Finding growth has become like finding neverland in Pakistan. However, in the latest news, the prime minister has formed a supra body to suggest “growth and job-oriented economic policies”. This makes one wonder whatever happened to the ‘experienced economic team’ who said they had the right formula for economic success at the time of elections in 2013.
Anyway, better to ask and do it, instead of not doing it at all. Chaired by prime minister’s Special Assistant on Revenue Haroon Akhtar Khan, the committee is comprised of six business executives as its members, and reportedly has zero representation from either P or Q blocks or even the central bank whose objectives includes economic growth.
The fact that there is no representation from P and Q block is rather intriguing. The former is constitutionally responsible for growth and long-term development. The latter, being the treasurer, has always acted like the de facto boss on such affairs, if not all affairs.
While the exclusion of P block is understandable (given that it has been ignored historically), BR Genie tells us that the exclusion of Q block may be a consequence of PML-N’s internal politics where CM Punjab Shahbaz Sharif and younger members of the Sharif family are trying to elbow out Dar & company. Whether there is truth to the matter, one will have to wait and see. But in the meanwhile, finding growth is proving to be as difficult as finding dollars.
The recommendations made by the committee have not been made public as yet. But if one were to ask Pakistani economists and businessmen about what would drive growth the most, a host of the different but consistent set of biases would be found in various quarters.
For instance, some economists will continue to focus on getting the institutions right; others would advocate for improving productivity and human capital. Then there are groups that call for reducing the government footprint and letting markets work without distortion. And then there are those who blame the usual suspects for lack of growth: ease of doing business, and predatory taxation.
Perhaps there is no single definitive answer; there is no magic wand of sorts. It may well be a combination of few. This column doesn’t pretend to know what would be the best mix of policies to kick off job-oriented growth in the country. But suffice to say that the basket of growth ideas must have an emphasis on agriculture and construction.
Farming economy, which employs a lot of people, has been struggling for quite a while. The farmers’ package announced by the government with much fanfare has produced lackluster results so far, and there is a need for new ideas.
Construction sector in Pakistan has hardly ever been focused on, although globally it’s one of the leading drivers of growth with significant share in the GDP. In Pakistan, construction has a very small share. That dynamic should change; construction is not only a growth driving sector but also a job-creating one. Some of the pieces to kick off construction growth already exist or are in the pipeline; the government only has to either announce them or step up on it.
For instance, low-cost housing policy has been catching dust since December 2014; likewise, the central bank has formed a mortgage refinance company, whereas the bill to fix the lacunas in mortgage laws has already been tabled. If the government can get its act together and kick-start this sector in consultation with the provinces (since housing is provincial subject), it could hit two birds with one stone: growth and jobs.
Lastly, while things like ease of doing business always matter, the single biggest problem that affects all economic sectors is taxation. Taxation in a form that exists in Pakistan today is the number one enemy of growth. To that end, the Tax Reform Commission has already spoken. It’s time to implement the recommendations of that report.
First published: March 25, 2016.
