‘In Pakistan, half-baked policies fail to feed the starving economy’

Comment

By Mansoor Ahmad

LAHORE: Pakistan’s economic policies frequently fail because stakeholders mostly tend to live with compromised decision instead of hashing out the issues to the bare bones and arriving at sustainable long-term solutions that are broad in their spectrum of benefits.

Globally the economic issues particularly relating to businesses are given high importance. The different economic ministries work in cohesion and complement each other. In Pakistan the policymakers are too ‘busy’ to spare time for stakeholders like exporters, manufacturers or others.

Even if they agree to meet, it is for an hour or so, during which 15-20 businessmen plead their cases in a haphazard way. In most of the cases the message is barely delivered as the attention of the time-pressed economic managers remains glaringly divided during the session. Diversified views coming from all sides make the issue even more complicated. Moreover problems faced by different sectors cannot be explained in such short time.

The planners have not fixed their priorities. They should evaluate the demands of each sector and its subsector and then decide what action would bring the best results. Take the case of exporters for instance in every sector there are different stakeholders. Each stakeholder wants a different change in policy. In case of textiles the spinners’ main issue is power tariff and energy cost as over 80 percent of the power and energy in textiles is consumed by spinning industry.

The value-added sector has the ability to cope with higher power rates but they are more concerned about refunds pending with the government. The spinners want high duty on yarn import. The value-added sector wants yarn import to be duty-free as it is their basic raw material. Moreover many types of yarns are not produced in Pakistan. Both basic and value-added sectors plead for subsidy but the subsidy provided on yarn export is counterproductive as it is imported by the global competitors of domestic value-added sector. Subsidized yarn would be cheaper for the foreign competitors but expensive for local industry. Economic decisions are delayed because of the divergent and often opposite recommendations put forward by different stakeholders of the same sector that confuse bureaucrats, who are themselves not experts on the subject. This is a flaw in our bureaucratic setup. We have to groom trade experts who reach the top without being transferred to any other ministry. .The bureaucracy dealing with economic issues in Pakistan generally takes decisions on new taxation, duties or levies in light of the feedback they get from different stakeholders.

Experts point out businessmen the world over usually want policies that benefit them individually and for this purpose suggest measures accordingly. They say a prudent and competent economic manager listens to the points of view of all stakeholders and then takes a decision in light of ground realities that are in the best interest of the country. However those lacking competence get confused when they are bombarded with divergent proposals on the same issue. The businessmen lobbying for their proposals based on vested interests do their homework properly. They prepare presentations telling half the truth and highlighting only those facts that suit their purpose. A competent economic manager would immediately know that some facts are missing and would gather them through his own staff before arriving at a conclusion. An inexperienced one would jump to the conclusion on the basis of that presentation.

However if another set of businessmen come up with a rosy presentation on the same subject a few days later proposing a different change in policy, the knowledgeable economic manager would be well prepared to argue with the pros and cons of the proposal . An inept person looking after the economy of the country however would get confused because he would be impressed by this presentation as well.

Businesses also complain about withholding taxes on cheques and utility bills have no impact of cost of doing business in the country; though it is an indication of government’s incompetence to document the economy. What is adversely impacting the viability of sectors like textiles in Pakistan is actually the non-regulated import of fabric, apparels from competing economies through under-invoicing. This has denied the local textile sector domestic market and made them unduly dependent on exports.