Pakistan, a promising land with a dubious current situation all
the time - Fiscal Deficit, Current Account Deficit, FATF grey list, decline in
GDP, high inflation rate, weak currency, low tax to GDP ratio,
poor savings rate and minimal export growth are common words used
by the world/market to explain the economic situation of the country. This
question arises even though the country is experiencing an increase in foreign
reserves, managing COVID-19 successfully, make loan payments, corporate
companies and banks posting increase in profits in FY20 as compared to last
year.
What makes this country run?
Resources and hunger……...
One of the biggest positive point for Pakistan is that country
has a greater percentage of young blood among its population. We may argue that
this may lead to increased unemployment, because there may not be enough
opportunities and average literacy level of young population is 10th Standard,
which is quite low. That too is a scarce resource due to highly corrupt and
ineffective education system and whoever is available in market is looking for
work to make his/her ends meet. Pakistan is always facing Current Account
Deficit due to the fact that the country
has lesser exports than imports with supply and demand principle hitting hard
when it comes to availability of products at cheaper rates. In our society the gulf between Have and Havenots is widening,
therefore on one end high value luxury goods imports increased in past years,
while on the export front, we only had Export and Re Import of wheat and sugar.
Textile sector showed a promising decrease in imports during FY20 but on other
hand export orders also decreased due to pandemic. During Jul-May 2020, raw
cotton import bill jumped by 13.29%YOY to $777million, considering Pakistan is
an agricultural country this situation seems to be worrisome.
Apart from effects of corruption at respective level in the
society, people must have ROTI, KAPRA aur MAKAN (Food, Clothes, Residence). No
matter what any Government claims, the ground reality is that people are
suffering from poverty, as well as unemployment and inflation which seems to
play hand in hand for the have nots at least.
Pakistan holds a key geographical position in the world, whether
because of CPEC route with China or hot waters requirement for Russia or being
a nuclear deterrent state for the country’s loved ones. Apparently, Pakistan
seems to be the only stable Muslim country left other than Turkey. This fact is
not liked by some other nations and they
wage continuous battles against Islam to challenge this position.
As per our industrial history, there are 5 industrial sectors
which are always the apple of the eye for all the governments. Textile is
obvious due to High Export contribution (without considering import
contribution in synthetic fiber etc.) but what about Surgical instruments,
Carpets, Leather, Sports Goods. It appears that we have decided that there is
no other industry other than textile in which we can excel. Why can’t we have
Industry friendly policies, which force local investors to come forward.
Although now governments are pushing for Car manufacturing industry but what
about Pharmaceutical, Multi-level Engineering based units, food processing industry,
electrical, Silicon chip Units Manufacturers, Mobile manufacturing units, Solar
Panel Industry etc. Pakistan needs Industry Revolution(INDUSTREVOLUTION)
along with honesty to achieve it.
Local Pharmaceutical Industry in Pakistan is showing very promising
growth locally as well as in exports. Growth recorded in exports by16.34%
approx. as compared to last FY, but this sector is dependent on Active
Pharmaceutical Ingredients(API), which is 90% import of the country. On the top
of it, Imports of API from India contributes a high percentage in this sector. Friendly
Production targeted policies for this Industry may include exemption from sales
tax on import of specific Plant & Machinery, Tax Amnesty for 5 years,
Discounted rate Loans, easy repayments with binding of having commercial
production in 3-4 years. The flip side is that as a result of any dispute
between Pakistan and India, the country may face an emergency situation due to
shortage of Raw Materials(API). We need to implement the solution on emergency
grounds so we can strengthen our backbone of Pharmaceutical Manufacturing
Industry in Pakistan. It would be the first step for our country to move
towards the independence in Pharma raw material and towards the linear
integration in pharmaceutical industry, because the second stage will be much
more difficult i.e to produce API Intermediaries materials which are required
for the manufacturing of APIs. India has already started its program for
intermediaries in order to get rid of China Dependency for intermediaries. We need
focused and swift thinking and implementation. For obvious reasons, we need
more than just committees and forums.
On electricity front, we have at least 3 Resources available for
the generation of Electricity in the country other than Furnace Oil. Water,
Wind and sunlight. And we also have the talent to harness them but apparently
we do not have financial resources to do it. But is it really the truth?
Since the Government has announced Special policy for the
construction industry, anybody can vouch for the money input and movement of
funds in Immovable property especially for a select group. Furthermore, Linear
Integration in construction industry is not a very long chain but due to
increase in price of steel, investors tend to earn cream from movement of plots
only, but that does not contribute productively to the economy. People who are
supposed to buy those residential properties need money and for having multiple
options to earn livelihood is necessary. Limited industries in the country is
not the solution nor contribute any positive impact in the society. We are in
dire need of detailed study of our country demand which we are fulfilling
through imports as well as we have to optimize the current available industries
production and initiate new industries on larger level to increase the economic
activity in the country.
