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.

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!