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May 8, 2018

‘9% GDP Next Level and Beyond’: Policies to continue no matter who forms next govt, says PM

Top Story

May 8, 2018

ISLAMABAD: Prime Minister Shahid Khaqan Abbasi on Monday promised that Pakistan’s economic policies would continue without any disruption whichever political government came into power.

“This is Pakistan’s second political government that is completing its full term. Let me assure you that whichever government will come next, the policies would continue,” he said while addressing an international conference titled “9% GDP Next Level and Beyond” organised by Jang Group/Geo Network and the Board of Investment (BOI).

“Your investment will be safe, we have very mature legal system and you will have very high returns [on investment],” he said and thanked the Jang Group/Geo Network for organising the event. The prime minister said, “Over the last five years, we have overcome various challenges, including security and power issues. Power shortage is the matter of the past, but now reducing its price is our challenge.”

Ambassadors of the Germany, Japan, UK, China and Turkey as well as the representatives of various international companies, investors and other officials attended conference. Abbasi said, “After coming into power, we early recognised gas shortage in the country and to mitigate the issues, we worked on import of LNG to inject more gas in the system. And now, over 30 per cent gas supply has been improved.”

“On security front, Pakistan fought largest war against terrorism in the World, in same terrain, where the world failed. We eliminated sanctuaries of all terrorist groups from our soil. It has taken a lot of our resources and sacrifices to bring security to the region,” Abbasi said.

“We invested in infrastructure not only for our own, but for the region. Pakistan would be a hub of connectivity in future, as by 2019, we would complete six-lane 1700 kilometres of motorways. We are also working on development of economic zones, seaports and airports.”

Abbasi said, “Pakistan has a lot of investment opportunities, there is not a single company that has lost money in Pakistan. Return on their investment is much high in this country.” The prime minister said, “CPEC has a great potential and the western China is now accessible through our ports.”

Later, the ambassadors of UK, Germany, China, Japan and Turkey in a panel discussion opined that Pakistan was sitting on a great asset, as its two-thirds population was less than 30 years of age. It the government invested in them and provided them good educated and training, the country could easily reach up to 9 per cent GDP growth.

They also acknowledged the government’s efforts for improving security situation in the country and also lauded its endeavours to overcome energy shortage that has been hampering the economy for last several years. However, they suggested that besides harnessing demographic dividend, the country should also focus on continuation of policies, and improving its perception in the world. They were also of the view that marketing a positive image of Pakistan was also needed.

Chinese Ambassador Yao Jing said, “We had achieved 9.5 per cent growth for 14 years through reforms and opening up our economy. We focused on development oriented policies.” He added, “We express confidence for 9 per cent GDP growth. Pakistan can achieve this target. China is optimistic for future development of Pakistan and would be a contributor in 9 per cent GDP growth of Pakistan. CPEC is moving faster while focusing on infrastructure development.”

British High Commissioner Thomas Drew said, “We do see enormous potential in Pakistan, as its 60 per cent population is below 25 year of age, this 9 per cent [target] is high side, but doable.”

Ambassador of Germany Martin Kobler said Pakistan’s young population was an asset. “I am not happy with the Germany’s degree of investment and trade with Pakistan [which is too low]. CPEC is a great idea, German investors are afraid [to invest in its projects], but I am strongly against this philosophy. They need to look into it and should invest.”

He added that Pakistan could get the 9 per cent GDP growth. “You can do it. Pakistan has added 11000MW of electricity to the system in the last five years, while earlier in 66 years, it added 18,000MW.”

Kobler added that the impediment was the country’s perception.” We do not influence our companies, but we depict a real picture of Pakistan. Security is getting better; you cannot compare Pakistan of today with 2008.”

“Pakistan should focus on three E’s [education, employment, engagement]. Pakistan’s spending on education less than 2 per cent of GDP, it should increase it. It should also focus on employment and youth should be engaged in education and politics,” he stressed.

Japanese Ambassador Takashi Kurai said in Pakistan, 81per cent of the Japanese companies wanted to expand their businesses and other to increase their employees. “Pakistan is definitely attractive, but it should focus on security, infrastructure and predictability and durability of policies and legal structure.”

Further highlighting the bottlenecks, he said that in Pakistan, customs clearance procedure was longer than other 20 countries of ASEAN [Association of South East Asian Nations] and South Asia.

“In 207 million population, 64 per cent is under 30 years. It is the ‘great, great’ element for attracting investment.”

Ambassador of Turkey Ihsan Mustafa Yurdakul, said, “I am a big believer of the development of the country [Pakistan]. It has a young population and if it is well-educated and well-trained, then it is a big recipe for reaching 9 per cent growth.” He added that the security situation had very much improved.

“We know that headlines are not the case, we know that. One thing Pakistan is missing and that is you don’t promote your country. There should be an organized campaign for it, make Pakistani successful entrepreneurs your ambassador.”

Regarding Pakistan’s important geographical location, he said, “You are the ‘South Gate’ to South Asia. You need to focus on regional inter-connectivity with neighbours and other countries.” He added, “You have the potential; you have find ways and means to produce for larger world.”

President of Overseas Investment Chambers of Commerce (OICCI) Bruno Olierhoek said the chamber had around 191 international companies from 35 countries that were contributing 10 per cent to Pakistani GDP and one-third to its tax revenues. “Over the last five years, we have invested $8 billion in Pakistan which is a clear sign of the investors’ confidence [in Pakistan].”

“According to the OICCI recent Perception and Investment Survey 2017, foreign investors believe that Pakistan is emerging and out of ten regional countries, Pakistan is best from six other countries including India, Vietnam and Philippines. The negative image of Pakistan being projected in media has been hampering the investment inflow, while in reality the situation is different,” he said

“We see more opportunities in Pakistan, including China-Pakistan Economic Corridor (CPEC). I am confident; Pakistan has all opportunities and will become country of choice.” Ehsan Malik, CEO of Pakistan Business Council (PBC), said if the true potential of Pakistan was exploited, it could not only reach 9 per cent GDP growth but also easily hit the double digits.

He suggested that there should be focus on export-led growth and added, “Any meaningful growth will not happen in Pakistan unless ‘make in Pakistan and do in Pakistan’ approach was not adopted. We need to have import substitution policy to generate jobs, balance our external sector and broaden our tax base.”

“Over the last 28 years, Pakistan has to enter into the International Monetary Fund’s (IMF) programmes 12 times, but we did not address the fundamentals economic issues. Our manufacturing sector share in GDP has been falling, as in 2008 it was 14.5 per cent and now it has fallen to 13.5 per cent. Besides, this sector is overtaxed while its growth lags behind.”

“Our 80pc economy is consumption economy and major portion of our FDI is for consumer space that hardly helps exports growth. Investment needed in export-oriented sector and not in consumer sector. Pakistan’s investment to GDP is 15.9 per cent which is almost half of India, Indonesia and other regional countries’ ratios. Energy cost is also high for the industrial sector,” he noted.

“Through stable political, economic and balanced tax systems, Pakistan has the potential to reach towards the 9 per cent GDP growth and overall economic and social development. Pakistan’s media industry also has a vast investment opportunity, especially digitalisation of the industry. So far, some progress has been made and a lot can be done,” said Javad Muzaffar Goraya of Geo/Jang Media Group, said in his opening remarks.

PPIB Managing Shahjahan Mirza said Pakistan’s per capital energy consumption was one-sixth of global average, indicating a huge potential for improvement. “Over the last five years, Pakistan has made broad-based structural reforms in power sector and added over 10,000 MW of electricity to the system, in which CPEC was the major contributor which also helped us in exploration of Thar coal. In private sector, it was 6000MW addition and by 2021, another 15,000MW would be added more in which major portion is of coal-based,” he said.

“To cope with the circular debt issues, Pakistan is also working on the structural policy reforms in the sector. In next five years, we target to increase share of renewables in energy mix to 40pc. In private sector, the government is going to start renewable projects and also transmission lines projects. Besides, government is soon to advertise hydropower projects for private sector.”

Finance Minister Miftah Ismail said, “Over the last 70 years, we did not live up to our potential. Last year, the GDP growth was 5.4 per cent and this year it would be 5.8 per cent. But to bring dent in poverty, we had to grow at 7 to 8 per cent.”

“We are focusing on export promotion and in next few days the government would announce export package. Despite having security and energy issues, no multinational company has left Pakistan, because they are earning well.”

Minister of State/ BOI Chairman Naeem Y. Zamindar said, “We [Pakistani economy] are at the verge of turnaround. We have small base, but the potential is visible. We lack capital and investment. Our 95 per cent investment is domestic. We have world class investment policies. We are working on ease of doing business and have brought 75 reforms.”

He added that competitiveness had improved, “but we have to go a long way”. He said, “We we are working on establishment of Special Economic Zones (SEZs) and a special zone for aviation sector is one of them, as this sector is of $3 trillion market.”