LAHORE, May 17: Immediate threats to Pakistan’s growth include difficult access to capital, energy crisis and institutional decay, says Asad Umar, president of the Pakistan Business Council and former head of Engro Corporation.
Addressing second day of Conference on Management of the Pakistan Economy hosted by the Lahore School of Economics, he said on positive front, long term triggers for growth were strong consumer base, wealth of natural resources and a geo-strategic location.
Ijaz Nabi, country director, International Growth Centre, Pakistan, opened the session, proposing regional trade as a vent for economic growth. He provided a historical overview of Pakistan’s trade relations with its neighbours, stating that there still existed substantial economic surpluses in Central Asian Republics, India, China and Iran that Pakistan could profitably exploit. He shed light on the issue of Most Favoured Nation (MFN) status granted by Pakistan to India on Feb 29, 2012, saying that gainers outweighed losers in trade liberalisation with India.
Furthering the discussion on the prospects for Indo-Pak trade, Dr Hafeez Pasha, dean at the School of Liberal Arts and Social Sciences, Beacon House National University supported liberalisation of trade with India, terming it an out-of-the-box injection into the stagnant Pakistan economy. While he agreed that there existed strong tariff and non-tariff trade barriers in India, he stated that there also existed strong trade complementarities and trade diversion possibilities for Pakistan with India, which could greatly help Pakistan reduce its import bill and improve its overall balance of payments position.
Naved Hamid, director of Centre for Research in Economics and Business, Lahore School of Economics, summarised various opportunities and pitfalls for Pakistan in trading with neighbours: China, UAE and Afghanistan. He stated that the general perception that most of Pakistan’s trade (excluding oil imports) was with the USA, Europe and Japan was no longer true because in 2010 trade with neighbours (including China) accounted for 25 per cent of Pakistan’s exports and 35 per cent of imports. He summed up the session saying that the only way Pakistan could get sustained economic growth was to change people’s focus from security to economics.
The second session was aimed at analysing immediate constraints and long term triggers for economic growth in Pakistan. This session focused essentially on steps needed to achieve a quantum leap in private investment activity (domestic as well as foreign) and promote domestic entrepreneurship in Pakistan. Kamal Munir, senior lecturer in Strategy, Judge Business School, University of Cambridge, commented on one of the most pertinent issues of energy politics, providing an assessment of privatisation of energy sector in Pakistan. He said it was time to revisit the private power policy paradigm in Pakistan’s context. Competition would remain a pipedream and unless this changes, reforms could not be pro-poor. He proposed that the bulk of energy needs should be indigenously met and controlled, as relying overwhelmingly on imported fuel and foreign investors exposed Pakistan to massive risks.
Sakib Sherani, former principal economic adviser at the Ministry of Finance, added to the discussion by listing potential growth drivers: energy availability, better governance, improved investment environment, reverse capital flight, lower tax rates for formal sector, greater resource availability for high-priority spending, improvements in agricultural productivity, regional connectivity and freeing land markets.
The final session of the conference attempted to discuss the issue of making provincial devolution work in Pakistan. Dr Ishrat Hussain, dean and director of the Institute of Business Administration, opened the session by providing an outline of the 18th Amendment to the Constitution, the NFC award of 2010 and the Implementation Commission headed by Senator Raza Rabbani that helped clarify the structure, roles and responsibilities of federal and provincial governments. He suggested creation of a district civil service structure in addition to the existing all Pakistan, federal and provincial services to help improve effectiveness of delivery of services at the local level.