KARACHI: The business community gives a mixed view on the performance of the economy over the last 20 years in terms of capital formation. Some say that the economy has registered growth due to good policies but others did not agree saying that capital formation had not done much to expand the industrial base.
They said that despite good policies and growth, the gap between the rich and the poor and urban and rural continued to rise. Besides, nothing has been done to improve infrastructure during the last 20 years. There has been no check to regulate the markets that led to several scams.
Following are the observations of the private sector in response to some queries sent to them by Dawn to give their feedback regarding merits and demerits of economic policies in the last 20 years.
FPCCI: President FPCCI Chaudhry Mohamamd Saeed says unfortunately, the past few years witnessed huge diversion of investment towards real estate and Stock Exchange, which promoted only speculative activities in the market.
There is a strong need to regulate these markets by channel sing and redirecting these resources towards productive activities, which can be done by promotion of industrialisation and widening productive base in the country.
The FPCCI president said, however, the overall liberalisation was not well-planned, particularly when viewed by the fact that the country is facing huge trade deficit and is turning into an import market.
On scams, he says after the unrealistic hike in property prices the trust of investors, particularly in stock exchange has shattered. Besides, cartels exist in some industrial sectors, which are not desirable in an era of competitive markets under free economy.
KCCI: President Karachi Chamber of Commerce and Industry Majyd Aziz appears deeply concerned over the rate of capital formation during the last 20 years in terms of economic performance. We aim for high growth of GDP but the level of investment remained below, he added.
Country has witnessed high growth due to policy mix of liberalisation and privatisation
during the fist decade of 21st century.
Policy mix is in the right direction but a lot to be done to reduce the rural-urban, rich-poor and inter regional imbalances. Smaller provinces should have better access to national revenue through better NFC awards.
For sustainable growth of seven to eight per cent we need to increase level of investment to 24-25 per cent on the heroic assumption of incremental capital output ratio (ICOR) of 3.5 per cent, he added.
Majyd said lack of proper regulated market led to several scams. The SECP and SBP are now making efforts to keep a vigil but a lot still needs to be done.
SITE: Chairman Site Association of Industry Ameen Bandukda said he was not happy with the performance of economy during the last 20 years as most of the liquidity has gone into speculative activities like real estate and stocks. Capital formation that needed to be done to expand industrial base has not been done.
He said the policy mix of liberalisation and privatisation has been good but it has not helped to realize its full potential. He said that the rich and poor gap has been continuously increasing. The fruits of development and economic growth are not being distributed to all across the board. However, this can be handled if small and medium agro-based industries are opened, including in rural areas. There is a need to increase the strength of the middle class.
KATI: Chairman Korangi Association of Trade and Industry Masood Naqi said he was not really happy with economic performance during the last 20 years in terms of capital formation. He said, We have not realised our full potential.
He says that non-implementation, corruption and bad governance along with politically motivations of various governments have hampered the process of liberalisation, privatisation and deregulation badly.
FBATTI: Chairman Federal B Area Association of Trade and Industry Masroor Ahmed Alvi said that there had been an improvement in capital formation but this has more to do with the changing world scenario after 9/11 incident and less due to our own efforts.
He said there had been virtually no improvement in infrastructure and situation is worsening with every passing day.
NKATI: Chairman North Karachi Association of Trade and Industry Faraz Mirza says that capital formation had never been a priority for the previous governments as compared to this government.
He said that it seemed that we are heading towards a capitalistic society. The gap between the rich and poor and rural and urban will further widen as most necessities are out of reach of the common man.
