Two steps backward

LAHORE: Every party after assuming power asks the electorate to bear some hardship so that the country could be put on a sustainable growth path.

After the end of their tenure, people find themselves worse off economically and mentally prepared for another appeal for sacrifice. The economic turnaround criteria for economic managers, is different from that of public.

For instance, Finance Minister Hafeez Sheikh at a recent webinar said the economy was on the move, which was evident from the historic profits of KSE-100 companies, the historic bank profits and the highest ever yearly increase in bank deposits.

It was really interesting that KSE-100 companies most of which are large scale manufacturers or large service providers saw their profits increase when the economy was in recession.

The banks have since long been accumulating huge profits irrespective of growth or depression in the economy.

It is simply elite capture. It shows that public resources are biased for the benefit of a few individuals of superior social status in detriment to the welfare of the larger population.

The lot of men in the street has deteriorated, but the big guns are making profits. It is not unusual in Pakistan to see many businesses posting losses (officially), but the standard of living of the owners of these businesses keeps moving up.

They drive better vehicle versions and the frequency of their foreign trips with family increases even when their business is going down. We have lost the way to move forward.

Businessmen are not certain whether to invest in the manufacturing sector or trade. Pakistan has gradually lost its advantageous global positioning in trade mainly due to deterioration of all governance standards and inconsistency of our policies.

During the Musharraf era, we were positioning ourselves as the trade corridor for Central Asia; now 20 years later we have built the China-Pakistan Economic Corridor (CPEC) road linking China by road with Gwadar.

Trade though this route has not really started. The link with Central Asia that goes through Afghanistan is unreliable, while routing trade through the CPEC network has not started.

Railways have almost derailed and PIA gone out of air. The transportation cost of a 40 feet container from Karachi to Lahore is higher than the shipment cost of the same container from China to Karachi.

This is because we have made the cheapest and quickest mode of transport Railways redundant despite having excellent rail tracks. It is a fashion to blame all our woes on outside forces like foreign powers, war on terror or even weather, but the fact of the matter is that this is the situation of our making. Politicians, bureaucracy, military and economic planners all played their role in pushing Pakistan to the turmoil we are facing. The mess has to be controlled sooner than later.

Foreign assistance has bailed us out numerous times in desperate situations, but at a cost. Many a time we compromise on our national interests and punish our consumers for the sins committed by those in power.

After every four or five years, we look towards the IMF to keep ourselves from defaulting on our loans. The IMF asks us to increase revenues through fair taxation.

We instead resort to indirect taxation to increase revenues that hurts the poor more. The rich recover all the taxes from the consumers and are not impacted.

This is the reason that all listed companies are in profit, while the common man lacks resources that are annihilated by the indirect taxes.

We are renewing the stalled IMF programme. Again, poor consumers would suffer if the government does not tax the rich according to their incomes.

Barring Pakistan, the entire South Asian and Far Eastern region prepared itself for the opportunities that are coming towards the south. Our resource allocation remained flawed.

We are facing gas shortages because the exploration policy for new fields took out incentive to explore. We ignored power and gas shortage warnings and have lost our markets to our neighbours that give preference to industries in power and gas supplies than the domestic sector.

Today, we are producers of low cost, low quality and low value-added goods, while our competing economies have gone high tech. Economy has to be treated on merit and should not be left on the whims of the rulers.

In our case, foreign policy dictates our economic policies. Regional trade should be promoted and for this the regional countries sort out the modalities.