LAHORE – A broad-based committee mandated by Pakistan Muslim League-Nawaz (PML-N) to draw up proposals for economic turnaround has urged the government to focus more on privatisation, deregulation, tax reforms, education, agriculture sector and improving infrastructure.
It has recommended a decrease in the interest rates and that the oil, gas, water, coal and power departments should be brought under one ministry. The recommendations have been prepared by a committee headed by a leading banker and industrialist and comprising economists, bankers, industrialists and agriculturists.
The report titled ‘Pakistan Turnaround’ will be presented to PML (N) head Nawaz Sharif before being included in the party’s agenda. The committee urged the government for instantly privatising State Owned Enterprises (SOEs). The committee said the Karachi Steel Mills, PSO, SNGPL, SSGPL, PPL, OGDC, PIA, NIT, NBP, Pakistan Railways, Civil Aviation Authority, Bank of Punjab and PTDC hotels should be privatised immediately.
The committee observed that SOEs are running at loss of over Rs 500 billion annually therefore these should be privatised, as it would also bring Foreign Direct Investment (FDI). It has called for moulding public opinion through debates in the media, parliament and educating judiciary. The committee said there is a need to immediately changing the boards of SOEs and suggested 39 names for the potential candidates for the new boards’ members.
While citing examples from US Great Depression, the committee recommended focusing on 3R’s (Relief, Recovery and Reform). “Undertaking of large-scale public works such as dams, bridges, roads and airports would provide employment thereby stabilising purchasing power. Another example cited is the success story of India, which would become second largest economy by 2050.
The committee said it is not the role of the regulator to set price for everything rather market pricing attracts the investment. The committee recommended tariff rationalisation in power sector in order to bring it in line with market pricing. It also emphasised on targeted subsidies and legislative cover to terminate connections for those who do not pay. “Our energy usage is extremely inefficient,” the report said adding gas should be allocated on efficiency standards to get most out of the limited resources.
It also recommended free energy audits for large users and mandatory electrical efficiency standards need to be announced for all appliances.
“Development in coal and small-medium scale hydel should be started immediately,” the committee recommends adding gas supply to CNG should be priced to bring it very close to petrol price. It also emphasised the government to lower personal tax to 15 percent and corporate tax to 20 percent, as in this way the tax base would be increased and economy documented.
All sectors of the economy should be taxed at the same rates including agriculture and stock market transactions. “The cost of doing business is very high and therefore it is very necessary to reduce interest rates and the government should encourage listing of small business also by reducing the cost of listing in stock exchanges.
“Present Security Exchange Commission of Pakistan (SECP) rules are very cumbersome and discourage businesses to list on the stock exchanges”, the committee recommended. The government should develop effective framework for lobbying with USA and EU for getting favourable trade term. The labour laws should protect the rights of the workers and businessmen.
“Present laws are tilted towards workers,” the committee observed adding social security hospitals be handed over to the health department and funds available with the government from Employees Old Age and Welfare Funds be used in the budget to invest in long term projects of public welfare. In agriculture, five percent annual growth will help alleviate poverty, curb migration to cities, promote agro-based industry and contribute to 8% of GDP growth rate.
The committee recommended privatising livestock sector and removing restriction on import of animals. It also emphasised the government for coordination among research institutes for the betterment of agriculture sector. The committee also urged the government to build big reservoirs in order to overcome water shortage.
The relationship with India should also be improved, as it is one of the fastest growing economies of the world and Pakistan should leverage this fact rather than be isolated. The committee observed that current trade level with India is around US2 billion through formal channels and US$ 5-7 billion through informal channels.
It was recommended that India should be given status of Most Favourite Nation (MFN) and using SAFTA platform effectively, as Pak-Ind represent more than 80 percent of SAARC economy. The report also emphasised on investing in education and training the workers to make them skilled and also concentrating on language skills.
“English language is a powerful tool for communication and we need to develop a strong English base in our education system. India is an example who has developed huge software industry as compared to China, which lagged behind because of language barrier,” the report concludes.
