Pakistan’s economy, a fumbling drive

30 Oct

Pakistan, a country whose population has surged to 208 million and its economy entering the $300 billion mark amongst the world economies, has passed through different phases of ups and down. Few years back this country was on Number 3 at Global Terrorism Index, foreign reserves were at $8 billion, Industry was suffering from power outages, gas shortage doubled the pain of small and medium enterprises; Pakistan Stock Market (PSX) 100 Index was hovering around 18000 points, Gross Domestic Product (GDP) growth rate was below 3%.

A comprehensive policy was adopted by Government of Pakistan to revive its economy and improved its security situation. Macro and micro economic indicators which were blinking red turned into yellow and later jumped into green map.

Now, the security situation has been remarkably improved over the years, LEAs did a nice job, the trust and confidence of investors both local and foreign also improved. Key indicators of economy started radiating positivity, PSX touches 53000 Bench Mark, GDP crosses 5%, revenue collection jumps up 50%, Power generation crosses 19000 MW and FDIs improved via multi-billion projects CPEC.

China Pakistan Economic Corridor (CPEC) is a unique opportunity to integrate with regional economies and Pakistan will become a hub of trade and manufacturing. Business community believes that $51 billion CPEC project is the part of $1465 Billion One Belt One Road (OBOR) will serve as a game changer and will set a new direction for Pakistan’s economy. It offered great regional connectivity and integration from South Asia to Central Asian Countries and beyond.

Pakistan’s economic outlook offered promising future and foreign investors should explore Pakistan for joint ventures and investment in energy, Pharmaceutical, infrastructure development and other sectors. Business community also believed that CPEC should not be centric to any specific country. The chambers of commerce and business community should come forward and play their due role in the completion of industrial zones under CPEC.

There is a dire need to exploit the country’s full export potential to capture markets of Central Asian States. Pakistan has great advantage of benefiting from the regional trade by increasing volume of its existing exports to the land-locked Uzbekistan, Tajikistan, Kazakhstan, Kyrgyzstan and Turkmenistan being a trade-corridor for them.

Coming to fumbling side of the economy, the government and the business community missed the opportunity to take advantage of Generalised System of Preferences (GSP) plus scheme granted by the European Union (EU). It required a focus and result oriented strategy to double the fruits of GSP Plus.

Another key issue, the cost of doing business, here the government must have taken immediate steps to lower the cost of doing business in the country. The cost of doing business had increased phenomenally in Pakistan over the past decade and this affected the consumers. Manufacturers need relaxation in tariff rates, lesser regulatory duties on raw material, cheap electricity and better transportations.

Similarly, the imposition of four percent super tax on the banking industry and three percent on other large taxpayers for another year has seriously dented the businessmen’s confidence. The extra profit earned by large tax payers can be invested in new initiatives for creating more job opportunities. Pakistan’s exports were already on decline, and additional taxation would further hurt the manufacturing sector. The investors are more inclined towards neighbouring countries, where cost of doing business is less and high profit margins.

Lets hope that the government would take concrete measures to improve governance, document the economy, reduce the burden of the existing tax payers, reform the taxation system and improve Pakistan’s rating in the World Bank’s Ease of Doing Business Index. The road ahead is very much clear; Pakistan should not miss the bus here.

 

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