Economy in 2017 and way forward

(MR:KASHIF ANWAR([email protected]
Former Vice President
Lahore Chamber of Commerce & Industry

The 2017, another year of hope to make Pakistan an Asian Tiger has passed. Will this dream come true any day and our next generations will see that moment or not. It is very obvious that any nation or persons progress is judged by comparing their previous year performance or comparing with someone else. Today, in the age of modernization, only those countries are competing with others who are advanced technologically, have mass scales of production, competitive edge to control their input costs, easy access to international markets, cheaper means of communication & transportation, vast infrastructure, friendly investment atmosphere, simplified taxation policies and security to investors etc.

At the closing of year 2017, we devalued our currency by more than 5% from 104.60 to 110.50 against Dollar. Devaluation was a long lasting demand of exporters to boost exports but our history verifies that as many times we devalued rupee earlier, we could not boost our exports. It only accelerates inflation. It is a bitter reality that under Export Strategic Trade Policy framework (2015-18), we had to enhance our exports to US$35Bn by year 2018 but instead of any improvement, we reached at one of the lowest level since 2015. On the other hand, our imports touched their peak since the creation of Pakistan taking the trade deficit to alarming position.

We have to make revolutionary policies for investment in our industrial as well as agricultural sector. Due to the law and order conditions in the country, foreign investors are not willing to visit and invest in Pakistan rather the local investors have shifted their investments and industries to other countries. The local industry is not capable to meet the requirement of existing manufacturing units for which they have to import raw materials at high duties and rates. The same is the case in agricultural sector, instead of improving yield and producing new varieties of crops, fruits and vegetables we have started converting our agricultural land to housing societies and industrial area. As a result we have to import vegetables for daily usage from our neighboring countries. No branding, lack of value addition and high input cost makes our finished goods non compatible in the international market. We have to showcase cheap, value added and good quality products in the international market to enhance our exports.

The industrial sector has suffered badly in previous years, many textile and other industrial units have closed due to non-availability and shortage of power. Not only the supply of energy, high and non affordable tariff rates have affected the industrial output. Non-availability of raw material, law and order conditions, increasing customs and regulatory duties, high rates of withholding taxes, complicated tax system, smuggling, under invoicing, surveillance of many departments added to the complexities for a businessman in running their daily affairs of business. Stuck up sales and income tax refunds with the tax departments squeezed the liquidity of businesses and added to their difficulties.

In previous years no big achievement has been made in broadening the tax base. Instead of repeated extensions in date of filing tax returns, the number of tax returns filed has not been achieved as desired by the tax authorities. The tax department could not convince non filers to file their annual returns. It has been made crystal cleared to the authorities that no new entrants willingly come into the tax net which is raising a big question mark on the existing tax policies and keeping the burden of non filers on the existing taxpayers.

Years are passing by but nothing concrete has been done for economic prosperity till the end of 2017. Pakistan’s total debt, trade deficit, current account deficit, fiscal deficit has increased sharply; exports have fallen, imports increased. We failed to attract foreign investors except China who has their own interest in our homeland neither we could not convince Pakistanis settled abroad to send their remittances to their country. Foreign reserves have not been maintained resulting in the depreciation of our Pak rupee. We are continuously taking loans, issuing Sukuk and Euro bonds to maintain the reserves status and for the repayment of our existing loans.

There is a special blessing of nature on this piece of land. Still nothing has gone out of control and everything is manageable if we have the will to control it. We have to revisit the current policies and implement those which are only for the betterment of Pakistan but we will not be in position to get the results from them until our national interest supersedes our self Interests.