Experts unenthusiastic about 8% economic expansion target

Say Punjab faces many challenges, particularly energy shortage

LAHORE: Pakistan’s largest province, Punjab, has set a growth target of 8% under the Punjab Economic Growth Strategy 2018 in the provincial budget for 2015-16.

The target has been outlined by the provincial finance minister, Ayesha Ghaus-Pasha, with an aim to change the fate of the province before the next general elections in 2018. However, the business community lacks enthusiasm about the economic expansion considering the hostile business environment in the province.

According to experts, the Punjab growth strategy primarily needs energy as a major component to reach the 8% target by 2018, but the electricity crisis cannot be solved well before the next general elections as a majority of the power projects are scheduled to be completed in either late 2017 or 2018.

“Then how will the Punjab government generate one million new jobs by the end of the next fiscal year and increase its yearly exports by 15% when work at more than 30% of the textile sector has been suspended,” an expert asked. “How will Punjab attract investment and add two million skilled graduates to the workforce by 2018?”

“I agree that the provision of energy is a must to realise the growth target and Punjab, along with Islamabad, is making every effort to eliminate the crisis,” said Ayesha Ghaus-Pasha while talking to the media recently.

The Punjab government, in order to overcome the power crisis, has initiated many projects in recent years. It is expected that once the energy shortages end, the province’s gross regional product will increase up to 2%.

For fiscal year 2015-16, an amount of Rs31 billion has been allocated for energy projects. The province is also working on projects to generate over 6,000 megawatts of electricity from different sources, in which the province is investing Rs258 billion, while the rest will be financed by the federal government.

China also intends to invest Rs360 billion in Punjab’s power sector.

“These estimates are not more than a dream considering the current situation in the province. You may set the growth rate according to the political will, but are there sufficient resources, manpower and technology available to achieve the goal?,” asked Punjab’s former finance minister and leader of Pakistan Peoples Party Tanvir Ashraf Kaira.

Independent economists also believe that it could be a tough challenge for the province.

“The issue is not energy. Even if we provide power to all Punjab industries today, the industry alone will not have the capacity to help reach the desired growth of 8%,” noted economist and professor Dr Qais Aslam.

He said the existing industry could merely add another 1% to 1.5% to the economic growth, if operated at full capacity. “Punjab industry is outdated, it needs rehabilitation and induction of latest technology with special focus on value addition and skill development,” he added.

He, however, said construction activities were one of the measures which could provide some boost and provide employment opportunities to people, like construction of a metro network - the Orange Line Metro Train - in Lahore.

Punjab Board of Investment and Trade (PBIT) newly appointed Chairman Abdul Basit is, however, hopeful. “The scenario is now changing for Pakistan, especially after government investment in different projects under the China-Pakistan Economic Corridor (CPEC),” he said.

“After the CPEC initiative, no other country wants to leave this part of the world without government or private investment,” said Basit, adding there were many European countries that were looking for feasible investments in Pakistan and Punjab of course will get a major chunk.

He is hopeful that the energy crisis will end by 2018 and for critics the rapid development of a host of power projects is the answer.

Published in The Express Tribune, July 21^st,  2015.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.