United States has stated Pakistan must legislate on tax collection to increase its revenues in addition to quickly withdrawing power subsidies that were draining the cash-strapped government’s budget. Pakistan’s non-NATO ally in the global war against terror warns that market forces would dictate matters unless government of Pakistan necessitates economic reforms in the crises-hit country. Further, US said the Obama Administration was “quite aware” of the “frustration” being caused to Islamabad by issue of market access to Pakistani products in America and was committed to development of Reconstruction Opportunity Zones (ROZs) in the terrorism-hit country.
Washington is appreciative of the ongoing Pak-India dialogue on increased economic connectivity that, US Consul General in Karachi William J. Martin said, would benefit entire South Asian region. “Pakistan must work quickly to fix the energy sector by eliminating government subsidies that drain the government budget,” American consul general stated during his meeting with young Pakistani entrepreneurs at Federation of Pakistan Chambers of Commerce and Industries (FPCCI).
“We know that Pakistan’s industrial sector has been hard hit by crippling electricity and gas shortages,” said Martin who was earlier welcomed by FPCCI vice president Khalid Tawab at Federation House. Counsel General said the present predicament, nevertheless, provided opportunities through which governments in Washington and Islamabad and private sector could work together.
“We are funding studies on power generation and distribution. Our technical experts are working closely with Pakistani officials on practical steps forward, figuring out how to solve tough problems such as technical inefficiencies, unsustainable tariff structures and power theft. All of these contribute to the energy shortfall,” the consul general said.
Increasing domestic revenues was another key area consul general dubbed as a “must” for Islamabad to address. “You know well that the government spends more than it collects. As businessmen you know that this is unsustainable,” Martin said. The American official agreed that raising taxes in any country, including his own, was a political challenge. But, the alternative was even less attractive, he viewed. He further added that adding tax collection legislation was critical to provide future governments services that would help private sector grow and create jobs.
“Inevitably, market forces will necessitate economic reforms,” consul general warned. About Pakistan’s longstanding demand for market access, Martin said his government was quite aware that improving market access for Pakistani products could have “a much bigger impact” on economic development in Pakistan than any assistance programme from US government. “I know that market access remains an area of frustration,” he conceded, saying President Obama was committed to ROZs in Pakistan, creation of which would allow goods produced in those zones to be exported duty-free to the US. He said the US was Pakistan’s largest source of Foreign Direct Investment. Pakistan enjoys a significant trade surplus with US.
The US official, however, hinted at diversification of mutual Pak-US trade that was by and large restricted to textile sector. “We believe that for trade to grow, it must be as broad based as possible and not limited to any one sector,” the consul general said. He complained that though his government was actively promoting American investment in Pakistan, particularly in the energy sector, Islamabad was delaying the approval of proposals jointly floated by the US-Pak companies.
“American and Pakistani partner companies have proposals pending with the Government of Pakistan to build plants to import Liquefied Natural Gas (LNG),” he said.
About the ongoing Pak-India trade talks, Martin said Washington was committed to promoting concept of a “New Silk Road” to forge stronger regional ties between Pakistan and its neighbours. “Lasting stability and security go hand in hand with economic opportunity,” he quoted US Secretary of State Hillary Clinton as saying.
“We are very encouraged by the ongoing dialogue between Pakistan and India on trade issues.” “New Silk Road” vision, consul general said, meant upgrading facilities at borders crossings, removing bureaucratic barriers to free flow of goods and people, and casting aside outdated trade policies. “The entire region will benefit from increased economic connectivity,” he said. Earlier, FPCCI VP Khalid Tawwab and other entrepreneurs asked consul general for a level playing field for the war-torn country’s export produces in American and international markets. “Give us market access, give us trade like you are giving to Mexico and other countries,” said an entrepreneur. Khalid urged need for Pak-US economic cooperation to bail out crisis struck railways sector in Pakistan. Counsel General was positive when a young entrepreneur proposed setting up of a US-funded Business Support Fund for the local businessmen.
Responding to a query, the consul general said building power plants was futile when the government was lacking the will to charge consumers for electricity. “If you don’t charge for your products it does not matter how modern you are,” he concluded.
