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WITH concerns about the economy a major preoccupation, the prime minister spent considerable time with leading trade and industry figures last Sunday. They told him that ‘hounding’ by the National Accountability Bureau (NAB) was seriously hampering their productive work.
The meeting chaired by the prime minister was attended by a dozen leading businesspersons from car and tractor manufacturers, retailers, textiles, pharmaceuticals and power generation, among others.
Several business leaders complained that NAB had hounded some among their community even when they held pro bono positions on boards. They are also understood to have told the meeting that NAB’s ‘highhandedness’ had resulted in bureaucrats becoming scared and refusing to work.
One participant told me the prime minister was “very receptive” in the first hour of the meeting and was “visibly upset” when informed of the fallout of some of NAB’s actions. He asked many questions about how the situation could be corrected and the right environment restored.
But the participant expressed disappointment that the prime minister at times did not display the understanding expected from the holder of such high office. “It didn’t help matters much that the prime minister’s special assistant, Naeemul Haque, kept interrupting him and others by saying ‘I will get this done and take care of this and that’ as if anybody would listen to him.”
Business leaders emphasised the importance of continuity of policies.
At the same time, another participant told me that despite Mr Haque’s unwelcome interruptions, an important member of the economic team Razzak Dawood made some useful interventions, while FBR chairman Shabbar Zaidi also contributed to the specific issue of tax on retailers. The prime minister’s adviser on finance, Hafeez Shaikh, took notes diligently all through the discussion.
Some of the key suggestions by the captains of commerce and industry included asking the FBR to go after those retailers who are not paying sales tax etc and force them to use terminals connected with the FBR as is the case with the nine big retailers.
The government was also advised to “be prepared to take a stand and not exit” the IMF programme even if things got tough as the business leaders felt that the programme offered long-term solutions and, therefore, should be completed.
The business leaders were clear in saying that they did not think the devaluation and other incentives alone would increase exports, even as these two combined to halt a slide in what Pakistan sells abroad.
What was needed for boosting exports was ‘massive investment’ to expand and modernise capacity and skills training to enhance the productivity of the workforce. As a start, the government should create an enabling environment and arrange concessional credit for such an expansion.
Some of the exporters pointed out the need to learn from Bangladesh where over 60 per cent of the workforce in the garment industry comprises women. They also advocated that the government allow a third shift of women to enable more women to enter employment.
Another important demand was for the government to ensure that land, electricity and gas were made available in special economic zones as a top priority. A crackdown on under-invoicing and smuggling was also sought.
Finally, the business leaders emphasised the importance of continuity of policies; without this, it would be impossible for them to properly plan out their investment decisions. Some participants felt the government has still some political capital left.
“People are willing to face tough times for a better tomorrow but the government must share information about the situation openly and communicate effectively in order to engender confidence among the public as also commerce and industry leaders,” one business leader is said to have remarked.
It is clear from this discussion that the prime minister understands that the state of the economy will determine his failure or success over the course of his term in office; if further deterioration is not halted now a catastrophe could ensue.
This scenario could take shape in two ways. First, when the economy numbers fall dramatically, it would be difficult to meet the needs of the defence forces; second, the people’s frustration may well mount and they could come out onto the streets in droves to protest.
In either of those cases (and worse if the two happen simultaneously), the government is likely to face a serious challenge, possibly an existential threat. Even now, when the economy is being contracted to stifle demand and check the spiralling deficit, one can find many unhappy people.
If the devaluation continues to manifest itself in ballooning inflation and the masses struggle to meet the most basic of necessities, the situation could take a turn for the worse rapidly. This is exactly what the prime minister, along with his new economic team, must be trying to stop.
So much so, that they can appear too desperate on occasion. The prime minister’s short address last Thursday is a case in point where he made an appeal for people to take advantage of the government’s amnesty scheme and also pledged to judiciously spend whatever tax revenue is raised.
At the same time as reminding the citizens of their patriotic duty, he also warned them that institutions were gathering information about the defaulters and those with undeclared assets abroad, and implied they would not be spared if they didn’t voluntarily take advantage of his scheme.
This prompted one economic analyst to say: “The prime minister’s address was pointless as he was assuring the judicious use of the public purse at about the same as his finance adviser was sanctioning a Rs20 billion bailout to the stockbrokers.”
These are among some of the balls Imran Khan has to juggle, and now that he is in power, if he drops some he will only have himself to blame.
The writer is a former editor of Dawn.
Published in Dawn, June 1st, 2019
