THE major challenge today is that the consumers’ universe is still not expanding as it should. The poverty level in Pakistan has increased from 32 per cent in 1995 to 39 per cent in 2002 as a result of appalling stagnation in macro-economic environment.

This has resulted in the shrinking of the consumer market instead of enlarging it. According to a rough estimate, more of the poor countries like Pakistan are debt-ridden economies and their debts are increasing as time passes. The increasing debts and growing poverty will further increase the non-availability of resources to put a halt to the increase in poverty incidence.

Secondly, the incidence of poverty is more concentrated in the rural areas which could result in massive rural-urban migration. Such migration is always very rapid in the developing and under-developed countries. The massive rural-urban shift on a global level could disrupt the balance in urban centres and badly affect the standard of living. It could rapidly increase the incidence of poverty and negate the very spirit of equal opportunities for all in the ‘global village.’

Nowhere in the civilized world food and children’s clothing are taxed as heavily as in Pakistan. General Sales Tax (GST) at the rate of 15 per cent (and an additional three per cent to cover the non-registered wholesalers/ retailers) is draconian in its direct and longer-term effect. On the one hand, it dampens future investment and, on the other, retards the natural process of growth of the consumer market and makes it out of reach for the common man to have reasonably adequate and nutritious food.

Poverty alleviation is any government’s top priority. But how does one achieve this objective when the common man is burdened with an iniquitous dispensation to the point of making even common food largely unafforable for him.

One does not alleviate poverty merely by dolling out money, but by creating jobs carrying adequate remunerations and enfranchising the consumer to become a participant in the process of sustained economic development. That objective cannot be achieved by blindly following the IMF-World Bank formula for non-protectionist trade and tariff policies and by allowing the giant multinationals of the West a free run of the field, in every country regardless of its stage of development and other constraints.

So let us take a deep breath and ponder for a while who is actually paying the GST and who it is hurting the most — the common man, of course.

We cannot ignore the fact that ours is primarily an agricultural country dependent mainly on production of food and cash crops. This in itself has serious political and economic ramifications. There should be a code of conduct which must safeguard the interests of all classes - the entrepreneur, the market and the consumer.

“International institutions like the IMF and World Bank are dominated by a few rich countries and are out of touch with the world’s poor,” a recent UN report says. The report acknowledges that “rich countries will always influence global decisions: whether it is the trade barriers and subsidies that keep the poor country farmers out of the affluent markets. Thus the leading global powers managed to do without inviting the opprobrium of being unfair and deviously manipulative from the regulating institutions of the world economy.

What is an open market economy? That the private enterprise be given a free hand and the forces of supply and demand create their own equilibrium in the market place as opposed to the norms and practices of a regulated economy, sounds fine and unexceptionable in theory. Similarly, the precept that “less government is a better government” in a democratic and economic dispensation is a myth, because the civilizations, through generations of painful experience, have not been able to avoid exploitation of man by man. Privatization invariably takes the shape of a “licentious leviathan” like the East India Company of yesteryear”.

The challenge before the local food industry today is the invasion of global brands, especially after Pakistan opens its market to the free flow of global companies and their products under the World Trade Organization (WTO) agreement. This is particularly relevant in the context of TV channels explosion via the satellite television. Because it makes almost impossible for an indigenous food company to have a level playing field to be able to compete with the global giants and remain in business. Thus, the global brands acquire an unfair competitive edge over the local brands howsoever high quality and reasonably period local products may be. In fact, it is a well- known fact that the global brands through price mechanisms simply eliminate the rivals by acquiring, where necessary, local brands through mergers to appease their appetite for high profits through monopolistic control.

No doubt, developing and under-developed countries need foreign investment. But foreign investment has to have a purpose and a well-defined framework of national objectives. In the drive for foreign investment, we should not allow the systematic deconstruction of our indigenous industry and economy by pursing, and open-house investment policy. Foreign investment should be in the form of a partnership in the development and expansion process, and not neo-imperialistic in character which invariably carries a heavy price tag. Unless checked in time with a well thought-out framework of rules and regulatory mechanism, a free inflow of foreign capital may ultimately lead to results highly prejudicial to our national interests as a sovereign country.

Our next-door neighbour India (ten times bigger than us), has already taken measures to protect its economy by constituting a “Directorate of Safeguards” consisting of 63 well-trained professionals inducted in it. Its function is to examine, ascertain and recommend safeguard measures to the government to protect its national economic interests in cases involving the extension of operations of foreign companies to that country. The purpose is to keep a balance between the need for foreign investment and fundamental national economic and industrial interests.

There is an urgent need for Pakistan to establish a similar outfit to protect its national economic interests before the global industrial behemoths, under the blanket cover of “glogalization”, start barging in— only to stifle or wipe out whatever national industrial assets we have been table to develop with our meagre resources.