LAHORE: This is with reference to Kaiser Bengali’s article of December 22 titled ‘Reviving the economy’.
The rather well-documented fact is that the decline in capital formation, including the somewhat widely misunderstood Musharraf boom years over the last two decades, is owed to the high cost of doing business. This, apart from other factors, was caused by a poor electric power distribution system, a poor security environment, growing geopolitical uncertainty and an overarching handicap caused by low literacy.
As for tax collection, the generally accepted norm is that the higher the incidence of moral hazard, the lower the government’s ability to collect direct taxes. Furthermore, the tax-exempt status of the agriculture sector compounds the state’s inability to increase revenue from taxation.
Surprisingly, relatively little attention is given to microeconomics in Pakistan which is where I believe the more daunting challenges lie. For example, agriculture and its numerous sub-sectors including horticulture, floriculture, food processing, leather and livestock have been neglected for far too long. As the fifth-largest (some argue that it’s now the fourth) milk producing country in the world, we still do not have proper collection, storage, distribution and quality control systems in place. Several other sectors suffer from weak and captive value chains as well and are, therefore, inefficient and fall well below internationally-accepted benchmarks for competitiveness and profitability.
Policy-makers and captains of trade and industry should also concentrate on the enormous opportunities found in Pakistan. They can also capitalise on the fact that China may soon begin to transfer some of its manufacturing to foreign destinations.
Rao Amjad Ali
Published in The Express Tribune, December 24th, 2012.
