Steering a rudderless ship
THE oil price windfall is not a free ticket to ride the Asian tide. Pakistan can grow significantly faster in the years ahead provided the power wielders act to extend the current consensus on terrorism to a minimum programme of economic revival. The official quarters are projecting an optimistic growth rate in the range of 6pc for 2015. Most businessmen and economists reached for their insight were cautiously optimistic. Punjab-based executives, on the other hand, were clearly more skeptical than others.
"I see no point in waiting for a tragedy to leap into action," said a successful Lahore-based businessman requesting anonymity, referring to the confusion over the anti-terror campaign before the Peshawar incident.
Stability has been achieved and our team will focus on growth now - Dr Miftah Ismail, chairman of the Board of Investment
"Challenges for the leadership demand extraordinary responses. For me, the biggest downer is the absence of an economic vision and the little interest to create one," he said.
"Yes, the country has the potential, but an archaic state structure is obstructing the movement towards its realization." He cited the government's misplaced focus on energy generation and dismissive attitude towards alternative solutions to deal with the critical shortage hitting the industry.
He also criticised the 'absolute' domination of the finance ministry over other economic ministries.
Dr Miftah Ismail, chairman of the Board of Investment and the prime minister's adviser on the economy, foresees the pace of growth gaining a visible momentum next year.
"Stability has been achieved and our team will focus on growth now," he responded over the phone, while mentioning controlled inflation (7pc), rising foreign exchange reserves ($15bn) and relatively stable rupee (around Rs100 to a dollar).
Ismail mentioned gains in the capital market, as the KSE-100 index escalated to a band of around 30,000-32,000 points, which, he believes, reflects investors' confidence based on betterthan-expected corporate results and the easing of monetary policy to kick start expansion by diverting savings to high yielding investment options.
He ignored the opportunity cost of investors' preference for quick return options in the trade-off for more valu- able long-term investment in manufacturing projects. Some senior executives of multinational companies sounded more apprehensive, probably also because of the horrific tragedy and its impact on overseas investors.
"While the recent decline in international commodity prices, impending policy rate cut and reduction in political noise is likely to have a positive impact on margins and overall investor sentiment, much work is still required to restore economic stability," Mr Arshad Saeed Husain, president of the American Business Council, responded through e-mail.
"Policymakers must focus on restoring the institutional role of governing. A stable environment where the government can be relied upon to maintain consistent policies, enforce and defend intellectual property rights, and provide a framework for the protection of local and foreign investment will in turn drive economic growth," he added.
A senior bureaucrat insisted that the current government's market-based policies will spin higher growth and generate public support for expansion- ary initiatives. He said privatisation is not an exercise to generate revenue, but the target is to reorient the whole system to make it freer, transparent and efficient.
"The enhanced role of the private sector is necessary to improve the delivery of goods and services to the people," he made a point, while ignoring the cost aspect that excludes the working masses from accessing goods because of lack of affordability. "We have some exciting times ahead in the near future," he tried to impress.
Kamran Y Mirza, CEO of the Pakistan Business Council, sounded disappointed with the performance so far of the PML-N - the party that had endorsed PBC's economic agenda before the 2013 elections and that a study found to be closest to PCB's economic vision as compared to any other political party.
"Things are currently looking better on the economic front because of factors beyond our control," he said, hinting at falling oil prices.
"It is not rocket science; everyone knows that taxing the taxed is unfair. All they need is political will to introduce reforms to make the business environment more conducive for investment," he told Dawn.
Some other business leaders were skeptical over what they called the 'near-sightedness' of the current crop of politicians.
"I wonder if the Nawaz government will be able to control its temptation to use the oil price windfall to finance glittery big ticket projects or retire piling circular debt of public sector enterprises. They need to divert the foreign exchange savings to more deserving infrastructure projects," a business leader of Karachi quipped.
"The governance has to improve; the rule of law enforced; the policies must be consistent and market abuse must be checked; stronger commercial relations be forged with neighbours; the tax net be broadened and investment encouraged before the country takes a flight to the future," an economist commented.
"A medium-term, five-year consensus plan that shifts the policy thrust towards inclusive growth is critical at this juncture as the country can ill afford testing the patience of hard pressed people watching the crumbling infrastructure of social and physical utilities. There are examples of resilient citizens beating odds, but that is not enough."