On January 22, while addressing a group of investors in Davos, Prime Minister Nawaz Sharif painted a glamorous picture of Pakistan - an achievement for which his speech writer deserves full credit, ie, for depicting Pakistan as an alluring paradise for investors, though the ground realities are not as alluring.
Speaking soon after the Bacha Khan University (BKU) tragedy - third major terrorist act in January 2016 - he promised that in 2016 Pakistan will be "a confident and safe country, open for business, trade, and investment" and assured investors of the "ease of doing business and earning healthy dividends". He then invited them to become partners in realising "his" vision of Pakistan, and promised them a host of attractions.
These attractions - intended to create an environment conducive for investment inflows - included a liberal investment policy that, besides encouraging set-up of joint ventures also allows 100 percent foreign ownership, full repatriation of capital and profit, tax-breaks, and customs duty concessions on import of machinery and raw materials.
To dispel the negative impression about Pakistan's globally reported economy-crippling power shortages, he said his government is implementing projects that will add 10,000MW to the electricity generation capacity of Pakistan in the next two years, and by the end of 2018 the total capacity addition will exceed 14,000MW.
But, because Pakistan's ground realities are undeniable, he said that a "comprehensive" National Action Plan (NAP) was being implemented to combat terrorism which, besides providing for a multi-pronged strategy of clean-up operations by the military and law enforcement agencies, is focused on chocking the financing of terrorism.
To begin with, generation of government's promised levels of electricity by the Neelum-Jehlum and Nandipur projects and Bahawalpur's solar energy park seems unlikely. Same is true about the controversial LNG import from Qatar which, besides providing gas to Punjab's industrial sector, is to fuel Punjab's existing power generation capacity.
In this backdrop, the Prime Minister claimed that development expenditure had been more than doubled for the third consecutive year to focus on key areas of the energy sector, and for strengthening the power sector via increased generation, use of better distribution technology, limiting line losses, conserving energy, and diversifying the energy mix.
But the fact is that, till end-January 2016, only Rs 278 billion of the Rs 700 billion (including Rs 38.4 billion of foreign aid) budgeted under the 2015-16 federal Public Sector Development Programme were released, and funds for three ministries including the Textile ministry, weren't released. Besides, fund allocation doesn't imply actual outlay and that too without huge leaks.
The government doesn't do even the doable - revamp/modernise the existing power generation system and speedily cut transmission/distribution losses. Instead, after the virtual blackout of Punjab, KP, Azad Kashmir, and parts of Sindh and Baluchistan last week due to NTDC's transmission system break-down, the government decided to (but didn't immediately) sack NTDC's top brass.
Aren't transmission system failures a routine affair? If NTDC's top brass is as reckless as the government wants us to believes, why it acted so late, or was its sacking contemplated because this time the parliament house too was affected? Does this reflect Pakistan's "thriving democracy and sound economic policies" that the Prime Minister talked about?
Talking of economic policies, lowering the fiscal deficit without visualising its consequences for the economy hardly fall in the category of "thriving economic policies". The latest instance thereof - pointed out by the Chairman TDAP - is that, to artificially reduce the fiscal deficit, the FBR is sitting on tax refunds of exporters worth Rs 225 billion.
The Prime Minister proudly claimed that Pakistan's tax regime is one of the lowest in the region side-lining the fact that indirect taxes are among the highest in the region, yet the tax-to-GDP ratio remains the lowest in the region. Besides, tax amnesties like VTCS reflect continued failure to nab tax-evaders and over-burdening of the honest taxpayers.
The basis of pricing fuel oil and natural gas too remains questionable. While SSGCL's and SNGPL's failure to reduce gas theft is undeniable, effective January 2016, Ogra wants the share of "system losses" in the tariff of both utilities increased from 2.5 to 7 percent, which could burden bill-paying consumers with an additional Rs 15 billion. Can such actions build investor confidence?
Analysts believe that petroleum products' prices weren't reduced in line with the fall in global oil prices simply to plug the revenue loss in import duty due to falling oil prices, which hurt Pakistan's sliding competitiveness, as proved by falling exports. There are also rumours that, in some shipments, the quantity of imported oil was less than that reported in the shipping documents.
Given such examples of governance, the Prime Minister's claim that "Pakistan is poised to emerge as an economic powerhouse in the region" remains doubtful, but an effective strategy for eliminating corruption, maladministration, crime and terrorism can certainly improve Pakistan's image to assure visible stability, which is the genuine investors' foremost priority.
After the Army Public School tragedy in December 2014, the government agreed to implement the NAP devised by the Army, set up apex committees at federal and provincial levels for regular joint review of progress, establish a National Counter Terrorism Authority, and provide constitutional over to military courts that will try terrorists.
But after rounding up of politicians (involved in crimes) under the NAP, the government lost interest in playing its role in the NAP; indicator thereof is that while it spent Rs 44 billion on the Pindi-Islamabad Metro-bus project, and allocated Rs 162bn for Lahore's Orange Railway, only Rs 15bn were allocated for the crucially important NAP.
On November 13, 2015 after France suffered from the worst post-WW-II act of terrorism, its parliament approved 26 laws to legalise new anti-terrorism strategies. The same month, the attitude of our government towards containing terrorism forced the Army to express its reservations thereon - an attitude that is also portrayed by the government's response to the BKU tragedy.
While the government took immediate steps to investigate Pakistan-based terrorists' possible role in the Pathankot tragedy, it didn't press India to expose the elements that attacked PIA's Delhi office, and despite conclusive evidence gathered by the Army showing India-backed Afghan terrorists being behind the BKU tragedy, the government is hasn't taken up this issue with India.
With President Obama predicting a terror-ridden future for Pakistan, should its government appear less than concerned about terrorism? The only benefit the politician can reap from resurgence of terrorism after the success of operation Zarb-e-Azb is that NAP (which is also targeting politicians involved in crimes) may not succeed. Will it be another manifestation of Pakistan's "thriving" democracy?
Pakistan, whose external debt ($64bn) is less than one-third of the wealth (over $200bn) its "citizens" earned and stashed away abroad, has proven potential. The Prime Minister was right only in making this claim, but realising that potential requires unbiased professional focus on optimising the potential of every sector - not only metro-bus projects and highways that the government is focused on.
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