of controlled democracy in 1985. The years 1998, 1993 and 1997 are landmarks inasmuch as each successive political regime force-multiplied the loan default by interfering politically in the recurring process specifically and in the nationalised banking industry, both with nationalised commercial banks (NCBs) and development finance institutions (DFIs), generally. With the “Day of Redemption”, Nov 16, only a couple of days or so ago, it is time to take stock of why so much credit was showered on virtually one sector alone, with a negligible amount in comparison to the agriculture sector and almost nothing if any, to the services sector.
Half Empty, Half Full
Pakistanis are incurable optimists who are more likely to look at a half empty glass as half full. A few weeks ago our new Finance Minister articulated the same thought at a seminar in Harvard University. Great hope has been vested by the broad masses of the people of Pakistan in the military regime, a “soft” martial law without its usual teeth never before seen in this country and one daresays, in recent history. The aspirations aroused in the people is scary, the military rulers will have to rise beyond themselves to ensure that the great expectations of the masses are not frustrated. In their talent search they will have to reach out for the services of friend and perceived foe alike. In the selection of a dream team to run the country, there is unanimity of views about their competence and integrity. Twelve or so years of democratic rule had driven us into the wilderness without a compass, the incumbent process will only be successful if it takes us back to a meaningful democracy in which all the people will participate as equal partners and not simply become pawns on a giant chessboard. With the economy in such doldrums that even easy credit has no takers, primary focus should be on the economy. However public perception wants accountability in supersession of everything else, an animal urge reminiscent of the feelings of the audience of the Roman Colliseum. Since accountability indirectly will not only force-feed the economy but will also improve law and order, build up the national morale as well as investor confidence, etc accountability (or the lack of it) will be the touchstone of success (or failure) of Gen Pervez Musharraf and his “Young Turks”.
IMF Prescription Time Again
If the diplomatic and media backlash from Kargil was not enough, IMF tightened the economic squeeze on Pakistan. Insisting on GST of various percentage on electricity, water and gas, IMF delayed the release of the tranche expected by Pakistan in July, the latest date for expecting IMF funds is September. The Finance Minister Mr. Ishaq Dar is quite confident about receiving the IMF funds and the market seemed to agree with him, various financial experts remained pessimistic. Even without IMF adding to the proverbial pound of flesh, we are in serious economic straits. The Finance Minister, an incurable optimist, kept a brave face as he sought to minimise the effect on the common man but he might as well be speaking into the wind, which as everyone knows, can howl but cannot read. More financial misery is in store for the man in the street.
Mixed Signals on the Economy
For sheer optimism, turn to Federal Finance Minister Ishaq Dar. And why not? When he took over as the nation’s account manager, the foreign exchange kitty was bare and IMF was on a fang baring relationship with Pakistan, mainly because of the nuclear blast but also because of the Independent Power Producers (IPPs) issue and the fact that Islamabad was failing on collecting revenues as well as controlling expenditures. More important there was foot dragging on the institutional reforms IMF desired. Reading correctly the vibes emanating from the White House (courtesy of old IMF and Washington hand State Bank Governor Mohammad Yaqub), troubleshooter Ishaq Dar counselled the PM to hang tough and sack the negotiating team consisting of Advisor Finance (Hafiz Pasha?) and Secretary Finance Moeen Afzal. He then took over the Ministry of Finance in addition to his own duties and lo and behold, the White House’s arm-twisting of the IMF resulted in the long-delayed package for Pakistan being agreed to and the first tranche released. Once the logjam broke, money flooded in and the result saw a strengthening of the Pakistani Rupee on the open market. Nothing succeeds like success and Ishaq Dar has been on a roll since negotiating the minefields with aplomb and confidence, sometimes getting carried away in his use of gender to describe achievement. To his credit he not only explained but also apologised quickly to put the incident behind him, even though his detractors are trying best to keep it alive in order to embarrass him.
Pakistan’s “Gold Coast”
If any other country in the world had the type of coast that Pakistan has, long stretches of virgin beaches with vast empty spaces hinterland, it would have been commercially exploited to the limit by now. But Pakistani planners being what they are, more akin to a mule with blinders, their focus has been more or less along the Indus Valley, with only lip-service attention to other areas. Whereas in the early days of the country it made sense, for a country with one seaport serving a population of 130 million (not counting the hundreds of millions in countries beyond) it is imperative to have alternatives. Furthermore domestic population congestion and economic factors because of the emerging markets of Central Asia require that a new sea-land dimension along a different axis be added for expansion or otherwise all facilities and opportunities are likely to be clogged and choked up.