DUBAI: The perpetually underperforming economy is bull in the China shop. Prime Minister Imran Khan’s charisma or financial integrity can help but won’t fix it. Yes, the prime minister could arrange some $14 billion, six each from Saudi Arabia and the UAE, and two from China.
Though terror incidents remain only marginally, the sentiment of stability in markets is at the mercy of inexperienced Finance Minister Asad Umar’s statements. There is also uproar over the award of a dam construction project to a consortium comprising Commerce Adviser Abdul Razaq Dawood’s company.
For a political party waiting to put the country back on track since May 2013, such a dearth of homework and teamwork is becoming its worst handicap. If the commerce adviser quits due to conflict of interest, his counterpart in finance must leave for inefficiency. Neither may happen.
Desperate to avert an International Monetary Fund (IMF) bailout and woo foreign investors, Khan is knocking every door. The foreign ministry held an investment conference for the ambassadors posted in Islamabad. The prime minister addressed them while a handful of key ministers interacted with the diplomats later. Probably, everything requires personal involvement of the premier.
German politicians' data published online in massive breach
The surge in the automobile sector stems from the Nawaz-era policy while the Gulf countries’ as well as Chinese investment is a low hanging fruit. The real challenge is to bring home hi-tech industrial giants to create a snowball effect.
It is a fallacy that Pakistan is capable of winning foreign investment on a competitive basis. For instance, will a company choose to shift a production plant to Faisalabad from Ahmadabad or Izmir?
As long as Pakistan is on grey list of the Financial Action Task Force (FATF), any such endeavours will have a limited impact. The fresh meeting of the Asia-Pacific Group of FATF members in Sydney must produce favourable results. Meanwhile, the government has issued multiple panic-driven regulations to address concerns of the task force.
Pakistan to focus specially on technology transfer in future deals
A poor or lack of understanding of new State Bank regulations has also made it harder for a resident, an expatriate or a foreigner living in Pakistan to make financial transactions. It is better to keep your dollars and pounds safe at home than satisfy a banker’s demands.
In short, the ease of doing business can’t be delivered amidst the scare of being blacklisted by the FATF. Nonetheless, the ambassadors’ response might have been positive and projections cautiously optimistic.
Of course, progress on infrastructure development, tackling corruption and law and order has helped build a favourable atmosphere. There is much to be desired to ensure delivery of the other fundamentals necessary for a foreign investor to establish his business, for instance, a level playing field, absence of red tape which obstructs import of machinery or provision of electricity and skilled manpower.
The pace of procedural and bureaucratic reforms has been slower than the pitch of rhetoric. No salesman succeeds with a market pitch when he can’t deliver within the deadline and the promised quality. It comes back to homework again.
Since the Zardari era, the country seems to have done away with the practice of competitive bidding. If a Chinese company is amongst the bidders, no one else can win it. The China factor has been a massive barrier.
When on the campaign trail, the Pakistan Tehreek-e-Insaf (PTI) promised to ensure transparency in CPEC-related deals and loans from China, which raised expectations. After the PM’s visit to Beijing, the status quo was maintained. The contracts awarded to China during the Nawaz Sharif era have so far been beyond the realm of NAB’s probe. Like scores of other pledges, the PTI has reneged on this promise too.
Luring investors to Pakistan without creating conditions for a level playing field is a fantasy. The Asian giant’s strong grip on Pakistan’s decision-making sphere must continue to take the toll.
The free trade agreements (FTAs) signed in the past should have been revisited for re-negotiation with the intent of enhancing trade as well as striking a balance. For instance, the prime minister’s Turkey visit should have produced a firm commitment from Ankara to accord the long-denied GSP Plus status to Pakistani textile sector as well as sincere consideration of a win-win FTA.
The two countries have not been able to finalise a trade agreement since 2010. Erdogan has bowed to the Turkish business community by denying Pakistan fair access to the market as well as softening his position on irritants barring a trade pact.
Turkey and China’s protectionism has not only been detrimental to Pakistan’s interests but also negates norms of the free-market economy.
Besides eliminating bureaucratic bottlenecks, the provision of enabling facilities and addressing investor concerns over a level playing field, the laid-back staff at the embassies as well as negligible online services scare away the expatriates what to talk of foreigners intending to set up a business or joint venture here.
The ambassadors and commercial attaches have been struggling to fix their act but the change does not go farther than their Twitter handles and Facebook posts.
Devoid of the requisite institutional synergy and competence in its financial team, the PTI government is chasing a desert mirage. Now those honeymoon days are over, the premier must cleanse his cabinet of poor-performing members while upgrading the online and offline service delivery.
The writer is an investigative journalist and academic based in the GCC with a career in writing on governance, diplomacy and security
Published in The Express Tribune, January 7th, 2019.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ