Economic policy: Imran’s party offers state-centric approach

PTI takes a second crack at announcing its policy proposals to the public.

KARACHI:

It was a policy announcement so nice, they decided to make it twice.

After being criticised by many in the national media for their economic policy agenda when they first announced it in Islamabad, the Pakistan Tehreek-e-Insaaf decided to take a second crack at introducing the public to their proposals, changing the venue to the country’s commercial capital and inviting more economic analysts and business reporters to cover the event.

Former Engro Corporation CEO Asad Umar and former federal industries minister Jahangir Khan Tareen, the party’s two leading policy wonks, made a joint appearance at a local hotel in Karachi, and laid out in unabashedly technical details many of the key aspects of the PTI’s economic policy agenda.

Given the fact that both men have led KSE 100 companies, it is somewhat unsurprising that they were both at the event on time, though it still started late because most of the reporters sent to cover the event took their time getting there.

Nor was any time wasted on political speeches glorifying party leaders. Tareen made some short introductory remarks and then turned it over to Umar, who then delved right into the five-point policy agenda, which comprises tackling the energy crisis, cutting back government expenses, tax reform (which includes cracking down on tax evasion), reforming the civil service, and increasing services such as health and education to citizens.

Policy buffs looking for details on the PTI’s proposals would have been disappointed by the event: there appeared to be no more details on offer than those laid out in Islamabad, though both men allowed for more questions, which helped clarify many of the party’s positions.

For instance, it has become increasingly evident that the PTI leans towards the left when it comes to its economic policy agenda. The party advocates not only for a robust regulatory role for the government – on which both the ideological left and the right agree – but also more direct involvement of the state through professionally managed state-owned enterprises. The PTI does not rule out privatisation, but its leaders did not seem enthusiastic about the process either, prefer instead to model itself on the state-centric vision of capitalism now being championed by Chinese leaders as an alternative to Anglo-American liberal capitalism.

The weakest link in the PTI’s policy proposals appears to be tax reform. The party broadly lays out a strategy to increase revenue and addresses some critical elements utilised by corrupt bureaucrats and businessmen, including the statutory regulatory order (SRO) system, which allows Federal Board of Revenue officials to offer tax exemptions to favoured businessmen.

However, neither Tareen nor Umar addressed the “presumptive taxation regime”, which institutionalises incentives for businesses to remain undocumented by removing income tax liabilities in exchange for payments of federal withholding taxes.

Nonetheless, the PTI leaders appeared to suggest that if the FBR was made an autonomous federal body, much like the State Bank of Pakistan, it would begin functioning more efficiently in raising revenues. The party hopes to use this, and other reforms, to increase the country’s tax-to-GDP ratio to 15%.

Tareen and Umar both used far more measured language than party chief Imran Khan when talking about the International Monetary Fund (IMF). Khan has famously referred to the Washington-based lender’s bailout programmes for Pakistan as “slavery to the IMF”. The men who would most likely deal with the IMF in a PTI-led government, however, seem to be keen not to burn those boats, just in case the economy needs them.

But more than an economic policy announcement, the PTI seems keen to present itself not just as the populist rabble-rousers who can get the masses riled up about hot-button topics, but also as a mature political party capable of governing the day it is sworn into office.

(Read: PTI’s economic policy)

Published in The Express Tribune, August 30^th, 2012.