What will help crack Pakistan’s code?

The writer has a business administration and marketing background and is an upcoming private entrepreneur in Islamabad. He can be reached at saad.gul2@gmail.com

The writer has a business administration and marketing background and is an upcoming private entrepreneur in Islamabad. He can be reached at [email protected]

Close your eyes and imagine waking up one fine morning to an entirely changed Pakistan. Police stations and courts no longer give you the spooky, grim and uncomfortable looks. Instead justice and fairness is visible all around. ‘Chowkis’ have disappeared and traffic seems to be flowing seamlessly. Road etiquette is at its best. People are treating one another with politeness and seem genuinely interested in one another. Women’s participation in the workforce is soaring.

Technology has enabled us to open up bank accounts instantly using just our smartphones. Religious fundamentalism is history and tourism is booming. No one is judging or is being judged because they’re worried ‘what will other people think?’ Instead, all energies are being focused on how to contribute to Pakistan’s journey to greatness forward.

But wait, wishes are no horses. And hence we need just a pinch to remind us we are not dreaming but living in the present in a country of 210 million, which has failed to produce a few great athletes, leaders, planners and visionaries. But there is something that drives this dream, ie, we all desire change and want to come on a par with other nations.

If you’re pondering that the summit is too high and we’ve never been there, we can learn from China’s example. Nearly 40 years ago, China started transitioning from a planned economy towards a market economy and the average growth rate, since, has been around 9.5% every year. For those of you who are unsure about this number, let’s just say that it’s very high. To put it in context, Pakistan achieved a growth rate of 5.3% during fiscal year 2016-2017, the highest in a decade. What did China do to quickly come atop the global food chain? They designed and implemented gradual pragmatic structural reforms.

Unfortunately, these things won’t just magically happen to us that way, for the simple reason that we are still clinging to the old ways of doing business, shy of urgently-needed structural reforms. We have got to start doing things that we’ve never done before.

What do we actually need to take Pakistan out of its current lethargic model of governance? Two ways a) structural reform, b) investing in high quality, accessible education.

Common business barriers that include cumbersome licensing permit and tax procedures; poor contract enforcement; inflexible labour markets; and regulations that favour local monopolies and state-owned enterprises stagnate progress. Poor infrastructure quality, crony capitalism and a major institutional void create the worst business conditions which lowers investment and slashes productivity by increasing the time and outlays required to establish and operate a business.

Since we couldn’t do a good job at filling in the infrastructure void ourselves, and now that China has come to our rescue with the CPEC investment dollars, we must focus our policy on productivity enhancing reforms, like Brazil did. We may offer, like Turkey, tax breaks to attract FDI to companies which allow expanding Pakistan’s exports or increase our productive capacity. Moreover, private investment in Pakistan today accounts for only 10 per cent of the economy. In emerging markets however, the average is about 18 per cent. There is still potential in the manufacturing sector, if targeted towards core manufacturing activities that will enable further production. The key is to achieve a high employment rate, which would help increase household income. Higher income results in higher consumption, and thus better overall quality of life. Alongside supportive fiscal and monetary policies, identifying the appropriate mix, sequence and timing of reforms for Pakistan will be crucial and will have to go through trial and error.

We must stop intellectual bleeding or ‘brain drain’ by incentivising students and young professionals to return to Pakistan after gaining education and work experience abroad. They bring with them skills, experience and knowledge from abroad, which they can deploy here if given a chance.

Furthermore, educating ourselves about emotional intelligence, organisational behaviour and personal leadership is of utmost importance. We still have time.

 

Published in The Express Tribune, May 30th, 2018.

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