Federal government has prepared a new strategy for the development and enhancing role of the private sector and decided lowering the barriers to development of small and medium enterprises. According to official sources, the private sector will play an increasing role in driving growth and creating job opportunities.
A strong Private Sector Development (PSD) strategy will therefore be an important element in enhancing the competitiveness of the private sector. The features of the new strategy are:
1) lowering the barriers to development of small and medium enterprises; 2) developing a modern financial sector with a view to providing a wide range of financial services; 3) removing irritants and impediments to private sector growth; 4) strengthening the country's physical and social infrastructure 5) consistency and continuity of economic policies.
Official sources hoped that all these measures are expected to improve Pakistan's investment climate, reduce the cost of doing business for the private sector, thus contributing to enhancing the competitiveness of the private sector.
An Economic Reforms Unit (ERU) has been set up in the Ministry of Finance, which will perform two basic functions. Firstly to prepare a comprehensive PSD and secondly, to streamline and simplify processes, procedures and regulations at all levels of government. Both functions will be carried out in close partnership with the private sector and all stakeholders at the federal, provincial and local levels of government.
Official sources disclosed that a better Business Advisory Council (BAC) will be set up to identify issues and then to formulated and implement remedial measures. In addition, the government is in the process of revamping the existing Monopoly Control Authority (MCA) into a Competition Commission, the draft law of which has already been finalised. At the heart of the Commission's work will be a competition policy that lays down a framework for enhancing competition in the economy.
A forward looking PSD strategy, official sources stated, supported by a vastly improved regulatory environment, processes and procedures will go a long way in freeing the private sector from constraints that impede its growth. This will create an enabling environment that will allow the private sector to focus on productivity, innovation and growth, responding to opportunities in the national and global markets.
According to official sources, Private Sector Competitiveness is also being enhanced by taking into account the recent findings on the State of Pakistan's Competitiveness Report by the Competitiveness Support Fund and released by the Prime Minister.
The Competitiveness Support Fund is a joint initiative of the Ministry of Finance, Government of Pakistan and the United State Agency for International Development. It has been established to support repositioning of Pakistan's economy on a more competitive global footing. The government is already providing support from the fund to gems and jewellery sector, pharmaceutical and agro-based industries to improve their competitiveness with a view to preparing them as export items of Pakistan, sources explained.
These are being used to implement an initiative to improve corporate governance, enhance transparency, protect minority shareholders rights, assist companies in being able to list shares on the stock market, raise capital and improve the use of Boards of Directors. An initiative to help companies invest in human resources and improve the motivation of employees and apply modern management will also be undertaken. Finally, companies will be assisted to register patents, acquire and license technology and improve their access to the latest technology.
According to official sources, the government is following a policy of intensifying deregulation, privatisation and liberalisation with a view to transforming Pakistan's economy into a truly private sector market economy which is highly competitive, fuelling growth, creating gainful employment, generating wealth and most importantly, reducing poverty. As part of overall liberalisation policy, the government is also pursuing trade liberalisation policy to encourage exports and provide consumers with access to imports from the global market at reasonable prices. Sustained export performance is a key priority. The government will also continue to liberalise its import regime while continuing its efforts on enhancing market access for its exports for both traditional and non-traditional items.
The government seeks to promote a globally competitive economy by reducing public and private barriers that hinder development. The present Government's reforms implemented in Pakistan are based on liberalisation, deregulation, privatisation, and good governance. Policies adopted include opening markets for imports and foreign investment, encouraging exports and linkages with multi-national enterprises, lowering administrative controls and reducing government ownership. The government understands that improved competitiveness derives from the introduction of best practices, a focus on human development, making up the value added chain and improved logistics.
About trade, official sources mentioned, Pakistan's access to global agricultural commodity markets is often restricted. Given the country's position as a major agricultural exporter and importer, the Government will strengthen every aspect of rules governing agricultural trade, eliminating distorting subsidies and significantly improving market access.
The focus on improved competitiveness has made it essential to improve the functioning of factor markets. The privatisation of large parts of the financial sector has strengthened Pakistan's banking and financial sector. The attention given to this area will be matched by reforms in the labour and land markets. Additional reforms will be undertaken to reform laws governing labour welfare and to rationalise the labour levies system. Health and safety at work regulations also need to be tackled. Another challenge is to ensure clear title for land transactions.
Competitiveness relies on ensuring that the population is healthy, secure (in both civil and criminal aspects of society) and capable of sustaining the basic requirements of life through improved education, infrastructure and a stable macro-economic climate. It is further enhanced by the provision of world-class tertiary education and vocational skills training and the development of a knowledge economy based on a fully developed Information and Communications Technology (ICT) infrastructure.
Improved competitiveness leads to sustained economic growth, which has proven to be effective in generating employment and reducing poverty. Therefore, the Government recognises improving competitiveness as a cornerstone of its economic growth strategy. The economy has responded well to the structural reforms carried out in the last 7 years and has emerged as one of the stronger growing economies of Asia.
Although, as a result, Pakistan has significantly improved its position in the Global Competitiveness rankings of the World Economic Forum, much more needs to be done. The Government will therefore continue to implement its second generation reforms in addition to the private sector specific reforms listed above.
Poverty and in particular the nutrition of a large proportion of the population will continue to be focused upon by the government. It is a key element of government attention because it believes that poor nutrition adds to costs of healthcare and reduces labour productivity. Fundamental improvements in the access to education, nutrition, and health are key elements in the government's approach to enhancing competitiveness.