Senior economist and a former Advisor to Sindh Chief Minister, Dr Kaiser Bengali has underlined the need for slashing imports including banning furnace oil imports and shifting the power generation on indigenous sources like hydel, coal, wind and solar.
Speaking at a press conference at Karachi Press Club (KPC) on Wednesday, Dr Bengali said exports should be increased by setting up industries. Currently, industries are not being set up and only service sector is flourishing, which is repatriating foreign exchange to their own countries.
"Technically, Pakistan is already in default; given that there emerges a net negative balance, if the foreign loans that Pakistan owes to foreign interests are deducted from the foreign exchange reserves," he said, adding that this time, default can be avoided only by compromising some of our political sovereignty.
Dr Bengali said he has done a research on Pakistan's economy spreading over a period of 25 years from 1990 to 2015, which indicates that our agriculture and industrial production is declining as compared to population growth rate. Pakistan has become a casino economy and development projects are identified, not in the public interest, but by contractors' interests. The management of the economy, particularly post-2000, has rendered the economy hostage to foreign interests, he added.
In the report, he has provided 12-point Economic Revitalization Programme, which included amending Foreign Direct Investment (FDI) policy to encourage investment that earns export value greater than profit remittance. Reduce GST (Goods) rate to 5%; single stage with no adjustments, no refunds to promote manufacturing, he added.
Dr Bengali said the FDI is coming only in the services sectors like mobile phones, but unfortunately, the profits generated from FDI is repatriated to abroad.
The country is facing both Dollar (imports and exports) and Rupee crisis (income and expenses). Our imports are increasing and exports are declining, which is creating crisis. Dr Bangali suggested utilizing railways for cargo transportation and rehabilitating Railways and shifting bulk of inter-city goods transportation from road to rail transport. Rail consumes one-third less fuel per tonne/kilometer than road transport, he added.
For this purpose, he proposed to set up a Holding Company to own Pakistan Railways and NLC and create an integrated goods transportation network: long distance by container trains and onwards by container trucks.
Dr Bengali said the economic decline also poses serious threats to the security of the country. Pakistan's armed forces personal are second to none in courage and bravery and have not been shy of making sacrifices in times of war on our borders and within. However, soldiers, sailors and airmen cannot fight with their muscles alone. They need armored cars and tanks and fighter planes and warships to carry the fight to the enemy. All of these need gasoline; gasoline costs dollars; dollars are earned through exports; and exports are generated by a vibrant manufacturing sector. Wars cannot be fought on the back of a collapsing economy.
For industrialization, Dr Kaiser Bengali said private sector is not investing in industries. He recommended reviving Pakistan Industrial Development Corporation (PIDC)'s role in setting up industries in Public-Private Partnership mode. Industries be set up by PIDC, with majority public funds and private management and sold to the private partner after achieving commercial production.
Dr Bengali said it is clear that Pakistan has to go to IMF at any cost and to accept all its conditionalities. "IMF's conditions are the same even if we receive $1.0 billion or $10 billion", he added.
He said agriculture and manufacturing are the commodity producing base of the economy and has deteriorated to levels where output, exports, revenues and employment opportunities are effectively declining. The GDP growth reported year to year is artificial, as wealth is being created largely through speculation in the stock market, the property market and the commodity market.
The ashraafia (elite) have enough financial cushions to bear the brunt of the emerging crisis. In any case, all they will have to worry about is how to reach the airport to fly out to the safety of their stashed-away investments abroad. The common men, the bulk of the population, will be left facing mass unemployment and inflation - and poverty and hunger.
He suggested introducing principle of 'Right of First Purchase' in land/property transactions and also principle of 'Right of First Purchase' in imports.
He said despite abolition of concurrent list, many departments in the federal government are still operational, which spend a lot of public money. He suggested reducing current expenditure, including non-combat defence expenditure. The spurious Ministries and Divisions at federal government level like Education and Training; Housing and Works; Human Resources and Training; Industries and Production; National Food Security and Research; Climate Change; National Harmony; National Heritage and Integration and National Regulation and Services be abolished.
The following Divisions be merged with their original Divisions: Defence Production - Defence; Information Technology and Telecommunications - Communications; Postal Services - Communications; Revenue - Finance; Statistics - Finance; States and Frontier Regions - Kashmir and Gilgit-Baltistan Affairs.
Speaking on the occasion, Executive Director of PILER Karamat Ali said that there was no talk on economic issues and political parties are bashing each other. He said despite the fact Pakistan has acquired Generalised Scheme of Preferences (GSP) Plus scheme from the Europe the labour unions are declining. No serious measure is taken to implement the international commitments, he added.