Ring out the old

LAHORE: Economy has been going down the hill for a long time; it has reached a point where going further down might cost us our sovereignty. The time to act is now.

There is no dearth of resources in our country. The fact that we have survived gross misgovernance speaks volumes of the resilience of our nation. We simply must put our house to resurge as a growing and vibrant economy. Our institutions are not operating transparently. They either toe the line of the ruling elite, or the regulators misinterpreted the rules to benefit those that please them. The solutions are simple and could save us billions in many spheres.

Take for instance the traffic violations. We ignore most drivers violating on way rules, or breaking traffic signals. The most that we sometimes do is to issue them challans. The violator pays the penalty and starts repeating the violation because he was apprehended occasionally. The law enforcers should introduce punitive measures that really hurt the violators. One possible punishment could be to impound the vehicle for one to seven days depending on the severity of violation. This will act as a deterrent against all traffic violations. This is easier said than done. As soon as a bike or a car is impounded the law enforcer would receive numerous calls to let the violator go. The governance is at the lowest level ever where the word of ruling elite or superior.

Economy cannot be revived on a sustainable basis on one factor only. Best investment policy failed to bring in investment to the country. Best environmental policy was unsuccessful in stopping the ever-declining degradation of the environment.

Best competition law did not deter the cartels from operating with impunity. Most comprehensive canal irrigation system in the country failed to increase our agricultural productivity. Provision of natural gas at subsidized rates did not bring down the fertili; which rather skyrocketed. The Security Exchange Commission of Pakistan could not stop the regular speculation and manipulations in the capital market.

If we look at other countries a smaller number of laws enforcing force effectively eliminates all traffic violations. It is because the law enforcers would not be cowed down by a phone call even if it is from the highest office of the country. For them all citizens that break the law should be treated equally. The speculators and manipulators of stocks lose their entire worth when they are caught and they often do. In addition, they spend some time in jail. There is not a single example in Pakistan where a speculator or manipulator of stock has been jailed. Same is the case with those that do not pay their due taxes. Why would they obey law when they enjoy the liberty of operating freely and without accountability?

Our businessmen and the economic manager talk too much about investors’ confidence. The businessmen say that if government functionaries raid their business premises it would hurt investors’ confidence or if factories are closed on throwing industrial water in clean water channels the investors would lose confidence in the state. This is a very strange argument. The state has the right to check the accounts of any business without any warning. This is legal globally.

The real investors appreciate governments taking such actions because all the genuine investors operate their businesses according to the law of the land. They run away from markets where they see that law violations are condoned by the authorities on the recommendation of any influential personality. They cannot operate with peace of mind in such societies. Use of influence in any field deprives the operators of level playing field. Genuine investors like a level playing field.

The non-genuine ones operate on the concept of fair play. They do not bribe, police, regulators, or political forces. This is the reason that major investments in Pakistan have not been from genuine investors. They committed their resources to a guaranteed rate of return on their investment. The state provided sovereign guarantee in this regard. These guarantees are now haunting the rulers. The investors have minted money on their investments in a big way. In the process the genuine investors lost interest in the Pakistani market. They know it is either the influence in the power corridors or a sovereign guarantee that ensures them profits much beyond the bank markup.