Taimur Saleem Khan Jhagra is the current Provincial Minister of Khyber Pakhtunkhwa for Health and Finance. Before starting his political career, he worked as a partner at McKinsey & Company.
Governance :
Q- How does the Provincial Government plan to operate the BRT project on a self-sustaining model?
Taimur Saleem Jhagra(TSJ) : I think the first thing is, that the BRT is already a success in terms of the service that it provides the people of Peshawar. That is clear from the popularity and from how easily people accept it. I think purely technically, if by self-sustaining we mean that there is never going to be a single rupee of operational cost borne by the government. I think that is not as important as the combination of the operational benefits that the BRT brings, the economic benefit that it brings and the overall structure of the model in terms of being the best value for money.
What's different here from the other such bus rapid transit projects in the country is that the Peshawar BRT is an integrated project that includes not just a main corridor, but feeder routes that link to the main corridor, which allow the BRT to serve the entire city. There are already eight feeder routes.
And those can easily be expanded and they can not only be expanded across Peshawar, but also to create linkages with Charsadda, Nowshera, Mardan or Khyber on the other side. So, making this a transportation solution, not just for the city of Peshawar, but for the Peshawar Valley as a whole, in which case it would serve close to 10 million people and integrate the entire region. Obviously at scale, the economics of the project would work much better and that's the sort of thing that has been done to make it more self-sustaining along with things such as the integration and building of commercial plazas, potential of advertising not just on the buses, but at the stations and on the overhead bridges. All of these improve the revenue generation component of the project and everything that I said together is what makes this BRT a better economic model than previous ones that have been done.
Q- What is your view on the take that our policymakers made some mistakes while designing the 18th Amendment. What changes are needed in the 18th Amendment in order to make this model sustainable?
TSJ : I think on the 18th amendment, you'll find a lot of views. You'll even find views within the party and perhaps you'll find issues based on where you are sitting and how you're looking at it. I believe that you can make any model work. You can make a unitary state work and you can also make a devolved state work. Once you choose a model, you need to ensure that the mechanisms required to make it work out there.
I'm personally a big fan of the 18th amendment. I think there are, minor or less minor things that can be improved and I think on that people can have different views. I certainly think, for example, during this pandemic, it was important and it is important that there be a legal mechanism for the country to respond in an integrated manner to an emergency.
But I also think that the devolution in the 18th amendment has brought huge benefits aid by bringing autonomy of action. It means that the country doesn't need to move at the pace of the slowest common denominator. And I think, that is hugely important and misunderstood. For example, today, the 1st of November, is the day that 7 million people in the SWAT Valley and in the Malakand division, get access to universal health insurance.
Within the next 90 days. Right. Anyone who is a citizen of Khyber Pakhtunkhwa regardless of where they live in the country are going to get universal health insurance. I think the benefits of that and the implications of that in the healthcare sector are huge. However, imagine if we had to take this decision for the entire country, and you had to get four provinces, two other federating units and the Federal Government agreed on this. We would not have been able to move at the pace at which we did. So, I think that this, and there are countless other examples like this are the sort of benefit that the 18th amendment brings. You ask a very important question about the fiscal challenges that it presents.
Typically, people talk about the transfer of funding from the Federal Government to the provinces. Remember that at the time when this was done, the intent was that, the revenue collection capabilities of the state would be improved considerably. Unfortunately, that is something that has never happened.
I believe that if we really need to solve the fiscal problems and the fiscal challenges that we face, I think you have to think out of the box in terms of how you create more fiscal space working together and that has very little necessarily to do with the 18th amendment.
Let me tell you a few areas, first the cost of government and one area where we're working together is to do with coordination is pension reform. The pension liabilities across the four provinces and the Federal Government exceed a trillion rupees a year. Almost 20% of government spending.
I can tell you that in KPK, the pension budget this year is 86 billion. Just 15 years ago it was less than a billion and about 1% of the budget. Today it is also about 20% of spending but we don't have a solution. Pakistan is one of the only countries in the world with an unfunded pension program, which actually puts the future pensions of all those hard-working civil servants of senior and junior grades at risk.
That is something that you have to solve. This is the sort of problem that is easier to solve through coordination and collectively and can release in the medium term, up to a trillion rupees of, of spending potential annually, as well as secure the pensions of all the civil servants for the future if we go to a funded program
If you look at other areas such as the size and scale of government, the sustainability of government and the value of money of resources. If you look at the structure of government, it is built through layers and layers of hierarchy from a secretary to a special secretary, to additional secretaries, to joint secretary, to deputy secretaries, to section officers, every person, and every layer has multiple support positions such as stenographers, senior clerks, junior clerks, like what we call class four employees. So far one productive position drivers. Every government car today has to have a driver employed and what that means is that the state has become the giver of direct employment and what this does is that if I obviously invested a rupee in economic value generation, it will give back dividends and benefits that are going to create direct and indirect jobs. However, If I'm going to spend the same Rupee on hiring another person in government, no matter how many people I hire in government the government is only going to represent, say 10% of the job market at most. 90% or more will always be employed in the private sector, but by not investing in the private sector we are never going to be able to unleash the job creation capability of the economy.
Then we're going to have to look at the size of government and the future sides of government, because we obviously have to protect the livelihoods of those employed by government today. And we ought to, and we will. But can we afford a model where government still hires thousands of stenographers a year. I didn't even know when I came to government what a stenographer is. It's someone who takes notes in shorthand so that they can type it up on a typewriter. But typewriters have been an extinct object for now for about 20 years, if not 30 but we still don't change the structure of government.
Procurement is the third area. We estimate that just in Khyber Pakhtunkhwa alone, savings from streamline procurement could be between 20 and 40 billion rupees a year which is about 20 to 40% of our development spending. I estimate that across the country, those savings annually could be around 500 billion Rupees a year.
If we adopt modern practices on how to centralize procurement, how to do framework contracts, how to streamline processes so that, there is lesser leakage. All of this is about operational transformation of the government. That will release the fiscal space to ease the burdens that we need as opposed to constitutional changes.
There is also a role for increased revenue generation where both the Federal Government and provincial governments can and ought to do more. We increased sales tax on service collection in the last year by 65%, despite the COVID pandemic and I believe that there is obviously still huge untapped potential that we can get into year on year, phase by phase.
But if we work collectively, understanding that there is a need both to cut completely unnecessary costs, and increase the overall size of the revenue pie available to the country, I believe to a large point that the discussion on the fiscal transfer distribution within the 18th amendment will become a moot point because if we keep on fighting over who gets the greatest share of the pie, and if every federating unit and the Federal Government keeps on claiming that what we don't have is enough and it is true that what we don't have is enough then surely the issue is the size of the pie, not the distribution.
Q- The KPK Government has done considerably well in terms of having a functional local government system. How has a functioning local government system helped the province in terms of carrying out the basic functions of a State?
TSJ : I think that the local government system that was introduced in 2015 is one of the silent, but most critical reasons for the tremendous success of Imran Khan and PTI in the province, where for the first time, since 1951, any single party formed a government without a coalition partner. Not only did PTI form a government, they guarded with a two thirds majority. What this devolution did in particular through the creation of a village government system, which meant that there are more than 3000 village governments across the province was that it put local development and local issues in the hands of the local community.
The village Nazim represented on average around 10,000 people and around 5,000 voters. The village Nazim both had money to spend, to solve micro level issues of waste management, pavement of streets and also micro level electricity issues of things like birth registrations.
The service delivery of government went to the doorstep of local communities. I think what that did in Khyber Pakhtunkhwa was to roll out a whole program of bottom-up development in small villages, the fruits of which we saw in the election and that perhaps was the most critical change. However, there are lots of improvements that can be made.
The new local government act makes that by introducing directly elected mayors in the top tier of local government, which means that the top tier of local government will be particularly instrumental in Peshawar and other urban areas as they will become much more empowered. The fundamentals of this were laid down and have been preserved and is the structure of village government that actually deals with local level issues across the province.
This model is now going to be adopted in Punjab and Islamabad as well.
Q- The KPK Government plans to reform the existing local government system. What are those reforms and how can these changes make the existing system more efficient?
TSJ : There are mainly two or three big differences. The first one is that three tiers of local government have been simplified into two tiers. The village tier, which basically stays as is, and the Tehseel tier, rather than a district tier, the logic behind, which is that our Tehseels today are actually bigger in terms of population than our districts were at the time that they were formed. Peshawar at the time of partition, including Nowshera and Charsadda would have been a district of less than a million people. Today it is almost 5 million people with Nowshera and Charsadda as separate districts. It makes sense to have smaller units at the top tier of government and three tiers created redundancy and a little bit of complication.
The second change is to go from an indirectly elected mayor or Nazim at the top tier to a directly elected Mayor model. This is hugely important because what you previously had a TIG and the best illustration of this model is a big city like Peshawar or Karachi, where the district mayor would actually have only been elected from one union council of the city and then being elevated. To control the entire district through an indirect election, which both creates the opportunity for rent seeking and means that the person only has really an electoral focus on one part of the area of the large Megapolis that he is meant to manage by being directly elected.
For cities we've actually kept the entire metropolitan boundaries intact. These directly elected mayors will come with a huge mandate and huge expectation and actually be able to function as mayors of large cities, such as Peshawar or if the same model were adapted in a place like Karachi should be doing. Those are perhaps the two biggest changes that should significantly enhance the efficacy of a local government.
Q- When is Khyber Pakhtunkhwa planning to have local body elections and how much resources will the Provincial Government transfer to local bodies?
TSJ : As far as the Local Government elections are concerned, we want to hold them as quickly as possible, but things like the COVID challenge have gotten in the way. We are in the middle of a second wave, and that is going to be an issue, but we will hold them as soon as it is practically possible, because it is an exercise at huge scale given the number of people that has to be elected.
On the resources part. The big innovation in the last local government was to give a sizeable chunk of development funding the local governments. What we Khyber Pakhtunkhwa did was spend up to 30% of its development budget through local governments. In practice, on average, through the four years, about 20% of the development budget was spent through local governments.
To give an idea of how huge that was, the amount of spending done through the local government's development spending, because what people typically do is mask the salaries of teachers and doctors and put them in the local government account and say, we've spent a lot. I'm talking of transferring development resources from the Provincial Government or the Local Government.
20% of provincial government spending was transferred to the local government. That meant that in four years, almost 90 billion rupees were spent through the local governments. To give a context in the previous 15 years, including the era of the much-touted Musharraf local government in the previous 15 years only 10 billion rupees had been spent through local governments. In the next four years, 90 billion rupees were spent. To also give context that 90 billion was more than what was spent in all of Punjab and Punjab is a province, remember four times the size of Khyber Pakhtunkhwa. I think these are extraordinary numbers and they made a huge difference.
Q- There is a lot of focus on the NFC Award when it comes to giving the provinces their share but very little attention is paid to the part where the Provinces have to help the Federation by collecting taxes. How can the provincial governments improve their revenue collections and fulfil their responsibility?
TSJ : I would say it's not just the provincial government that needs to improve revenue collection. I think we create these clichés. If you look at the data in general, the growth in sales tax on services in Pakistan has actually only happened once the subject has been devolved to the provinces. I think we have many flaws in our revenue collection ecosystem and they need to be collectively solved.
And I don't think one can stress enough on that. Let me give a very shocking, very simple fact. You know, again, first federal collection is not just federal collection. It is collection for the entire Federation of which the four provinces are apart.
And rather than make this a zero-sum game we need to realize, and I need to realize, and I do realize that. You know, I am a stakeholder in what the federal government does in terms of tax collection, because a proportion of that revenue comes to me. So, I shouldn't be doing everything to support and help their efforts and not do it. This is yours, and this is mine.
However, do you know that, while federal transfers make up 75% typically of what go to provinces because that's the way that ecosystem is structured. The three main heads from which I get money, whether that's the FBR, whether that's energy payments in terms of the hydro electricity sector or whether that's payments of royalties for oil and gas.
Do you know that I get each of these payments without the transparency on what the Federal Government has collected. FBR releases money to me, but doesn't show me what they've collected. I don't blame the Federal Government for this at all, of course, but I do blame the system that we have created that we need to change.
What I have to do because we keep a model of FBR collections and projections so that we can forecast the revenues that we are going to receive to be able to plan our spending better, which is one of the innovations we started in the KP government, but to get the FBR figures, I typically have to open newspapers such as the Business Recorder on the first of the month and see what FBR has collected, because I don't get that data formally.
What this means is that issues lingered on and on, and this lack of transparency and of course it exists at the provincial level as well, creates inefficiencies, whether that be at the federal level or the provincial level. So, I think that's the first thing. The other thing is of course there are flaws in our tax structure, that will be hard to collect, take income tax.
It is an anomaly that, income tax is collected by the Federal Government as it should. But agriculture income tax is actually collected by the Provincial Government. This is actually enshrined in the constitution and what this creates is arbitrage opportunities where people can hide actual income their agriculture earnings for income tax evasion purposes. This is the sort of thing we ought to be solving. We have both expressed the openness to work with the Federal Government to have them collected for us because we believe it is the right thing to do.
There should be much more integrated data sharing so that we can actually see that this data on what is paid by agriculture land owners, as agriculture income tax is shared with the FBR and vice versa. What is paid by individuals to the FBR is shared with the provincial government so that tax evasion can be solved. Think of the efficiencies that this would create.
On sales tax on services, actually one faces similar issues to the collection on sale tax on goods, where we have an embedded long-term grey economy, that one needs to actually bring into the tax net, but to do it in a smart way because whether we like it or not, our economy actually at the moment works having incorporated the impact of this great economy and people's individual business models to do that. What we have done at KPRA, and it has been successful is first we brought KPRA under the direct management of the Finance Department because we felt interests were more aligned rather than.
Earlier they were being controlled by the excise department, which has traditionally been a department with inefficiencies and leakages.
The second thing we did was that we actually brought significant transparency on collection by putting in good resources and good people so that we could actually start aggressively collecting income tax as a sales tax on services, where it is easy. Then what we have continuously done is an effort to try and adapt and reduce taxes from sectors, which are effectively untaxed to encourage people to register and start being taxed and that has been successful because in the last two years, we've actually only seen growth. In particular in the last year, the 65% growth that we've seen that we are so proud of took KPRA’s revenue to above 17 billion. Earlier, KPK had less than one tenth of the revenue of Sindh and Punjab.
However, within one year that ratio has been brought down to almost one fifth and this year we believe that we can actually, if COVID doesn't impact the economy, get to somewhere between 20 and 25 billion and hopefully in a good year, be approaching close to 25 billion. That of course, what means significant additional revenue for the provinces.
However, as we looked at this growth, because we continuously look at the numbers and see where the growth is coming from, we also looked at the growth, in the corresponding segments of the FBR’s KP wings, RTO Peshawar and RTO Abbottabad and we found that KPRA growth far outstripped the growth of the FBR. That also makes sense because for the FBR, Khyber Pakhtunkhwa was going to be a small province where the majority of the institutions, senior management and boards’ attention cannot go. And it's actually a great illustration of how devolution can help better performance because once incentives are linked to results, you will actually see at a devolved level, people strive harder to achieve those results as you have now seen with the story of KPRA in Khyber Pakhtunkhwa.
Health :
Q- Various studies suggest that most of Coronavirus cases in the country were asymptomatic. Does the provincial government plan to carry out anti bodies tests in order to ascertain where the province is in terms of people affected by Covid-19 to date?
TSJ : Look, I think we explore options. What has made all of these decisions easier is that there's a great mechanism of coordination now between the provinces and the Federal Government through the NCOC so that decisions like antibody testing, antigen testing, the scale of testing and the national policy on restrictions versus opening up can be done together, rather than every province in this case, taking individual decisions. Earlier, I talked with great passion about devolution, and we used that devolution to shape our early response at a time when a coordinated mechanism was not there, but at such a point in a pandemic, perhaps one of the most important things is clarity of message and consistency of action. In that context, I firmly believe that these decisions are better taken together. I think Pakistan's big challenge in this second wave of COVID is going to be our implementation capacity, to do things in the right way because we all know that the implementation capacity of the administration arm of the government in Pakistan has always had limitations.
We are great at very specific emergency response. So, for example, when an earthquake or a flood hits is when you see the best of how and when Pakistan responds to an emergency but we need to build up our capabilities of being able to do things in a more proactive manner. The way I look at the sort of restrictions that we need to enforce better such as mask wearing is similar.
For example, to the national challenge of making people wear seatbelts and helmets, it is just that somehow in terms of our national psyche, there are these little steps of discipline that we are not very good as a society at adopting and we're also not very good as administrators at enforcing.
That perhaps what COVID can do is to help us. Really think through what it will take to implement steps like these. I'm less worried about the quantum of testing and I'm also less worried about the types of testing. I think Pakistan will get through the second phase better than most.
I remember that we did that in the first phase and one of the keys to success over there is for the government to take on pressure. I remember the amount of pressure that used to come every day on the basis of Khyber Pakhtunkhwa having more deaths. We stayed the course, did the right thing and over the long term, our death ratios normalized and reduced below the bigger provinces as they should have. I remember the pressure daily on continuously needing to carry out more tests. An era where 220 million people have access to Facebook and Twitter, the public pressure at times of emergency is going to be different. One of the hallmarks of good government has to be, to take the right decision, given our constraints while recognizing what the right thing to do is while absorbing public pressure and I think that is one big challenge and the key to success. The other one is the little details that reduce the risk of transmission or disease such as mask wearing where the government needs to do a better job, but frankly, society also needs to do a better job of taking sensible precautionary measures.
Q- The universal healthcare model is widely under appreciated. How does the provincial government plan to implement the Universal Healthcare program in the presence of fiscal challenges?
TSJ : I don't think it's that hard. As I said before, I think Pakistan's fiscal challenge is partly borne out of a lack of imagination of being able to look at revenue and spend in and out of the box manner. This Universal Health Care package costs us about 20 billion Rupees a year. If I set my priorities correctly this should be one of the first 20 billion that goes into the healthcare bucket of expenditure because of the number of benefits that it has. It incentivizes the private sector to build capacity. It creates competition and hence we believe will raise the standards in the public sector. It ensures that additional funding goes to healthcare establishments that actually performed better as decided by members of the public. It creates secure. It gives security to every citizen of the province at a time when they need it the most, which is at a point of critical illness, the costs and psychological burden of which can be crippling and life changing. It also creates the opportunities for further enhancement for example, creating top-up schemes, creating the opportunity to layer on coverage for diseases such as for situations such as liver transplants, kidney transplant.
The Universal Health Care project is really important, Why? Because once you understand how insurance works, and once you understand the limitations of the state in Pakistan, it is so clear that this is going to be a game changer in healthcare service delivery in the province and above all if we enable people to work better through situations where they need better healthcare, we also reduce the costs of combating disease down the line.
For example, we've already included the opportunity for people to do a free breast cancer screening in this to be able to empower people. To screen for breast cancer earlier will mitigate the costs of dealing with it later. If I'm spending 20 billion rupees a year out of a potential budget outlay of 90 billion Rupees, that is a five percent of my budget but the impact is huge and in Khyber Pakhtunkhwa we look at this perhaps as the biggest development project. It's bigger than building any motorway. It's bigger than building any BRT. It's bigger than building any large hospital because we believe that it will enable perhaps hundreds of hospitals to work better to deliver service better.
Q- The provincial government aims to encourage the private sector to invest in the universal healthcare program. What steps are being taken to assist the potential investors?
TSJ : When I was working at a private consulting firm outside the country, I actually realized the amount of investment interest there is in the healthcare sector because we actually had large private equity firms interested in building hospitals in Pakistan. So, there's no lack of interest. The Prime Minister has already announced that things like, machinery and equipment for hospitals will be allowed to be imported free of duty if it is not available in Pakistan. We have a responsibility and are making a constant effort through our ease of doing business reforms. Although I don't claim to be anywhere near perfect as we all suffer from the red tape that exists in Pakistan, but we're making a constant effort to improve our ease of doing business environment.
Along with that in the healthcare sector particularly, we are also looking to empower and improve the institutions that will enable private sector investment. I'll give two examples.
The first one is that we've just strengthened the board of the Healthcare Commission which is the regulatory authority for private and public sector hospitals. We've put in place a fantastic board so that they can do their job to create and uphold standards, and also so that it consists of the sort of people that don't look at the private sector as the enemy, as traditionally the government has done.
We've also similarly put in place a fantastic board for the Health Foundation, which is an entity in Khyber Pakhtunkhwa that looks at public private partnerships. We've already outsourced eight hospitals, eight medium-sized hospitals between 40 and a hundred plus beds. These hospitals are run in a public private partnership mode, not in Beshara, but in the far-flung areas, in the tribal areas and in Chitral. We are now going to expand that so that we run a chunk of our capacity at secondary level through public private partnerships, and at primary level through public private partnerships, which will allow government to utilize the capacity that is created in fewer hospitals.
We will be able to have more doctors in the hospitals that we run ourselves, more paramedics, more nursing staff, and we'll be able to use the private sector in areas where government faces a challenge to provide good service delivery. So, it's not just the health cards through which we are looking to, uh, incentivize the private sector but we are also going to actively partner with the private sector to provide last mile service delivery or excellence models in partnership with government.
Q- What is the latest update on the MTI reforms that were introduced by the provincial government and how can they help the stakeholders of the healthcare sector?
TSJ : Firstly, the concept of the MTI has to be clear. The hospital is such a large and complex entity in particularly a large tertiary hospital. The aim of MTI is to devolve significant autonomy to these large hospitals so that they can make decisions quicker and run effectively like a corporate institution, but one that is reporting to government. It is a work in progress, but it is certainly a very clear success in my opinion. And I say this as someone who didn't have a stake in the system being created. I only joined. politics and the government two years and a little bit ago.
One example of how the MTI system is working, after the recent bomb blast at the madrasa in Dir colony a couple of days ago. I went immediately to the Lady Reading Hospital, to look at how they were dealing with the patients that had come in and they had at the time 70 plus people, many of them in serious condition, but the way the emergency department of Lady Reading Hospital, and not that this is often one of the criticized, um, establishments, because it is the face of MTI but the way they were dealing with these patients, the professionalism astounded me and it didn't just astound me. I had an opposition MPA who was at the hospital with me. Even he voiced my sentiments on how well the establishment was dealing with the patients. There's still loads of improvement areas in how the MTI has used this autonomy. I believe we can put in much better financial management protocols. I believe we can put in place much better corporate training for the management of these institutions to be able to work effectively better as corporate entities that are more transparent and use the autonomy better. But this will be a constant evolution because one of the challenges that we try and fulfill are look, we need good board members.
We need good management across the place. We need to get rid of myths such as that people in senior positions will necessarily be the senior most position. No law, no senior, most official because no law of medic ever says that you only gain stature through grey hair. You grow, you gain it through performance and that's what the MTI should enable it. One thing we are doing is taking action where the MTI isn’t working well. And an example of that is we dissolve the entire Bannu board because we weren't satisfied with how the MTI bundle was performing or being governed by the board.
We have now improved our board selection process, so that rather than just putting in place what seemed to be a reasonable set of names, we have an entire portfolio of potential board members. We look at the mix of board members coming in any board and we interview all board members that we select and that is why I can talk of the boards that we've recently created. At the Health Foundation at the Health Care Commission and the revamping of the Khyber Teaching Hospital board as being ones that we can have a lot of confidence in because of the quality of people that we've put in. If we take steps like that, I believe that the MTI reforms will actually go further and produce significantly more dividends than they already have done.
Productivity :
Q- Rashakai Economic Zone is said to be one of the most important components of CPEC. What is the progress on that and how can it help Pakistan in terms of restoring its trade linkages with the Central Asian states?
TSJ : The Prime Minister inaugurated; the developer's agreement being signed. We're now in a position for an SPV, that's going to run the project which is to be started. I hope that it should be done in two to three months. The innovation over here is rather than the government running the zone ourselves, we've created an SPV where we are minority shareholders but we run it. We gave it through a 30-year lease to a Chinese state-owned company, and we know how good the Chinese track record in creating special economic zones is. We hope that it will create the dynamism to run this differently and to bring export-oriented industries over here.
The question is why is that important? It is important because Rashakai can really transform, not just Khyber Pakhtunkhwa, but Pakistan’s potential to export to Afghanistan and other central Asian States. We have a motorway to Peshawar. We already have a reasonably good road to the Afghan border, but we are investing in a new Peshawar to Torkhum motorway, which should complete Pakistan's motorway connectivity from Karachi to Torkhum.
Along with that, we're also investing in a new state of the art border terminal at Torkhum. If we do this and the provincial government is taking it on itself to become a stakeholder in improving the economic activity with Afghanistan and Central Asia, because obviously benefits accrue to the province, not just to Pakistan as a whole. If we do this, I believe we'll be able to attract significant investment and economic activity, to Rashakai and I believe this is the sort of model that we need to explore more of.
We are doing a lot more to restore our trade linkages with the Central Asian states. I'll give you one example of how far we go. Of course, we have been working with the Federal Government to increase border markets, to increase openings. We're working with both the civil and military authorities. We're improving the road network and improving the east-west connectivity between the tribal districts and the rest of the province. We believe in this case, not just the Peshawar-Torkhum motorway, but the rehabilitation of the Indus highway and the creation of a new Peshawar-DI Khan motorway and then connecting that down to DG Khan and South of the country is actually what will transform the Western and less developed, but not just of the province, but of all of Pakistan. I think that is critical but when we talk of being out of the box, we put our money where our mouth is. So, for example, uh, when pre-COVID, we were working with the Federal Government on opening the Torkhum border formally 24/7 for the first time ever, the Provincial Government actually granted a hundred million rupees to the Federal Government to put in place more staff and equipment at Torkhum because it felt like, FBR and customs processes were too slow.
The results were immediate; trade volumes went up by 30 to 40% almost overnight. COVID restrictions of course have impacted that. Many of Pakistan's economic and financial problems are born by both the public sector and the private sector as well due to not thinking out of the box in terms of what greater revenue spent better can do for things like infrastructure to improve Pakistan's economic productivity.
If I were an investor, before incentives of any sort, I would just want this country to have uninterrupted power, whether that be electricity and gas, that's available easily. And if we solve that, we enable the industry to work confidently 24/7, 365 days a year. If I can work confidently 365 days a year,24/7, I'll be more confident in being able to put in place investments and know that I will get a return in the longer term. That is where, and the sort of thing that I would urge the private sector also to push government on and that's where we try to spend our energies on this way.
Q- You have talked a lot about the importance of digitalization and IT. What is the KPK government doing to encourage startups and is there anything being done to incorporate them in the government machinery?
TSJ : On digitalization, I think government should be doing more, but I don't think that is just something for the political leadership to do. By digitalization, I mean, frankly, and let me say this bluntly, there is no excuse today for there to be a single piece of paper for important decisions being taken in Government, certainly nowhere near the volume of paper that we use. We did an analysis that shows that the average summary takes around 80 days to approve. I must say that the will to change this cannot just come from the political leadership, it needs to come internally from the civil services and they should have a will to reform processes. I think that is hugely important. I remember using email in Peshawar in 1995, it's 2020, but email is still not a legal instrument of communication in government and that should give us food for thought. It is an area where I believe that, while we have taken baby steps but a lot more should be done and I think that over there, many of the excellent civil service leaders across Pakistan must take more of a step to be on the front foot.
Coming to the point regarding startups, we are encouraging startups. We have an IT board, we have incubators of our own and we also have an NIC office in Peshawar that does great work. The startup economy is flourishing in Pakistan and I've personally gone and, engaged with them, perhaps at least 15 times over the last two years because I believe that it is important for them to know that they have support from the highest levels of the Provincial Government, not just of the Federal Government.
I truly believe that startups will find a way because we have very dynamic talent. While talking about talent in Khyber Pakhtunkhwa, I will actually use the words of the former head of the NIC set up who said, “it seems that this province has perhaps the most hunger and the rawest talent that we need to channel for change.”
In this case, I actually believe that government's job is that while startups will find a way, government should actually get out of the way and we've taken steps to do that. I think we can actually do more of that. We've reduced taxes on online marketplace businesses to almost zero but I think it is also more important that we encourage that talent and engage that talent. We continue to make it easier for them to operate and I think dividends will flow and we will continue to do that.
Q- As a consultant, what message would you like to give to the upcoming entrepreneurs in Pakistan?
TSJ : I would say, follow your dreams and don't be discouraged by the resistance and setbacks that you face because. success never comes easy. Somehow in Pakistan, we can sometimes be taught to try and search for the shortcuts to success. I think there are phenomenal success stories. Take Careem for example, founded by an ex-colleague, a Pakistani and a success story that seemed very unlikely when it was launched. I was there with the founder, Mudassir Sheikha when it was just an idea in his head and that perhaps is the sort of example that best illustrates that even if every entrepreneurial story will not be a humongous success but if you work hard enough, having that idea and have a bit of luck fall in your favor, you can have success not just at the local level or national level, but you can create success stories that are global in scale. That's what we should actually be looking for to create many more Careems and many more such ventures, that actually transform what entrepreneurship in Pakistan can achieve. I know that there's not just one Mudassir Sheikha out there, there are many but we just have to instill the belief that they should follow that dream.
I think that the one thing that the first time when I heard, struck me as odd, but it's very powerful. It is that in the context of entrepreneurship in the US which is perhaps a society that values entrepreneurship the most. Failure, which is an essential ingredient of entrepreneurship is seen as a badge of honor by entrepreneurs because it represents the learning that enables you to be successful in your next venture and that's perhaps something that I would leave with many of our upcoming and emerging entrepreneurs, so that they can be encouraged by the fact that they can be bold and they can fail because when some of them will succeed, it will help transform the entire country and not just their own life.