4th Pakistan Economic Forum: Pakistan needs to utilise CPEC for its growth strategy: Dr Husain

Consistent efforts by government and private sector are required to enhance growth rate, says former SBP governor

ISLAMABAD: Pakistan needs to utilise the China-Pakistan Economic Corridor (CPEC) for its growth strategy otherwise, it may miss this opportunity, said former State Bank of Pakistan (SBP) governor Dr Ishrat Husain.

China and Pakistan are jointly undertaking a multibillion-dollar project that features investments in infrastructure, highway network and power plants. While there is scepticism over Pakistan’s ability to repay Chinese loans taken to complete the corridor, Husain said collaborative efforts can help Islamabad register the economic growth the country witnessed in the 1960s.

“We need a growth strategy based on industrialisation plans, including joint ventures with Chinese companies to create jobs in the country,” said Husain while addressing the 4th Pakistan Economic Forum (PEF) held on Wednesday at Serena Hotel.

Speaking on ‘sustainable macro-economic growth’, Husain said that Pakistan has grown by over 6.5% for over 40 years from 1950 to 1990 ahead of China and India, and it can still achieve this growth rate.

He, however, said that this requires consistent collaborative efforts from the government and the private sector, which also include monthly meetings between the prime minister and exporters.

The former SBP governor also said that small and medium-sized enterprises (SMEs) are not getting their due share in banks’ lending. Meanwhile, the share of SMEs in private sector lending has now reduced to just 6-7% from 17% in 2005-06.

“I do not know why housing finance is so low in Pakistan; even Bangladesh is ahead of us. I hope it will go up in the coming years,” he added. The Pakistan Business Council (PBC) is a business policy advocacy forum that was formed in 2005. It collaborates with leading experts from different sectors to prepare a set of policy recommendations that are later presented at the PEF events.

Shabbar Zaidi, who led the ‘fiscal policy reforms’ team, commented that indirect taxes constitute up to 74% of the total taxes, which is a serious issue to tackle.

He said that the tax policy should be separated from tax collection; otherwise, the country would continue to face difficulties in its tax system.

“We have to have a consensus on tax policy in Pakistan,” stressed Zaidi. Indus Motor Chairman Ali S Habib said that under-invoicing or misdeclaration is hurting the economy of the country, especially through misuse of Afghan transit trade agreement and trade with China.

“Under-invoicing is not difficult to tackle. We just need concerted efforts,” he added.

Pakistan’s domestic industry is capable of facing any challenge, but for that the government needs to shield it from the unorganised sector that does not allow it a level playing field for competition, said Habib.

Due to its big population, Pakistan cannot afford to import everything. Therefore, it needs domestic industries to meet local demand and then go for exports to have a healthy trade balance, he suggested.

Also speaking on the occasion, Gul Ahmed Textile Mills Chairman Bashir Ali Mohammad commented that the country needs at least five-year policies instead of short-term ones meant for six months to increase exports on a sustainable basis.

Mohammad added that Pakistan has not been able to take full benefits of the European Union’s (EU) Generalised System of Preferences (GSP) Plus scheme due to a stronger rupee in the last three years or so. 

Published in The Express Tribune, January 18^th, 2018.

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