By: Ehsan Lashari
One of the persistent yet lesser talked about challenge faced by Pakistan is policy making. The incompetent policy structure has sunk overall economy of Pakistan deeper into the crises. Over the past years, different governments have been focusing on redressing the macroeconomic imbalances. However, there are host of other problems which have driven the lingering economy into whopping recession. The apparent problems in building of conducive business environment are the robust cause of economic depression. The lack of jobs and poor foreign investment triggered the economy of this country in full blown crises of uncertain economic milieu.
Pakistan has not focused on the conducive environment for the business sector. As British economist Mankew remarked in his macroeconomics book “If one country wants to take over the poverty and one needs to establish strong economy, make proper environment for business.” This contemporary problem of Pakistan has created insignificant milieu for economic balance and measures. Paucity of business in country inhibited country into limited jobs which are only on government level. Moreover, government is not able to attempt more jobs as required. Owing to this, country is in affliction of serious unemployment deals of trouble. According to statistical report 2019, the unemployment rate in Pakistan was at approximately 4.45 percent, a slight increase from 4.08 percent the previous year 2018. Another prediction of IMF shows that it will be more than 6 to 8 percent at the end of 2020. This worsening conditions are only due to lack of prominent business sector in Pakistan.
Coercive economy needs another positive and significant environment which is for foreign investment. The foreign investment mushrooms the rate of FDI (foreign direct investment) . Unfortunately, foreign investment in Pakistan is not attractive much as it needs because it needs cheap labor, positive law and order situation, and corruption free environment. According to the foreign investment report 2019, the total stock of FDI stood at 34 to 38 billion rupees. However, India has 61 billion rupees foreign investment. Foreign investors witness their self-interest. They do not remain in waiting for better law and order situation in Pakistan. These repulsive forces like corruption, political instability, and worse law and order situation, have diverted foreign investors to invest in South Korea, Bangladesh, and in India.
Pakistan is in deep and serious quagmire of economic uncertainty. The total GDP growth of this country is 313 billion dollars. It ranked 42th according to GDP growth. The inflation rate remains 8 to 10 percent. The per capita income is 1600 rupees. The labor engaged agriculture is 42 percent whereas contribution of agriculture in GDP is 19 percent . Agriculture is giving deficit in output . It means that agriculture does not have much potential as it has to be . The labor engaged in industrial sector is 23 percent but its contribution in GDP is 21 percent . The 30 percent of Pakistan is living below the poverty line . Below the poverty line means that one individual who is earning less than 1.25 dollars in a day . This accounts that 30 percent of population of Pakistan is earning about to 1.25 dollar or 150 rupees daily.
This depicts the lethal conditions of economy in Pakistan . The import of Pakistan is 56 billion dollars but on the contrary export is only 25 billion . This country is being subdued much by the setback of Net-export deficit . The total remittances are 20 billion dollars . Additionally , foreign reservoirs costs about 10 billion dollars totally . The debt upon Pakistan is about 92 billion of dollars . These debts have formulated economy of this country into destruction and prolonged illness . Pakistan needs to pay these debts in installments but , when it does not meet installments in given time ; The dollar price flies and downturns the value of rupee . After the ruling price of dollar , Pakistan goes to IMF and IMF imposes certain conditions . Furthermore , under those conditions Pakistan stumbles much and more in serious crises.
Moreover , Pakistan needs to focus on policies to come down upon these crippling crises . Pakistan needs to take competent decisions rather than only concentrate on macroeconomic imbalances . The competent policies and painstaking decision are only tool to cope with these circumstances .
Firstly , the Reco Diq case has afflicted the economy of Pakistan and raised some comprehensive and legal questions upon Pakistani government and mediocre establishment . This misplaced patriotism has instilled Pakistan economy into robust setback of 5.9 billion dollars in International Court. Pakistan circumvented the foreign company to sue in Reco Diq after the investment of billions of dollars . Pakistan needs to come into focus on joint policy and conducive environment for foreign companies to invest or It needs to entrench an organization including experts and economists which only focus on foreign investment .
“There are several areas in economic landscape that require competent decision making”
Secondly , Sui gas reservoirs are serious depleting day by day . This grave depletion of gas reservoirs would create majority of crises in the near future . Pakistan . Pakistan preceding leaders failed to arrange for sustainable imports of gas e.g through the Iran pipeline . The pervious government negotiated with Qatar for Gas supply which is quiet expansive . So Pakistan needs to contact with Iran for gas pipeline rather than Qatar . To remove this , government should make the entire making process on LNG gas business more transparently and ignore the external mediocre uniformed forces .
Thirdly , over three hundred government entities ( small businesses ) are losing two percent of Pakistan GDP each year . Pakistan needs to reconstruct these entities like PIA , and steel mills , or should be privatized or remained close down for redressing of policy . So , government needs to entrench special plans for this purpose .
Fourthly , the small and medium enterprises are the main source of jobs creation , good and services . But the ill lack would have it , they are on the verge of borrowing for their basic survival so government needs to divert these small businesses to carry loans from government on the interest rate of 5 to 10 percent . Moreover , Pakistan needs to establish easy laon schemes for these on governmental taxing authorities .
Fifthly , Pakistan needs to establish special economic zones under CPEC . These zones would help whole the population of Pakistan specially Baluchistan where 60 percent people are living below the poverty line ; in assisting of employment opportunities . These zones could also assist the business environment in country .
Sixthly , Pakistan needs to avail waste disposal ; Karachi produces 11000 tones of solid waste daily ; Lahore 7000 tones ; Hyderabad 4000 tones . This waste should be availed by creating power plants . Some Latin American countries are acquiring 16 to 20 kMW electricity from this solid waste .
Seventhly , Pakistan is unable to use the Thar Coal reservoirs for the power generation because there is lot of carbon emissions and does not have enough water to cool these reservoirs . So Pakistan needs to give project of Thar Coal to privite foreign companies against a small share
Finally , manufacturing contributes only 10 percent to GDP . This country will remain non industrial unless it builds the manufacturing industries . After establishing of industries , Pakistan should impose essential tariffs to get steady contribution in GDP.
These policy problems could be compensate through aforementioned provisions . Expansion of cooperation with neighboring countries would help to ensure pragmatically these policies easily . Because , domestic problems needs effective implementation of policies . This can be practiced through ignoring of external policies . This country does not need to focus on defense budget besides it needs to concentrate on economy . Pakistan economy could be underpinned by inhibiting the influence of mediocre uniform ( Wardi wali Sarkar ) in policies.
The writer is a student of Economics at University of Baluchistan