ARTICLE (May 28 2010): I profusely admit that I am not an economist, nor an accountant/banker, but duly qualified in maritime commerce only, thus I am writing with caution with my limited knowledge resource. The catalyst behind my writing is a proud Memon patriotic Pakistani, friend of mine who had been former President of KCCI/SITE, Chairman, SME, and shared his view being in business on forthcoming budget.
The way our homeland and its GDP nose-dived reeling to 2% GDP from 7.6% with growing burden of foreign and local debts, thus being salvaged by the IMF conditionalities. If the bankers can be at the helm of our economy instead of economist, at least we may be allowed to make our humble suggestion as we feel Dr Hafeez Sheikh from the previous set-up is most competent person and he is willing to listen to all shades for improvement of our economic health, which is certainly in a very poor shape.
I would like to quote Deputy Chancellor, David Laws (Liberal Democrat), "Public borrowing is only taxation deferred, and it would be deeply irresponsible to continue to accumulate vast debts, which have to be paid off by our children and our grand children for decades to come". How true it is, that today every Pakistani carry a debt of Rs 27,000 as reported.
The huge decline in LSM growth about 7.6% and industrial performance is not significant, except a little growth in auto sector. The high interest rate, poor governance, lack of water and power, rising law and order situation, coupled with instability for the last two years, has crippled us economically and the situation is gloomy and future is bleak. I would, strongly suggest all to read a book by Shahid-ur-Rehman named "Who owns Pakistan", a food of thought for all in particular for Dr Sheikh to devise measures to benefit the poverty ridden common man instead of elite class.
In view of continued poor governance, rampant corruption and low calibre government functionary, I wonder as to how we expect Dr Sheikh to deliver and salvage the economy. The FBR is all set to impose the VAT and emphasising on revenue growth only, rather than employment generation, as unemployment is soaring and our populace with median age of 17/21 years are running from pillar to post for bread and butter. The inflation and ever-rising commodity price, be it edible or non-edible, is biting severely those who are even employed. The irony of fate is this that the masses are paying 222 billion rupees plus 100 billion rupees in pension to government officials for the poor governance and about 400/500 billion rupees are dished out to armed forces, leaving a very insignificant amount for PSDP, health, education and welfare of masses.
Can Pakistan afford a regiment of Federal/provincial ministers and trips abroad. I, wonder if the Finance Minister will be able to restrain the government to cut down their expenditure, rather only going for imposing more taxes. The ex-banker Finance Minister pinpointed that only in the FBR 300 billion rupees are siphoned away due to flying invoices and GST returns etc. In spite of gloomy and bleak future and loss of my productive time, it is incumbent upon me to make some humble suggestions to our learned Finance Minister.
-- Focus on employment generation rather than revenue generation.
-- If the VAT is imperative, the government may exempt edible items, medicines senior citizens, education and service sector and delay it for next year.
-- Rationalise import duties in consultation with the trade bodies for domestic industries to survive.
-- Facilitate mineral exports by providing freight subsidy and hinterland connectivity.
-- Facilitation to entrepreneur and good understanding with regulators can create confidence and may help in documenting the economy.
-- Explore windows available in the region for employment of our skilled youths.
-- Low-cost housing, may create a stimulus for unemployed labours and construction industry.
-- The SME sector plays a vital role in our economy and my friend Chairman of SME Bank recommends that Rs five billion be injected, rather than privatising it.
-- Revisit of Laws, rules and regulations: It is equally important that we must bring our laws in line with civilised world and ratify international conventions, so that FDI, may reflow, investors are shy due to obsolete laws.
-- Power sector: Our growth and exports will keep on suffering, unless we embark on more hydel generation, by building Kalabagh and harnessing all resources for cheap hydel energy or coal energy, instead of relying on thermal based, IPPs or new concept of dubious RPPs. The US has already agreed to overcome our energy crisis and has pledged 1.14 billion dollar to partially finance the 19 energy initiatives mostly renewable power projects. The USTDA has already invited Pakistani delegation to the US, for baggasse-based co-generation projects at sugar mills. Power generation cost is very low as the baggasse is available at no cost.
According to USTDA report, 2000 MW of energy can be generated by 2012. Coal, wind, solar power projects may also be considered to reduce the soaring oil import billion of 11 billion dollar. Thermal-based RPPS must be discouraged as our exports can't be competitive with high utility tariffs.
-- Making of misadventure in case of distributing 30 million high quality energy savers be discouraged. It is true that Asian Development Bank is investing 40 million dollar in the energy efficient cost-effective compact fluorescent lamps and the government will invest 65 million dollar to distribute free energy savers to the masses.
It is not a bad idea as the studies revealed saving of 1100 MW at peak demand and it was practised decades back in the US and civilised world. There is no denial to this fact, but the advance countries are now popularising LEDs which has life up to one hundred thousand lighting hours and consume only one-third energy when compared to CFLs. I feel that in the allocated amount of about 125 million dollars, we may be able to assemble 30 million LEDs bulb locally, which in addition to saving energy, may create employment for 1000 people. Government and Asian Development Bank may consider a study before making a misadventure as we may respond to the latest available technology only.
Maritime employment: I have been pinpointing that world maritime industry is suffering shortage of 20,000 officers, thus window is available, so we may train our youth to fill the slot and improve our home remittances from 70 million dollars to min 200 million dollars.
Remittances: The government has taken good initiative and remittances have improved through banking channels as it has helped us largely in these hard time, but there is till room to induce overseas Pakistanis so that we may achieve a target of 10 billion dollars instead of 7.5 billion. If Bangladesh and Philippines can do so, why can't we. The US State Department describes remittances as development resources and place them in category of domestic savings and foreign private investment.
FDI: The government must address the reason of drop in FDI by 48.9%, a serious situation, thus it calls for identifying the reasons of fall and address the issues to improve flow of FDI in manufacturing sector not only in services sector. We all know that telecom sector in the past was biggest contributor of FDI, however, all efforts to be made to induce entrepreneurs in manufacturing sector.
Improve export: Pakistan can improve its exports to bridge the trade deficit, as statistics available show that Bangladesh is exporting worth 19 billion dollars, thus we can do better. TDAP has to play its due role efficiently and be given target of min 25 billion dollars and be monitored.
LNG imports: A lot of base work was done in 2005-06 to build LNG terminal at Port Qasim,, therefore it is imperative that we go full speed ahead in building the LNG terminal as natural gas contributes 49% to our energy consumption. The gas demand is expected to exceed supply by 4 bcm by the end of 2010. The gap will widen to 44 bcm by 2020. We must conclude agreements to import LNG as India has built two terminals at west coast Dahej and Hajira so is Singapore and all are operational. Let us give a kick-start to the LNG import to bridge the gap, before it is too late.
Water scarcity: Whilst India continues to build Dams on our 3 western allocated rivers under Indus Water Treaty and all our efforts have been to no avail, thus preserve whatever water we get by adopting drip irrigation, water lining of our canals and arresting the seepage. We may construct small dams on monsoon fed dry river beds to conserve water at every cost to meet the food need of growing population. Plantation of more trees to save the climate change and go for water-shed management. The government is well advised to allocate handsome amount for building of small dam for dry season, which is achievable in short period with strong will and dedication.
I personally feel and remain confident that if Dr, Sheikh is given a free-hand, he has the skill reputation of achieving in the past, so why not now. We must ponder coolly that we can't survive with present GDP growth as even Bangladesh, Nepal and Sri Lanka have fared better than us. India is doing well with 7.5% GDP, so is China set to 10% GDP growth. The option is either to give up or face the challenge bravely for the sake of posterity. The government must cut down its expenditure and invest more in PSDP, health and education with better governance to achieve our targets. It is better to light a candle then to curse the darkness.
(The writer is Governor, World Maritime University Malmao (Sweden) (Email: captshah1@hotmail.com)
Source: http://www.brecorder.com/index.php?id=1062040&currPageNo=1&query=&search=&term=&supDate=
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