ARTICLE: Regular followers, whom I hope and pray number in the millions, will recall that this column has always focused on protectionism, capital investment in agriculture and planned industrialisation, and that the writer has always been allergic to FDI (always referred to as a Trojan Horse), a trade deficit (probably am the last mercantilist on the planet), privatisation (especially the National Airline) and every other argument which places consumer choice before common sense spending within means.
'Make in Pakistan', rather obviously, is therefore very close to my heart.
Accordingly, the Prime Minister's declaring that his government will henceforth be vigorously pursuing "Make in Pakistan" policy is indeed a big positive - quite the time to open the honey bottles and celebrate.
Except, even the optimist in me cannot help but be weary: what if, yet again, this be merely a political slogan? This would not be the first time in history that a variation of made in Pakistan has been popularised only for political gains - recall "Be Pakistani Buy Pakistani" and "Pakistan First". Let us pray and hope that this time it is different, and let us shove this "What if" crap out the window.
However, if it is not to be a slogan only, then at the outset we must define and understand what is meant by "Make in Pakistan."
Any time any factor of production doesn't originate from Pakistan, the output cannot be called made in Pakistan. Hence, FDI does not count; external loans however, being a necessary evil, need not be discounted. So kissing backsides to bring in FDI is to be avoided, except for projects which involve technology transfer in real terms.
Assembly plants for anything, in substance and in reality, are not made in Pakistan; the thumb rule we had was if more than 50% of the input was not ours, quantitatively and price wise, then the output is not ours.
We cannot make everything in Pakistan is the next sad truth of life; so as we embark upon the journey that is make in Pakistan, we need to be doing our homework and deciding on priority sectors to deploy precious and scarce Government resources. It would, however, make sense to initially focus on efficiently utilising what natural resources we have been blessed with - start with the basics: agriculture then industry. This is not to suggest that we ignore information technology - a Pakistani start up getting as big as Google and Facebook is my next best dream - right after discovering oil reserves bigger than Saudi Arabia, Gas reserves bigger than Qatar, and that the Margalla Hills are made of 24 carat gold.
Crawl, walk, run - fly.
The intention here is not to develop the make in Pakistan playbook - that costs money; however, there are some broad dos and don'ts which may be helpful. For instance, whilst any make in Pakistan strategy, given our current state of affairs, will by necessity require the investment of time, resources and capital by the State, taking off without the private sector on board might, rather more likely than not, jeopardise the mission. Accordingly, land reforms, property rights, and contract enforcement should remain the top, perhaps the only, reform agenda for the State; the judicial system and the police need the undivided focus of the top leadership, if this country is to rise as an economic giant - even perhaps before corruption.
On the other hand, easing up imports to make exports competitive makes no sense in the real world - at least to me. Undoubtedly, it is logical that raw material for exportable finished good should allowed to be imported sans any duty, but for that a separate mechanism may be devised rather than bringing down tariffs across the board; bringing down tariffs on finished good does not ever in any way feed into make in Pakistan.
We have tried that shitty policy since 2005 - every foreign good or service we opened up our market to, ended up destroying the domestic competitor absolutely and comprehensively; fine, our businesses just cannot compete with the umpteen times more resourceful MNCs, and they probably never will be able to! Live with that!
Rather than experimenting again and again, and systematically destroying domestic business in the process, it is best to accept that the footballs are an exception to the rule.
And if as a nation we cannot afford Prada, considering that we cannot print dollars, let the domestic devils wear Servis Shoes!
In which universe are/were we expecting Servis Shoes to compete with Prada?
Everybody: those of you, who would, given a choice, fly PIA before Emirates, raise your hand. Is there no one? Okay, what if the State paid all the debt of PIA and even bought it new planes as of today- still no one? Sorry, what was that? Oh, ok, some of you would rather fly BA! Cheers! have a safe trip!
It would appear that in my passion, I have already transgressed the allotted space. However, since, like I said before, the topic is close to my heart, more likely than not we may revert next week to make in Pakistan, perhaps even more passionately.
The journey to make in Pakistan was and is never going to be easy - it will require a lot of effort at every stage, and doing the homework diligently tops the list. More on this next week!
On the other hand, in conclusion, I for one am convinced that bullshit abstract concepts are never getting us to make in Pakistan!
(The writer is a chartered accountant based in Islamabad. Email: [email protected] . The views expressed in this article are personal. The views are not necessarily those of the newspaper)
Copyright Business Recorder, 2020
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