Blackmail, indecision and breach of contract

LAHORE: There is a disconnection when we look at the state, and trade and industry, despite the fact that this government has interacted with the businesses much more than the previous regimes. The problem arises when government fails to act on agreed points.

In many cases, the government fully understands the impracticality of its decisions, but continues with those impracticable decisions. In some cases, the government is convinced that Pakistan having a full database of its citizen has the ability to document the entire economy, but feels constrained to implement this concept by linking all economic transactions with the CNIC numbers of buyers and sellers.

Government fails to even act on issues where businesses and state are on one page. It is reluctant to act on issues necessary for improving tax compliance fearing traders’ agitation.

Even before coming to power the ruling party assured the exporters that they would be provided gas and power at regionally competitive rates on long-term basis. After assuming power, the government announced to provide five exporting sectors a competitive power and gas tariff for six months.

The economic team never realised that exporters could never benefit from such benefit on short-term basis. When they negotiate the export deal they execute in four to eight months. They cannot evaluate their cost on a short-term concession.

This fact was made known to the economic planners in various meetings and they understood the underlying problem. Still next three energy and tariff concessions were again announced on six monthly bases. In the next budget the tariff concession has not been announced (as it requires subsidy).

At least exporters should have been informed that a policy was being drawn. However, exporters are also agitating for point scoring only. After steep decline in rupee value the electricity tariff is already in line with the regional power tariff. The cost of imported gas is also much lower than the cost of locally supplied gas.

Exporters this time around are facing the problems of declining demand in the global markets. No concessions would boost the demand.

Moreover, highly devalued rupee was so advantageous for our exporters that the Indians were finally forced to devalue their rupee as well. Still, during the PML-N regime one Indian rupee was equivalent to Rs1.70 Pakistani rupees.

Now one Indian rupee is equivalent to 2.10 Pakistani rupees. Our exporters have failed to take advantage of high devaluation.

Economic planners do not have the courage to confront the exporters lobby and insist that they enhance their efficiencies instead of pressing the government for further concessions.

Another contentious issue between the government and the businesses is that of CNIC. The government last year decided in principle to document all purchases from retailers through CNIC.

All retailers were asked to provide the CNIC number of all purchases above Rs25,000. The traders and even the industry agitated.

The matter was first deferred for one month, then two months and finally for six months. After lengthy negotiations, it was notified that from January 1, 2020 all purchases above Rs50,000 would be documented through the CNIC of the buyer.

The notification was not fully implemented by the time Covid-19 hit the economy. Traders started agitating that the demand has declined after pandemic and buyers are not ready to provide their CNIC.

Now in the budget for the next year it was announced that the CNIC number of the purchaser would be mandatory on purchase of goods or services worth Rs100,000 or above. Traders again are opposing it.

They know that they can exert pressure on the government and defer its implementation indefinitely.

All this is happening at a time when we are hard pressed for revenues; when we are desperate to enhance our productivity; when businesses need hand holding from the state to move on from depression to growth.

The government has never adopted a principled stance. It is always prone to pressure from vested interests.

Economy and growth are triggered through prudent policies of the state. A government has to exert its writ particularly in cases where it is convinced that it would benefit the nation and the economy in the long run.

It should be prepared to face short-term agitations instead of giving in to its justified stance. This could only be done by a leader who has confidence in his/her ability.