Despite many efforts, recent nominal upsurge in direct foreign investments and Pakistan’s current macroeconomic indicators have not earned confidence of the business community, a leading entrepreneur said
Instead of making tall claims, the government should introduce meaningful fixes to fiscal and tax problems as they hamper sustainable growth, Mossadaq Chughtai, who owns several companies in the United States and Pakistan, said noted.
“I am always troubled by the government’s claim of economic success because fruits of such growth are hardly available to those in the middle and the lowest rungs of the ladder,” Chughtai, who has investments in steel, agriculture and technology sectors, said in an interview on Pakistan’s economy.
Secondly, he said, attempts to address current account deficit or balance of payment are just a temporary solution, and do not look like a bold new strategy or vision to troubleshoot lingering economic issues.
The government is relying too much on IMF loans and assistance from friendly countries, and not focusing on achieving actual GDP growth at home.
“This has been our problem for a long time and leads to, up and down patterns in economic growth after every few years – it’s high time that we stop this trend and take solid steps to jump-start Pakistan’s economic growth.”
Chughtai noted that the buildup of foreign exchange reserves is just a cushion, not a guarantee that the country would be able to pay back billions of dollars in loans due in 2020 fiscal year, and at the same time also meet some key development requirements.
At the moment, he pointed out that entrepreneurs do not find ease in doing business since they continue to face numerous obstacles in the way of launching new ventures.
“The way forward for Pakistani economy is not dependence on foreign loans but hefty inflow of international investment in the export oriented sectors to boost exports.”
It is critically important to review the measures taken to expand tax collection as the country still has not much to show for in terms of revenue generation, the Virginia-based entrepreneur with several businesses in the United States and Pakistan said.
On all these counts, he said, the current government is continuing to fall, way behind.
To make matters worse, the government has cut down the development budget and has increased electricity tariffs and fuel prices.
“These austerity measures have no rationale, and spiraling energy prices have failed to inspire confidence or stimulate economic growth, which last year remained around 3% of GDP and is predicted to be just over 2% in 2020.
Chughtai suggested that the Government should facilitate duty free import of raw materials for products that increase exports in areas like sporting goods, textile, engineering, surgical instruments and electronics as well as on the machinery for the export oriented sectors.
Then, he said, there is the vital question of transparency and conflict of interest among upper echelons in and around the government.
“The international investor wants a smooth process, not any hiccups like the woefully slow working of the Board of Investment, which should be held accountable for its performance.
“Now, the government should take radical steps, listen to investors and genuine experts to create more jobs at home and to boost average income per person so spending power of an average Pakistani can be increased domestically. .”
In a nutshell, Chughtai said homegrown steps like broadening the tax base, real improvement in revenues collection and facilitating inflow of investment are absolute imperatives for creation of jobs and economic growth.
