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June 27, 2020

Exploitative regimes ensure perpetual public poverty


June 27, 2020

LAHORE: People of Pakistan are hostage to the inconsistent and exploitative policies of successive governments, which has brought our economy on its knees and kept its population constantly in poverty. Improvement is still possible through transparent policies.

The first step in this regard should be to restore the writ of the government. When you announce duty concessions on smuggling prone items, you are in fact abdicating the writ of the government.

Why is it that unbridled smuggling and under-invoicing takes place in Pakistan while it is under control in India, Sri Lanka and Bangladesh? When you gradually back off from the CNIC condition or continue diluting it, you admit that tax evaders are stronger than the government of Pakistan.

Have we ever probed as to why different sectors in India and Bangladesh surged much ahead compared to the same sectors in Pakistan? Three decades back, Pakistan was ahead of Bangladesh in Textiles, and slightly behind India.

Pakistan’s pharmaceutical sector was far superior to India in 1990. It was producing quality tyres for the local market till 1980.

Its tile industry was flourishing. In 2020, we have not only lost our advantage but smuggled and under invoiced products have marginalised many of our industrial sectors.

In exports we have hardly added $5 billion in the last 12 years, while exports of numerous industrial sectors in India have surged by $5-$100 billion during this period.

Bangladesh’s textile exports have surged from around $3 billion at the start of this century to $28 billion. We have never even touched $14 billion in textile exports.

We are the odd country out in the subcontinent, where economy has deteriorated in the 21st century. It is indeed a pity that before the start of this century, our per capita income was double than Bangladesh and 30 percent higher than India. Today Bangladesh’s per capita income is $300 higher than Pakistan and India has leaped far ahead.

There has been no sole searching for this debacle. The most promising economy of the region in the 20th century has been relegated to the most disappointing performer not only in the region but around the world.

One cannot deny the fact that the current failure depicts the failure of past regimes. In fact, every government after assuming power blames the plight of the economy on its predecessors.

The painful fact in this regard is that none of the governments that assumed power have mustered the courage to adopt transparent policies and eradicate corruption.

Every government enjoys a honeymoon period of 90-120 days, and when it fails to move transparently it gets the flake for all the ills whether inflicted by it or its predecessors.

People have reason to blame the ruler of the time if their life becomes more stressed during the reign of the new government.

However, the question is why are all governments shy of transparent reforms? Why don’t they take clue from the neighbouring economies?

Governments change hand in Bangladesh and India as well, but one thing common in them is that they respect the consistency of past policies and keep national interest above self-interest or vested interests.

Each ruler improves transparency and introduces reforms. Our rulers prefer the status quo.

They are afraid of entrenched mafias. They seek their support instead of confronting them.

They change the long term-policies announced by their predecessors. This effectively impedes long-term investment. They have failed to arrest the corruption in power and energy sector.

The most painful aspect is that governments in Pakistan put in cold storage the well-researched reports of reputed global consultants. These reports were prepared by the international consultants on very high fee paid by the state.

Take for instance that McKenzie rated the Pakistani pharmaceutical industry as the sunshine industrial sector of the country.

The report was prepared at the instance of Asian Development Bank. It quantified the exports potential and health benefits for Pakistan if its recommendations were implemented.

The then Planning Commission of Pakistan appreciated the recommendation. Pakistan would not be facing the drug shortages it is facing currently due to Covid-19 had those recommendations been implemented in next seven years after the publication of that report.

The exports would have touched $5 billion by now and Pakistan would have become a research hub on drugs, like India. We have unfortunately failed to even address the pricing issues, registration of new molecules etc.

Pakistan’s pharmaceutical industry dominated by quality domestic manufacturers has the capability and efficiency to export numerous generic essential drugs if domestic price issues are resolved (based on commercial viability).