Invest in Pakistan

Published January 24, 2018
The writer is an attorney teaching constitutional law and political philosophy.
The writer is an attorney teaching constitutional law and political philosophy.

IT is not news to anyone anymore that the rich are getting richer and the poor are getting poorer. In the streets of Karachi or Lahore or Peshawar, one sees ever more children begging for alms, brushing against cars that cost more than they will ever see in their lifetime. Young men and women, burdened with an education that yields no jobs and that has been paid for by parents who have foregone so much, have been killing themselves for want of hope. The elderly, left to fend for themselves, die of starvation, their savings long exhausted, their bodies just about alive.

In the face of these realities, the fact that the world is getting more unequal, and that there are numbers to prove it, comes as no surprise. The numbers, though, released by the NGO Oxfam, are especially damning. According to the organisation, a full half of the world’s people, that number about 3.7 billon souls, did not see a single penny of the wealth generated by the world last year.

On the other side, the happy, gilded and golden side, the world’s richest one per cent gobbled up a whopping 82pc of all the wealth generated in the world last year. Of that top 1pc, 122 new billionaires were created in just Asia alone, and they saw their cumulative net worth increase by $404bn. Unsurprisingly, many were in India and China, where nearly three-quarters of all the wealth went to the top 1pc of the country and nothing at all went to the bottom 50pc. The inequality tallies for Pakistan, a poor country, were just as damning. Pakistan’s richest 20pc consumed seven times more resources than the entire bottom 20pc.

The success of the prime minister’s efforts is not something that will trickle down to all.

It is in the midst of this ever-expanding gulf between the world’s rich and the world’s poor that world leaders will meet this week in the Swiss town of Davos. Among them will be Pakistan’s Prime Minister Shahid Khaqan Abbasi. Prime Minister Abbasi is expected to make an ‘Invest in Pakistan’ pitch to wealthy business executives and world leaders. The pitch will likely focus on increasing foreign direct investment in Pakistan, likely emphasising increased investment in industries such as the garment industry, which have seen growth in the past several years.

Like the money the bottom half never sees, the success of the prime minister’s efforts, however, is not something that will trickle down to all Pakistanis. As Winnie Byanyima, Oxfam’s executive director, put it, “The people who make our clothes, assemble our phones and grow our food are being exploited to ensure a steady supply of cheap goods, and swell the profits of corporations and billionaire investors.” A large percentage of these sort of workers live in Pakistan and indeed, the plan for the future, if the prime minister’s efforts are any indication, is to attract more such jobs to the country. According to the International Labour Organisation, about 37.4pc of garment workers, for example, are paid far less than the minimum wage prescribed by the law, often toiling in substandard conditions, without ventilation or breaks. None of it is a secret in Pakistan; periodic catastrophes like the fires and conflagrations in poorly constructed, overcrowded factories with hundreds of underpaid workers draw temporary public attention before it dissipates again.

It is not that attracting foreign investment to Pakistan is a bad idea. It is undoubted that with more investment there are more job prospects and so on. The crucial issue that is routinely ignored is that along with foreign investment there is an urgent and acute need for local reform, particularly in the area of taxation.

To attract the investment in question, Pakistan is likely to offer an even lower top corporate tax rate than before (the rate was 35pc in 2013 and is expected to be lowered to 30pc in 2018). When this lower rate is added to the already existing tax loopholes via which Pakistan’s wealthy do not pay taxes, then you have a situation where the best-case scenario is the creation of exploitative jobs that will further crush the country’s poor.

Given these truths, one cannot help but think that it is Pakistanis rather than foreign investors that need to be convinced to ‘Invest in Pakistan’. Currently Pakistan’s taxation gap is 9.8pc of GDP, which is 64pc of the 2016-2017 budget. The wealthy are adept at evading taxes and foreign corporations are being attracted with promises that they too will not have to pay taxes.

Every day, more fancy bungalows with high walls are erected so that those gobbling up the largesse can do so with friends and family and without the gaze of the poor interfering with their fun. In holy months or difficult times, these wealthy periodically emerge from their havens to distribute alms among the poor, ideally with a large audience present.

Many animals are sacrificed on Eidul Azha, the ration for a few families is ensured in Ramazan. All this, it is assumed, makes up for the real sin, the truth of which is contained in the numbers of the report — the fact that rightful taxes are never paid, that poverty is exploited behind the closed doors of factories and offices.

India and China, those looking at the Oxfam report may conclude, have comparable levels of equality. But India and China, many must note, are not Muslim countries, and being Muslim, clerics and commentators are wont to remind us, imputes a commitment to eradicating inequality. That commitment obviously does not translate to actual action, to anything beyond handing a few notes to the begging child when in public, while pilfering wages from a worker’s wallet in private. The prime minister should make his pitch in Davos, convince others to invest in Pakistan — but perhaps he should make it to Pakistanis as well.

The writer is an attorney teaching constitutional law and political philosophy.
rafia.zakaria@gmail.com

Published in Dawn, January 24th, 2018

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