A wake-up call

It is not me alone, but the whopping increase of over nine percent in the prices of petroleum products has shocked the entire nation. Nobody was expecting such a harsh decision at this point in time, when the prices of the 'black gold' in the international market are coming down. The cost of living and doing business, both, would touch new peaks.
It seems that those who are sitting at the helm of affairs are being befouled by some in the bureaucracy. It is a severe blow to the industry, agriculture sector and the inflation-hit consumers as the fresh hike in petroleum prices would not only push up the prices of commodities, but would also aggravate the already deteriorating economic situation.
Since July, petroleum prices have been increased four times and reduced twice. As a result of an increase in petrol prices, the profit margins of dealers and oil marketing companies have increased by 11.5 percent and 12 percent. The collection of general sales tax has increased by upto 9.5 percent. The dealers' commission is paid at four percent, companies' margin is five percent and the GST 16 percent. The government will now earn 50 paisa to Re 1 per litre, additional GST and dealers and OMCs will earn 20-30 paisa per litre higher profit on various products.
The increase in petroleum prices would add to the rising inflation and cost to industrial production that was already under pressure because of higher electricity and gas charges. The increase in the transportation cost of goods would not only inflate manifold, but would also add to miseries of the masses.
The agriculture sector would also suffer a new blow because of the fresh hike in the prices of diesel, as due to water shortage, the farming community is bound to get ground water through tube-wells, which are mainly operated through diesel, because of massive power outages.
The business community is unable to understand why OGRA has been given discretionary powers to make an increase in the prices of petroleum products, while all over the world, the prices of POL products are increased in consultation with the elected representatives. The government should withdraw the recent increase in petroleum prices that are bound to earn a bad name for the government.
The concerned government circles should take measures for the promotion of alternate fuels as the trade deficit is fast widening, due to heavy imports under the head of petroleum products. The timeline for the increase in the prices of petroleum products is also raising questions because at a time when the whole industry is suffering due to the energy crisis and the high cost of doing business, the raise in POL prices is bound to give a further blow to the industry. "It seems that it is an attempt to create trouble for the government."
There is no denying the fact that the government has done much good, like the NFC Award, Austerity Plan, Benazir Support Programme for Poverty Alleviation and above all the Balochistan Package that would mitigate the sufferings of our brothers and sisters living in that province. But in my opinion, there are quite a few other issues that are coming in the way of an economic turnaround and call for urgent attention by the President.
An acute shortage of electricity and gas; fast declining exports; high mark-up rate; law and order situation; Shortage of skilled labour; weak institutional framework, unprofessional attitude of the Federal Board of Revenue, absence of one-window operations particularly for foreigners and above all, low agriculture yield.
The question arises how these problems could be solved. The answer is very simple and that is, by implementing better management policies. I have no doubt that Pakistan, my country, is a land of opportunities. It has all the resources. It has huge fertile lands, rich minerals resources, abundant water, an excellent canal system, all four seasons and above all, more than half of its population is less than 25 years of age.
But in economic terms, we have failed to perform and our industrial production is much lower than even Bangladesh's. Our exports are less than a number of business entities in many countries. Now the question is why could we not do well despite having the resources?
To my understanding, we need to focus on strengthening the institutional framework, improvement of law and order and continuity in policies. What I have learnt, through my experience, is that we have never given due attention towards strengthening our institutions, while our neighbouring countries are ahead of us.
I have visited almost all the countries of the world and learnt during my visits abroad that all the leading economies have strong institutions. Actually a strong institutional framework absorbs shocks. Do you think that the Americans are better than us? In no way do they have any superiority. They cannot match our qualities, but they are lucky enough to have strong institutions.
And their economy, despite the unprecedented meltdown, is still on the move. The question is, are we as a nation ready to wake up, or do we need to be jolted by external, uncontrollable factors to roll us over? While I may not have all the answers to our problems, I know for sure that we need to reduce the use of commodities that we cannot afford, or do not sufficiently have. Let's start with energy. Let's stop importing what we can produce locally. Let's start with oil and let's start with power. And let's think of more creative ways to solve the issues at hand.
(Writer is former Senior Vice President of Lahore Chamber of Commerce & Industry)