Time to follow Quaid's principles
By AMANULLAH BASHAR
Aug 14 - Aug 20, 2000
Quaid-i-Azam Mohammad Ali Jinnah, in his first speech as the father of the nation had singled out "bribery and corruption" as one of the biggest curses and a real poison suffered by the people of India 53 years ago.
Obviously, the purpose of the Quaid in pointing out these ills was to sound a bell of warning for the newly born nation to refrain from indulging these curses to live respectfully among the comity of nations.
Unfortunately, the golden advice of Quaid-i-Azam was criminally ignored which consequently left Pakistan far behind of the countries who got freedom much after Pakistan.
Though the nation is celebrating the 53rd Independence Day, but without a true sense of independence. The rampant corruption and bribery, which was allowed to flourish by the people at the helm of affairs consequently, weakened our political and economic sovereignty.
This is an undeniable fact that the rampant corruption, which prevailed for a greater period of the checkered history of Pakistan, has resultantly rendered the innocent people to the economic, social and political slavery.
The corrupt managers led the economy to the stage where it is indebted under the huge foreign loans approximately between $35-38 billion. In fact, the foreign debts do not really matter for the economy like Pakistan had we maintained the repayment capability of our economy. The termite of corruption has destroyed our repayment capability to such an extent that we have to borrow from the international lenders to meet the financial obligations of debt servicing every year. This is really a serious situation, which demands for a permanent solution of this problem. The situation demands that in order to gear up all our resources we should address the issues on priority basis for economic revival, which is the only key to restore the repayment capability.
The present government while realizing the gravity of the situation has come out with a reform agenda which includes civil services reforms, agriculture reforms, power sector reforms, poverty eradication programmes, taxation reforms, Police reforms, accountability process, Privatization plan, banking and financial sector reforms.
The government has also realized to take steps for uplifting the image of Pakistan on the international scene. In this regard, the Ministry of information is organizing a 2-day seminar with an objective to obtain facts and views from a cross section of specialists in various fields so as to formulate a strategy to improve the image of Pakistan abroad. It is encouraging to note that the harsh facts have been admitted that Pakistan is in need of image building. However people from cross section of life feel that for uplifting Pakistan's image abroad, our own home requires to be in order first as the charity always begins at home. Prominent business leaders observed that it is an open secret that who was responsible for damaging the image of the country. A strong lobby of the corrupt bureaucracy has always created problems for smooth industrial investment in this country. They have always tried to make the system so complex that even local investors are unable to make investment within their own country. Why the local and foreign investors preferred to invest in industrial zones of Dubai, Sharjah, Singapore, Jordan or even in Bangladesh. Why exports of Bangladesh export processing zone shot up to the tune of $1 billion a year while Karachi Export Processing can hardly earn $70 million a year. Only because of inconsistency and complexities of the policies and the system respectively.
Even today, you cannot get your job done unless you bribe the relevant officials. For making the economic reforms and policies a success and for implementation of good economic decisions within the country, first thing which is required is to put the genie of corruption into bottle first. All policies would prove a mere rhetorics otherwise, they remarked.
The most critical issue, which needed to be immediately addressed, is to put together the shattered social fabric of the society. The fragmentation of the society in different regional, sectarian and ethnic groups is a dangerous sign for integration of the society. A strong bond of unity is a pre-requisite to achieve the common goals whether economic, social or political. To infuse national spirit among the fragmented society is the real issue which is the responsibility of all forces working in different segments of the society to bring people back on one platform, if they really love Pakistan as a mother land.
Despite all political and economic odds, Pakistan has managed to develop a strong agriculture as well as manufacturing base. A respectable size of 8.8 million spindles in the textile industry offers a strong base for enhancing our export earnings through value addition. All efforts are needed to direct the enhancing productivity and production of this sector through value addition. According to an estimate the textile sector alone has the strength to double its exports currently around $5 billion by capacity utilization of the available stuff.
Despite having the capacity and capability, why our manufacturing or agriculture sector failed to play the desired role? The answer is simple. The good governance, which is an essential element for economic growth, was grossly missing from the national scene. Different parties and individuals that came into power in Pakistan had a single point agenda i.e. stick to the seat of power, come what it may to the economy or even to the social fabric of the society. We would have to take lessons from the past. Good governance is the key to success in all respects of economic and social life of the country. The people can only achieve the goal of economic revival alone and not by the bureaucracy. Priority should be given to the local investors who being the natives can genuinely feel pinch of the severity of the pain. Concrete steps are required to offset the atmosphere of mistrust between government and the private sector to restore the confidence of the local investors. The bitter experience of inconsistency and ad-hocism in government policies has created an atmosphere of mistrust in the private sector.
Apart from exploiting the strong manufacturing base available within the textile industry, Information Technology is another area which offers great opportunities to support our economy. Though it is late, but as saying goes "It is never too late to mend" the economic managers in Pakistan should create a National Information Technology Council comprising of senior executives of internationally minded institutions. The council should be given the mandate to develop a precise, well-founded and creative view of tomorrow" opportunities in this field. Non-resident Pakistanis may also be invited to advise and bring with them contacts and new relationships. The council might also invite other companies and nations to look at the infrastructure and view Pakistan's possibilities. Pakistan should provide a good environment for companies to flourish by way of incentives. All these steps may provide a strong base for developing a viable information technology in Pakistan. It is estimated that currently Pakistan's exports in this field are merely around $30-35 million. A target of $1 billion can be achieved in this field within a couple of years provided our academic institutions were given a clear direction for promoting IT education at an affordable price.
As a result of harvesting a bumper wheat crop of over 21 million tonnes this year, Pakistan has signed a contract for export of one million tonnes of wheat worth $170 million. This can be describing as an ice-breaking event. As nothing succeeds than success. The government has planned to encourage the growers by increasing the support price of wheat to achieve a target of 23 million tonnes of wheat next year. This is a right step in the right direction. Having a strong agricultural base, Pakistan can do magic in developing its economy. A strong will is however required achieving optimum level of its agriculture potentials.
The pattern reveals that during 1999-2000 agriculture sector achieved a growth of 5.5 per cent as against 1.9 per cent of previous year. The production of rice increased to 5.1 million tonnes as compared to 4.6 million tonnes last year. The cotton production reached to 11.2 million bales from 8.7 million bales last year showing an increase of 10.3 per cent and 27.9 per cent respectively. The production of sugarcane is estimated 46 million tonnes which is lower by about 16 per cent as compared to last year production. The decline in production is attributed to the delayed payments by the sugar mills, which discouraged farmers to grow sugarcane. Other factors contributing for decline in production include abolition of flat rates of electricity tube-wells by WAPDA in Punjab created water constraints and less rainfall.
According to official sources, the industrial investment or capital formation in the manufacturing sector witnessed an increase of 20.4 per cent during 1999-2000. The private sector investment in large-scale manufacturing registered a sharp increase of 30.6 per cent during the course of the year while public sector investment recorded a marginal increase of 0.6 per cent growth.
The net foreign private investment inflows stood at $449.6 million during July-April 1999-2000 as against $415.0 million in the comparable period of last year showing an over all increase of 8.3 per cent. The portfolio investment was severally affected by the external and internal shocks last year but recovered from $7.4 million during July-April 1998-99 to $ 57.1 million during 1999-2000. The foreign direct investment inflows however declined marginally to $392.5 million during 1999-2000 as against $407.6 million in the same period last year, which implies a decline of 3.7 per cent.
Current economic situation
For the last several years, Pakistan's economy has been facing serious difficulties owing to persistent lapses in implementation of structural reforms and stabilization measures. The imposition of economic sanctions following nuclear tests of May 1998 exposed Pakistan's underlying vulnerability and precipitated a balance of payments crisis.
Following October 1999 an attempt was made initially to stabilize the situation. There are signs, which suggest that the economy has begun to stage a modest turnaround. The recovery in economic growth is fully supported by a strong rebound in agriculture and a pick up in large-scale manufacturing excluding sugar. Also contributing to the current year performance is a fall in rate of inflation, a "V-shaped" recovery in exports, a much greater degree of exchange rate stability, stable foreign exchange reserves, substantial progress made in restructuring Pakistan's foreign debt and improvement in credit rating in international bond market.
Major challenges however include improving fiscal account, restoring investors' confidence further and achieving higher growth on a sustainable basis.
As against an average growth rate of 6 per cent in the 1980s, real GDP growth slowed to an average of 5 per cent and further to 4 per cent during the first and second half of the 1990s, respectively. While agriculture maintained an average growth rate slightly above 4 per cent during the last two decades. It is the large-scale manufacturing and services, which contributed to deceleration of growth in the 1990s. As against an average growth of 8.2 per annum in the 1980s, large-scale manufacturing slowed to an average of 4.7 per cent and further to 2.3 per cent in the first and second half of the 1990s respectively. Services sectors grew at an average rate of 6.6 per cent in the 1980s but slowed to an average of 5.1 per cent and 4.1 per cent during the first and second half of the 1990s respectively. Fixed investment as per cent of GDP declined significantly in the 1990s. As against an average rate of close to 17 per cent in the 1980s fixed investment declined to 15.3 per cent in the second half of the 1990s.
Currently, the unemployment rate is estimated at 10 per cent and the phenomenon of underemployment even more serious in Pakistan.
Only about 60 per cent of the annual increment to the labour forces, estimated around 12-1.3 million, are expected to be gainfully absorbed, adding the remaining 500,000 or so persons to be pool of unemployed annually.
The estimates of unemployment, developed by various government departments and independent economists differ quite substantially.
Officially, out of a population of 136.9 million an estimated 39.28 million persons are in the labour force with male and female components being at 33.37 million and 5.91 million respectively. About 44 per cent of the employed labour force are in the agricultural sector and about 56 per cent in the non-agricultural sector - about 20 per cent in the formal sector and 36 per cent in the non-formal sector.
Official figures however described the overall open employment rate as 6.1 per cent for both sexes and the underemployment, not meticulously estimated, is reported to be a multiple of the open unemployment.
Official statistics suggest the under-employment rate at 11 per cent while studies in private sector estimate that it could be between 15 per cent and 40 per cent.
A large scale under utilization of women resources in terms of duration for work, income, skills and productivity differentials has contributed heavily to the country's poverty.
In order to mitigate the unemployment situation, the present government has launched a poverty alleviation programme. The introduction of Micro-Finance Bank for which a fund of Rs32 billion has been allocated by the government a $100 million in assistance from the Asian Development Bank is of course a welcome step. The scheme of Micro-Finance Bank is intended to extend credit of Rs5000 to Rs30,000 to people in smaller communities to be used for income generating activities. The government feels that it is in essence a revolutionary social movement to empower the under-privileged communities. The scheme aimed at to help the poor enabling them to generate income by using the amount. So far, the banks in Pakistan were meant only for deposit purposes. The poor had to access to the banks. The huge advances were allowed only to the moneyed people or on political considerations. The scheme if allowed to be implemented in accordance with its true spirit, no one could stop an economic revolution, which may emerge out of the ranks and files of the poor in this country.
Different governments in the past had also launched such programmes, unfortunately the beneficiaries of such schemes were chosen on political considerations. The Yellow Cab Scheme and distribution of land among the land-less haris are the glaring example of this political stunt. The needy masses were never allowed to benefit out of these schemes.
It is hoped that the present government would take stock of the previous examples and evolve a system to ensure that the benefit of the scheme goes to the poor purely on merit and not on the basis of recommendations or considerations i.e. "Parchi" or "Sifarish".