In 100-day plan announced in the run up to general election 2018, PTI promised to make a “Council of Business Leaders” chaired by the PM. The promised objective of that council is to improve doing business in Pakistan, to attract investment, encourage participation of overseas Pakistanis and to grow exports. With the PTI knocking out rivals, that promise is now closer to reality. The question is what challenges the party will have to overcome to ensure that the council delivers.
The council of business leaders isn’t an entirely unique idea. Economic literature on the East Asian developmental experience tells us that these countries developed strong independent institutions that interacted and negotiated with the private businesses, instead of simply dictating from the commanding heights or letting the private sector completely free on its own.
While a symbiotic relationship between the government and private business was critical, strong autonomous non-partisan nature of those countries political and bureaucratic elite was equally critical to keep that relationship working for the greater economic good rather than a few rent seekers. This meant almost micromanaging the economy where as soon as various forms of state endowments reaped fruits for one business sector enabling it to meet key performance indicators, the endowments would be swiftly shifted to other business sector that needed it more.
A similar strategy is adopted by Bangladesh in recent years where the representative of its top business body – the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) – sits in an office next to the country’s PM office. That reflects the seriousness of a developmental state mindset. And in that light PTI’s proposal that the PM will chair the council of business leaders is welcomed, albeit that proposal has to be implemented with caution. Here is why!
While having a symbiotic relationship with the private sector is one of the key features of developmental state, the authoritative nature of those East Asian states was equally critical behind its success. Given Pakistan’s political, ethnic and cultural diversity, the PM hopeful Imran Khan can ill-afford to be authoritative. Hence a strong need for transparent, rule-based economic management, the charter of which BR Research proposed in its columns The Fourteen Points of Charter of Economy and Charter of Economy: follow up on the 14 Points published May 30 & Jun 1 2017.
This leads to the representation problem. In his speech yesterday, Khan said human development will be the central focus of his strategy, and that all policies will be kept with the poor in mind. This means that he will have to take great care that the Council of Business Leaders does not hijack the economic agenda in their favour, paying only lip service to human development and the poor. Another aspect of the representation problem is the representation of ethnicities and business sectors. A council dominated by a few sectors or ethnicities, risks distributing the economic pie or state endowments to a select few.
On a related note, the weak capacity of research and advocacy of businesses in Pakistan will also have to be kept in account. They aren’t exactly well endowed in these aspects; whereas business chambers also suffer from their own representation problems (See also Empty Chamber? Jan 8, 2016). Relying too heavily on businesses, who aren’t exactly beacons of knowledge and policy thinking, is a risky affair. Likewise, is the risk of relying too much on the team of 200 talented people that Khan is looking for? At the end of the day, civil service reforms and institutional building will be the key – at least of key economic sectors to start with, many of which require strong federal and provincial coordination. Fixing that coordination alone through legal and institutional mechanism isn’t going to be an easy job. God speed!
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