The joint economic forum has been billed as an institutional arrangement for periodic consultation on economic issues
From SHAMIM A. RIZVI, Islamabad
Dec 02 - 15, 2002
The visit of US Secretary of the Treasury, Paul O'Neil to Islamabad was reassuring as he gave strong indications of enhanced US-Pakistan trade and business relations and cooperation in many other related fields. The Treasury Secretary who visited Pakistan to represent its country, in the second meeting of Pak-US joint economic forum declared that the United States considered Pakistan a long-term development partner. "Pakistan has the right conditions and the leadership to achieve economic success at a rapid pace", he added.
The second meeting of the forum lasting 3 days brought into focus a number of key issues relating to enhancement of economic cooperation between the two countries. Some of the important themes on the agenda included market access for Pakistani products specially textiles in the US markets, debt write off, US economic assistance, private sector cooperation, social sector development and poverty alleviation. Anti money laundering measures taken by government of Pakistan also came under discussion.
Speaking at a joint conference with his Pakistani counter part, the Finance Minister Shaukat Aziz, the US treasury Secretary declared that Pakistan and the United States have agreed to sign a free trade agreement (FTA) to help each other businessmen. There will be no tariff barriers and we would work with our Pakistani friends to sign FTA. The US was currently holding talks with many countries and various other international organizations to sign FTA to mutually benefit each other, Mr. Neil added. The two sides, he said, also discussed the possibilities of market access, especially for textile sector, as it would generate jobs and trigger economic growth in Pakistan. The forum also considered initiating the process for free trade agreement.
Pakistan assured of taking necessary measures to prevent money laundering and terrorist financing activities. It was pointed out that an act was in an advance stage of finalization and would be placed in the parliament for approval. An anti money laundering coordination unit has been set up at the Ministry of Finance to coordinate policy making as well as introduction between various agencies like Ministry of Interior, Foreign Affairs, the State Bank of Pakistan, National Accountability Bureau and Security agencies.
Against the backdrop of globalised economic scenario, a developing country like Pakistan can achieve economic stability if it is provided with greater market access, economic assistance on softer terms and debt write offs like the one which is under consideration in Washington. The US Treasury Secretary was of the view that Pakistan has the right conditions and the leadership to achieve economic success at a rapid pace. The rule of law and attack on corruption will facilitate inflow of foreign investment. It is in the context of larger inflow of investment and expansion of trade that the role of private sector assumes greater importance. As the Privatisation process goes apace in the country, the investor at home and abroad can be further encouraged to participate in it. It has already been decided that at the next meeting of the forum, the private sectors of the two countries will be closely associated with it. The respective governments can facilitate their cooperation in various economic sectors.
The joint economic forum has been billed as an institutional arrangement for periodic consultation on economic issues. Alongwith two other forums, which are Pak-US Business Council and the joint trade and Investment Forum, a strong foundation has been laid to translate into reality the desire for close and long-term bilateral cooperation. It needs to be emphasized that greater inflow of investment will open new job opportunities in Pakistan and this needs priority attention. Access to markets will lead to expansion of trade. Social sector development and poverty alleviation programmes can be expanded through greater economic assistance. However, improvement in macro economic indicators will not be enough. The benefits of economic revival should be reaching the people on a regular basis. It has already been proved that economics, which economics, which have invested in the people, have gained a great deal in fostering economic progress and prosperity.
Earlier, the forum was briefed about economic performance of Pakistan in the last three years, micro-financing in Pakistan, process of Privatization, education sector reforms, vision for future development and growth strategy, financial reforms, debt strategy, and capital market reforms. The forum noted that Pakistan has done well in strengthening its economy because of financial structural and capital market reforms that has enabled it to reduce its fiscal deficit, lower inflation, increase gross foreign exchange reserves over $8.8 billion, expected GDP growth of 4.5 pc in large scale manufacturing, particularly in cement, steel, textiles, automobiles and engineering sectors and restored confidence of international investors and financial institutions leading to foreign direct investment of over $400 m and remittances over $1.4 billion in the first four months of the current financial year. Exports for the first four months were up by 15 per cent while imports up by 13 per cent. Revenues during the same period were on target, up 16 per cent, with considerable buoyancy in sales tax and customs duty collections.
The forum took keen interest in micro financing in Pakistan and noted that micro finance is critical for poverty alleviation, as it would enable the poor to gradually build their assets and enhance their income earning capacity resulting in economic growth. It was anticipated that over Rs.7 billion would be distributed as loans in this sector over a period of five years.
The forum also took note of the fact that Pakistan's privatization programme was highly ambitious and attractive for local and foreign investors. New opportunities were emerging in the energy sector, in oil and gas development, down steam industries, power generation and distribution and gas transmission and distribution. It was hoped that the US investors would find the opportunities in the regional context were also highlighted. It was argued that reconstruction work in Afghanistan and opening of Central Asian States to the world will inevitably generate economic activities in Pakistan. Pakistan was taking appropriate steps to prepare itself for taking advantages of the prospective opportunities. In this regard, Pakistan is developing a network of ports; regional road network, revamping of railways and upgrading the overall infrastructure, so as to effectively exploit the new economic opportunities.