There is one area where all are on the same page: Export growth. Everyone is for it. The trouble is not everyone reads the page the same way. How else do you explain the numbers? The tug of war within the government is quite apparent: the pious part promises incentives; the 'real' government rolls them back.
The page is screaming at you that the only exit door out of the IMF lock-up is neon-signed 'exports'. The lights leading to the door are well lit but each government agency is burdened with its own baggage. The same page thesis gets reduced to a prayer, not the policy coherence that is needed.
We seem to be expending more energy explaining it all away - hiding behind naked truth - than doing something about it.
We want to declare victory on the strength of quantitative growth. Unfortunately, we can't pay back our dollar-denominated loans, or finance imports, through more kilos of textiles. When it is pointed out that we are selling more for less - a clear iteration of our subsidizing foreign consumers - we are smugly informed "Oh, that's because international prices have plummeted. Look at Bangladesh. Look at India". Is that consolation enough? Shall we rest on the laurels of our volumetric gains?
Despite claiming to be on the same page government agencies are in fact playing against one another, scoring 'own goals', as Razak Dawood laments. Look at Power Division trying to slap all kinds of additional charges when the ECC had decided to cap electricity prices at 7.5 cents for the exporting sector; marvel at FBR bringing exporters to the brink of insolvency by withholding refunds.
We hear the Adviser Finance proudly present statistics to demonstrate how this year the government has so magnanimously given back more of what it owes to the exporters than it did last year. The Adviser conveniently forgets the two periods are not comparable: last year no refunds were due(except paltry amounts like refunds on locally procured packing materials etc) because of the then prevalent zero-rating regime!
With apologies to Dr. Johnson, statistics is the last refuge of spin doctors. To illustrate, if inflation next year is 12 percent (compared to 15% this year) they will proudly claim inflation has come down. No, it hasn't; only the growth rate of inflation has. What cost hundred rupees last year and grew to 115 this year will cost 129 rupees even if inflation rate goes down to 12%! The Doctor is too smart to be reminded of the 'base-effect' illusions of statistical analysis.
If the Adviser genuinely believes the government is dishing out more refunds than before why doesn't he go public with the accruals? Let him give us authentic figures of what was outstanding on 30th June 2019 and what is owed today. If the outstanding amount of refunds has gone down we will fold our tent and stop contributing to these pages, without asking the Adviser to reciprocate in any way.
An understandably chagrined Prime Minister has given his word to Razak Dawood that prices of gas and electricity will remain unchanged for the next three years. Now that's the kind of policy certainties we aspire to. We only hope we don't have to hum kaun jeeta hai teri zulf ke sar honey tak - that non-payment of refunds won't put us six feet under by then. Some Pyrrhic victory that will be!
While we bicker over energy prices and held up refunds the world is moving on. While we struggle with subsidies to make up for poor competitiveness the world is designing ways to redefine competitiveness. While the trade arm of Ministry of Commerce(TDAP) remains fixated on trade fairs the world is making them redundant through the internet of things and B2B facilitation.
When we survey the global trade landscape we see countries gaining a competitive edge through technology-based innovations (AI, robotics, 3D, digital dictatorships). We see them selling less for more through greater value addition - by integrating into the global value chains and importing more to export more. The page out of their bible reads greater productivity and efficiency, not rent seeking.
We see an unstoppable race to integration. WTO has been overtaken by bilateral/ multilateral trading arrangements. There are 160 Free Trade Agreements (FTAs) worldwide. Another 97 are in the works. The US, the EU, ASEAN, China, Japan, all have a large number of FTAs and are looking for more.
Asia is the focus of 'mega trade deals', the latest being the Regional Comprehensive Economic Partnership (RECP) that ties up China, Japan, Korea, Australia and New Zealand with the ten ASEAN countries. Undeterred by the American withdrawal Canada, Mexico, Chile and Peru on the American side of the Pacific are partnering with the Asian side (Japan, Korea, Vietnam, Singapore et al.) in the Trans-Pacific Pact that encapsulates 14% of the world economy.
It is only the international trade dilettantes who are resisting FTAs. They face an uncertain future.
Why are world's major economies falling over each other to secure multiple FTAs? The idea is not to seek advantage over others through tariff preferences. They know preference erosion is bound to set in as FTAs mushroom. The idea is to enlarge the pie, and try to get a bigger slice.
The FTA motivations are unencumbered trade, fewer barriers, greater value-chain facilitation, and enhanced competitiveness. It is the win-win situations they are after- collaborating while competing; forging partnerships that give them a competitive edge.
China's Belt and Road Initiative is the primer in trade domination. It requires a lot of diplomatic muscle and it is expensive - a trillion dollar investment over ten years- but if it successfully wards of US challenges we will have all roads leading to Beijing.
Pakistan has gone 'missing in action' in the emerging world of bustling FTAs and global trade infrastructure. We are trying to fight the 21st century war with the WWII weapons. Is there anyone in the government reflecting on the shape of things to come?
It is good to receive periodic polemics from the Ministry of Commerce on SEZs, industrial policy and tariff rationalization. But do they realize all these initiatives will be to no avail if not situated in an open economy?
Will the road to Beijing lead us to a more open economy?
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