Economic strategy

LAHORE: It is unfortunate that instead of a prudent political consensus we will have to depend on the strength of the powers that matter to move forward, as the policymakers have no time to wait for consensus.

Pakistan, or for that matter, cannot move ahead without a stable and consistent economic strategy. We have seen economic policies changing with every change of government in Pakistan. This is the reason that investors have no confidence in the economy of Pakistan.

They invest in short term business ventures so that they can benefit the most until the government of the day lasts. Another grave mistake that we made was to give power producers a guaranteed rate of return on their investment and to assure them that whatever power they produce would be bought by the state and in case it did not need power it would pay them capacity charges.

That policy is haunting the government as power production is higher than the demand. The first agreements in this regard were signed by the PPP during its 1993-96 tenure. The mistake was repeated with little variations by the Musharaf regime as well as the PML-N government during their 2013-18 tenure.

This shows that our politicians have not learned from past mistakes. Our power sector is in a mess because of this policy. The corrupt practices and mismanagement have added to our woes in this sector. Politicians of this country still do not realize that we need to create jobs that would come through industrialization. They are not bothered that a gradual de-industrialization has been taking place in the country since the start of this century. The weight of the manufacturing in our GDP is constantly declining. Our planners have concentrated only on textiles and neglected other sectors. The Indians also depended on textile exports for a long time. Their planners then started giving similar importance and facilitations to the sectors like engineering, pharmaceuticals and IT. Today, India is a major exporter of pharmaceuticals in the world; its auto-parts exports and vehicle exports are much higher than our total exports. Indian IT exports are five times higher than our total yearly exports.

Now that the caretaker government has provided a level playing field to all industries, including power and gas tariff, the other sectors are happy but the textile sector is grumbling. We have made our textile sector inefficient through unwarranted facilitations and subsidies while marginalizing the other sectors by denying them even normal facilitations that they deserve. Exports, for instance, are duty free. The principle is assured in the case of textiles but most other sectors are mostly denied this facility. The bureaucracy does not bother to evaluate the duty refunds for other sectors like they did for every textile item that is exported.

Similarly, when the textile sector complains of under-invoicing or smuggling of textile products, the government reacts immediately, while numerous sectors like tyre producers, tile manufacturers, artificial leather manufacturers, or crockery sectors and auto-parts producers regularly point to these unethical practices in their trade but nothing is done in this regard. The result is that these industries could not scale up and many factories in these sectors have closed, resulting in huge job losses.

Unemployment would remain high in Pakistan until the government comes up with a very long term policy for each industrial sector that has constitutional protection so that the next government could not change it in the middle.