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Business

November 10, 2018
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PTI not different than previous governments’ in visionless policies

Business

November 10, 2018

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LAHORE: The present government has continued all those policies that failed to put the economy on a sustainable path. It is also supporting the five exporting sectors that got support from all governments in the last four decades; without satisfactory results.

When any sector gets facilitations from the state, one expects its share in the global market to grow. Unfortunately, the global share of the five pampered exporting sectors has seen their global share declining in last three decades.

The share of textiles, the largest recipient of government facilitations has declined from over two percent to 1.3 percent in the global market. Sports goods once were a force in the global market, but our presence now is nominal.

Our surgical instruments were once considered the best in the world, but after rapid automation in many economies, we find it hard to find customers since we operate on obsolete technology.

We lost major share of our hand-knotted carpet market to Afghanistan and Iran. Our leather products lack quality, though we produce excellent leather. We lack technology and innovation to produce quality leather products.

We cut a sorry figure in all five major exporting sectors in global markets, yet the government continues to support them. The sunshine sectors include IT where we have no comprehensive policy. In fact, a large chunk of IT receipts come in informally.

We should find out as to why the IT exporters prefer informal payments? We must facilitate the exporters of software to encourage them to bring in money formally. Pharmaceutical is also a promising sector. The pharmaceutical industry is hostage to the Drug Regulatory Authority of Pakistan that keeps a tight lid on domestic drug rates that result in discontinuation of many drugs that are not commercially viable at DRAP fixed prices.

The discontinued drugs can be exported at much higher than DRAP fixed rates, but foreign buyers never pay higher than the domestic rates of the exporter. A sensible policy as suggested by World Health Organization is to fix average price of each drug that is prevalent in three nearest economies. For Pakistan, it could be India, Bangladesh, Sri Lanka or China. Current drug regulations are stressing domestic patients (they are forced to buy discontinued drugs at black market prices) as well as denying Pakistan an export market. The halal meat sector has never been facilitated, although its potential is over Rs4,600 billion.

Pakistan today needs both export and revenue boost. Developed economies plan their growth strategies through well laid plans. In Pakistan, there is no industrial policy and growth is linked to the protection, which the state announces for any particular sector in the annual budget.

There is no think tank operating at policy level in Pakistan that sets growth goals for each industrial sector. In Pakistan, the government provides short-term solutions to serious hurdles faced by the industries.

Bank mark-up, high energy cost are issues that cannot be resolved in one or two years. The entrepreneurs are mentally prepared to move ahead keeping these drawbacks in mind. The power of the rulers to provide relief to one industrial sector while ignoring the rest creates uncertainty and bad feelings among those that are deprived of the relief.

As far as the utilities and bank mark-up are concerned, there should be a uniform policy for all sectors. Matters like facilitating a sector in developing a brand or exploiting a particular market could be addressed by the state separately.

Pakistan’s demographics are both a challenge and opportunity, as 11.5 percent of its population is between the ages of 15-19. This means that 20 million people at the rate of four million per annum join the workforce in the next five years.

At the present level of productivity, we would not be able to produce things for this age group, who will be the prime consumers as well. Entrepreneurs want to exploit opportunities that are in the offing but need a prudent and viable industrial policy.

Ideally there should be an economic policy statement and the annual budget should follow its objectives. Pakistan has come a long way from a zero industrial base to rapid industrialisation till mid-60s.

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