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Impact of the OBL episode on Pakistan’s economy
A Guest Post by Majyd Aziz
The Doomsday theorists and the ignorant anti-American elements in Pakistan have become over-active after the showdown in Abbottabad. Suddenly, they are back into action with their I-told-you-so rabble rousing posture and are trying to galvanize the citizens into a universal condemnation of not only Washington but also the civilian leadership and the military hierarchy of the country. President Obama is being considered as a re-incarnate of the younger Bush while all hell is being let loose on the two well-protected high rollers safely ensconced in Islamabad. The brave among this inciting crowd, all the more fortified by the drawing room analysts and pseudo-democrats, are out to get the scalps of the two Generals who had their tenures extended.
The Formation Commanders made the right noises by warning the White House, in fact, warning the world not to attempt such an adventure again inside Pakistan’s territory. There was the usual talk about ending the drone "culture", reduction in the number of Americans moving all over this nation, and threatening to "review" cooperation between Pentagon and Rawalpindi. Hallelujah. It reminds one of the classic Peter Sellers’ movie The Mouse That Roared. It may play well in maybe Gujranwala.
However, what is missing in all this wailing and blaming is that no one has seriously considered the impact this draconian adventure would have on Pakistan’s tottering economy. Come next fiscal year, there is going to be a fundamental shift in the nation’s budget planning and revenue expectations. The Finance Minister and his jolly band went to IMF with a structured begging bowl but the high priests sitting in the citadel of this institution showed them unusual courtesy by escorting them out the exit door sans any largesse. State Bank of Pakistan big boys have put their hands up in desperation that inflation is still an uncontrolled albatross around the economy. The euphoria in Trade Development Authority of Pakistan and in the minds of less knowledgeable spin-doctors of the ruling party that the export figures would be at all-time high, based on the extraordinary performance of the raw cotton and spinning sector is fizzling out sooner than expected. Half of the spinning mills are switching off their machines because all of a sudden the global demand went poof.
The Finance Ministry officials transformed the Ministry from a being a facilitator to trade and industry by playing their own version of contract bridge by considering themselves as "us" and the businessmen as "they". When there was genuine opposition to the introduction of the macabre Reformed General Sales Tax, some hare-brained official came out with the asinine proposal to get the country’s President to issue three Ordinances as part of the Plan ‘B’ conjured up by minions in Federal Board of Revenue. Lo and behold. The trade and industry representatives got these officials on the carpet and within no time, the Ordinances became stale jokes.
The Federal Budget is due on May 28 and the energetic but elusive Finance Minister will again attempt to teach the Parliamentarians a lesson or two in Economics 101. He has already received a bagful of help from the Presidency who outmaneuvered seasoned politicians and got them to do the tango with him. The budget would be approved but at what cost? Is the country ready to bear the ramifications of what the good Senator Doctor Sheikh has in store for the 175 million denizens? Would it be an ingenious financial vision or would it be dictated orders from IMF and other International Finance Institutions? The answer would be certain when the dust clears on the last Saturday of this month.
Should one recount what is happening on the physical infrastructure scene? Very casually and without fanfare, the nation is now short of 7000 mw of power. Very brazenly, the natural gas people unilaterally decree that gas would not be available for industries and CNG Stations. Those who decide at what cost Pakistanis would get petrol ritualistically but forcefully announce that petrol, diesel, and other petroleum products would now cost an arm and a leg.
The reason why this economic picture is being presented is to bring to the fore the very fact that the OBL episode has come at a very delicate time for Pakistan. The billions spent on the Global War on Terror by this cash-starved nation, the fabulous military victories in eliminating terrorists and extremists from the wild, wild north of the country, and the confidence reposed in the valiant forces by Pakistanis have suddenly burst like a pin pricked balloon. The general feeling was that in spite of the difficulties people faced on the economic front, it was essential and crucial that the Armed Forces were provided with everything to protect and secure the borders and the strategic assets.
This confidence in the Armed Forces must not be allowed to wane. Pakistanis must continue to support and encourage the brave forces. The entire Defense establishment must learn whatever lessons it has to learn and must carry forward. Demagogues and Fifth Columnists must be ignored and should not be given prominence by the electronic and print media.
There should not be despondency and blame-game either within the forces or among the politicians. Dejection at this stage will ruin the country by hampering its economic progress. This is the time for all decision makers to sit with the mainstream businessmen and industrialists to get the country out of this economic quagmire. The Pakistan Business Council attempted to get the politicians to sit with them at the same table and discuss the economic agenda. A noble step, but it did not create any waves because mainstream trade and industry representatives were excluded while third or fourth tier nominees from the political parties came to Serena in Islamabad to make the usual pompous statements. (Incidentally, this writer had proposed such an All-Parties Conference while taking part in a PTV program hosted by Dr Huma Baqai a couple of months back. So, credit to PBC for following it up and spending money to get politicians together).
The impact of the OBL drama would not be as damaging to the country as propagated by many analysts. This is not the time to strain relations with USA and other Western countries. Secretary of State Hillary Clinton has offered a comfort zone to Pakistan. Assurances are coming from Foggy Bottom as well as from Capitol Hill that Pakistan would be supported and that Pakistan needs maximum cooperation from Washington. This is the time for the government and even the Armed Forces to ensure that American financial assistance is not squandered away and also that Pakistan should be provided all facilities to procure smart defense technology to continue its frontline role in exterminating terrorists and extremists from this country. Emphasis should be on foreigners who have created havoc by assuming the role of so-called Jihadis. The Saudi Arabian, Sudanese, Egyptian, and the Chechen Jihadi elements must be declared persona non grata and their native countries be forced to take them back.
The recent positive outcome of the talks between the Interior Secretaries of India and Pakistan in New Delhi and the Commerce Secretaries in Islamabad and Bhurban will open new vistas of economic cooperation not only between the two countries but among all SAARC nations. This is a breath of fresh air and the expectations are positive and beneficial for Pakistan. Furthermore, there is expectation of foreign investment not only from India but also from other countries. This is the time to invite massive investment in minerals exploration, in information technology, and in livestock. These would create jobs and pump up the economy.
Pakistan cannot afford to be strangled by the OBL opera. Once lessons are learnt, once accountability has ended, and once the nation’s skies are really made impregnable, the concentration should be on the economy. The most unpatriotic thing a citizen can do at this juncture is to be persistent in carping about the capability and competency of the Armed Forces while at the same time, all those who are neglecting efforts to rejuvenate the economy are guilty of the same crime too. This is the ideal time to say "YES" to the Founder’s motto: Unity, Faith, and Discipline. By the way, what happened to Pakistan First?
Majyd Aziz is a Karachi based Entrepreneur and a senior leader of the business community. He is a former Chairman of SITE Association of Industry, former President of Karachi Chamber of Commerce & Industry, and has held posts on the board various public organizations and companies.
This article is taken from another source. Views expressed in this article are those of the author and may or may not be the views of From The Pulpit and DiscoMaulvi. To submit content for From The Pulpit, please email FromThePulpit [at] MuhammadAly [dot] Com.
Pakistan | Youth Resources: Untapped Potential
A Guest Post by Majyd Aziz
Preamble
PAKISTAN is fortunately placed at an envious demographic position as one of the “youngest nations on Planet Earth” with nearly 70% of the population below the age of 35. In fact, the peak youth share is around 21% within the ages of 15-24. The advantage of a young population should enable the country’s planning managers and policymakers to prepare a visionary agenda taking into account the benefits, potential, and value of this young force.
PAKISTAN is still unable to enjoy the demographic dividend that this young population can bring. The pathetic educational system in the country does churn out graduates but most of them are not worth having within the working environment. Technical training centers are set up all over the country managed by the various provincial authorities. At the same time, organizations such as Skill Development Councils have played a defined role in providing skill development and vocational training opportunities to the youth. The Benazir Bhutto Shaheed Youth Development Program (BBSYDP) is a visionary and practical initiative undertaken for the youth of Pakistan. Moreover, the employment opportunities for the youth, at this moment in time, are relatively very few, very uncertain, and very low paying. In fact, the absorption of youth in the labor market has been limited to a large extent.
PAKISTAN is in the midst of the unrest being generated by the sense of deprivation and dejection faced by the youth. The young people are entering or ready to enter the job market and are waking up to the stark reality that jobs are scarce, that they are not properly trained to deal with the available jobs, and that they are not sure of the tenure of the position if they are lucky to land a job.
PAKISTAN is at a crossroads when it comes to handling the youth. The benefits of the demographic dividend are not possible if the youth do not enter the labor market, but then if there are no opportunities to become economically active then the youth would be stranded and lost at sea. This here is the challenge. Youth unemployment is endemic and continues to rise. The rhetorical statements of politicians assuring the youth that jobs would be available become stale news once these politicians are safely ensconced behind the portals of power. The dissatisfaction among the youth increases especially when they are exposed to the electronic media that is showing them a different world and in the process creating wants and desires which cannot be satisfied.
PAKISTAN is also subject to other negative outcome of the frustration of these young people. These youth become readily available fodder for extremist forces who take advantage of this deplorable situation. At the same time, many youth, especially in urban areas, have become unwilling partners in crime and this is substantiated by the phenomenal increase in street crimes and petty burglaries. The proliferation of drug use among the youth is a matter of serious concern too.
PAKISTAN is also beset by other factors that have impacted negatively on the economic viability of this country. The billions that are spent on the Global War on Terror, the burgeoning inflationary trends, the pressure on the currency, the increasing cost of petroleum imports, the physical infrastructure handicap, the dependence on borrowings from the multilateral agencies resulting in a dictated economic policy framework, the disconnect between the provinces due to parochial and ethnic compulsions, the political instability, and the excessive non-developmental expenditure, have not only been demoralizing but have seriously affected the viability and sustainability of trade and industry. Unemployment has become the Number One cause of gloom and doom among the populace.
The Way Forward
PAKISTAN government must plan and promote the National Agenda for Youth Resources (NAYR), in consultation with industrial and trade associations, WEBCOP, economists, and educationists, etc. There is an imperative and urgent need to focus on the various modalities and concepts that would enable the formulation and implementation of the NAYR. The major areas would be:
(a) Ensuring literacy
(b) Provision of skill development and vocational training
(c) [Alternatively, entrepreneurship development]
(d) Internship and practical training
(e) Placement opportunities
PAKISTAN is endowed with talent and resources, both natural as well as human. There is a high priority requirement to indulge in out-of-box thinking and prepare this NAYR. The major areas enumerated above can be further elaborated as follows:
PAKISTAN policymakers have to revisit their educational priorities. A sad reality is that the allocations for education in the Federal as well as Provincial budgets diminish every year. The dismal environment in the government-owned schools has affected the proper schooling of children and this has been transformed into a horrific foundation for the youth. At the same time, most of the private schools profess to provide superior education but the cost to parents is alarming, Of course, the educational institutions set up by social or community-based organizations are playing a paramount role in providing decent education. It is proposed that trade and industry associations, chambers, as well as large enterprises must be mandated to set up educational institutions on their own or must financially support organizations such as Citizen’s Foundation so that quality education becomes universally available.
PAKISTAN government must ordain TEVTAs that have been set up in every Province to initiate projects on Private-Public Partnership basis to modernize, upgrade, and renovate the existing technical and vocational training institutions and also must prepare and plan centers and curricula in consultation with WEBCOP and Skill Development Councils as well as trade associations so that the Pakistani youth can enter the global economy as a well-trained and tested professional.
PAKISTAN has a functioning Higher Education Commission and this organization must assist and direct the various educational institutions to develop alternate programs to introduce and impart knowledge-based education to inculcate entrepreneurship in the youth of Pakistan. This would enable trained or skilled youth to become owners rather than depending on employment.
PAKISTAN has not been successful in ensuring that most of the present technical institutions have a working relationship with trade, industry, or the service sectors whereby programs could be planned to provide on-job-training as well as practical working knowledge of the concerned skill. There is also no system of mentoring the youth. This gap has to be reduced and it is essential that the trainee is able to obtain this hands-on facility and resource.
PAKISTAN political government must ensure that it is essential to take on board the chambers and associations to come up with a systematic and pragmatic program that would encourage the members of the associations and chambers to tap into the pool of these trained or skilled youth and utilize them in their establishments. However, it is pertinent to note that market-demand skills should be taught to the youth rather than depending on outdated or routine curriculum.
Essential Areas of Employment
PAKISTAN policymakers have to accept that the objective of NAYR would be to ensure that training is provided in sectors that conform to the requirements of the global economy as well as addressing the cultural, traditional, and national dynamics of the country. It would be beneficial to the nation, to the individual and to the employer.
PAKISTAN has a strong agriculture base. The youth should be trained in operating equipments that are imperative for mechanized farming. This would increase productivity as well as streamline the cultivation of various crops. Training in proper usage of fertilizer, seeds, and other inputs would surely make a marked influence on the economies of the rural areas. At the same time, there is immense scope in fruits and vegetables, right from plucking down to the eating. The fruit and vegetable farms can provide much needed employment to the young people.
PAKISTAN is also increasing its share in the services sector. Educated youth can fill the demand for human resources in various fields in the services sector. Call centers, software programming, hotel and restaurants, sales representatives, cell phone repairs, food catering, enumerators, security services, event management, and transport drivers are areas where formidable job opportunities can be created.
PAKISTAN is going to witness a boom in construction, especially in low-cost housing. There is a backlog of over nine million housing units that have to be built to cope up with housing demands. Private sector is ready to provide training for trades associated with the construction industry. Skilled operators are required for bulldozers, dumpers, loaders, and other construction equipment. BBSYDP does provide short term training for masons, plumbers, electricians, floor tilers, painters, etc. At the same time, there would be ample job opportunities in cement, paint, sanitary fittings, cables, fans, geysers, tiles, and other nearly 40 industries due to the housing boom. There are not that many skilled workers at present to cope up with the upcoming demand by the housing sector.
Conclusion
PAKISTAN can get out of the economic morass if concerted efforts are made with passion and with sincerity. It is also incumbent upon the youth to be serious in acquiring the skills and knowledge to prepare for a career in their chosen fields. Needless to mention, a working youth will generally not resort to fraternizing with extremist elements nor would the youth subscribe to unethical and objectionable activities if one is busy with his vocation. It is only then that Pakistan will greatly gain from and benefit from the demographic dividend deriving from the large potent youth population. The Great Poet Allama Iqbal expressed his admiration for those young people who are achievers:
Mohabat mujhe oon jawano se hai
Sitaron pe jo daaltay hain kamund
Majyd Aziz is a Karachi based Entrepreneur and a senior leader of the business community. He is a former Chairman of SITE Association of Industry, former President of Karachi Chamber of Commerce & Industry and has held posts on the board various public organizations and companies. He is also a member of the Steering Committee of BBSYDP Sindh
Views expressed in guest posts are the opinions of the author and may not necessarily reflect the opinions of DiscoMaulvi and From The Pulpit…
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Pakistan Needs A Better Business Environment
A Guest Post by Majyd Aziz
The economic prosperity of any country is largely due to the initiatives of the private sector and fully supported by the government thru demand-oriented facilities. The government has to introduce a laissez-faire mode of relationship with regard to industry and trade. In Pakistan, there has always been a yo-yo style relationship between the government and the business community. The over-employment in the government bureaucracy has led to abnormal increase in governmental interference, harassment, and corruption. This has come to a point where about half of the industrialist’s time is wasted on government matters such as inspections, audits, correspondence, reports, filling forms, and visits to government offices. The government must reduce the plethora of taxes, must minimize punitive measures, must lessen the visits of petty officers of myriad agencies, and must slash the tax rates if there has to be increased investment in the country.
It is essential that the government seriously revisit the General Sales Tax regime (whether it is Value Added tax or Reformed GST) and transform it into an acceptable and workable form. The present backbreaking 17% rate is criminal, it leads to temptation to evade, and is keeping traders and industrialists from registering under the system. If the VAT has to be enforced then it must be with determination and must be broad-based with all links in the chain covered. But, more importantly, it is imperative that the rate is not more than 5%, otherwise, this scheme will be difficult to implement and will remain hostage to the corruption syndrome. The present uncertain thinking by the government in GST matters is the root cause for the vicious campaign against VAT.
Furthermore, the industrialists, and more importantly, the traders would become prisoners of the discretionary, arbitrary, and coercive powers of the concerned officers. There would be frequent squabbles with the tax staff, there will be continued visitations by all kinds of agencies who will keep on demanding information which the Collectorate will already have, and there will be so much discomfiture and dejection that the industrialists and traders would be forced to cower and grovel into succumbing to the eventual and highly popular "muk-muka".
The government can become more involved in bringing about a comprehensive documentation system in the economy if it affirms its determination to continue with the process. The trend towards dilly-dallying on important issues has brought about a negative response to various governmental measures and has fortified the resolve of those who do not agree with the government’s scheme of things. It is imperative that the administration provides a sustainable solution to the process of documentation and that can only be done if the government can establish its writ but at the same time bringing about a kinder, gentler tax regime. The high-handedness of tax collectors must be checked and those elements in the tax collecting agencies that are bent upon creating a polemic condition must be removed from the scene. The government must understand that the pragmatic way to bring forth universal documentation is to provide an enabling environment.
The government must begin efforts to strengthen local bodies and this can be done by finalizing the date for local bodies’ elections and a systematic devolution of power down to the local level. The balance sheets of District Governments must be published and must be made transparent so that the citizens can get an opportunity to know what they are earning and spending and in which manner. There is immense amount of corruption in these local bodies. Fly-by-night companies are given contracts for city projects, etc. It is proposed that the government, in the first instance, target five cities, i.e., Karachi, Lahore, Peshawar, Rawalpindi, and Quetta, and divide them into zones. The road construction project, for example, could be given to one construction company for every zone, and that this company should be wholly responsible for the construction of the roads in that zone. If then the roads condition deteriorates, that company must repair it and must be penalized for shoddy work. These companies should be well-established ones, and that one-deal companies are not entertained at all. A bank guarantee could be a pre-condition to keep these companies in check.
It would not be out of place to quote the example of SITE Ltd. There is a total collapse of infrastructure in the largest industrial estate of the country. SITE Ltd needs an immediate and complete overhaul. The organization is still in the dark ages and continues to act like a mean, vicious, and demanding landlord. So much so, even the Supreme Court had to intervene and order the setting up of effluent treatment plants and a general clean-up of the estate. Of course, even today it is dirty, unorganized, encroached, and getting worse by the day. Remember, it is this same estate that provides nearly 30% of the total revenue of the government.
It is important to mention the need for an encouraging environment for textiles too. There are no two opinions that all the components of the textile sector should be confident and should be appropriately satisfied that they have been adequately backed by the government. The relevant ministries and agencies must resolve on priority basis the residual issues that still impact negatively on these constituents of the textile sector since these actions would ensue into more employment, more exports, and more industrialization.
A better and more enabling environment could be created if the government is serious about controlling the rampant under-invoicing, smuggling, and mis-declaration. The Afghan Pakistan Transit Trade Agreement is another deterrent. Labor is unmotivated and thus productivity, efficiency, and quality still haunt the industrialists. It would take years before water, gas, and electricity is available on demand. And, the less said about the monetary policy of the State Bank of Pakistan, the better. All these are impediments and roadblocks. The recent floods and the havoc it generated have formidably pushed the country’s progress. Billions would be required to bring sanity into the country. There is no political stability, there is no quality of life, and there is no continuity of policies. In spite of the oft-repeated mantra that “all is well”, the sad fact is that the road towards prosperity is full of pot-holes, it is dark, and it is under constant attack.
The solution lies in seriously and sincerely taking the industrial and business community on board. Policy making without intensive deliberations and without ascertaining the needs and demands of the industrialists and businessmen would be just another ad hoc measure. The time to change is now. The global marketplace is already becoming saturated with competitors from other nations. Pakistan cannot be a bystander or an isolated soloist in the world today. But, for now, "Le plus ça change, le plus c’est le même chose" (The more things change, the more they stay the same).
August 11, 2010
