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January 11, 2019

Writ-less govt, witless policies, rudderless economy

Business

January 11, 2019

LAHORE: Pakistani economy’s biggest drag is the absence of the government writ as most of the laws that ensure fair trade and better regulations are in place but authorities are unfortunately too timid to enforce them.

The law for instance makes it binding on the sugar mills to make the payment of the sugarcane they purchased from the farmers within fifteen days. Yet the millers hold the payments till next season.

They then ask the government to give them concessions and subsidies so that they could export the surplus and clear farmers’ dues.

The law also makes it mandatory for the millers to start sugarcane crushing every year on October 1, in Sindh and October 15 in Punjab. Failure carries heavy penalties on millers, but the season invariably starts in the last week of December or in January in both provinces. No mill has ever been penalised for starting crushing as late as mentioned above.

The environmental law in Pakistan is very clear on the way the industries could operate. They are not allowed to throw polluted water in waterways. They cannot pollute fresh water channels; they cannot release the industrial waste in the normal sewerage. All industries are forbidden to emit smoke from their chimneys. Yet all these violations occur with impunity and the regulators look the other way.

The state law is clear that the shops and markets should close after sunset. This was done to conserve power as its use is at peak after dark. Another aspect was to ensure fair working hours for the workers. The shops that open at 10:00 AM or 11:00 AM in the morning close at past midnight to 1:00 AM, stretching the working hours unfairly.

Still no government has been able to get this law implemented. The nation is paying a huge price of this indiscipline. In most of the developed countries and in many emerging economies the shops and markets open at 9:00 AM and close at 5:00 PM. The shopkeepers and the buyers engage during this time and spend the rest at leisure. Its saves them power when it is most needed nationally. Even in Pakistan the power consumption of around 2,000 MW could be saved if markets closed at 5:00 PM.

It is a matter of concern that trade and industry has not played its due role in guiding the economy towards a sustainable growth path. Creditable global institutions in fact praised Musharaf regime for introducing economic reforms that were fiercely resisted by the private sector.

This resistance resulted in lopsided implementation of reform process.

The same institutions pointed out that in contrast the reforms in India were led by the private sector and its willingness facilitated the Indian government to introduce them without any resistance.

This approach has in fact made the difference between the leap taken by Indian economy over Pakistan. The Indian tax collectors for instance have the authority to check even the residences of the businessmen to find out any hidden wealth.

The Pakistani tax authorities cannot even dare to make a list of stocks displayed openly by the shopkeepers. Indian regulators could confiscate any smuggled item found in the markets. The Pakistani regulators turn a blind eye as almost all the local markets are flooded with smuggled goods.

Under-invoicing in India is not possible as the local industry jealously guards its interests and frustrates all such measures. The custom authorities in India have no option but to confiscate the under-invoiced goods. In Pakistan even after proven under-invoicing of over 200 percent, the importer is let off the hook by allowing him to pay the duty according to the actually assessed value. He thus is not a loser even if caught.

The real manufacturing sector hesitates to invest in Pakistan because of unchecked smuggling and under-invoicing. The only industries that are flourishing in Pakistan are the ones based on local raw material and are limited in number as they are operated by few or families.

Besides textile, cement and sugar industries are the other two examples in this regard. Now even the edible oil manufacturers have started operating with some collective understanding that helps them to keep the rates unreasonably high.

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