EDITORIAL: Everything the ADB (Asian Development Bank) report has said about the need for structural reforms to shift the economy to an export-led growth trajectory, and also to reap maximum benefits from CPEC (China Pakistan Economic Corridor), has been known to everybody in Islamabad for a long time. And it is indeed ironic that the “Economic Corridor Development in Pakistan: Concept, Framework, and Case Studies” report from the Manila-based lender has come out just when the prime minister has gone to China, and the press is speculating, not really officially denied, that one of the major talking points will be breathing fresh life into CPEC. Yet even getting the Corridor back on track, in the best-case scenario, is not going to be enough.
As the report noted, “CPEC alone will not bring optimal results. Structural reforms for private sector development are needed as well”. And “also, tax reforms are essential to broaden the tax base and enhance the perceived fairness of the tax system”. But hasn’t everybody been talking about exactly all this since forever? Aren’t “tax base” and “private sector” reforms part of every party’s manifesto? In layman’s terms, ADB’s complicated economic language only meant that we’re still no closer to instituting critical reforms than when their need was first felt many years ago.
But it did go on to mention that corridors work best when they partner with more regional trade schemes and also, very crucially, attract private sector investment; both local and foreign. Another point that is as old as time — as old as Pakistan, at least — is that Pakistan’s geographic location affords it immense commercial as well as political leverage; if only it were able to truly harness its potential. And wasn’t CPEC the game-changer that was finally going to get that job done?
Yet having the right pieces is one thing and putting them in the right places is quite another. That, because of a whole host of reasons, is something that we’ve struggled with throughout our existence. Now, however, things have come to such a pass that unless something is done, very urgently, the country might well stare sovereign default right in the face.
SEZs (Special Economic Zones) are a very good place to start, as the report very rightly recommends. It’s also the best place to lure the private sector from all around. And, more than anything else, it’ll also help cut through the red tape that has spelled the end of many, many such adventures in the past; though never quite as spirited as CPEC. It’s no surprise that even ADB observed that “roles and responsibilities of the federal, provincial and local governments need to be streamlined, and vertical governance imbalances in revenue generation should be reduced”. That’s another thing that everybody, all the way up to the Supreme Court, is trying to push along.
The best thing that the report does is identify inefficiencies in the system that need to be got rid of. That’s always very high on any priority list. And it saves the government a lot of homework. The need of the hour, then, is not just getting CPEC back in top gear, but also synergising its benefits with the private sector and milking the most out of this historic opportunity to get our act together. It’s also a rare chance to reform all the inertia right out of the arms of the bureaucracy that overlap with trade policy, at the very least.
Yet the Pakistani system isn’t exactly known for adapting to times. And many such warnings have been flashed in the past. Whether or not CPEC also turns out to be just another one of those lost opportunities, a far cry from the bonanza it was made out to be, will depend to no small extent on which foot the present Pakistani government puts forward while it’s in Beijing, and how it is received there, and then also how it follows whatever happens there on the ground over here.
Copyright Business Recorder, 2022