KARACHI: Former Chairman of Board of Investment (BoI) Muhammad Azfar Ahsan has given a roadmap to overcome the ongoing economic crisis and bring the economy on the right track to make Pakistan a prosperous and developed country.
“Long term economic policies, privatisation of loss making entities, restructuring of national institutions and widening of tax net by imposing tax on agricultural and real estate sector are some of the major initiatives that can bring an economic revolution in the country,” Azfar suggested.
He has also strongly advocated a unified panel where civilian and military leaderships come together with mutual understanding and plans for Pakistan’s future and the enhancement of its investment climate on both national and regional levels.
“All concerned stakeholders of Pakistan need to collectively decide when and how the country should achieve stability and prosperity. I believe that we can improve our economic situation within a few years, if we consistently work towards enhancing our finances and reducing our debts”, he mentioned.
Talking to Business Recorder, he said that the interim government headed by Anwaar-ul-Haq Kakar can address this instability as time progresses, provided they exhibit political will, which has been lacking in previous administrations. A solution lies in the mutual understanding and planning of civilian and military leadership.
He said that there is need to make economic policies at least for 10-15 years and all governments must ensure the continuity of thee policies to restore the investors’ confidence and bring foreign investment in the country.
Nothing worthwhile has been done in Pakistan in terms of Foreign Direct Investment (FDI) or fixing the investment climate and even Pakistan has failed to provide a safe and stable investment environment for both local and international investors, he said.
“There has been a decline of 77 percent in FDI in the first eight months of 2023, which serves as evident proof that the investment climate in Pakistan needs restructuring, as it cannot function effectively anymore”, he mentioned.
The investment situation is alarming, as even Pakistani investors are hesitating to invest in their land due to lack of a stable policy framework, which is the spine of any investment climate, Azfar said.
The instability stems from the fact that previous governments in Pakistan have not prioritized the progress and betterment of the Board of Investment (BoI) and consequently, the FDI is on decline. Amidst the need for a Special Investment Facilitation Council (SIFC) did become apparent as an arm of BoI to obliterate any red tape or bureaucratic hurdle.
“It is crucial to offer the necessary support to foreign investors and small business owners, ensuring stable and consistent policies for ideally twenty-five years with a minimum of ten years of executional framework that stays above and beyond any political change”, Azfar urged.
Unfortunately, in Pakistan, a consistent and stable investment climate has not been established, leading to periodic closures of businesses and their eventual departure. This imbalance has negatively impacted the investing atmosphere and foreign direct investment, he mentioned.
Political will is the next essential factor that can drive the change. The entire concept of SIFC, as an extended version of BoI, was developed during the last government’s tenure, mainly to expedite the process and enable BoI for a quick turnaround on projects. Presently, SIFC holds more power in terms of its policies aimed at benefiting investors.
Former Chairman BoI further said that in order to bring more investment and enhance the exports we must focus on 7-8 countries as well as 8-10 leading export products/ sectors to bring more foreign inflows in the country.
He said that the privatisation program must be initiated as there is potential of earning sizable revenue through the privatization of public assets. There is a need to privatise the white elephants like PIA, Pakistan Steel Mills (PSM), Pakistan railways to save the billions of rupees subsidy being spent to run these loss making institutions. “We have seen the advantages of privatization in Telecommunications, yet institutions like PIA and PSM await a favourable decision while draining public funds,” he added.
Restructuring of various government departments must be a part of long term economic policies, he said and added that performance accountability is another aspect sorely needed in our governance system. “I believe that performance audits can significantly mitigate crises caused by negligence,” he said.
Despite the multiple challenges Pakistan faces, there is still an opportunity to chart a path towards growth, success, and prosperity by strengthening the institutions of Pakistan, Azfar said and added “however, this requires a thorough evaluation, and we must do that to create the most informed and clear way forward”.
In order to increase the tax net, the tax net must be broadened by bringing the untaxed sectors into the tax net. Agriculture and real estate sectors have a healthy share in the economy but still out of the tax net. “The country can earn more revenues and can expand the tax net by imposing tax on agriculture and real estate sector”, he said.
Former Chairman BoI said that this is a critical moment for us as a nation to decide whether we choose to continue with the ebb and flow of the economic tide or take a few steps and turn the tide in our favour. Not making a decision will lead us nowhere.
He also urged the media to play a pivotal role throughout this trans-formative era as a vehicle of information and awareness to support the economic revival.
Copyright Business Recorder, 2023
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