KARACHI: Eighty per cent of Pakistan’s economy is driven by the private sector but the government that has little to do with the economy likes to claim the credit, said Dr Ishrat Husain on Thursday.
He was addressing the ‘Macroeconomic stability and growth’ panel at the third Pakistan Economic Forum (PEF). The event was organised by Pakistan Business Council (PBC).
“Pakistan has the least open economy in the world. A roaring domestic economy is not enough but rather an international economy where even a small share translates into billions of dollars,” Dr Husain stressed.
Responding to a question on getting the government interested in changing things for the better, he said, “Reforms and consistent economic policies regardless of political party at the top is important. Economics beyond political bickering is the way to go.”
The panel suggested reforming taxes, financial sector, public sector enterprise and land reforms. It further recommended that the next NFC award should provide incentives to the provinces for tax collection.
The China-Pakistan Economic Corridor (CPEC) was hailed as a game changer, with panellists from energy, water, logistics and economy sessions stressing on the need for availing the opportunities it offered.
The case for railways
Pakistan Railways poor performance was discussed in detail by the ‘Logistics and Connectivity’ panel.
Panel chair Salim Raza, former SBP head, said that Pakistan needed to open up the railway sector on the lines of its airspace which is used by private airlines. Opening up will allow for competition and eventually things will improve, he said.
The panel noted that Pakistan Railways remains under-utilised and mismanaged, leading to deterioration of assets and financial results.
Panel co-chair Babar Badat said that Pakistan remained one of the least connected countries in the world.
A slide showing railways expenditure highlighted Rs21.8bn (39pc) went to salaries, Rs14.9bn (26.7pc) to pension, Rs11bn (19.4) fuel, Rs3.6bn (6.4pc) repair and maintenance, Rs2.3bn (4.1pc) electricity and Rs2bn (3.5pc) miscellaneous.
Yet another one showed analysis of train operations in 1974-75 and 2013-14. Daily passenger trains went down from 452 in 1974-75 to 90 in 2013-14, passengers carried dropped from 399,205 to 130,657, freight trains down to 6 from 179, freight carried daily was down to 4,410 tonnes from four decades ago when it was 36,622 tonnes.
Meanwhile, employees per train per day increased from 217 in 1974-75 to 1,008 in 2013-14.
Highlighting that Pakistan Railways was the biggest land owning public entity, he suggested introducing private investment in train operations, delinking schools, hospitals and real estate development and establishing an independent company for providing these services through public private partnership and corporatisation of Risalpur Locomotive Factory and Islamabad Carriage Factory. It was also recommended that railways should focus on freight as opposed to passenger trains.
He opined that CPEC would prove to be a boon for Pakistan Railways and stressed that railways needs to establish an independent organisation to monitor potential projects under the CPEC as well as explore transit potential for Central Asia, Afghanistan, Iran and India.
Water, energy mix
The panels on water and energy discussed at length the issues face by the country.
In his detailed presentation, Suleman Najib Khan stressed on the need for reevaluating the Indus Basin Water Treaty and safeguarding Pakistan’s interests.
In her brief speech, Dr Zaigham Fatima said that Pakistan lacked a water policy and proper governance framework. “Consider water as an economic tool,” she said.
Recommendations by Farooq Rehmutullah on the energy sector included formation of energy and national energy authority an autonomous regulator, improved use of energy as well as decreasing conversion losses, presently at 84pc by 4pc per annum.
On the coal front, improvements were suggested by Khalid Mansoor in transmission network, port facilities as well as communication networks (rail and road). As well as structural reforms to reduce circular debt, it was stressed that CPEC projects be given top priority.
Published in Dawn, November 20th, 2015