Corporate Pakistan seems to have readjusted its policy thrust on the economy by dropping the agenda of regional trade promotion in South Asia and pushing for the adoption of an inward-looking, more nationalistic ‘priority Pakistan’ approach.

Perhaps influenced by PTI leader Imran Khan’s vision, or the anti-globalisation trend reflected in President Trump’s ‘America first’ and PM Modi’s ultra nationalism in India, the Pakistan Business Council (PBC) has opted to stress for a more inward-looking approach.

Last week the PBC, a research-based advocacy group of major players in the corporate sector, launched a position paper entitled ‘The State of Pakistan’s economy’ containing analysis and recommendations.

“People are trying to use the current economic stress to their advantage on either side of the divide in a politically polarised environment”

Besides routine demands for consistency in policies, parity in cost of input with competing regional economies, market based valuation of the rupee and rationalisation of unfair tax burden on its members, the PBC blamed structural flaws for pressures on the external front in the economy.

It has also projected apprehensions in business circles regarding CPEC by demanding transparency and safeguards for the country’s industrial base. The mention of the demographic challenge appears to be forced and has probably been inserted to tone down the concerns over CPEC.

“In our view it would be unfair to use critical economic problems to peddle a political agenda”, said a leading businessman explaining the opening remarks of the paper (that is to say, to attribute the state of the economy to the current political uncertainty is not correct).

“People are trying to use the current economic stress (capital market fall, currency volatility, rising debt and widening current account deficit) to their advantage on either side of the divide in a politically polarised environment.

“Yes, uncertainty is not conducive to business but the roots of the problems we are faced with are deeper”, he added.

The change in mindset was also reflected in the PBC’s demand for greater protection for local industry. Instead of the export-led growth model of ‘liberalisation, deregulation and privatisation’ that the private sector has championed since the 1980s, the PBC has pushed to the fore the idea of import substitution.

Defending its position, the PBC CEO, Ehsan Malik, told Dawn that the current comment on the economy was objective and an outcome of detailed deliberation with members and development partners.

“It’s futile to insist on the adoption of policies that are too ambitious or unrealistic. In the current geopolitical environment we have softened the demand for diversification of export destinations with focus on South Asia.

“In more recent dialogues with multilateral agencies we observed that even they have revised their position on the subject”, he told Dawn.

In the year 2011, when PBC launched a five point minimum programme called the ‘National Economic Agenda’, regional trade was at the top of the list.

In 2013, before the elections, it re-launched the agenda with six points where the subject was relegated to the third position before it was dropped altogether in 2017.

Exports have shrunk to a six year low of $21.6 billion in FY17, and despite relatively low oil prices, imports have touched $48.5bn, according to the current State Bank data.

“With both private and government consumption level well above peers, there is little room left for investment… Private sector credit as a percentage of GDP has halved from 29pc in 2004 to 14pc currently”

The think tank, however, expressed concern at the level of competitiveness and called for renegotiations of harmful trade deals.

Over the past few years the PBC has produced several reports on bilateral trade with partner countries amplifying the issue of inefficient trade diplomacy in Pakistan.

“Every free and preferential trade agreement signed thus far served the partner better. The terms of trade for all practical purposes deteriorated for exporters, and the local industry was exposed to avoidable competition.

“The country trade reports provide empirical evidence to show how Pakistan’s interest was compromised”, a businessman who sits on the PBC board shared.

To stress its position on the issue the report says, “The country is de-industrialising prematurely….We are outsourcing jobs to China and elsewhere as a result of flawed FTAs.

“The one with China has seen our trade deficit grow from $3.2bn when signed in 2006 to over $14bn now. Yet we pursue fresh agreements with Thailand and Turkey”.

Though members such as FMCG giants Unilever/PNG, auto and drug companies are making good on the high propensity to consume in Pakistan, the PBC was critical of the high level of consumption that compromised the country’s investment potential.

The report said: “With both private and government consumption level well above peers, there is little room left for investment….Private sector credit as percentage of GDP has halved from 29pc in 2004 to 14pc currently.

“The government is crowding out the private sector from bank lending as it tries to fund its deficit”.

Published in Dawn, The Business and Finance Weekly, July 24th, 2017