GDP, the guiding light?

For years we see our poor economy that despite improvements in GDP fails to have trickle down effect never reaching the lower hierarchy. In fact the chasm between the haves and haves not has increased as each year passes by. But interesting enough despite poor GDP numbers many large enterprises have posted their growth in double digits. Wealth has increased but in certain segments of society only. Confusing isn’t it. Then we hear why some large international groups might be interested to invest in our country as soon as things start to improve. Some introspection has resulted in the following interesting information worth sharing as it is certainly thought provoking.

It is believed by some that the GDP alone does not truly give the correct picture of health of the nation and needs to be replaced by more relevant tools. Definition of Gross Domestic Product (GDP) is that it measures nation’s economic performance as it is determined by the market value of all final goods and services and has been used since 1934. Thus the world’s top economies have been using this system to gauge their growth for such a long period of time despite the fact when this system was coined it was to show the good side of the governments at that time and things have changed drastically since then.

The Organization for Economic Cooperation and Development (OECD) annually issues a report based on a study of 140 countries, indicating the levels of happiness in those countries. For at least the last decade, European countries such as Denmark, Finland, and the Netherlands and other countries such as Canada, Australia and New Zealand have ranked at the top and the U.S. has not made the top 10!

As the satisfaction and success of life in countries that are economically behind those that are growing faster or have more cumulative wealth is higher than those that are wealthier raises new questions. Are we really measuring the right parameters to gauge success? Is this confusion leading us to a chaotic path?

World experts on the subject of happiness, Dr. Ed Diener and Dr. Sonja Lyubomirsky and Dr. Martin Seligman, have concluded that beyond the basic level of necessities to support life, such as adequate, food, water, housing, the following things can increase happiness levels: meaningful close relationships; a positive, optimistic frame of mind; accepting responsibility for your life; being engaged in meaningful work; living in the present; and practicing an altruistic life, including gratitude, forgiveness and compassion.

An alternative measure, called the Social Progress Indicator  originated by the World Economic Forum and advocated by the Social Progress Imperative and Harvard Business School Professor Michael Porter. The Social Progress Indicator examines how countries perform on 52 indicators related to human needs, and foundations of well-being. Norways followed by Sweden top the list where as the U.S. comes in at number 16 and Pakistan ranks at 122 (2015)!

“The Index defines social progress as the capacity of a society to meet the basic human needs of its citizens, establish the building blocks that allow citizens and communities to enhance and sustain the quality of their lives, and create the conditions for all individuals to reach their full potential.”

The Index combines three dimensions – Basic Human Needs, Foundations of Wellbeing, and Opportunity. Each dimension comprises four components, which are each composed of between three and five specific outcome indicators. The included indicators are selected because they are measured appropriately, with a consistent methodology, by the same organization across all (or essentially all) of the countries in the sample. Two key features of the Social Progress Index are the complete exclusion of economic variables and the use of outcome measures rather than inputs.

In a country like Pakistan, a poor but developing country that keeps on grappling with growth and running after GDP targets as a measure of success is handicapped as it is unable to deliver returns to its masses that outnumber the resources. The failures are of course not only related to this fact in discussion but due to governance and management at large but the focus on the GDP doesn’t help everyone?

If we were to focus on Social Progress Indicators we would be more interested in number of students graduating or getting jobs instead of number of schools constructed. We would not only focus on opening up of new hospitals but how many lives saved or improved. We would focus on job creation more than setting up new industrial zones. We would focus on creating wealth through entrepreneurship instead of distribution of wealth!

Chris Meyer and Julia Kirby, writing in the Harvard Business Review Blog and authors of a forthcoming book, Standing On The Sun , argue that “exclusive reliance on economic measurement has aligned Western Capitalism around managing the financial resources that don’t create value.”

We are not blessed with the liberty of wasting time and we need to learn from others what they missed and not necessarily repeat the same mistakes in order to complete the journey as a nation. Can we align ourselves correctly and focus on what matters to our people so we can gain the lost trust and grow together? Let’s create value!

Trade: A Must Spotlight for Economic Affluence in Pakistan

The bathtub theorem in Economics set forth the analogy that national income of any country may be understood as water in a bathtub and exports are one of the major water injections that raise the water level. Applying this theory on Pakistan economy, it is blatant that we are experiencing the contractionary effect which in bathtub terms means injections are less than the pulling outs. Our much reliance on imports causing leakages and less capacity or capability to exports is not making significant additions.

The Significance of International Trade

The significance for developing economies such as Pakistan, trade cannot be undermined. Wisely developed and focused trade policies has benefitted a number of economies as it has miraculous impact on private sector development, in employment, further innovation, introducing technological advancements and technical exchanges, quality in the products and process, improving good will in the international arena. Tremendously progressive economies of Asia such as South Korea and its fellow “dragons,” Singapore, Taiwan, and Hong Kong) are the only developing countries that are developing in real terms with moderate inflation, low unemployment, an export surplus and fairly equal distribution of income. What madekes the base of this shift? The transition beganins with a focus on foreign trade which resulted in the boom. I wonder what impels some of hus to argue these economies cannot teach us much as Pakistan experience is hardly relevant!,,!. However, the diverse examples and experiences can help us giving a direction what works and what doesn’t work.

A recent report by PRIME, tracking the progress made on the economic revival manifesto presented by PMLN Government in the June 2013 suggest that we under performed and remained worst in trade and industrial performance. The promises regarding the establishment of industrial clusters, energy requirement is still promise yet to be materialised. Whereas Pakistan international trade is suffering from huge amount of deficit due to low demand for its export or where there is demand, the incapacity to meet the demand and non-fulfilment of the international orders has shaken the trust of international buyer, which in the age of big and strong level of global competition poses a serious threat. One of the key reasons is internal political turmoil and instability. Let’s assume it doesn’t hurt the local businesses and does not eat up much of the public funds which may alternatively had been spent on constructive things, still it hurts our image and still we portray ourselves as aggravating , corrupt and out of control nation.
Measuring such as the maximizinges the tariffs from 20% -25% to the 30%-35% on luxury items would not work for long as long local manufacturing has not be strengthened. Considering the highest incomes disparities in Pakistan, Luxurious items would still remain in use. Interestingly the rich have become richer both locally and internationally so the demand for luxury items are inelastic.elSticelasticity of demand
Do the international Collaborations but do it for overcoming the failure such as in exploring and exploiting Pakistan’s own oil and gas resources, Alternative energy is becoming a growing focus around the meet the growing energy demands in the country.
Some of the other useful strategies in overcoming energy issues faced by export based industry include.

Overcoming Energy Crises:

Providing Subsidies to promote all the alternate energy solutions

Give tax relief to the industries introducing alternative energy solutions and becoming self-sufficient in their energy usage and provide subsidies on the import of Solar panels should be subsidized. Unless energy issues are resolved, our production capacity cannot expand.

Pakistan should seek Technical support from international partners in projects such as converting waste to power. Any research, related to technology or technique that business can benefit from, should be “purchased” so to be used by the wider community.

Product Diversification and Quality Sensitivity

Pakistan has made fewer items in its basket as exportable and no serious efforts have yet been made to explore where we can expand. Pakistan Foreign Mission abroad must be assigned with the responsibility of updating the local exporters, chambers and business associations regarding the demands of particular commodities whereas foreign ministry must compile the products and markets with high potential of Exports.

Another blemish on exports is the Product Quality. Exportable items must have thorough quality check and assessment as your products speaks loud about how you keep the commitments.

Tax based Measures

Government needs to provide a reasonable Taxation relief for a definite period of time to export based industries either small scale or big manufacturing units if they have just started their operations.
This is in particular important for sick industrial units. There is an immediate need for the revival of these closed units and revitalizing them to contribute to the national exchequer. Government should immediately declare them as tax free units. This does not mean government would cut the source of its revenue. Already they are not making anything out of deceased units. Their revival means other revenue sources such as more income tax from job holders, sales taxes from their consumption would come.

FDI in Manufacturing Sector.
Our immediate neighbor India is playing all cards to entice foreign investment in the Manufacturing sector. This is apparent in Moody’s Government new Venture “Make in India”, campaign to attract investor around the world. This strategy would not only generate employment within the country but would build country’s export potential, availability of Import subsidies and technological advancement inevitably. It’s an essential in India to set up a manufacturing plant or assembling unit of any product if you wish to enter in Indian economy. Benefit the India, if you are taking benefit from large consumer base in India with the availability of cheaper labor. These practices need to be replicated in Pakistan too.
Infant industries should be exempted from tax for at least a period of three years just as China Cut taxes on small firms. China will also extend tax provisions granted to small businesses into 2016

The import for the purpose of setting up a factory, an industry or any sort of business should be heavily subsidized. E.g. a plant or machinery required to start a factory and these subsidies must gaudily and meticulously communicated to the investors groups and business community.

Government department itself should set examples by making purchases from local brands so as maximize their revenue and possibility of investment into business expansion.

Capacity Improvement Measures

Creating Branding awareness amongst the export based industries may prove to be lifeblood for standing long and serving the international competition. Such programs must be initiated by Small and Medium Enterprise Development Authority, Trade Development Authority, and training departments of Ministry of Commerce. More the Businesses would know significance of branding in International selling, the better are the chances of stirring quality consciousness.

Trainings should be initiated for small traders and small businessmen so that they know how their counterparts are doing business in other countries

Interest-free loans to small and medium industries e.g. specially those making goods with exports potentials such as toy manufacturing, marble factories , artificial Jewellery and handcrafts. Knowing that Small and mid-sized manufacturers are central to regional economic growth and innovation and that they face unique challenges in deploying advanced manufacturing technologies, through new programs such as Manufacturing Technology Acceleration Centers, manufacturers can expand their efforts to strengthen the competitive position of small and mid-sized businesses.

Farmers and Agricultural Entrepreneurship should be promoted as our quality and quantity ultimately depends on what we produce as an agriculturist economy.

It is important that Pakistan`s structural problems, systematic flaws and commitment to the promises are addressed on priority. A fresh approach to improvise on trade diplomacy, sincere efforts to minimize the conflicts and a focused approach toward trade and industrial revival are the foundations where any strategies can work.

If you have a burning desire and a plan to take action, there is absolutely nothing you cannot achieve.

Dream then Believe then Achieve!

Don Charisma

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«If you have a burning desire and a plan to take action, there is absolutely nothing you cannot achieve.»

— Thomas J. Vilord

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Charisma quotes are sponsored by DonCharisma.com – you dream it we built it … because – “anything is possible with Charisma”

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Living in the…,……

When you try to complete this phrase you could easily end up completing it in a way that suits you? Though it’s usually said living in the past is not a good idea and perhaps having a mix of living in present and future is better. Recently I heard a TED talk on how experts can predict how we make our day in and day out decisions based on our orientation towards time. That means those that have a particular orientation of time might have a different perspective of life and can easily have different outcomes in their living styles.

All this theory is good but the recent episode of our win in India against Indians in Hockey points towards an underlying issue that has become a norm for Pakistanis. We’ve been cursed or to put it conservatively obsessed with Indians due to our historic rivalry. Question is that is this real healthy? The way our players responded was only because it was Indian public. I believe that the players might have responded differently had it been a different set of public group or country.

Then look how we were so happy that we’ve beaten India but we’re content with that win opposed to not reaching number 1 position. Some would say but that’s a negative approach as we win after so many years? But I argue that because we’re obsessed with rivalry and we’re oriented to live in the past we end up settling for less than number one. We compete with India! But is it necessary that they are number one? I think no! So if I’m right then aren’t we selling our potential short??

I think as our national orientation is in the past for time we’re masters of our inferior destiny? Think about it can’t we set our targets to new heights? Can’t we compete with the best? Can’t we live in present and more in future??

I aM CoRruPt

I am corrupt! Am I?

I dislike the stagnation around me. I feel there is someone out there to blame for anything and everything that is not perhaps right. When I sit all alone I think and look for the cause I have an answer it’s the corruption!

Rising bills, inflation, poverty, bad governance, injustice, inequality, cruelty and the list goes on. I or any person in my vicinity can relate to corruption as the root cause of it all.

Why can’t these people do the right thing? I talk to myself my subconscious self. I feel frustrated with an urge to leave my surroundings to join a land where the root cause is absent. Where the list of wrong is not there. Is it those blessed ones have overcome this human virtue and outcast CORRUPTION from their communes?

Not in reality then what gives them the advantage that we lack as a group of people. One would think that its as simple as pointing the finger. But when you let your conscience play out impartially…. walla! you have the answer. The corruption is hidden inside my ownself!

I am corrupt ’cause I chose to accept. I am corrupt ’cause I don’t sacrifice. I am corrupt ’cause I fail to share. I am corrupt ’cause I fail to look farther. I am corrupt ’cause I believe that till we rid this virtue amongst us we cannot rid our problems.

I am forced to think, hasn’t this virtue always been in form of greed from the time of mankind’s inception? It it not true that societies around us, despite corruption have overcome similar coat lists of problems, as we are up against today. If your quest gives you an answer other than what we have been accustomed to, doesn’t that change the whole frame?

Have we been stuck in this moral hazard for long now that we must be a pure group of people / society only then bliss and happiness will be bestowed upon us. We all know that this battle will not finish in the near future so we will not succeed in any thing in the near future? Mind boggling huh! Are we the outcomes of such conditioning that is our biggest impediment. All I am left with is to conclude that until I overcome my own corruption in thought I can’t see a clear future for all!

We can succeed with fresh perspective and strategy and without waiting for idealism to diffuse amongst us all!

A couple of friends commented that we need nationalism the glue to bind us to face up the challenges. Another addition is we need people with commitment and no rocket scientists simply sticking to a straight path will bear results benefiting ALL.

But my stress is upon, till the individual doesn’t want to make the change they won’t put it in a dish for you. I suggest most humbly that it’s our ALL belief and value system that is not letting us make the required outcomes. I’m waiting for the urge to overcome the negativity!

>Ad hocism

>I often think that Pakistan is an Emergency country. Look around and you will see why I suggest it so; we do everything at the last moment. It has become a part of our daily life, from paying our taxes to utility bills or meeting our obligations. What impact such last minute actions has on the execution of any thing is that we have not had ample time to think through or plan for the activity. Therefore the outcomes are more often unpredictable and poor in nature.

In the recent months we have condoled with the families of those that lost lives in the terrorist bombings but also for those that lost their loved ones due to the negligence or oversight of medical doctors. As the whole nation was in shock to see the adorable child lose her life it resulted in an outcry and hatred against such gross misjudgment. Once again our response was even at the policy makers level very immature, reactionary and short term. All the same, based on the principles of ad hocism. The result was very simple, close down everything i.e. health facility.

After the dust settled and those that were suspected to be responsible for the gross negligence were fined or put behind bars. All of a sudden out of the woods came a health bill specifically for the private sector health providers. The health bill starts with the premise that all that practice in the private healthcare market are under the microscope and since they charge user fees for delivering healthcare they will be held responsible for any morbidity or mortality. They would be considered for charges of murder and would be stripped of this and that. The health facility will be closed down and this would scare everyone and things would improve. In my view again this is a reactionary and ad hoc response that has not been thought through.

The health bill’s first focus is on the private side of the healthcare service. If we suppose that the bill’s intention is to improve and guarantee quality then it has to encompass all the providers that practice healthcare both public and private sectors. The bill cannot go about putting punitive and criminal damages on licensed practitioners only when the cities are swarming with quacks that practice openly.

Why is the quality of the healthcare service so poor or delivered in hiccups because the people who should be responsible for making the laws to govern the quality and authenticity of healthcare have been busy with their love for the pharmaceutical sector. Question is why the focus on the drug industry only, because it involves money and large money means benefits for many. The time that should have been spent in implementing policies for improving and regulating the healthcare has been lost.

So now the problem is being solved as always in an Emergency without thinking through of the linkages, impacts and broad ripple effects; without any focus on plausibility of the policies and how they can be implemented and accepted by the stake holders. Again with an arrogance of bureaucracy it is believed that the laws will be imposed and they will be accepted and succeed in making a difference.

As logic should prevail the correct approach would be:

-to raise the professional / technical body to enforce a system of continuous improvement of production of professionals such as doctors and technicians and nurses.

-A compulsory system of reevaluation of the healthcare providers / professionals should be introduced to ensure up gradations and encompassing the minimum safe knowledge levels for the general safety of the patients.

-A system to be followed by all (public and private) health facilities that ensures standards of infrastructure, practicing rights of doctors,morbidity audits, mortality audits, infection committee,Pharmaceutical Committee,third party quality audits.

-A special force that can close down practicing people who do not have officially acceptable documents and or licences to practice medicine.

-A technical body designed to accept complaints and law suits against healthcare providers

Its a pity that we will continue to make the mistake of ad hocism as we are an emergency nation. May we become a nation of elective approach that uses our brain faculties. Amen!

>Accountability Accounts

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We are rapidly developing as a nation which talks about accountability excessively. The past year everyone under the sun talked about justice and accountability. But what is interesting about this accountability? As long as it only deals with others it remains the center of our attention! We want to hold everyone accountable! We would like to have our scores settled with any and everyone!

Lets hold the government and previous governments accountable. Lets hold the bureaucracy accountable. Lets hold the army accountable. Lets hold the doctors accountable. Lets hold the lawyers accountable. Lets hold the maulvis accountable. Lets hold any one we can blame accountable! But lets not hold ourselves accountable!

NRO that became the center of attention and the reason of perhaps the future moving and shaking is the outcome of this accountability! But what the main stream media is not talking about is that all the accountability is a result of those people who are part of our society and they are the ones that have committed crimes against the society and country! True. But aren’t they the true replica of who we are as a group at large.

If as a nation we want to talk about accountability lets start by saying that i will hold myself accountable for all my actions that go against the nation and then once i am ready to put myself on the right track then i will go and mind other people’s affairs.

As a nation we like to meddle in other people’s affairs. But unfortunately if we want to fix the problem and be the solution then we will need to initiate the process of self accountability at each and every individual level. This will and can lead to the beginning of required change that will be forceful. Don’t we all know that how truthful we are as a group and a community; when the time comes we do not let any chance go by of materializing any short cut or corrupt methods to pinch and or nick the interest of the country!

People of the nation need to understand that if they want justice that they are so interested in pursuing and seeing being delivered from others for them then they will need to start speaking and practicing the truth at the individual level before they expect others around themselves to do that. Its as simple as that, converting from a nation of hypocrites to a nation of righteous people. May we find our lost selves!

>Indonesia: Endurance and Evolution

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Still feels like yesterday when I first visited Indonesia in the mid eighties! A country with rich heritage and bustling cities. What remained highlight of the journey was Bali. I can still remember hearing from the guides that Indonesia was a rich country vis-à-vis natural resources. At that time the oil piped out of the country was very much close to that of Saudi Arabia. Even then the country was having their troubles; sounds familiar?

Let’s take a snap shot of what is going on today in this still biggest Muslim country based on population spread over 17,508 islands. In 2009 when it draws to the end and the world is sunk in the recession with a hope to recover Indonesia stands tall and bold with a positive GDP that stood at 3.9 percent on quarter to quarter basis and 4.2 percent on year on year basis. There was a constant improving business index in all business sectors. Yet again a case study for us as it is our brother Muslim country and is on the road to progress. Can we initiate such steps that can give us economic stability and a prosperous future?

The country since its independence after the World War II has moved from authoritarian era between its first president Sukarno and then followed by General Suharto till 1998. Following this period the country entered a new era of re democratization and reforms. The era of Reforms has been gradual and picked up speed after 2004 and many organizations and individuals are to the credit to supporting this transition. Thus Indonesia has endured the challenges of facing communism, authoritarian rule and existence of the country. Even then it has got back on track of the evolution in the positive manner.

Indonesia’s main export markets are Japan , the United States, China, and Singapore. The major suppliers of imports to Indonesia are Japan, China, and Singapore. In 2005, Indonesia ran a trade surplus with export revenues of US$83.64 billion and import expenditure of US$62.02 billion. The country has extensive natural resources, including crude oil, natural gas, tin, copper, and gold. Indonesia’s major imports include machinery and equipment, chemicals, fuels, and foodstuffs.

Trade between Pakistan and Indonesia has been gradually growing from $645.4 million in 2004-2005 to $1254 million in 2008 but it is still at a very low level in view of the size of the markets of the two countries. Pakistan still does not occupy the worth mentioning list of countries that trade with Indonesia.

At the forefront of Indonesian pro business policies is the urge of the government to reform and measures to address Corporate Governance and legal system thus changing the business culture. This approach has paid dividends in form of setting up of new businesses. Strengthening this further the government is granting full liberty for foreign direct investments by virtue of green field operations (new projects) or joint ventures.

As the Chambers of Industries and especially RCCI takes interest in promoting joint trade between the two countries substantiating it further by the FTA to be finalized by the beginning of 2010 this will pave the road for our business community to take advantage of this unexplored territory. Let’s begin the learning process and bring success to our two Muslim countries. Amen!

>Follow to Lead

>It is always taught that in order to lead one has to learn to follow. One wonders if that is the case when we consider our people who are just followers. Will they have the courage to lead when the time comes? Why don’t they lead? Why are we lacking leadership today? We have followers and individuals who pose as leaders but don’t understand the concept or even the definition of leadership.

Chris Cork recently wrote a small article to this tune in The News in which he mentions that people who were taught to follow in the educational system will not lead. I thought he made sense as I had similar observations that the educational system does not inculcate fresh thinking and innovation. That is also the reason our youth is not intrigued to write, question, read. Their brains have been programmed at our educational institutions to think like robots.

since it is hype to coin conspiracies these days. Would it be wrong to say that there was some sort of conspiracy and it could be even a national one that lets keep the masses followers so the ruling elite and leaders would have their own pool to propagate their classes and keep on building their wealth and strength at the expense of the masses that we all know are treated to this day as slaves without much thought to their civil liberties.

Who will be then the follower who will one day lead thy sheep and liberate thy from the shackles of such cruel rulers? Can the follower rise to a leader or this is a myth we were made to believe so that we would just become followers and never taste the leadership once entangled in this deadly trap? Think and make your own mind!!

>Learning from Vietnam

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Vietnam; The hidden Charm

Recently I had the good surprise of being exposed to the country of Vietnam in a different light at the forum of Rawalpindi Chambers of Commerce and Industries. A small delegation comprising of the Ambassador and his colleague the Trade Councilor were on an introductory trip for the RCCI.I had brushed through articles in the Business Journals in the past few years on the success and growth of Vietnam but never had the opportunity to view it in depth. In preparation for attending this meeting when i started to read about the present situation on Vietnam I realized the potential that it holds for us and the whole world. In the meeting that was hosted by RCCI we were fortunate enough as members of the Executive Committee to be exposed to the dialogue that has started between the two offices for the exchange of ideas and trade promotion.

So what are take homes from the success story of Vietnam? Let me give a snapshot of the present Vietnam. Vietnam won its Independence in 1945 and then got stuck in the war that tore the country for 30 years. In 1975 it culminated in the victory that resulted in the countries reunification. This tropical land hosts a population of over 87 million 60% of which is youth and mostly under 25. A very high literacy rate of over 94% helps in making its human resource a great capital. This land is rich in natural resources and exports more than it imports thus building the nation each day.A very young country it stands and boasts its success today because it vowed to take a new turn not too far in the past. As recent as 1986 the country started a campaign “doi moi” (renovation). With such a slogan to rebuild and renovate the country and change the economy to an export based one the country was on a road that would take it on the highway to success. Interesting enough the present form of government system is as recent as 1992 with the present constitution which as further amended in 2001.

Today Vietnam (the hidden Charm) is the fastest growing economies of Asia and has persistently been on growth curve and has been right behind China and ahead of India. It forecasts the possible growth rate of 6.5% in 2010 despite the recession. It is considered to be the favorite for FDI of all the major Economically leading countries and Japan and Singapore has taken keen interest in investing in the economy.

Taking parallels from Vietnam. Pakistan has 4 provinces where as they have 59. Pakistan has a constitution that has been there for much longer where as Vietnam’s constitution is new;1992. Pakistan has more land and diversity in weather and variation in type of land. The agricultural land and canal system of Pakistan is older and superior but is the per hectare production still higher? Pakistan has a similar agro based economy, young population, rich natural resource base. People are hard working at least in the lower echelons of the country.

Lessons for us Pakistanis are that despite being in war for such a long time the country has made a come back. Why? The people of the nation have put in their focus in rebuilding the country. Pakistan has natural resources, human capital, technology and hard working people. What we lack is attitude, patriotism, loyalty, community interest, humility, patience, courtesy. Therefore these short comings overpower our strengths and we result in the situation that we are in. There are certain difficulties and hurdles that all nations face but the belief to see your country rise is the key.Let us read what others have done and how and why they are doing well. Let us deploy the lessons they have learned without reinventing the wheel. They had the will to make their nation successful so they did. If we have the will to make our nation great we Can! Are you ready?