Pulls and pushes
THE government has created a forum comprising four key economic ministries to coordinate and unify efforts to boost sluggish production and falling exports. The growth trends in these base areas of the economy are not aligned with what the Pakistan Economic Survey has described as 'remarkable achievements of FY14-15'.
The Cabinet Committee on Production and Exports will be headed by Finance Minister Ishaq Dar and include the ministers for commerce, planning, textiles, industries and production, and national food security. The parliamentary secretaries of these ministries are also the committee's members.
Federal Finance Secretary Dr Waqar Masood dismissed apprehensions regarding the centralisation of the decisionmaking process as baseless
When contacted, Federal Finance Secretary Dr Waqar Masood, who has served in various leading positions in the economic team of multiple governments over the past 20 years, was quick to respond: "the committee will coordinate the work of all the included ministries, and prepare and coordinate their plans for presentation to the prime minister. It is intended to give a new focus to production and exports.
He dismissed apprehensions regarding the centralisation of the decisionmaking process as baseless and reiterated that "it is a focused attempt to tackle some of the emerging challenges in the industrial and exports sectors".
Kamran Mirza, who leads the Pakistan Business Council (a business policy advocacy platform), termed the creation of the new forum a step in the right direction.
"We at the PBC are concerned about the stagnant economic base and the lagging exports. The country needs a cohesive economic policy that gels, as the pulls and pushes between government departments and ministries do not bode well for progress. The gap between the potential and performance of the economy is huge. It is an issue that needs special attention of the policymakers," his response was generalised.
The renewed focus on exports and production comes after the tardy performance of agriculture and industry during FY15. The lack of investors' enthusiasm contained agricultural growth to 2.9pc and industrial growth to 3.6pc, while large-scale manufacturing went up 2.5pc against the targeted 7pc.
The business community ended up actually exporting less than before. The country's exports proceeds fell by 3.6pc to $24.2bn, against $25.1bn in 2013-14.
Nonetheless, there were some positives as well. Official data for FY15 depicts inflation to have reached a 12year low (6pc), while the interest rate decelerated to a 42-year low (7pc) and the capital market created new records of robust performance; the KSE-100 Index gained almost 4,700 points to shoot up to over 34,000 points.
The country also struck a landmark deal on the China-Pakistan Economic Corridor in the last fiscal, while the IMF issued favourable economic health reports. Unemployment dropped to 6.2pc and the current account deficit narrowed 27pc to $2.28bn on the strength of remittance inflows and the drop in the cost of oil imports. As foreign exchange reserves improved, the exchange rate achieved relative stability.
But the convergence of these positive factors seems to have failed to convince local businesses to invest in capacity expansion and new projects to widen the production base of the economy.Foreign investment also declined.
Businessmen and corporate executives blamed the government's policies and their ineffective implementation for the downward trend in manufacturing and exports. The disjointed agenda of multiple overlapping ministries and departments further compromises the quality of governance. But the biggest issue that many business leaders point out is the rul- ing party's approach to resolving problems.
"They are allergic to the idea of devolution of authority. When the decision on every summary has to be approved by Ishaq Dar himself, delay is the natural outcome. The current fast-paced world cannot wait for the finance minister, so the decisions are either delayed or approved directly by Prime Minister Nawaz Sharif if the relevant federal secretary has direct access," a textile tycoon of Punjab said.
"I don't see how the creation of another committee, headed again by the finance minister, can help. And it would be reduced to a mere debating forum unless he chooses to allow his colleagues to fully participate in the economic decision-making.