GOVT URGED OF MAKING ECONOMIC ROADMAP
THE GOVERNMENT HAS NO BUSINESS TO BE IN BUSINESS.
Dec 5 - 11, 2011
The Lahore chamber of commerce and industry (LCCI) is one of the country's premier chambers striving to be the best chamber in south Asia in terms of growth in business volumes, turnovers, exports, and contribution in tax revenues.
Situated few walks away from governor's house in Lahore, the LCCI is serving its members to their utmost satisfaction. The LCCI is committed to making an effective contribution to the nation's economic development through the promotion of trade and industry.
The LCCI acts as a bridge between the government and the business community. It plays an important role in policy formulation by maintaining a constant interaction with the relevant authorities.
The LCCI's mission is to serve the business community and conduct its practices in best possible way, to be a bridge between the business community and regulatory bodies to participate in policy advocacy forcefully to the best interest of the business community and to seek long-term relations with members reflecting fairness, honesty, and transparency.
Leading industrialist, Mohammad Pervaiz Malik told PAGE that focus of the Punjab government on power generation, education, health, infrastructure and agriculture sector are appreciable.
Launching of Punjab rozgar scheme, establishment Punjab education council and allocation of huge funds for enhancement of fruits and vegetables exports are helping to strengthen the economy of the province.
According to him, acute shortage of electricity and gas crippled economic activities in the country and the allocation of nine billion rupees for 500mw projects by the Punjab government would definitely help mitigate the problems being faced by trade and industry in the wake of power shortage. An allocation of Rs1.36 billion for solar tube wells would help enhance agri yield in the province.
Malik said the decision of Punjab government to conduct performance audit of government departments would not only help increase efficiency in the government departments but it would also bring much needed transparency in the working.
He said that Punjab rozgar scheme is a visionary step of the provincial government, as it would help the unemployed educated youth to earn their livelihood in a respectable manner.
According to him, the establishment of Punjab education council for having a check on increase in fees of private educational institutions would go a long way in ensuring quality education to the students.
Allocation of Rs2 billion for enhancing exports and preservation of fruits and vegetable would strengthen the agriculture sector as by exporting fruits and vegetables the farmers would be getting a better return.
LCCI president Irfan Qaiser Sheikh asked the prime minister to convene without any further delay an all parties conference including all the leading chambers in the country to prepare a 12 to 15 years economic roadmap to cope with challenges being faced by the economy.
He said that the private sector is main stakeholder when it comes to economy and without taking it onboard in the formulation of business-related policies an economic turnaround would be day dreaming.
He said that an acute electricity, gas shortage, over 72 per cent hike in electricity prices in the last five months, highest ever markup, huge banking spread, loss making state-owned enterprises (Rs600 billion annually), unskilled workforce, and poor infrastructure are the main causes of economic meltdown, and the private sector has the ability and the capacity to prepare a 12 to 15 years economic roadmap to overcome these issues by ensuring sustainable growth.
According to him, the interest rates need to be in single digit for reducing the cost of borrowing while ensuring that banks increase cash flow lending and reduce emphasis on collateral.
Improving access to finance must also be accompanied by increased availability of venture capital.
The state bank should encourage gradual expansion and diversification of financial products while at the same time paying closer attention to the supervision of the entire banking system to prevent large-scale failure.
At the same time, the government must also adopt fiscal restraint and reduce bank borrowing in order to ensure that private sector's access to finance is not undermined.
Mr. Sheikh said the country needs heavy investments to overcome the growing electricity and gas deficits resulting from energy policy and planning neglect of the last three decades.
Electricity peak supply-demand is usually between 5,000 to 6000MW costing the economy around Rs250 billion per annum. Almost 70 per cent of power generation is oil/gas-based. This is expected to increase the gas supply-demand gap to around 1, 127 million cubic feet per day (mmcfd) in January and 1,046 1 mmcfd per day in February. Pakistan needs to speed up the construction of infrastructure for the import of gas from Qatar, Iran, and Turkmenistan.
Iran-Pakistan (IP) and Turkmenistan-Afghanistan-Pakistan-Iran (TAPI) pipelines are critical for meeting future needs of the economy and society; the former can supply 750 mmcfd while TAPI has 1300 mmcfd capacity. Pakistan should formulate an energy security plan and electricity supply should become an essential part of this framework.
The LCCI president said the economic growth requires infrastructure. The country is falling behind in the development of special economic zones, export processing zones, industrial parks and other specialized infrastructure.
"We need to invest in the essential infrastructure for growth such roads, bridges, airports and rail network as well as widespread access to affordable and reliable utilities and a nationwide digital outfit geared to increase productivity," he said.
"We are still not using information and communication technology to improve our way of doing business. We also need to build large-scale research and development infrastructure to support innovation, high-quality and high-value production and diversification of economic activities." he added
The LCCI president said that the public sector enterprises (PSEs) such as Pakistan international airlines, Pakistan steel mills, Pakistan electric power company, Pakistan Railways, National highway authority, Pakistan agriculture storage and services corporation and the utility stores corporation continue to exert substantial burden on the public finance.
These eight PSEs are incurring losses of around Rs600 billion annually to national treasury. The LCCI recommends immediate revival of the privatization program. Selling these organizations would also be better for managing the economy responsibly. This would immediately reduce a burden of around Rs600 billion on the public finance which is considerably higher than Pakistan's annual development budget. Above all, the government has no business to be in business.
The LCCI president said that Pakistan suffers from a skill deficit in sector of the economy.
Education, vocational training, and skill development have not kept up with the needs of a changing economy.
Only three percent of the population undertakes any vocational and technical training after school as compared to over 70 percent in the European Union and 40 percent in Korea.
Despite establishing the technical education and vocational training authority (Tevta) at the provincial level and the national vocational technical education commission (Navtec) at the federal level, vocational training is still falling short of producing a highly skilled workforce.
The LCCI recommends that the government needs to fund partnerships between firms, academia and training providers to train workforce, he concluded.