Issues of Concern in Pakistan

The betterment of the youth is completely ignored by all political parties

I still recall what I wrote in an article in 2014: I read a comment in the Thomas Reuters Foundation that everyone knows that Imran Khan may be a great pressure cooker in the kitchen, but you can’t trust him to be the chef. I also wrote that from a czar-like prime minister, Nawaz Sharif has been reduced to a deputy commissioner-type character who will deal with the day-to-day running of the country while the army takes care of important issues related to Afghanistan, the US and India. This was quite true until we saw the Turkish coup attempt and the leaking of the news regarding civil-military disagreement on the handling of non-state actors by Dawn’s reporter, Cyril Almeida. Our state functionaries seem to disregard the fact that the common man is keen to get his daily problems solved. In Pakistan, he has followed almost blindly any ray of hope and, unfortunately, he has been betrayed on most occasions.

Nawaz Sharif’s government has rightly invested in the long neglected increase in power generation, but more in-depth and strong reforms are required for a sustainable economy which takes care of the problems of the common man during the short-term and medium-term. Even the China Pakistan Economic Corridor (CPEC) projects need transparency and a corruption-free perception for benefits to flow. Nawaz Sharif has tried to take the sole credit for his development projects, particularly the very important CPEC. It is true that CPEC, the 51.5 billion US dollars project launched by Chinese President Xi Jinping and Nawaz Sharif, is a game changer in the region. Even the IMF has said that CPEC will boost investment and growth in the short run and entail risks of repayment obligations and profit repatriation in the long-term. But we conveniently forget that the common man is more interested in solving his daily problems.

It was imperative for China to find a route in the form of CPEC for the survival of its system and to prevent it from another revolution. With all the known capitalist ventures which China has taken in recent years, Xi Jinping wants a harmonized economic system (which would suit the Chinese national interest) by making sure that the state system would prevail as he announced that the Chinese Communist Party had the ultimate say over state companies. The level of Chinese interest is evident from the news that China has withdrawn its offer of setting up a LNG terminal at Gwadar port on the BOT (build operate transfer) model and now wants its own engineers to complete the project.

China was apprehensive that the protest by Imran Khan may disrupt its CPEC activities. Chinese ambassador Sun Weidong took the opportunity to assure him that CPEC was of great significance in enhancing bilateral connectivity, improving people’s livelihood and fostering pragmatic economic and trade cooperation. Ambassador Weidong also assured Imran that all the regions, including Khyber-Pakhtunkhwa, would benefit from it.

China had its time when, during the last many years, it concentrated only on economic development, but with the current Chinese military muscle, Xi Jinping has already announced the biggest restructuring of the People’s Liberation Army since the 1950s, a plan that unnerves America and its Asian allies and could upset the global balance of power. ‘We must emancipate our minds and change with the times’, he told the troops of the 13th Group Army. They should not, he said, ‘wear new shoes to walk the old road’. Earlier, he had started to implement a plan to transform the Soviet-modelled military, long focused on defending China from invasion, into a smaller, modern force capable of projecting power far from its shores. The plan, to be implemented by 2020, is one of Xi Jinping’s most ambitious and politically risky undertakings yet. He has since been elevated in the Communist Party by being declared the ‘core’ leader which has put him in the same rank as Mao Zedong and Deng Xiaoping.

The latest exchange of unpleasantries between the Pakistan Peoples Party (PPP) and the suggestion of the minus Zardari formula in the PPP by Imran Khan further diminished the chances of the opposition getting together on the issue of Panama Leaks. But the opposition is unnerved because they know that by the next financial year, many of the infrastructure projects will come online and the PML-N government will try to encash this achievement in the next general elections in 2018.

All this is happening when we are halfway through Zarb-e-Azb (deploying 200,000 Pakistani state forces) and we have a hostile neighbour in the East and an angry Afghanistan government in the West. The going is expected to be difficult with the economy as exports are affected in view of the armed conflicts in the Middle East, a lower oil price which has brought down the purchasing power in many countries, global slowdown in productivity, global slowdown in trade, issues with Brexit in the European Union, the candidacy of Donald Trump in the US presidential elections and hopes of a global economic recovery have become dim. Pakistan has not benefited from the GSP+ agreement with the European Union because Eurozone has done much worse in the global economy as compared to the US.

The relations with India are likely to be under stress in the coming months as Modi’s Bharatiya Janata Party is facing an election in India’s most populous state, Uttar Pradesh, where he is likely to talk about nationalism and be tough about Pakistan, in order to avoid the subject of economic development in India.

On the domestic front, the honeymoon period of the government is long over. Nawaz Sharif and the PML-N had the reputation of being business friendly, but the actions of the Finance Ministry to ‘somehow’ increase revenues and document the economy have not produced results in terms of better revenue collection, but it has empowered the bureaucrats to use their discretionary powers. While the business environment is getting unfavourable for Small and Medium Enterprises (SMEs), the remittance inflow is getting lower and the depressed investment data – despite low interest rates – speaks of the low level of confidence of the business community. The Federal Board of Revenue (FBR) was successful in achieving last year’s target by imposing unprecedented indirect taxes and withholding tax refunds, but this has not improved the business environment nor has it improved the purchasing power of the masses. The government’s desire to have a broader tax base has suffered another setback because only 1.1 million people filed tax returns against 3.8 million registered with FBR.

There is so much talk of tax collection and revenue generation that even President Mamnoon Hussain – who normally keeps an extremely low profile – talked about increasing the tax revenue in order to raise the standard of living in the country. In view of the steep shortfall of revenue, it is reported that the government tried to pressurize some chartered accountancy firms to secure advance income tax from their clients or assist in out-of-court settlements of tax disputes. The FBR desperately needs to achieve its October 2016 revenue target of Rs. 260 billion after it faced a shortfall of Rs. 56 billion during the July – September quarter.

Pakistan has to budget expenses very carefully in view of possibility of declining remittances by overseas Pakistanis, particularly from Saudi Arabia. We have observed a number of workers returning from Saudi Arabia recently after being denied wages for many months. The Saudi government is faced with a critical economic situation where less spending by the government and businesses means less growth and fewer jobs. The only way for them to create more jobs for Saudis in such an environment may be by getting rid of foreign workers and replacing them with locals. This is known as ‘Saudization’.

Pakistan is too involved in internal politics and tensions on the borders to take part in any global issue or worldwide concerns. The current account deficit (meaning the value of imports of goods/services/investment income is greater than the value of exports) widened by 136% in the quarter (July – September 2016). We are actually faced with a situation where all political parties are concerned with everything except the economy although it is necessary that all major political parties should sign a Charter of Economy which should clearly define the economic objectives for our country.

IMF Managing Director Christine Lagarde stated during her visit to Pakistan in October 2016 that Pakistan is out of crisis and a moment of opportunity presents itself, but policymakers must seize this moment and carry forward with the reforms needed to ensure that the hard fought macroeconomic stability of today translates into prosperity tomorrow. A timely reminder came from her to increase public spending on health and education and more efforts to make growth inclusive, particularly in expanding opportunities for women.

The manifesto of almost every political party emphasizes upon stable prices, low inflation, steady and sustained economic growth, low unemployment or full employment and a ‘balanced’ balance of payments, but we fail to see a clear and well-defined economic direction from the political parties. On the basis of past affiliations, we ourselves declare that the PPP is more towards the left and the PML-N is more towards the right, but the continuously changing world has also brought changes in perceptions in this field. Roger Cohen rightly wrote in The New York Times that it is no surprise that the leftist supporters of Britain’s Labour Party leader, Jeremy Corbyn, should find common cause with the rightist backers of Donald Trump.

The betterment of the youth is completely ignored by all political parties in Pakistan although they try to gain support from the youth and they bring forward youngsters in their respective parties (Bilawal in the PPP and Mariam Nawaz in the PML-N and, of course, the ‘youthful’ Imran Khan himself in PTI). On the contrary, foreign diplomatic missions in Pakistan are working on programmes to attract our youth. I heard the Danish ambassador, Ole Thonke, clearly explaining that the Danish government is keen on development projects which care for the Pakistani youth. Grace W Shelton, the US Consul General in Karachi, recently stated that her country wants to see Pakistan’s future in the hands of its youth who need the tools with which to build that future.

Posted by Editor. Zafar Shafique is a businessman and member of the governing Council of The Pakistan Institute of International Affairs.

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Filed under Bhutto, BJP, CPEC, Discussion, Europe, Trade, United States

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