Conference on Management of Pakistan Economy: Pakistan's trade ties with neighbours highlighted

The second day of the Eighth Annual Conference on Management of Pakistan Economy hosted by the Lahore School of Economics was devoted to discussions on finding means and channels for accelerating domestic economic growth. The day's first session highlighted Pakistan's strategic importance and its trade relations with its neighbours, particularly India, China, the UAE, and Afghanistan.
Dr Ijaz Nabi, the Country Director of International Growth Centre, Pakistan, opened the session, proposing regional trade as a vent for economic growth. Provinding a historical overview of Pakistan's trade relations with its neighbours, he said that there still existed substantial economic surpluses in Central Asian Republics, India, China and Iran that Pakistan could exploit profitably. He also shed light on the issue of the Most-Favoured Nation (MFN) status granted by Pakistan to India, saying that gains far outweighed losses in trade liberalisation.
Dean of the School of Liberal Arts and Social Sciences, Beacon House National University (BNU) Dr Hafeez Pasha discussed prospects for trade between the two countries. Terming trade liberalisation as an out-of-the-box injection into the stagnant Pakistan economy, he agreed that there existed strong tariff and non-tarrif trade barriers in India. He stated that there also existed strong trade complementarities and trade diversion possibilities for Pakistan with India, which could greatly help Pakistan reduce its import bill and improve its overall balance of payments position.
Director of the Centre for Research in Economics and Business of Lahore School of Economics Dr Naved Hamid summarised various opportunities and pitfalls for Pakistan in trading with neighbours: China, the UAE, and Afghanistan. He stated that the general perception that most of Pakistan's trade (excluding oil imports) was with the US, Europe, Japan, was no longer true. According to him, trade with neighbors (including China) accounted for 25 percent of Pakistan's exports and 35 percent of imports in 2010.
He said that the only way Pakistan could achieve a sustained economic growth was to change people's mindset from security focus to economy. The second session aimed at analysing immediate constraints and long-term triggers for economic growth in Pakistan.
This session focused essentially on steps needed to achieve a quantum leap in private investment activity (domestic as well as foreign) and promote domestic entrepreneurship in Pakistan.
Dr Kamal Munir, University Senior Lecturer in Strategy, Judge Business School, University of Cambridge, commented on one of the most pertinent issue of energy politics, providing an assessment of privatisation of the energy sector in Pakistan. Stressing the need for revisiting the private power policy paradigm, he said that competition "will remain a pipe-dream and unless this changes, reforms cannot be pro-poor".
He proposed that the bulk of energy needs should be indigenously produced and controlled, as relying overwhelmingly on imported fuel and foreign investors exposes Pakistan to massive risks. Providing another perspective to the issue, Asad Umar, Former CEO Engro Corp, said that immediate threats to Pakistan included difficult access to capital, energy crisis and institutional decay.
On the positive front, he remarked that the long term triggers for economic growth in Pakistan were a strong consumer base, wealth of natural resources, and its geo-strategic location. Former principal economic Adviser of the Ministry of Finance Sakib Sherani said that there was a need to discuss potential growth drivers: Energy availability, better governance, improved investment environment, reversing capital flight, lowering tax rates for formal sectors. Other factors affecting growth, he said, were greater resource availability for high-priority spending, improvements in agricultural productivity, regional connectivity and freeing land markets.
Assistant Professor of the School of Humanities and Social Sciences, LUMS, Dr Syed M Turab Hussain concluded the session by analysing major constraints faced by the industry in Punjab. According to him, major constraints included access to finance, access to land, business licensing and permits, corruption, crime, theft and disorder, customs and trade regulations, electricity, functioning of courts, inadequately educated workforce, labour regulations, macroeconomic instability, political instability, practices of competitors in the informal sector, tax administration, and tax rates.
The final session of the conference also attempted to discuss the issue of making provincial devolution work. Dean and Director of the Institute of Business Administration Dr Ishrat Hussain provided an outline of the 18th Amendment, the new NFC Award and the Implementation Commission headed by Senator Raza Rabbani. He suggested the creation of a District Civil Service structure in addition to the existing all-Pakistan, Federal and Provincial Services to help improve the effectiveness of the delivery of services at the local level.
Director of the Centre for Public Economics, Chengdu, China, and Distinguished Professor of Economics, South western University of Finance and Economics Dr Anwar Shah provided arguments about whether 18th Constitutional Amendment served as a glue or solvent for nation-building.
Stressing the need for a more thoughtful implementation of the 18th Amendment, with the federal government focusing on federal functions, he proposed fundamental reforms, including fiscal responsibility framework for federal, provincial and local governments, civil service, land reforms, tax and expenditure and government organisation, right to information, and accountability.