Export emergency: who is in charge?
Deficient bureaucracy, rather than poor business management, is to blame for mess
Containers at a port. PHOTO: REUTERS
ISLAMABAD:
Is the current economic crisis the most unique one in the history of Pakistan? I think it is.
That was the impression provided by this week’s session of the National Assembly’s Committee on Finance as well.
Those present there could think of only one way out of the quagmire Pakistan is stuck in under Ishaq Dar’s watch: declare an export emergency.
Read the latest official reports on the number of economic and financial sectors to assess the downturn, which accelerates by the day. And this happens in a country which should not face depression and recession as per western economic norms as it is not built on private-sector bank-financing but on historical resources of funds, materials and workforce that comes from an unprecedented youth bulge.
Export package termed short-term solution
The Engineering Development Board (EDB) website reveals that over the past five years the export of engineering goods fell from 5% to 15%.
The mining industry has lost all foreign investment for the first time in the past three decades. This is despite the massive high and intermediate-value mineral reserves in the country.
Value-addition in exportable industrial and agricultural goods appears to be a distant dream. That is what all indicators reflect if you carefully examine the data splashed on the economic and finance-related official websites.
Take a look outside Pakistan now. The engineering and mining sectors have significantly become engines of growth in many countries of Europe and Asia. Talk to any investor in these two areas in Pakistan and you would hear of doom and no word of hope.
What makes investors think like that? Is it lack of technical labour or bank financing? To find out I spoke to a number of investors who attended last week’s meeting of the NA Finance Committee. They told me that even poor marketing is not to blame for failure in increasing exports. It is the bureaucracy, especially the finance and economics-related offices in Islamabad and the four provincial capitals which act as the real roadblocks to realising the actual potential of Pakistani resources.
They claimed that this bureaucracy is doing everything to discourage Pakistani growth and to encourage imports. This brings down the prospects of posing a resilient competition to imports that flood Pakistan at will.
Trade has picked in Pakistan in non-grocery goods. But foreign goods’ unprecedented import depletes the foreign exchange reserves and chances of employment.
This was the argument presented by Arif Habib and other major business leaders and chambers’ representatives at the NA Finance Committee meeting last week. Slowing down or ending the foreign goods’ influx is what the local investors need from the policymakers as well as the trade-related bureaucrats.
This, however, cannot happen without improvement in the policymaking mechanism. That is what Dr Saeed Qureshi, Pakistan’s former secretary general finance and a prolific writer on Pakistani economy, proposed.
Basic industries, low-cost value addition and a policy for encouraging local industry via external trade mechanisms and taxation facilitation can come only once the policy mechanism is functional, and its execution is timely.
Refunds of exporters are stopped at the FBR while external trade management is poor to the extent of criminality, most chambers’ representatives complained. And there was a consensus that an export emergency needs to be launched without delay.
This was the most inducing discussion I ever attended in my career, as the government, the opposition, the bureaucracy and the business representatives struck a spontaneous consensus on what was happening to the economy and what should be done without further ado.
One question repeated intermittently at the meeting was: who is in-charge? Dr Nafeesa Shah, MNA from Sindh, said there was an urgent need for laying an emergency proposal on the floor of the National Assembly to fix the responsibility of bringing the economy to this ebb so fast—in four years.
Boosting exports Legislators stress modern techniques
Not many took this proposal seriously but there was a consensus on one point: industrialisation process in Pakistan has come to a halt. And the government’s policy of neglect was the sole reason for that.
How did the cost of doing business rise in Pakistan so dramatically that it discouraged exportable surplus? This was the most important question asked. The business representatives had three major reasons to define this tragedy: energy prices; non-payment of over Rs500 billion refunds over the past five years; and, neglect of the SME sector.
The cost of doing business was also inflated by the ‘speed money’ that exporters have to pay Customs for importing raw materials and intermediate goods. One chamber representative said more than Rs3 billion a year had to be paid to the Customs staff in Karachi alone.
Arif Habib said industry, IT, and construction are the areas that the government needs to focus on in a revival strategy. Or else, India, Bangladesh and Sri Lanka would grab all the orders so far available to Pakistani exporters. But who would bell the cat? None in the committee hall knew a thing about that.
The writer has worked with major newspapers and specialises in the analysis of public finance and geo-economics of terrorism
Published in The Express Tribune, November 6th, 2017.
Is the current economic crisis the most unique one in the history of Pakistan? I think it is.
That was the impression provided by this week’s session of the National Assembly’s Committee on Finance as well.
Those present there could think of only one way out of the quagmire Pakistan is stuck in under Ishaq Dar’s watch: declare an export emergency.
Read the latest official reports on the number of economic and financial sectors to assess the downturn, which accelerates by the day. And this happens in a country which should not face depression and recession as per western economic norms as it is not built on private-sector bank-financing but on historical resources of funds, materials and workforce that comes from an unprecedented youth bulge.
Export package termed short-term solution
The Engineering Development Board (EDB) website reveals that over the past five years the export of engineering goods fell from 5% to 15%.
The mining industry has lost all foreign investment for the first time in the past three decades. This is despite the massive high and intermediate-value mineral reserves in the country.
Value-addition in exportable industrial and agricultural goods appears to be a distant dream. That is what all indicators reflect if you carefully examine the data splashed on the economic and finance-related official websites.
Take a look outside Pakistan now. The engineering and mining sectors have significantly become engines of growth in many countries of Europe and Asia. Talk to any investor in these two areas in Pakistan and you would hear of doom and no word of hope.
What makes investors think like that? Is it lack of technical labour or bank financing? To find out I spoke to a number of investors who attended last week’s meeting of the NA Finance Committee. They told me that even poor marketing is not to blame for failure in increasing exports. It is the bureaucracy, especially the finance and economics-related offices in Islamabad and the four provincial capitals which act as the real roadblocks to realising the actual potential of Pakistani resources.
They claimed that this bureaucracy is doing everything to discourage Pakistani growth and to encourage imports. This brings down the prospects of posing a resilient competition to imports that flood Pakistan at will.
Trade has picked in Pakistan in non-grocery goods. But foreign goods’ unprecedented import depletes the foreign exchange reserves and chances of employment.
This was the argument presented by Arif Habib and other major business leaders and chambers’ representatives at the NA Finance Committee meeting last week. Slowing down or ending the foreign goods’ influx is what the local investors need from the policymakers as well as the trade-related bureaucrats.
This, however, cannot happen without improvement in the policymaking mechanism. That is what Dr Saeed Qureshi, Pakistan’s former secretary general finance and a prolific writer on Pakistani economy, proposed.
Basic industries, low-cost value addition and a policy for encouraging local industry via external trade mechanisms and taxation facilitation can come only once the policy mechanism is functional, and its execution is timely.
Refunds of exporters are stopped at the FBR while external trade management is poor to the extent of criminality, most chambers’ representatives complained. And there was a consensus that an export emergency needs to be launched without delay.
This was the most inducing discussion I ever attended in my career, as the government, the opposition, the bureaucracy and the business representatives struck a spontaneous consensus on what was happening to the economy and what should be done without further ado.
One question repeated intermittently at the meeting was: who is in-charge? Dr Nafeesa Shah, MNA from Sindh, said there was an urgent need for laying an emergency proposal on the floor of the National Assembly to fix the responsibility of bringing the economy to this ebb so fast—in four years.
Boosting exports Legislators stress modern techniques
Not many took this proposal seriously but there was a consensus on one point: industrialisation process in Pakistan has come to a halt. And the government’s policy of neglect was the sole reason for that.
How did the cost of doing business rise in Pakistan so dramatically that it discouraged exportable surplus? This was the most important question asked. The business representatives had three major reasons to define this tragedy: energy prices; non-payment of over Rs500 billion refunds over the past five years; and, neglect of the SME sector.
The cost of doing business was also inflated by the ‘speed money’ that exporters have to pay Customs for importing raw materials and intermediate goods. One chamber representative said more than Rs3 billion a year had to be paid to the Customs staff in Karachi alone.
Arif Habib said industry, IT, and construction are the areas that the government needs to focus on in a revival strategy. Or else, India, Bangladesh and Sri Lanka would grab all the orders so far available to Pakistani exporters. But who would bell the cat? None in the committee hall knew a thing about that.
The writer has worked with major newspapers and specialises in the analysis of public finance and geo-economics of terrorism
Published in The Express Tribune, November 6th, 2017.