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April 11, 2021

Rogue interests

Business

April 11, 2021

LAHORE: There is no denying Pakistan’s economic woes are of its own making mainly because its ruler’s interests always precede the nation’s.

Pakistan is a highly resilient nation. We were distinguished by the World Bank as the country that had never posted negative growth under the severest economic crisis- the distinction we lost by posting negative growth last year. That proved that even resilience has a limit.

Each government that assumes power comes up with its own economic agenda. There is no consistency in policies. Each government tries to find out the faults in the previous regime. They commit the same mistakes during their tenure. One thing common in almost all governments has been nepotism, awarding permissions and contracts to the favoured ones. All keep bureaucrats under pressure through frequent postings and transfers. The development funds are distributed among the public representatives belonging to the ruling party to carry out development work in their constituencies.

The bureaucrats have institutionalised corruption. The money is distributed through rank and file. From clerk to the highest bureaucrat with lucrative shares reserved for the concerned minister. Only a few resist this institutionalised corruption. The result is that corruption continues unabated in ministries where huge money could be made. Power sector inefficiencies for instance remain high because of this institutionalised corruption. If we calculate the money made in the power sector it amounts to hundreds of billions every year. No single individual takes it all. It is distributed in a manner that everyone makes sincere efforts to maintain or even increase inefficiencies.

The inefficiency in the health ministry similarly benefits employees across the board. In seventy years we have not been able to put in place a transparent mechanism that determines the rates of medicines. Bureaucrats keep lid on increase in prices of drugs for a long time. During that period they selectively allow increase in rates of few drugs out of thousands of applications received. Only those applications are entertained which ‘they’ want to oblige.

When drug shortages increase beyond control the entire industry is allowed to increase the prices under a formula. Naturally the price increase allowed after years of denial do not go well with the public and the regulators again start strangulating the drug manufacturers. They start with the past practice of allowing increase in rates of few drugs probably after seeking their rent. The increase in rates of 10-15 drugs goes unnoticed and the game goes on.

The low tax collection is also due to the institutionalised corruption in the revenue department. People do not hide their wealth in Pakistan. They show it off through their luxurious residences, high rise plazas, and luxurious cars worth Rs8-10 million. These live styles are visible to even ordinary men. But they somehow escape the eyes of the tax collectors. They do not do so on charity but on rent. They tolerate under filing by manufacturers. They look the other way when smuggled goods are openly sold. In fact in all big cities there are specific markets that are notorious for selling smuggled goods but these remain invisible to the tax machinery for obvious reasons.

Pakistan has gradually lost its advantageous global positioning in trade mainly due to deterioration of all governance standards.

Governance guards national interests, while corruption protects self-interest. Today our road infrastructure is in shambles, 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 China to Karachi. This is because we have made the cheapest and quickest mode of transport Railways redundant despite having excellent rail tracks.

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. Today we are low-cost, low-quality and low value-added producers of goods, while our competing economies have gone high-tech. Successive governments showed urgency in signing international agreements and conventions without bothering to analyse whether these were in our national interest or not. Pakistan for instance has signed ILO conventions that have not even been signed by the United States, Japan, China, or India.

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. India is not the only country in this region.

We have failed to make inroads in markets like Afghanistan, Sri Lanka and Bangladesh. In fact we have lost substantial markets in Afghanistan to India and Iran. We have almost capped CPEC (China Pakistan Economic Corridor) after making huge investments in infrastructure.