100-day roundup: Has the PTI government delivered on its promises?
Can the bureaucracy deliver?
A WEBSITE by the Imran Khan government to inform people on the progress made in its first 100-day agenda lists a number of decisions made and actions initiated to arrest the persistent economic slide, revitalise growth, create jobs and boost exports.
Important measures announced or initiated include reduction in energy prices for the Punjab export industry, formation of a task force for developing a national tariff policy, formulation of provincial labour and industrial policies (by PTI governments in Punjab and Khyber Pakhtunkhwa), overhaul of the Federal Board of Revenue (FBR) by separating tax policy and administration, and constitution of separate councils of economic advisors and business leaders.
A plan to create a wealth fund for turning around loss-making state-owned enterprises is being worked out. The policy board of the Securities and Exchange Commission of Pakistan (SECP) has been reconstituted to create a business-friendly and enabling environment to charm private investments into the manufacturing industry in an attempt to increase exports and substitute imports.
Reforms are ‘underway’ to make energy affordable, eliminate inter-corporate debt in the power sector, recover unpaid electricity bills and reduce system losses (including theft), and shift to renewable energy.
The persistent economic downturn is indeed the most important issue facing the country and the PTI government.
In the words of renowned economist Atif Mian, who was forced to quit the economic advisory council days after its formation, Pakistan’s inability to grow like everyone else around it — China, Bangladesh and India — is killing our children, an issue that Mr Khan himself had raised in his inaugural televised address and pledged to address by reviving the sliding economy.
Many businesspersons and economic analysts this correspondent spoke with are glad that the government is moving in the right direction but have doubts about the ability of the rusty bureaucratic machinery to deliver.
“They (government) have taken several important initiatives like separation of tax policy and administration, abolition of the bureaucratic control over the SECP policy board, revision in energy prices and so on in their first 100-days. But a lot more needs to be done to rebuild the economy and stimulate growth,” noted the CEO of a business council.
Hasaan Khawar, a development professional and fellow at the Consortium for Development Policy Research, was of the view that the people calling out the PTI on its election promises was unprecedented and had generated debate on issues that were never discussed before. “People questioning the PTI government on its performance, something never seen before, has enhanced the sanctity of party manifestos.”
He appreciated the government initiatives to restructure the economy for sustainable growth, but said no clear plan had been announced so far despite the passage of 100-days in power.
“The formation of different task force to develop proposals on various issues facing the country is a positive development but the bureaucratic domination of these bodies has affected their effectiveness.
“Similarly, we do not know if the government has ever consulted the economic advisory council on issues like just concluded talks with the International Monetary Fund,” Mr Khawar concluded.
A businessperson, who requested anonymity, was critical of certain appointments at top positions: “In departments like the FBR that have a direct impact on growth of businesses and companies.”
Moreover, he questioned the inclusion of some in the business advisory council who have no understanding of the issues facing the labour-intensive small- to medium-size businesses.
“It is strange that there’s no representation of the SME sector on the council of businessmen. With Razak Dawood leading it only large corporations are likely to benefit from its suggestions,” he said.
Syed Nabeel Hashmi, a leading auto parts manufacturer and exporter, said many initiatives being taken to spur economic growth were positive. But he was worried about the bureaucratic machinery’s eroding capacity to implement whatever plans or proposals are finalised to boost the industry and exports.
“Our government machinery is inherently incapable of creating an environment in which companies and markets can thrive, a major factor behind very low private investment.
“You cannot expect the economy to turn around or even a flawless economic programme to succeed without reforming
and overhauling the bureaucratic machinery, which is responsible for on-the-ground implementation of policy initiatives,” he stated.
The prime minister’s 100-day agenda tracker can be viewed at www.pm100days.pmo.gov.pk
Published in Dawn, The Business and Finance Weekly, November 26th, 2018
‘Tough measures are necessary to rescue the economy’
The PTI government believes its economic policies have already started showing signs of stabilisation. It believes its policies will put the country on a sustainable growth and development path within 12 to 24 months in stark contrast to past growth spurts fuelled by borrowed money and deficit financing.
In a brief interview, Minister of State for Revenue Hammad Azhar said the government contacted the International Monetary Fund (IMF) soon after coming to power. It simultaneously engaged with friendly countries for alternative financing options to minimise the pain that might have come due to rushed acceptance of fund conditions.
Following is the edited version of his comments.
Minister of State for Revenue Hammad Azhar tells Dawn popular support for the government will not decline as long as the ruling party sticks to its core pledges of accountability, transparency and reforms
There is a perception that had the government approached the IMF sooner, the growth momentum could have been saved. Do you agree?
We established contact with the IMF around 10 days after coming to power. The IMF team was in Pakistan exactly three weeks after we formed the government. As for the growth momentum, global data and experience strongly suggest that the conditions associated with the IMF programme drastically slow down the economy.
The pace of deficit reductions, energy price adjustments and short-term revenue-generating manners envisaged in most IMF programmes is rapid. It has a strong tendency of shocking the economy and rapidly slowing it down. Therefore, these conditions need to be carefully evaluated and not accepted in a rushed manner. The government’s strategy of exploring alternative bilateral financing options has proven to be a wise, timely and successful decision in this regard.
Expectations of GDP growth have been lowered by over two percentage points to four per cent from 6.2pc. How will the government improve revenue collection and create employment in a sliding economy?
The earlier expected growth rate of 6.2pc was fuelled by high levels of debt-financed government spending and dangerously high fiscal deficits (6.6pc in 2017-18). The result of this deficit-financed growth was that Pakistan’s economy plunged into a serious crisis. Our economic history is testament to the fact that short spurts of such economic growth that are consumption-led and financed by borrowing prove to be unsustainable. Fiscal and current account deficits exposed the superficial nature of such growth periods. The PTI government believes that investment, productivity and export-led growth are imperative if Pakistan is to embark on a sustainable economic growth trajectory and finally bridge its recurring financing gaps.
On the revenue front, Pakistan’s tax potential is enormous given the size of our informal economy. Revamping the Federal Board of Revenue (FBR), broadening the tax base and reforming the current tax policies can lead to fresh and large revenue streams.
Finally, employment opportunities will be created by reviving and enhancing our export industries and embarking on our industrialisation strategy. That is where the investment- and productivity-led growth model plays a vital role. The PTI’s flagship housing scheme is also a huge employment-generating project and holds the potential to become the engine of economic growth.
Low growth and high inflation can erode popular support. How will you manage public expectations? How long will it take to mend the economy?
It is a well-known fact that this government inherited an economic crisis. People understand that stabilising the economy in the short run was necessary to save it from collapse. There will be no drop in popular support for the new government as long as the PTI sticks to its core pledges of accountability, transparency and reforms. The public has been made aware of the fact that decades of neglect and shying away from structural reforms by successive governments have brought the country to a point where tough measures are necessary in the immediate term to manage and rescue the economy. Recent surveys have clearly demonstrated that the public is overwhelmingly supporting the PTI government.
The economy is already showing signs of stabilisation. In the medium term, which we believe is 12 to 24 months, our reforms will begin to yield dividends. We will Insha Allah have embarked on a sustainable growth and development path.
Published in Dawn, The Business and Finance Weekly, November 26th, 2018
Attempting to fine-tune the CPEC strategy
WITH its reservations over project priorities, the newly elected government decided to review the country’s CPEC strategy and launch an action plan within its first 100 days to transform the project into ‘a real game changer’ for Pakistan.
In its view Pakistan was not fully benefiting from CPEC-related investments due to insufficient transfer of knowledge and capabilities, lesser partnerships with local businesses and high dependence on imports of goods and services from China.
The PTI manifesto had pledged to: ‘Create a two-way linkage with China and promote an indigenous-focused growth strategy and leverage trade infrastructure, and utilise Chinese expertise, latest technologies and efficient methods to supplement domestic manufacturing capabilities and enhance yield in agriculture.’
It also promised to: ‘Promote local value addition through joint ventures and value added exports, facilitate the integration of Pakistani manufactures with the global value chain, and ensure that Pakistani businessmen are fully involved in CPEC policy and project implementation.’
The joint statement and the continuing dialogue do not indicate a shift in CPEC strategy
A nine-member committee was set up to suggest ways to create space for the PTI agenda in the CPEC programme with marked preference for social and human resource development, investment, uplift of agriculture, industrial parks and export-oriented industrialisation.
Prime Minister Imran Khan was keen to expedite the stipulated programme scheduled for the second phase of the CPEC.
The minister for planning and economic reforms instructed the relevant authorities to fast track the process of establishing Special Economic Zones so as to achieve groundbreaking within three months.
Nine such CPEC zones are to be set across the country to attract foreign industrial investment.
Board of Investment Chairman Haroon Sharif says Pakistan will have to develop an ‘island’(s) on the pattern of Dubai International Financial Centre where the country’s laws do not apply.
“We have to insulate foreign investors from the jurisdiction of state institutions, courts and laws to give them a ‘sense of security’ in order to attract foreign direct investment,” he said.
Thus Prime Minister Khan went to China with a heavy agenda, the centrepiece of which was an integrated trade, investment and financial package.
Prime Minister Imran Khan was keen to expedite the stipulated programme scheduled for the second phase of the CPEC
The hope was that Chinese aid could help Islamabad reduce the size of the International Monetary Fund (IMF) bailout and enhance the possibility of minimising the Fund’s conditions related to the stabilisation programme.
But, apart from a stipulated doubling of Pakistan’s exports to China with in the near-term, the package is still under discussion with no timelines set for the negotiations.
While expressing in a joint statement their satisfaction with the ‘operationalisation of the currency swap arrangements’, both sides agreed to ‘strengthen cooperative ties in financial and banking sectors’.
The currency arrangement has yet to make any meaningful dent in bilateral trade which continues to be conducted mainly in dollars, and Beijing has supported Pakistan’s move to access the IMF credit facility to resolve its unfavourable balance of payments problem.
While the prime minister’s visit has been billed as a success by both sides — given the stipulated widening of bilateral economic cooperation — it is difficult to speculate about the outcome of continuing opaque bilateral discussions on specifics.
The joint statement appears more to be an expression of vision and mission about a strategic partnership and shaping of common destiny without any deviation from the CPEC course already set.
Thus, following the premier’s visit, some analysts are of the view that Pakistan’s expectations from China should be realistic, based on an understanding of CPEC’s status and role in Chinese President Xi Jinping’s Belt and Road initiative (BRI).
After all, to quote an expert with intimate knowledge, “CPEC is a mere cog in a giant wheel” as CPEC projects have the potential to feed into the larger BRI structure embracing 60 countries located in different continents.
The view has found support in the joint statement in which leaders: ‘Affirmed their compete consensus on the future CPEC trajectory’ and ‘agreed to protect all (CPEC) projects from all threats.’
Since CPEC ’s original guidelines and principles have laid down four priorities: Gwadar port, energy, transport infrastructure and industrial cooperation. This means infrastructure projects cannot simply be wished away.
And non-commercial projects on social and economic development are also part of the original CPEC programme, although Mr Khan did succeed in getting a part of the PTI agenda included in the joint statement for early initiation and implementation.
Both countries agreed to set up a working group on socio-economic development and China has agreed to support Pakistan in establishing poverty alleviation demonstration projects.
But the joint statement and the continuing dialogue do not indicate a shift in CPEC strategy.
Published in Dawn, The Business and Finance Weekly, November 26th, 2018
A few tumultuous months at the PSX
THE capital market has been on a roller coaster ride in the 65 trading sessions since the incumbent prime minister took oath of office. As it were, the traders hadn’t been raking in money hand over fist prior to the installation of the PTI government.
From Aug 17 to Nov 22, the KSE-100 Index has drifted down by 1,573 points or 3.8 per cent. The benchmark closed last Thursday at 40,874 points, from 42,447 points at the start of the era of the present government.
While politically, the government has been pretty comfortable, the economy remains in the eye of the storm. The government has had to grapple with fast depleting foreign exchange reserves and ever-widening deficits.
Incidentally, the two worst and best sessions followed each other in quick succession the previous month.
Investors were spooked due to uncertainty, which is considered worse than bad news
On Oct 8, heavy sell-off by both local and foreign investors saw the KSE-100 index cave-in by 1,328 points (3.39pc), the highest single day drop in 15 months, dragging the benchmark to close at 37,898 points — lowest in 10 months. Around Rs244 billion ($2bn) was wiped out of market capitalisation in a single day.
Traders and senior market participants agreed the fuel that fired selling was the confusion regarding Pakistan’s entry into the International Monetary Fund programme (IMF), about which mixed signals were being flashed.
Investors were spooked due to ‘uncertainty’ which, at the Wall Street, is still regarded as worse than ‘bad news’. The State Bank of Pakistan’s weekly data that week unveiled foreign exchange reserves at $8.3bn, standing at almost a four-year low.
But the market stabilised quickly and on the 24th of the same month, the stocks staged a spectacular rally to clock in gains of 1,556 points (4.1pc). The stock index surge represented the highest gain in a single session in three-and-a-half years. The bourse managed to add Rs254bn to its market capitalisation.
The development that put the market on fire was the Saudi government’s consent to lend a helping hand in fending off the looming balance of payments crisis faced by Pakistan.
To the visiting Pakistani prime minister, the Saudi government promised financial assistance of $3bn in deferred oil payment and another $3bn in support of foreign exchange reserves.
Pakistan Stock Exchange CEO Richard Morin stated that it was a very positive development for the bourse and the market was ‘right to react the way it did’.
The two worst and best sessions followed each other in quick succession the previous month
Clarity on the government’s plan to resolve the economic situation created confidence in both individual and institutional investors who entered in droves to build short- and long-term positions in blue-chip stocks available at attractive valuations.
But the euphoria proved short-lived as contrary to expectations, a similarly large financial assistance package from China and UAE did not immediately materialise and the government finally decided to enter the IMF programme.
The negativity deepened as the MSCI Semi-Annual Index Review results announced on Nov 13, downgraded two stocks of the five in MSCI Emerging Market to Small Cap Index.
While the modalities of Chinese assistance to Pakistan are currently being worked out, a stalemate has occurred in policy level talks with the IMF, which laid out harsh conditions for a bailout package.
The global lender asks for an increase in revenue collection target by 19pc, flexibility of rupee against the dollar, double digit interest rates, increase in power tariff by 20pc and an audit of each taxpayer. Along with that, the IMF asked for all details of the country’s financial deals with China. The conditions are unacceptable to Pakistan and so the talks are in disarray.
Senior broker and the former chairman of the local stock exchange, Arif Habib says that initially investors raised their expectations too high regarding financial assistance from several friendly countries.
Although he does not rule out a surprise package from China or UAE, Mr Habib laments the lack of ‘clarity’ on these and a final decision on the IMF deal. “Clarity on these issues will end speculation in the market and encourage even long-term investors to take fresh positions,” he says.
Other market observers hold similar views: “Going forward, a successful agreement on the IMF loan facility, discussions of which have been deferred, would remain a key point in investors’ interest. Any prospective inflow from China and UAE to support the balance of payments crisis could further entrench investor confidence on the country’s economy,” says Muhammad Fawad Khan, executive director, research and business development at brokerage BMA Capital Management.
Published in Dawn, The Business and Finance Weekly, November 26th, 2018
What do business houses say about the 100-day plan?
Overseas Investors Chamber of Commerce and Industry
Considering that the economy was in a state of distress at the time of transfer of power to this government, it is not surprising that the first 100-days have been quite eventful in terms of confidence building among key stakeholders.
The self-imposed controversy of going or not going to the International Monetary Fund (IMF), the level of funding required from the IMF or from friendly countries, withdrawal, and subsequent reversal, of restriction on non-filers to buying vehicles and property, various delays in announcing electricity and gas tariff etc, could have been managed better.
However the government has taken some clear policy decision which augers well for the economy moving forward like the decision to incentivise and support exporters, reduce exporters’ tax refunds, recover the full cost of utilities except from exporters and poor segments of the society, and not interfere in managing the exchange rate parity.
Moreover, the decision to form a ‘holding company’ for managing state-owned enterprises (SOEs), focus on promoting austerity, good governance, ease of doing business, poverty alleviation, appointments in regulatory bodies based on merit, attention to water conservation and intention to build 5 million housing units for poor, are encouraging.
The first 100-days of the new government are about to end. What have been their best and worst policy decisions? And what measures should they implement going forward?
Talking from a foreign investor’s perspective, there is considerable interest on Foreign Direct Investment (FDI) opportunities in Pakistan which can materialise once there is confidence on the commitment and capability of the government to deliver on the consistency of policy, fair treatment to all investors including domestic investors and honour commitments made to existing investors.
The long awaited tax reforms, documentation of the economy and broadening of tax base are also critical.
The government, we assume, is aware that there is widespread expectation that it will soon unveil growth-oriented economic and trade strategies, with more specific initiatives to diversify exports, boost local manufacturing instead of imports and attract sizeable FDI and local investment, all of which are critical to revitalise the economy and put the country back on a fast track of economic growth.
The Pakistan Business Council
Since any 100-day agenda is only the first step on a journey, the PBC believes that the government is off to a good start, especially given the challenges in the economy.
The lens through which the PBC looks at the progress is one of ‘Make-in-Pakistan’, which is a thrust to create jobs, promote value-added exports and encourage import substitution.
On fiscal reforms, the government has moved, as the PBC advocated, to separate policy making from tax administration and to make tax audits independent of the FBR. The government intends to address the talent and technology gaps of the FBR which should help broaden the tax base. The PBC would have expected the government to restore the provisions of the Finance Act 2007 to encourage scale and competitiveness through formation of groups through holding companies.
New commissioners have been announced for the SECP and a policy board formed to create a supportive rather than a controlling corporate framework. We hope that the government will quickly move to address the anomalies in the Companies Act 2017. A Council of Business Leaders has been formed. A new industrial policy to promote domestic manufacturing is on the anvil.
The FTA with China is being renegotiated and the government has secured agreement on the exchange of import-export data to quell rampant under-invoicing. Future trade arrangements with other countries will also be closely examined through the lens of jobs, value-added exports and import substitution.
The government has moved towards realistic pricing of energy, yet has protected the five priority export sectors from additional cost. We would hope that energy-intensive import-substitution industries will also be protected in the future.
The government had to perform due-diligence by examining the extent of the challenge and in exploring avenues other than the IMF to address the challenges. Whilst it could have taken less time to do it, now that the decision is made to approach the IMF. To its credit, the government has not interfered with the State Bank’s prerogative to manage the exchange rate or determine the policy rate.
The CCI has resolved that there would be a single national food standard. This will promote scale by allowing businesses located in one province to address demand nationally and, in time, globally.
In response to the PTI’s agenda to declare an agriculture emergency, the PBC would have liked clarity on the policy on crop support prices for wheat and sugar cane. Policies must encourage growth of cotton required by our textiles industry and edible-oilseeds (for oil and animal feed) and lentils, on which we spend billions of dollars in importing.
The government has moved on its promise of five million houses over five years. Besides mortgage funding, it also needs to address the policy framework to encourage industries such as steel and tiles, otherwise it will result in higher imports.
A sovereign fund is to be formed to hold and restructure SOEs. Whilst the PBC welcomes the transfer of SOEs from the control of line ministries, it would encourage a more aggressive privatisation programme than the one currently contemplated by the government.
**Federation of Pakistan Chambers of Commerce and Industry**
The new PTI government’s priorities were relevant for addressing the prevailing deteriorating economic situation. We acknowledge that it was a great challenge for them.
The big challenge that the new regime faced — negotiating a bailout package with the
IMF — still persists. Though the Saudi and Chinese governments have agreed to provide financial support to avert balance of payment crisis, the support will be limited with Pakistan needing to negotiate with the IMF nonetheless. We appreciate Prime Minister’s initiative of hard bargaining with the IMF.
As far as decisions made within the first three months are concerned, it would be more prudent to comment upon them after the details of these achievements have been released by the PTI government. The Prime Minister has asked the Punjab and other provincial governments to present their 100-day progress.
The incumbent government’s rebuilding, redesigning and negotiating favourable relations with China, Saudi Arabia, Malaysia and the UAE is a success achieved within a short-time.
Official statements reveal that money laundering of billions of dollars has been traced and the money will be bought back to Pakistan; this will support economic sustainability of the country. The FPCCI strongly supports this initiative.
Various taskforce and committees on the 100-day plan will soon submit their recommendations to the prime minister.
Setting 100-day priorities was an indication of good planning by the government. It set a direction but the problems, hurdles and impediments associated with each target due to traditional work cultures may create delays in achieving results in certain areas. For sustained economic development the nation will ignore the unintentional delays.
Published in Dawn, The Business and Finance Weekly, November 26th, 2018
Provincial harmony is critical for healing agriculture
The PTI government had promised to declare an agriculture emergency and revise the National Water Policy, perhaps sparing little thought for the complications it involved.
The web portal developed to track the 100-day performance of the government claims that a national agriculture emergency working group has been set up. No information is provided about the constitution of the group and the work it has done so far. Imposing the emergency in agriculture requires constitutional backing and complete interprovincial harmony. With what magic wand the working group will achieve both remains unknown.
As for upgrading and implementing the existing National Water Policy, the Council of Common Interests (CCI) had set up an interprovincial committee. That committee’s first meeting remained inconclusive and its members will meet again in the first week of December, according to newspaper reports.
Water scarcity has hit Sindh and Balochistan badly and poor farmers are bearing an increased cost of inputs, such as gas, electricity, seeds and fertilisers
Sindh is demanding a key change in the formula for water distribution among provinces. Punjab fears the change might cut its present water share and affect agriculture badly.
Sindh says the current water sharing mechanism has already lowered agricultural output in the province.
The government claims that it has initiated engagement with lending institutions to fulfil one of its key agriculture manifesto points — to subsidise farmers and improve their access to finance through innovative lending products, such as warehouse receipt financing.
The State Bank of Pakistan (SBP) had launched warehouse receipt financing years ago. It is now looking into how banks have so far used this system to improve farmers’ access to formal finance. With banks’ collaboration, this system can be upgraded and other agri lending products introduced. Bankers are optimistic that this will happen soon.
For transforming farm produce markets and incentivising value addition in agriculture, the PTI government has so far drafted a piece of legislation. Once approved, it will allow private sector companies to enter the strategic food storage business currently under the aegis of the public sector. The competition thus created is expected to reduce the cost of storage.
Besides, the government and the central bank are working together to promote food processing in the SME sector with a focus on exports, officials claim. But senior bankers say they have so far not received any specific guidelines about lending to SMEs in the food sector, adding that the central bank’s old prudential regulations on SME lending continue to serve as the core regulatory framework for financing all types of companies in this segment.
The PTI had also promised to revamp the livestock sector with an aim to achieve self-sufficiency in milk and milk-based products, increase meat production massively and make millions of small livestock farmers more prosperous.
The 100-day performance tracker claims that a national livestock emergency working group has been set up. But its constitution and the terms of reference have not been shared with the public.
In Punjab and Khyber Pakhtunkhwa where the PTI is in power, work on fulfilling the party promises on the agriculture sector has already been initiated. At least, this is the impression the PTI wants to create through its 100-day performance tracker. But for reasons best known to the authorities, the details of the ‘initiated’ plans have not been shared with the general public or media.
Revolutionising agriculture is a serious business. The previous governments of both the PPP and the PML-N made some efforts to improve the state of agriculture. The incumbent PTI government can also contribute to this ongoing process. But it is naïve to expect that any government can revolutionise agriculture in just 100 days.
All pre-election PTI promises in this regard should be seen in the context of that time. And now the party’s claims of having done “this” or “that” without offering details should be viewed in today’s context. The relationship between the federation and Sindh, the second largest province and the second biggest contributor to agricultural economy, suffers from a lack of mutual trust. Water scarcity has hit Sindh and Balochistan badly and poor farmers are bearing an increased cost of inputs, including gas, electricity, seeds and fertilisers. The rupee is down and general inflation up. Besides, talks of deeper involvement of China and Saudi Arabia in our agriculture lack sufficient transparency, which is creating anxiety.
Some sweet talking on agriculture transformation makes a lot of sense, but only politically!
Published in Dawn, The Business and Finance Weekly, November 26th, 2018
Farmers criticise PTI for broken promises
WITH 2.86 million hectares of cultivable land — of which1.16m hectares remain unutilised — the agriculture sector in Khyber Pakhtunkhwa is afflicted with low productivity.
The sector is contributing just 14 per cent to the provincial income, which is far below its potential. Its reasons include small landholding — more than 80pc being less than five acres — sowing of low-value crops because of the farmers’ limited access to inputs as well as their poor financial and technical resources, inefficient irrigation (0.93m hectares are rain-fed) and a marked decline in land use.
A weak seed industry, poor research and development, supply-driven instead of demand-oriented production and a lack of appropriate storage facilities are major issues that the sector faces.
The PTI appears to have done little for the farmers of KP who say the ruling party is bereft of new ideas when it comes to promoting agriculture
The PTI claimed in early 2016 that it was working on a new strategy to develop the province’s farming sector that lagged far behind those of Punjab and Sindh. But no concrete plan has been introduced so far.
Fazle Maula
Convener (Khyber Pakhtunkhwa), Kisan Rabita Committee
Mr Maula says the KP government didn’t come up with any programme for either agriculture or livestock sector, except the billion-tree project. “In fact, the billion-tree project hurt the livestock sector. The government banned the grazing of cattle in the mountains of Swat, Dir, Buner and Hazara. Livestock farmers have no other place to take their animals to,” he says. He fears the continuation of the ban will further damage the already struggling dairy industry in KP, noting that a large number of animals from the province are smuggled out to Afghanistan.
Janisar Khalil Khan
Chairman, Ittehad-e-Zamidaran-o-Kashtkaran Pakistan
Neither the federal nor the provincial government has so far initiated any consultation process. “So one can safely say that even if the rulers plan to announce any package for the agriculture sector, the proposed measure will be devoid of any kind of input from principal stakeholders,” he says.
He adds that the indifference is in stark contrast to the assurance that PM Khan gave farmers when he visited Mardan before the polls. He says the government has failed to rescue sugar cane growers who couldn’t sow wheat after the refusal of mill owners to begin the crushing season on time.
Riaz Ahmed Khan
Swat-based farmer
Mr Khan says the government has done nothing for the farming sector so far. He wonders how one could pin their hopes on a government that is incapable of checking the exorbitant increase in farm inputs, particularly fertilisers and pesticides whose prices have gone up in the name of the rupee depreciation. Fertilisers are produced locally and have nothing to do with the exchange rate, he says.
He adds that the province is home to some of the best quality fruits and vegetables, but it lacks appropriate processing and storage facilities. Thus, a large chunk of the produce goes to waste at farms or during transportation, he says.
Jamal Khan
NGO worker
Mr Khan, who works for an NGO that trains rural communities in livestock management, says the only facility that the farmers get from KP livestock officials is the SMS service about animal vaccination.
“But the officials concerned never attend phone calls by the farmers,” he adds.
Khan Zaman Khan
Representative, Kisan Sangat
Mr Khan says he is worried about the seed industry getting little attention from the department concerned. He notes that the farmers either fail to get certified seeds from the market or pay seed traders exorbitantly high rates. “The government is not playing its role... there is no market regulator,” he adds.
State-run research institutions are not coming up with new seeds that are tolerant of climate change and can perform well in a soil that has seen gradual degradation due to the overuse of fertilisers, he adds.
Khalid Mahmood Khokhar
President, Pakistan Kisan Ittehad
Mr Khokhar recalls that the PTI had recognised the importance of the agriculture sector by promising to impose an ‘Agriculture Emergency’ soon after coming into power. He regrets that the party has reneged on its promise and has done nothing as 100-days of its government come to an end.
He also recalls the promise to cut diesel rates for agriculture purpose, and that so far no step to the purpose has been announced.
Mr Khokhar points out that the government has done away with the Rs5bn revolving fund the PML-N government formed last year for the farming sector and that subsidy on fertiliser and pesticides have been brought to naught.
He concludes that the government did extend the flat rate for electricity for tube-wells from three months (announced by the caretaker setup) to one year but imposed a tax of Rs200/horsepower on motors, and thus increased the power tariff by Rs8/unit, as one has to pay the tax whether one uses the tube-well or not.
Sarfaraz A Khan
Former-president, Kisan Board Pakistan
Mr Khan says farming does not seem to be on the priority list of the incumbent government. It has hurt the fertiliser sector by halting or reducing LNG imports. Consequently wheat growers are going to pay the price in the form of higher rates of urea fertiliser, the most important for Rabi crops, he laments.
The government did take a good step by allowing export of sugar and linking the payment of rebate on exports to the mills that would pay the sugarcane growers in time and at official rates. But positive impact of the measure was negated as it didn’t pay the millers the rebate on earlier exports, he says.
Published in Dawn, The Business and Finance Weekly, November 26th, 2018
Little relief for farmers as subsidy removal begins to bite
The PTI had touched upon all key aspects of agriculture in its manifesto in the run-up to the July polls. However, the federal government has had no meaningful engagement with the farm sector or the farming community in its first three months in power.
The only notable contribution that the federal government has made to the agriculture sector is the reduction in the electricity tariff on tubewells by almost 50 per cent. This brought the per-unit electricity cost to Rs5.35 from Rs10.35.
However, farmers believe that this relief remains insignificant in view of the overall energy crisis. Farmers can’t avail subsidised rates for tubewell use in the absence of electricity. Although the government reduced the electricity cost, it discontinued the subsidy announced by the Nawaz government on fertiliser in one go. This hasn’t gone down well with the farming community.
“A urea fertiliser bag is now sold for Rs1,750 against the earlier subsidised rate of Rs1,350,” says Javed Kaimkhani, a Mirpurkhas-based fertiliser dealer. He adds that the price of diammonium phosphate (DAP) fertiliser has risen to Rs3,504 per bag from Rs2,450.
Farmers use urea fertiliser while sowing Rabi and Kharif crops. Three to four bags are used for wheat sowing per acre and five to eight bags are needed for the sowing of seed cotton. Wheat sowing is being delayed as the crushing of sugar cane is still not in sight.
Optimising the existing subsidy programmes and ensuring cheaper inputs were the PTI’s major manifesto commitments.
Grower Mahmood Nawaz Shah says the government should strive to reduce the farmer’s cost of inputs to make agricultural commodities competitive and profitable in the region. “Perhaps farmers don’t need subsidies that much. But they are indeed interested in seeing their cost of inputs going down,” he asserts.
Prime Minister Imran Khan in a brief televised address to the nation in September appealed to overseas Pakistanis to donate money for the construction of dams. Besides building big dams, the government intends to work for water conservation and control losses to enhance productivity.
Mainstream political parties do not oppose the government’s plan to build Diamer Bhasha Dam. Farmers also support it, but caution that the country’s water regulator — the Indus River System Authority — must ensure judicious interprovincial water distribution, especially during the early Kharif period when Sindh needs water the most.
Sindh Chamber of Agriculture Vice President Nabi Bux Sathio says the subsidy withdrawal was not a wise step. The government had announced earlier that sugar mills would start crushing from Nov 15. Barring one factory, none of the mills has begun crushing sugar cane yet, he claimed.
Kabool Kathian
President, Sindh
Chamber of Agriculture
Mr Kathian says that Sindh-based farmers had high expectations from the PTI government, but its performance has been dismal in the first 100 days. Farmers await the provision of new technology that the PTI promised them before the polls, he adds.
He says farmers need a special package in Sindh. The State Bank of Pakistan should facilitate them in terms of credit availability, which remains cumbersome. The government should honour at least half of the commitments it made in the manifesto, he adds.
Mahmood Nawaz Shah
Vice President,
Sindh Abadgar Board
Mr Shah believes the cost of production for farmers has increased in the first 100 days of the PTI. Commodity prices are under pressure while the pace of value addition to agricultural produce is slowing down, he notes.
The horticulture sector produces 13 million tonnes of vegetables and fruits annually, but suffers from low yields and high pre- and post-harvest losses of up to 35pc.
He asserts that the export value can be enhanced from the current $400-plus million to $1.5 billion. But the government has not shown any meaningful policy direction on value-added agricultural products in its first three months, he says.
He adds that the agriculture sector uses 95pc of water resources, noting that 60pc of water is lost before reaching farms while 30pc is lost on the farms. Therefore, building dams alone without paying attention to water efficiency will not solve the problem, he says.
Published in Dawn, The Business and Finance Weekly, November 26th, 2018
2