Getting house in order.
Positivity indeed is a prerequisite for anticipating positive outcomes. However, there is a stark difference between being positive and irrational. We have been time and again resorting to the later when it comes to the overall state of the economy. It is no less manifesting in the expectations that have been associated with China Pakistan Economic Corridor (CPEC) for the uplift of our crippling economic variables.
Throwing all weight behind CPEC without paying significant heed to the much needed, somewhat necessary, structural reforms and in turn governance, would be an ostrich approach. Considering the trumpeted 'game changer' as an over:night remedy for our woes would be equivalent to living in a fool's paradise. For an ungovernable and unstable Pakistan, it won't be child's play to reap the fruits of the project. Undoubtedly, it still will be a game changer but tilted towards the other side of the equation.
Timing has particular implication and worth in politics, foreign relations, and predominantly business. As a common dictum puts it, 'only people have friends, countries have interests.' China is here for business, and it means business. We need to secure a well:grounded bargaining position in the equation even with the all:weather friend. The entrenched norm of diffusion of responsibility shall contribute to putting strategic discretions and decisions into their lap, and it will be their terms that shall prevail. To achieve the required fortified status, getting the house in order is need of the hour and what that necessitates is a continuous process of reformatory measures to be initiated on an emergency basis.
When there is the talk of reforms, 'structural reforms' is the jargon we get to hear, a mere reflection, perhaps, of expressing knowing of the subject. What are its components, rarely gets serious consideration at least on the front of policy paradigm. And when I say 'getting house in order', it comprises the same as does the term being discussed. These are the measures that involve the overhauling of the institutions and structures that drive the basic elements of the economy. It is targeting the obstacles that are hindering the fundamental drivers of growth, economy's competitiveness, and adjustment capacity.
In a decent operation of the economy, a system of taxation plays a vital role but unfortunately, it is in a state of dismay in Pakistan. It is not just the meager number of taxpayers but the unfairness of the tax regime that is playing real havoc. It has to refurbish before it becomes tax heaven for the Chinese. Those who need to be taxed, if not, shall daunt the very doles of the venture. The biggest fear regarding CPEC more than anything is meeting the same fate as overall modus operandi of the system. And hence unorthodoxly, every segment of the society is expected to benefit from it. For the dream to come true, commitment against practices such as cartels, barriers to new entrants and lack of competitiveness has to be envisioned in the projects under CPEC. The role of Federal Board of Revenue (FBR) and Competition Commission of Pakistan (CCP) comes into play respectively.
Economies are said to flourish on favorable trends of a balance of trade, exports for sure remain the key engine. Structural bottlenecks are most vivid in the form of the absence of standardized products for lack of quality assurance mechanisms, insignificant focus towards import substitution, a growth of the informal sector and nonexistence of intellectual property rights, to name a few. For the matter of CPEC, since China is a middle:income state, will try to relocate low:end industrial units to Pakistan, these won't contribute much to the economic up gradation if these holdups are not addressed promptly.
Accountability is not just a disbursing universal electoral slogan, but an obligatory insignia of governance. And not just accountability but it is only the phenomenon of accountability across the board that promises a yield. Checks and balances would not only discipline us as a nation but are essential to tackle the embezzlements that are coming with the influx of the Chinese such as the recent ATM scams by them. The efficiency of institutions National Accountability Bureau (NAB), Federal Investigation Agency (FIA), Anti:corruption Establishments and other such agencies is required in urgency than ever before. Nonetheless, it is not merely efficiency, but enhanced coordination is, what must be ensured. In this regard, serious efforts are necessary to revise the rules of business for defining the mandates of government functionaries and achieving institutionalized decision:making.
For an economy to prosper, the public:private partnership has a deep:rooted part to perform, and the trust deficit between the two can cause a dent in economic fortune of a country. The mutual trust:building measures must be pursued with ultimate devotion. Along with other sectors, the partnership should be put to use in skill development to raise a competent domestic workforce. Institutions such as Technical Education and Vocational Training Authority (TEVTA) must be mandated with tasks to achieve improved cooperation between the two sectors for skill development to tap the employment opportunities optimally under CPEC.
Last but not the least, nation:building is a continuous process with an uninterrupted flow of advantages. This would entail soothing Balochistan, mainstreaming FATA and clearing the constitutional status of Gilgit:Baltistan (GB). These are duly indispensable but in excruciating limbo, ironically. Any further delay towards reforms in these territories shall hover uncertainties for rewarding aftermaths of CPEC. For growth to be sustainable it must be inclusive as well as just and reforms for that matter have to be in a holistic manner and above all timely.
The author holds degree in Economics from LUMS and is a serving Civil Servant.