The country’s trade bodies have stepped up their efforts to persuade political parties to meet their demand of the Charter of Economy (COE) and develop a policy consensus on how to pull the political economy out of the deep-seated crisis.
Confronted by a political and economic mess, it is probably for the first time that the business community is looking at the big picture with the widest possible participation of concerned stakeholders to forge a national document pledged to the country’s salvation.
Though initially acting individually, a process is now being initiated to reach the consensus policy framework through joint coordinated efforts. In absence of policy continuity, this approach stands out in sharp contrast to the focus of trade bodies on day-to-day problems in its dealings with the decision-makers.
A CoE or a policy consensus, trade bodies hope, will end the extreme political polarisation the country is facing these days. Instead of the blame game, political parties would work for a common objective.
In the current climate of political polarisation and crisis, the private sector is taking the lead in drafting a Charter of Economy
The Islamabad Chamber of Commerce and Industry (ICCI) wants to bring all the political parties in the Parliament and the provincial assemblies on one stage to discuss the way forward and steer the country out of the economic crisis. Its objective is to achieve consistency in economic policies irrespective of political change.
It is also aware that no consensus policy can be successfully implemented without the active participation of the federating units. (Here there is a major issue of disparity in regional development).
If an agreement on a comprehensive strategy may be difficult to reach because of the sharp divergence of views and conflicting interests of various stakeholders, the next best alternative may be an agreement on the common minimum agenda.
An All Parties Conference is planned for August 7 by the All Pakistan Textile Mills Association (APTMA) for the revival of the economy to highlight (critical) issues in discourse with decision-makers.
The Chamber is already engaged with several economists seeking their input and the collective thought of experts will be presented at the conference. And the technical suggestions finalised at the conference would be shared with all other chambers in the country and the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) as well as provincial governments.
In addition to these efforts, the FPCCI has requested the State Bank of Pakistan to provide a strategy paper for the consumption of foreign exchange listing preferences of imported items.
A positive development is that PTI Chairman Imran Khan (IK), contrary to his earlier instance, is reported to have agreed to sign a CoE in a recent meeting with the Rawalpindi Chamber of Commerce and Industry delegation. It may be recalled that Prime Minister Shahbaz Sharif initiated the CoE proposal when IK became the prime minister. But no progress was made because of political polarisation.
In its campaign to bring all political parties on the same page the RCCI has also drafted a CoE. “We are pushing for all leaders and policymakers to develop a consensus on how to navigate from the situation of extreme distress and pull the economy out of this downward spiral,” said a statement issued by APTMA. APTMA, which represents the largest segment of the country’s industry, is haunted by the fear that the country is ‘on the brink of economic collapse.’
Included in the crucial issues raised by APTMA is that political stability is a serious impediment to economic progress which results in suboptimal short-term macroeconomic policies, frequent policy U-turns and non-completion of ongoing projects.
Roadblocks to entrepreneurship and innovation need to be mitigated so that we can empower our youth and our disfranchised talent to bring about a grassroots-level economic revolution. And the best mechanism is through supply-side intervention, by bringing more individuals into the economy and increasing the labour supply for which entrepreneurship and financial inclusion are critical.
Implicit in the national consensus policies is that the majority of the people should also benefit from them. To quote Dr Mahbub ul Haq, take care of poverty and this will take care of GDP. Social inequality constraints development. Any CoE should be a part of the manifestos of political parties if a referendum is not seen as advisable.
Political parties issue their manifestos just a couple of weeks before elections. To quote an analyst, each of these manifestos is mainly a wish list. The wish list rarely goes into the realm of actionable policy. This process, it may be added, apparently erodes the vote bank of mainstream political parties and generates social tensions.
APTMA also dispelled what it described as ‘the widespread misconception’ that exporters welcome rupee devaluation. In the long run, it added, the large devaluation of the rupee is worst for exporters, especially textile exporters, because it raises input costs, making exports less competitive. (Latest data issued by the Pakistan Bureau of Statistics show that exports of merchandise fell 5.17 per cent to $2.21 billion in July from $2.34bn in the same month last year.)
Investors’ confidence cannot be met with a 15pc interest rate, says APTMA, and adds that interest rates should not be raised in order to stabilise the economy.
A CoE also needs to redefine the role of the private sector. It would be in the fitness of things that role should be voluntarily defined by businesses rather than bureaucracy or politicians.
Company managements have to take care of all other stakeholders in businesses: minority shareholders, workers, government, consumers and lenders. They should formulate a joint policy on how these stakeholders would share the fruits of economic progress driven by the private sector’s enlarged role in the proposed CoE formulated by them.
Published in Dawn, The Business and Finance Weekly, August 8th, 2022