Pakistan’s agenda for economic reforms

That Pakistan’s economy suffers from poor governance is not really breaking news. Scores of books, journal articles, and opinion pieces have been written on the subject, though mostly from the lens of political economy and institutional autonomy or – say - from the perspective of putting the right people for the right job. But few, if not none, have ventured to explain what’s wrong with the cogs of the machinery by spelling out the specific inner-workings and inter-dependence of those cogs. Dr. Vaqar Ahmed of the Islamabad-based think tank the SDPI has sought to fill that gap.

In his just-published book titled ‘Pakistan’s agenda for economic reforms’, Vaqar sets out to make two main points. First, that the arms of Pakistan’s economic regulatory framework do not talk to each other; nor do the arms of economic governance. And second, the coordination mechanisms between Pakistan’s economic governance, regulation and accountability frameworks allowing the three branches to talk to each other either do not exist or are otherwise broken. The book is peppered with interesting yet disturbing examples across various economic sectors to bring home these two points.

It is, for instance, disturbing to note that there is no coordination mechanism that ensures linkage between Federal Secretary at the Ministry of Commerce and the provincial governments. Vaqar recommends that Secretary Commerce should meet all the provincial chief ministers and not only debrief them regarding the meetings of the Cabinet Committee on Exports and Production (CCEP), but also inform them about desired support from the provincial government. This will be an opportunity for the CM to inform the Secretary regarding any specific facilitation required from the federal government with regards to production and exports. Of course, the first step would be timely meeting of the CCEP, which as the book flags, does not happen as frequently as it should.

Amongst a host of specific examples about the lack of coordination mechanisms, Vaqar flags the absence of evidence-based evaluation of the role of provincial government in trade facilitation. Indeed, several key issues related to commercial trade and transit (including security of cargo) is now under the jurisdiction of provinces.

Another concern is related to the farming economy that provides sizeable employment. The book flags that “while issues of fertilizer seeds and pesticides remain the responsibility of the federal government, issues of impurities in these farm inputs and their subsidies supply remain with the provincial domain.” This two-tier regulation has led to several distortions that have not even been evaluated let alone resolved.

Two recommendations that demand attention in our view are Vaqar’s emphasis on: (a) developing the capacity to conduct regulatory impact assessments (RIA), and accordingly conduct RIA at periodic intervals; and (b) representation, transparency and accountability, which perhaps stems from his years of experience at a think tank.

The RIAs should also evaluate when to expand coordination mechanisms, and when to do away with them. For instance, currently there are 60 joint economic commissions (JEC) formed to follow up on trade and investment cooperation with various countries. While the decisions of some JECs are being effectively followed, others remain dormant, the book notes.

In the case of the latter, he argues that the advisory committee of the Planning Commission needs to be expanded to include a greater number of well-reputed non-government organisations, think tanks, private sector associations, and social enterprises.   He also recommends the restructuring of the CCEP such that it meets every month and receives detailed explanation by the Ministry of Commerce on monthly export numbers, as well as the perspective of relevant business associations, consumer groups and development partners. This column does not agree with giving international development partners such a close window to the government; but it does support the notion of representation and inclusiveness of local stakeholders.

The writer’s experience as a researcher manifests in the book’s attention to detail. For instance, he flags the absence of a study on the incidence of provincial taxes even though many years have passed since the devolution. Or that the Planning Commission has not updated its macroeconomic model for more than six years – and that there is also a need to develop an integrated modeling framework.

The flipside of being a research-heavy book with one too many academic citations after another is that the average non-technical reader, who is one of Vaqar’s intended audience, will struggle reading it. Perhaps, and here the editor’s critical role seems to be missing, the book could have used various storytelling techniques punctuated with historical and political narratives that could have been drawn from the writer’s own experience to help set the context to the problems and their solutions.  It may have resulted in a longer book, but it would have expanded its audience by taking readers on a journey.

Be that as it may, this book is not a work of an arm-chair analyst; it offers pertinent, practical advice about issues that currently plague the country’s institutions, their workings and their arrangements. It will serve as a good reference for students of business and economy, journalists, corporate and third-sector professionals.

In his talk about the book at Karachi School of Business and Leadership late last week, Vaqar wondered who will bell the cat in terms of fixing the cogs of governance. Whether the society should opt for social accountability instruments or for policy engagement methods? How to create a demand for transparency?

The answer to questions like these could open the door to solutions for Pakistan’s long list of problems. While Vaqar’s book does partially dwell on these questions, he should pick up that subject for another book – specifically incorporating an impact-assessment of think tanks, op-ed community, print/electronic media and the social media on creating the demand and supply of transparency and accountability, especially on economic issues.