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The new economic agenda

  1. The economic agenda
  2. Towards self reliant economy
  3. Reviving the Saindak project
  4. The SBP annual report
  5. Improvement through fertilizer

The business community has expressed their satisfaction

Dec 20 - 29, 1990

The much-awaited economic package, presented by the Chief Executive Gen. Pervez Musharraf may be good for hitting the long term targets, but it has ignored the kitchen which is the most immediate concern of the masses in Pakistan.

Majority of the people living hand to mouth with in a meagre GNP rate even below $400 in this country were rightly expecting something different from the previous governments of Nawaz Sharif and Benazir Bhutto. These two political governments were known for making tall claims for improving the lot of the poor, but practically speaking these claims were for public consumption. They hoodwinked the innocent people of this country by their false claims of poverty alleviation. Practically speaking they made the life miserable in Pakistan by dancing on the tunes of the World Bank and IMF to get more loans. And now the situation is that more than 96 per cent of the GDP goes into debt servicing.

People took a sweet revenge from the corrupt politicians by keeping a mum when their heavy mandated governments were falled from sky to the ground.

Frankly speaking people were attaching great hopes with the military government for a visible change in two areas. a: Immediate relief in prices of essential goods including utilities and b: an immediate crackdown against the corrupt including radical reforms in the police system of the country. Except incidents of the serious nature such as car or motor cycle snatching, killings etc more than 95 per cent cases are not reported to the police. Why people do not report to the police obviously because they have no faith, confidence in the system. This confidence has to be restored through radical changes in the system to give a true sense of civic life both in urban and rural areas.

The business community however has welcomed the economic package announced by the Chief Executive Gen. Pervez Musharraf on Wednesday night.

Fazalurrehman Dittu, president of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has expressed satisfaction as according to him most of the recommendations moved by the FPCCI have been accommodated in the economic package.

The Chief Executive’s resolve to exclusively use the sale proceeds of the privatization of the public sector entities is one of the most workable option for the government to get rid of the foreign debts.

Outlining the salient features of the package Dittu endorsed the step of the government to reduce mark up rate by 2 per cent which he said should have been done much earlier.

Bringing agriculture income into tax net was the long standing demand of the business community. Now the demand has been formally accepted and it has been made the part of the government policy. This step is expected to help exchequer manifold beside giving relief to the tax payer already contributing out of proportion.

The business community also hopes that general sales tax would also be made rationale so that it is accommodated by the consumers as well as by the trade and industry.

Amjad Rafi, president of Karachi Chamber of Commerce and industry (KCCI) also expressed more or less similar feelings by describing it as positive gesture on the part of the government.

The KCCI president observed that cut of 2 per cent in mark up rate was a good step in the right direction and would boost industrial production in the country.

Similarly, special emphasis on small and medium enterprises will encourage establishment of these units in the country which is the need of the hour.

Yaqub Karim, former Chairman, SITE Association of industry while appreciating the package said that the new government has started realizing the productive use of national resources. In this context, he regretted that so far a handful of politically influential people had the monopoly over the financial sector of this country. These elements not only looted and plundered the financial sector which is reflected in the huge stuck up loans of the banking system but stalled the way of the genuine and deserving people. He said that generally speaking the banking system in Pakistan does not provide any financial assistance to the large majority of the depositors. These general depositors can use banks as a depositing place. There is no financing facility is available to the small enterprises. He strongly recommended that banks should be made accessible to the small and medium size enterprises and advances and loans up to Rs. one million should be made available on easy terms so that a culture of cottage industry and small business enterprise could emerge on much faster rate in this country. He was of the view that there is no risk of default in small loans. Almost 100 per cent rate of recovery has been proved time and again in many cases, provided the loans have not been given on political considerations or false collaterals.

The four priority areas identified in the economic package i.e. revitalization of agriculture sector, promotion of small and medium industries, boost to oil and gas exploration and development of information techology and sofware industry are the most pertinent areas which need immediate attention of the government.

The Chief Executive has repeatedly emphasised on poverty alleviation and relief to the common man. However this is a claim so far. To achieve this target the government will have to take some radical steps specially in the utility infrastructures. Petroleum products though are not directly related to the poor but increase in price of oil products will affect each and every thing used by the poor. Similarly electricity rates are much higher which is the basic essential items for the citizens as well as the trade and industry. Costly electricity is one of the major reason for cost push effects on industrial products. The higher cost of products rendering the manufacturing sector incompetitive in the international market but the cost push effects making things beyond reach of the common man. Hence the rates of utilities such as oil, electricity, gas, phone and transport have to be brought down at least at par with other countries to produce exportable surplus in the country.

The concerned authorities have been asked to expedite tariff negotiations with the IPPs and to finalise within thirty days pending investigations and submit a report, is a step which will go a long way in restoring the confidence of the investors in this country. The mishandling of the IPPs issue has not only marred the investment climate in the country but has adversely affected performance of the stock markets in Pakistan. The 30 days deadline given by the Chief Executive to resolve this issue would prove reassuring and consequently the turnover at the stock markets may go beyond double on the day the matter is resolved, a broker at Karachi Stock Exchange felt.