Steering the economic ship

The economic situation is still unsteadily swaying and could wobble because a lot of medium and small scale industrial units, the main employers in the informal sector, are closing down. This situation has been exacerbated due to the pandemic crisis and the on-off lockdown decisions. It has negatively impacted on the employment figures and this is the ticking bomb that needs to be defused with utmost priority. Sadly, the informal sector is extremely exploitative because most jobs are not regular and there is no social security and even no continuous employment security. Sadly, the informal sector is notorious for not paying minimum wages to workers. Sadly, the informal sector continues to remain out of the tax net, depriving the country of much needed revenue.

There is a rising incidence of hidden unemployment, not only in the agriculture sector, where there are too many hands doing a job that could be done by fewer people (with even limited mechanization of farming), but also in the informal, non-agricultural sector. Corporate Farming must now be widely introduced because agricultural productivity is pathetic and they can grow new commodities such as soybean that at present farmers are averse to farming them. Large conglomerates must enter this sector bringing with them modern machinery, equipment and processes.

The positive news, despite the pandemic crisis, are that exports are inching up, large scale manufacturing increasing, foreign exchange reserves and remittances are on a rising trajectory, current account is surplus, revenue has crossed the PKR 4 trillion threshold, construction sector is on the go, monetary policy is stable (albeit still on the higher side), illegal movement of funds through money laundering has been to a large extent contained, etc., but the present and the near future unemployment figures are still casting dark shadows. This situation is further compounded with abnormal increases in food prices, poultry, meat, and utility rates. The menacing adversary of Prime Minister Imran Khan is not the Opposition but the spiraling cost of living. Moreover, marginalized people with just a few hours of job per week are statistically classified as employed. Their take home pay might be below sustenance needs but they are counted as employed and hence the distorted percentage rate of employed.

The Federal Budget 2021-22 is expected to be real time growth-oriented and facilitative. The positive economic indicators have boosted the morale of stakeholders and this momentum must be maintained and therefore this is the opportune time to introduce far-reaching innovative measures in the Budget so that not only export-led growth is attainable but also industries, trade and services catering to the domestic markets are viable and sustainable. FBR should revisit its penchant for arbitrary, judgmental and authoritarian measures, especially on compliant active taxpayers. The statement of Finance Minister Shaukat Tarin that audits would be funded by independent third parties is a welcome initiative. Advisor to Prime Minister for Commerce Abdul Razak Dawood hinted at reduction in customs duties and in additional duties for a substantial number of raw materials.

One troublesome question now needs to be seriously answered by the Prime Minister. Why cannot the present government get its Privatization of state-owned enterprises act with full force? Every now and then, the charade of appointing consultants and financial advisors goes on and their findings result in the Privatization Ministry hierarchy either trembling with trepidation or backing out and maintaining the disastrous status quo. The hemorrhaging of hard-earned treasury revenue by these enterprises continues to be criminally frittered away, year after year. The federal and provincial governments own huge tracts of land that remain unutilized and hence gradually encroached by the land mafia in connivance with officials and armed lawbreakers. Transparent public auctions for most of these lands should be initiated with strict proviso of utilization for industries, housing, markets, etc., by successful bidders within a specified timeframe.

High electricity costs could be offset by announcing incentives for increasing usage of electricity as this would reduce pressure on gas consumption. To further boost up construction, especially affordable housing, there must be zero or reduction in excise duty on cement. But if this is done, then it should be ensured that cement mills also reduce their prices.

What hits one between the eyes, right in the center of the forehead, is that in the middle of this pandemic and prevalent unemployment crisis, the stock market is booming, having crossed Mars and on the way to Jupiter. It is this dichotomy that highlights how dysfunctional Pakistan’s economic models are and why the ship of economy is still on turbulent seas, because the elite capture and rent-seekers are still not bothering to create a pro-people economic environment. At present, the decision makers are fixated on GDP figures and daily come out with higher projections. One swallow does not make a summer.

Unlike China, Pakistan certainly cannot dream of suddenly becoming an export-driven economy unless policymakers accept the ground realities and take a holistic approach to attain an inclusive and favorable economy. Never before has been the opportunity to shed archaic rules, regulations, and mindset as it is now. The government must become the bridge over troubled waters. Notwithstanding the unfortunate demolition derby style of national and provincial politics, the politicians have never learnt to be on the same side of the economic dynamics. The irritating fact is that even the business sector leadership does not have the courage to say “Enough is enough” to the heads of political parties but continues to issue press releases and “appeal and thank you” newspaper advertisements for self-interest on a regular basis. Michael Norwood, author of ‘The 9 Insights of the Wealthy Soul’, stated that “Vision doesn’t come as a lightning bolt. Rather it comes as a slow crystallization of life challenges that we one day recognize as a beautiful diamond with great value to ourselves and others”.

(The writer is President UN Global Compact Network Pakistan. Twitter: MajydAziz)

Copyright Business Recorder, 2021