KARACHI – Expressing concern at the grave condition of the national economy, Pakistan Business Council (PBC) has asked the government to implement urgent steps to steer the derailed economy back on track. The PBC members said that the council is ready to fulfill its role as a catalyst to support the government in crafting a precise agenda to put economy on path towards stability and growth.
Former Commerce Minister Abdul Razzak Dawood, MCB Chief and PBC Chairman Mian Muhammad Mansha, Engro Corporation CEO Asad Umar, Unilever CEO Ehsan Amlik, Siemens Pakistan MD Sohail Wajahat, Millat Tractors Chairman Sikandar Mustafa Khan and Kamran Mirza spoke to the media during the discussion on critical economic issues. The PBC members said that the energy crisis, the growing deficit, poor foreign investment inflow and an overall slump in economic activity were undermining the national economy.
Engro Corporation CEO Asad Umer said that as the country is facing an alarming economic situation, the current government which plans to hold a multi-party dialogue on economic reform should tackle the energy crisis on a war footing and undertake critical reform decisions. He pointed out that the energy sector was hemorrhaging Rs 260 billion annually because of inefficiency, poor generation, distribution system and outdated units.
He asserted that some of the units are producing electricity at only 25 percent of their total capacity, a big loss to the economy. It was noted that the government has estimated 1.4 trillion rupees fiscal deficit in the current financial year, a level which was clearly unsustainable for the ailing economy. He also indicated that Pakistan has lost about $24 billion in foreign investments in the last three years ($8.5 billion a year) because of a variety of complex issues.
The PBC proposed that the government undertake urgent steps to cut the deficit sharply by overhauling the tax and tariff structure and bringing all sectors under a uniform, documented tax net. It was pointed out that the government should introduce reforms and revamp public sector enterprises, starting with the transparent appointment of capable and professional top management and boards which would be empowered to take necessary steps.
There was consensus that the most alarming aspect of the rampant inflation is the government’s massive borrowing from banks, the State Bank and non-banking sources. The PBC members also expressed strong concern over the increasing smuggling of tea, tyres, razors and other products under the Pak-Afghanistan Transit Trade Agreement. For example, out of 0.18 million tonnes of imported tea, almost 90,000 tonnes of tea was being smuggled into Pakistan.
A member of the PBC disclosed that under ATTA, a massive quantity of tyres and razors had been imported at levels which were far more than the requirement of the people of Afghanistan. He said that the scale that ATTA is being misused can be gauged from the fact that if every vehicle owner in Afghanistan changes his tyres, there would still be a surplus of imported tyres in the country. Similarly, if every Afghani, including a child, shaves two to three times a day, Afghanistan would not face any shortage of razors, he noted.
Razak Dawood said that under-invoicing at the country’s ports and smuggling had a huge impact on the economy. During the discussion he indicated that the government should take urgent steps to curb such actions which were weakening the foundations of the economy. He also called for Pakistan to strengthen trade ties with India in the larger interest of the country. The PBC advocated that wasteful government expenditure be eliminated alongside the phasing out of non-targeted subsidies from which the wealthy derive disproportionate benefit.
The council backed a significant increase in education, health, income support expenditures (targeted subsidies) for the most vulnerable segments of the society. The PBC members stated that the council was a non-political, not-for-profit institution and that its objectives include the implementation of policies that accelerate Pakistan’s economic growth. The council comprises Pakistan’s largest corporations, business groups including multinational companies.
