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January 6, 2021

Hopes for the new year

January 6, 2021

Now that 2020 is over, let’s start our new year with a firm resolution and a big hope of economic recovery in the wake of a successful vaccination program ensuring a relatively Covid-free world.

The just-past year played havoc with humanity in the form of restrictions on movement, unprecedented lockdowns, economic downturns, joblessness, fear and a big death toll. Pakistan is a case in point.

Pakistan suffered a lot when the government announced a lockdown in March last year, due to the pandemic, and all sorts of economic activity came to a standstill. Comparatively speaking, the government performed better in the Covid-19 days by starting a vigorous cash disbursement program through the Ehsaas initiative, announcing an incentive package for the construction sector and bringing down the interest rate from double digits to single digit, supporting large-scale manufacturing.

However, some issues could not be tackled well, especially food inflation owing to the sugar and wheat scandals, and fuel price hike owing to bad management by the energy team, as is obvious from the recent Inquiry Commission Report on the shortage of petroleum. The government smartly resorted to smart lockdowns instead of a full-time lockdown, and resumed economic activity due to which our exports started performing better along with a positive outcome under the head of current account. The concept of a Roshan Digital Account was introduced by the State Bank of Pakistan for overseas Pakistanis; this has also started positively contributing to the investment mode of foreign remittances.

There is an urgent need to offer new incentives to, along with the construction sector, other industrial sectors by creating a large number of Special Economic Zones (SEZs) for export-oriented growth under CPEC. The IT and Telecom sector is one of the promising sectors, and needs to be promoted for export-led growth. The export of trained manpower is another sector that needs to be promoted by enhancing the role of NAVTTC and TEVTAs, as we have a lot of scope owing to our youth bulge, which can contribute a lot in economic activity.

If we look at the figures of foreign remittances of countries like Vietnam, Philippine, India and Bangladesh, it is all due to technical manpower working abroad as against our raw labour exports to the Middle East, especially Saudi Arabia and the United Arab Emirates. There is also a need of more emphasis on the value addition of textile products, which has become stagnant due to traditional exports constantly demanding subsidies. More emphasis by Prime Minister Imran Khan on the promotion of livestock, livestock-related products and honey is not bad but the large-scale manufacturing industry should be prioritised for the uplift of the economy.

There are definitely new hopes for Pakistan and Pakistanis at the beginning of the new year. It’s a considered opinion that life will be different during 2021 as compared to 2020, owing to multiple reasons – ranging from better economic conditions to improved human development all over the world including Pakistan. One thing is for sure: the economy will improve once we are out of this corona crisis, although it will take quite some time to achieve the level of economic development that was available in the pre-corona days. Our textile exports as well as large-scale manufacturing have already started improving. The job market is also improving due to the construction industry package.

We can also reasonably expect a healthy competition in the IT sector and Telecom sector coupled with e-learning programs in 2021. IT services exports are also expected to enhance in the coming days owing to the Digital Pakistan Vision approved and launched by the prime minister back in December 2019, although there are tangible issues of affordability and accessibility of broadband internet all over Pakistan.

The Universal Services Fund (USF) has been rendering wonderful services in the field of rural connectivity but again spectrum renewal, creation of telecom tribunals under the Telecom Act, right of way for telecom infrastructure are some of the real issues which also need immediate attention of the government. The recently announced mobile manufacturing policy is an optimistic vision for telecom sector growth in 2021. We can expect a new vigour in CPEC-backed SEZs, starting with a great zeal and feel-good factor in Pakistan, especially the Faisalabad and Rashakai SEZs in the coming days.

There is a lot of optimism and hopes for the new year, which may come true if the government takes the right steps in the coming days and months. It all depends on the implementation of visionary policies in the field of economy taking into account agriculture, industry, and the services sector including but not limited to the promising IT and Telecom sector, which may bring prosperity for the people of Pakistan as well as accolades for the government.

The writer is an economist.