Public Private Partnership with option of tax holidays will push soar investment
Our quality manpower exports will determine the growth of remittances from GCC
Interview with Professor Syed Ali Abbas Abidi — a first-rate educationalist of Pakistan
Professor Syed Ali Abbas Abidi needs no introduction. He is a renowned educationalist of Pakistan. He is an erstwhile Vice Chancellor of a private university and holds LLM, MBA, M.Com, MA (Eco), LLB, CPA (Australia), CPA (UK), APFIP (USA), CICA (USA), CFC (Canada), ACIS, AITM, CBE, CTP, DIBF and DICS. He renders his services as a legal expert especially in business, taxation and corporate laws.
PAKISTAN & GULF ECONOMIST had an exclusive discussion with Professor Syed Ali Abbas Abidi regarding economy of Pakistan. Excerpts of the conversation are as follows:
I think the incumbent Prime Minister as compared to the previous Prime Ministers has more face value inside and outside Pakistan. Further he has good relations with the people who are brands of Pakistan. People like Wasim Akram, Waqar Younis, Shoaib Akthar, Javed Miandad, Majid Khan, Jhangir Khan, Jehanshar Khan, singers like Abarar, Shahzad Roy, Ali Zafar, Ali Azmat, Film & Drama actors & actresses, and top hockey players. If Imran Khan uses these people as ambassadors and Consul Generals and send them abroad, they can better represent Pakistan and I have no doubt in my mind that they will bring top notch businessmen in Pakistan. If these people go to Chamber of Commerce of the world and appeal to expatriates and foreigners for investing in Pakistan, the size of foreign investment will increase and the gap between export and import would narrow down and also the problem of foreign exchange will be solved.
We should give target to Ambassadors and Consul General with percentage of commission in salary and perks if they are able to motivate foreigners and expatriates to investment in Pakistan. We have got news that most of our Consul Generals and Ambassadors do not attend foreign Chamber of Commerce meetings, Expos, and are unable to become instrument to bring foreign investment.
The government needs to come up with Public Private Partnership with option of tax holidays so investors will be attracted to invest. Changes have to be done in tax laws and incentives should be given to the investors such as loan on low interest rate. Pakistanis are good donors. If government asks small amount from people and use such amount in building public limited listed companies, people will be ready to pay as they will get dividend in future and more jobs will also be available for the youth. Such amount can be collected from people by way of internet or adding Rs.25 in utility bills. People will not be annoyed as they will be getting reward in the shape of dividend and they will also become shareholders of different new listed companies. Government can make investment by printing currencies as these new companies will produce goods and services which will adjust the chances of increasing inflation. It is essential to make the subject of entrepreneurship mandatory at the school level so that students learn to become businessmen instead of job seekers. The Founder of Pakistan M. A. Jinnah was instrumental in the liberation movement of Morocco, Indonesia, Malaysia, Nigeria, Algeria, Tunisia, Sudan, Libya so his services are to be brought in picture and remind these countries the obligation of our founder for them in a soft manner.
Pakistan is the 68th largest export economy in the world and the 98th most complex economy according to the Economic Complexity Index (ECI). In 2017, Pakistan exported $24.8 billion and imported $55.6 billion, resulting in a negative trade balance of $30.9 billion. In 2017 the GDP of Pakistan was $304 billion and its GDP per capita was $5.53k.The top exports of Pakistan are House Linens ($3.33bn), Non-Knit Men’s Suits ($1.89bn), Rice ($1.63bn), Non-Retail Pure Cotton Yarn ($1.27bn) and Non-Knit Women’s Suits ($1.04bn), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Refined Petroleum ($7.04bn), Crude Petroleum ($2.88bn), Palm Oil ($2bn), Petroleum Gas ($1.84bn) and Cars ($1.35bn).The top export destinations of Pakistan are the United States ($3.5bn), Germany ($1.9bn), China ($1.85bn), the United Kingdom ($1.46bn) and Afghanistan ($1.39bn). The top import origins are China ($15.2bn), the United Arab Emirates ($6.95bn), Saudi Arabia ($2.53bn), Indonesia ($2.46bn) and Japan ($2.37bn).
The number of Pakistani workers going to the six-nation Gulf Cooperation Council (GCC) is on the decline, fueling fears of a consequent fall in remittances from there, particularly at a time when the entire region in general and Saudi Arabia in particular is undergoing dramatic political and economic changes. Pakistan’s remittances from the GCC started growing rapidly from 2002, partly owing to post-9/11 developments and increased manpower export to that region. But from 2014, our manpower export to the UAE, the largest market of the Pakistani workforce, has been on the wane and from 2015, the same has been the case with Saudi Arabia, the second largest market. Besides, as Saudi Arabia is now reshaping with its fiscal policies and expanding non-oil economy and as the UAE is fast emerging as a global business centre, the dynamics of manpower exports are also changing. Though Pakistan has not yet experienced any major setback in remittances’ flow from these two countries, some signs of weakening are quite visible now. As Saudi Arabia, UAE and other GCC nations are reshaping their economies, future inflows would depend on the quality of our manpower export. If we look at annual remittances from Saudi Arabia, no big change has occurred in the past five years despite the fact that our manpower export to that country has seen a declining trend after 2015. A major reason is that remittances coming from the more than two million Pakistanis already working in the kingdom and fluctuations in manpower export for one or two years cannot majorly disturb remittances. The 2018 remittances from the kingdom may also reflect a fuller impact of the July 2017 levy under which a tax of 100 riyals (Rs2,800) per month was imposed on each unemployed family member of foreigners living in the kingdom. Many Pakistanis unable to afford this tax have started coming back home, and those who would prefer living there would obviously not be able to send as much foreign exchange as they did before the levy.
One important determinant of the volumes of remittances from the GCC region, or from anywhere else for that matter, is the quality of our manpower exports. Our record is poor on this count. As Saudi Arabia, UAE and other GCC nations are reshaping their economies, much would depend on the quality of our manpower exports there in determining future remittances.