DISCOURAGING INVESTMENT CLIMATE
AROOJ ASGHAR (email@example.com)
Jan 18 - 24, 2010
Pakistan's economy is facing numerous challenges like trade deficits, volatile oil prices, electricity, wheat and cotton crisis, high inflation and political instability in the country.
Foundation of Pakistan's economy is shivering these days and apparently nothing concrete is happening to support that. In past, macroeconomic fundamentals improved, the real GDP growth rate increased to above 6 percent from 3.6 percent, annual inflation rate increased, and current account posted an unprecedented large deficit. So far, ministry of finance has failed in mobilizing adequate domestic resources to finance developments, which is restraining the growth rate.
This is one of the reasons why the actual rate of development is below the potential rate of development. It is also responsible for our dependence on external resources in the shape of loans, investments, subsidies; defer payments and grants to an extent that it has now impinged on economic sovereignty. This economic mismanagement has badly affected Pakistan's national interest-- national interest means national interest and not what most of the rulers define and believe.
Domestic factors like political instability, and unstable law and order situation, capital flight, collapse of stock exchanges all are testing the strength of economic fundamentals of Pakistan.
A lot of emphasis has been placed on the investment in stock exchange, real estate, construction, trading mainly in mobile phones and cars instead of making policies for investors to invest in manufacturing concerns and mega projects which would have created millions of jobs.
On top of that, now the Banazir Income Support Program is nothing but a source of corruption. Why hard cash is being given to 'needy'? Look at the vision of introducers of this policy and the people who are advocating this scheme. The best thing is that give grant to poor (even one fourth of the people currently getting this support money) and ask them to do some business or trade thus creating circle of business. Get 1000 Rs and buy food stuff and enjoy. What an irony.
We hardly see any real mega projects in the process. Reason is very simple; all efforts are to remain in power or coming into power. The left over time is for the economy.
Rising political uncertainty has cost the Karachi stock market dearly in the shape of outflow of foreign investment in December that was otherwise showing encouraging signs in the previous months. The stock market, which became attractive for the foreign fund managers at the start of the current fiscal, witnessed a net outflow of $6.279 million in December so far. Market players anxious over the uncertain political situation and its fallout on the economy and stock business said, apart from the confusion on the political scene, the absence of any leverage product for the last many months had hampered the entry of local as well as foreign funds in a big way.
Pakistan is literally at a state of war but so called leaders have other priorities. The law and order situation can't be worse than this; on average every 5th day Pakistan had a bomb blast in 2009. The precarious security situation particularly terrorist attacks in NWFP, Punjab and Karachi have serious impacts on the economy. Baluchistan situation is already not good.
Market players pointed out that Pakistan was unable to understand the gravity of the situation because of global financial crisis whose severity, though subsided, but still prevailing in the developed nations because of over 80 percent portfolio investments, was coming from the US, which means that the market was still not attractive for diversified global investors.
Pakistan's situation is not that simple, besides having political instability and security disturbance, Pakistan has worst kind of cartels and extreme greedy business community (exceptions are there). Every one is trying to multiply its wealth rather than following the natural path. The country is moving towards a situation where we will see fights in streets and markets. We are not ready to give space to others to live. Time is approaching when a person will stand up while gun in one hand and head on other then these influential people will invite them to share the space. At that time, not only these people will pay the price in the shape of their blood but also the common man, who is always the first choice of terror.
Can anyone go and tell these elite to open their eyes and brains?
We are not getting new investment because we are too much busy in our lives. We have oil fired power plants because we have strong oil marketing companies. We are encouraging to use LPG because it's favorite business of the wives, sons, son-in-laws, and daughters of "soft hearted" people. We can't drill more gas reservoirs because WE are not willing to share profits with the land owners. We encourage rental power plants, which are third grade obsolete machines, with power purchase agreements with WAPDA.
We decline to bring down the sugar prices. And the full credit goes to consumers who can't take tea without sugar, can't sleep without eating sweet dish. No one has asked you to take sugar, its your desire then PAY and no complaints please. We are facing water shortage and in coming years it is predicted that Pakistan will have severe water crises due to India's unabated construction of dams on Pakistan's water. But WE ignored this issue and never rose with India when development and construction in India started.
We are suffering because we want to suffer, we love to suffer. We do not understand because we don't want to understand. We are dreaming because we want to live in a fool's paradise. We have not learnt any lessons from Abbasid Caliphate, Gurnata rulers, Mughal Emperors, East Pakistan debacle because its past, lets forget the past and live in present.
It's never too late. We have the potential to do the miracles. We have numerous successes in limited time. Pakistan is a land of opportunity. It has the leadership whereas the only missing link is ignorant people. A slight change in the attitude of elite can bring life to the lives of people.