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Salvation of the economy

A seminar organized by Pakistan National Forum and Social Policy and Development Centre

Dec 04 - 10, 2000

A seminar on 'Salvation of the Economy' was recently organized by Pakistan National Forum and Social Policy and Development Centre in Karachi. Over 200 audience were a little disappointed as Finance Minister Shaukat Aziz and Governor State Bank of Pakistan, Dr. Ishrat Hussain, the two key speakers could not come due to other 'pressing engagements'.

Col. (Retd) Ikramullah, President, Pakistan Forum, while introducing the subject said, "The purpose of establishing the Forum is to promote national integration and bring the Pakistanis together, at home and abroad." Referring to the efforts of successive governments, he said, "They have not been successful due to credibility gap. If we want to go ahead and want to make Pakistan a prosperous country, the economic managers have to prepare achievable plans. As a nation we have to discipline ourselves to restore our credibility."

Dr, Nuzhat Ahmed, Director, Applied Economics Research Centre at Karachi University presented the review of the economy and suggested remedial steps. The topic of her presentation was "Macroeconomic Revival Strategy". Her emphasis was on value-addition and efficient use of resources. Referring to low tax elasticity, she suggested efficient collection of tax particularly agri income tax and usage of the revenue in a prudent manner.

Naseem Baig of Arif Habib Securities presented a paper on "Investment Climate and Foreign Investment". In his views "Investment flow to the areas where the returns are attractive and sufficient legal covers are available. But consistency in government policies is perceived to the most important factor. No investor, be it local or foreign, would like to make any long-term investment decision if the uncertainty is high. Foreign investors are well aware of the hazards of investing in developing countries but hardly look towards a country where policies change over-night."

Feroze Khan, Chairman and CEO of O J Industries, gave a brief review of the industrial sector. He identified fisheries and information technology as the two sectors having enormous potential for export earnings. "By changing the entire work style of fishermen, and introducing 100 modern boats, Pakistan can earn one billion dollars in the next 3 to 5 years through fisheries. The country needs 80,000 trained people to develop the IT sector and enable the industry to earn foreign exchange", he suggested.

Mian Asif Saeed, former chairman of National Development Finance Corporation, said that lending money to agriculture sector was far more profitable than the manufacturing sector. While comparing the growth of industry and agriculture he said, "Manufacturing sector was adding value to the rupee by 2.6 times and now it is only 1.4 times. In case of agriculture, value-addition to rupee was four times and now it is 6 times." He advised the banks to lend more to agriculture sector to exploit its full potential." At the same time he pointed out the inherent weaknesses of the financial system and inability of staff.

"Demand-led export strategy has been prepared by the current economic managers to explore new markets in South America, Africa, Eastern Europe, Australia, Russia and Central Asia and the result is positive" said the chairman of Export Promotion Bureau, Tariq Ikram. Pakistan's exports are supply-led and not driven by demand. The new strategy aims at catering to needs of overseas buyers through establishing 'Skills Development Council' and restructuring of the Bureau. He said that Pakistan which had exports of $ 6 million to Iraq in the past, had reached a level of US$ 20 million. It is expected to touch US$ 200 million in the next two years.

Dr. Hafiz A. Pasha, Managing Director of Social Policy and Development Centre delivered the key note. He said, "The country is at a historical point where social, political and economic problems have emerged at the same time. The country needs comprehensive solution of these problems. There is a need to develop and implement sustainable plan."

There is a need to arrange more of such seminars. Although, the government is resposnible for developing policies for the country, participation of general public is a must. Institutions like Pakistan National Forum and Social Policy and Development Centre are 'think tanks'. In the devloped countries think tanks play a key role in the development of policies. It is unfortunate that there is an acute dearth of such forum in Pakistan. Therefore, often policies are influenced by pressure groups. Unless there is greater partcipation by general public the policies will always be tilted towards a group/groups rather than being aimed at improving the standard of living of masses.