Renowned economist, former Advisor to Sindh Chief Minister Dr. Bengali has underlined the need to slash imports including banning furnace oil imports and shift the power generation on indigenous sources like hydel, coal, wind and solar.
Addressing a press conference at Karachi Press Club (KPC) on Wednesday, Dr. Bengali said exports be increased by setting up industries. Currently industries are not being set up and only service sector is flourishing, which is repatriating foreign exchange to their own countries.
“Technically, Pakistan is already in default; given that there emerges a net negative balance, if the foreign loans that Pakistan owes to foreign interests are deducted from the foreign exchange reserves,” he said adding that this time, default can be avoided only by compromising some of our political sovereignty.
Dr. Bengali said he has undertaken a thorough research on Pakistan’s economy over a period of 25 years from 1990 to 2015, which indicates that our agriculture and industrial production is declining as compared to population growth rate. Pakistan has become a casino economy and development projects are identified, not in the public interest, but by contractors’ interests. The management of the economy, particularly post-2000, has rendered the economy hostage to foreign interests, he added.
In the report, he has provided 12-point Economic Revitalization Programme, which included amending Foreign Direct Investment (FDI) policy to encourage investment that earns export value greater than profit remittance. Reduce GST (Goods) rate to 5%; single stage with no adjustments, no refunds to promote manufacturing, he added.
Dr. Bengali said FDI is coming only in the services sectors like mobile phones, but unfortunately, the profits generated from FDI is repatriated to abroad.
The country is facing both Dollar (imports and exports) and Rupee crisis (income and expenses). Our imports are increasing and exports are declining, which is creating crisis.
Dr. Bangali suggested relying on railways for cargo transportation. Rehabilitate Railways and shift bulk of inter-city goods transportation from road to rail transport. Rail consumes one-third less fuel per tonne/kilometre than road transport, he added.
For this purpose, he proposed to set up a Holding Company to own Pakistan Railways and NLC and create an integrated goods transportation network: long distance by container trains and onwards by container trucks.
Dr. Bengali said the economic decline also poses serious threats to the security of the country. Pakistan’s armed forces personnel are second to none in courage and bravery and have not been shy of making sacrifices in times of war on our borders and within. However, soldiers, sailors and airmen cannot fight with their muscles alone. They need armoured cars and tanks and fighter planes and warships to carry the fight to the enemy. All of these need gasoline; gasoline costs dollars; dollars are earned through exports; and exports are generated by a vibrant manufacturing sector. Wars cannot be fought on the back of a collapsing economy.
For industrialization, Dr. Kaiser Bengali said private sector is not investing in industries. He recommended reviving Pakistan Industrial Development Corporation (PIDC)’s role in setting up industries in Public-Private Partnership mode. Industries be set up by PIDC, with majority public funds and private management and sold to the private partner after achieving commercial production.
Dr. Bengali said it is clear that Pakistan has to go to IMF at any cost and to accept all its conditions. He debunked the myth surrounding bailout package and attached conditions; IMF’s conditions are the same even if we receive US $ 1 billion or US 10 billion. Lesser loans do not mean less harsh conditions.
He said agriculture and manufacturing are the commodity producing base of the economy and has deteriorated to levels where output, exports, revenues and employment opportunities are effectively declining. The GDP growth reported year to year is artificial, as wealth is being created largely through speculation in the stock market, the property market and the commodity market.
The elite have enough financial cushions to bear the brunt of the emerging crisis. In any case, all they will have to worry about is how to reach the airport to fly out to the safety of their stashed-away investments abroad. The common men, the bulk of the population, will be left facing mass unemployment and inflation – and poverty and hunger.
He suggested introducing principle of ‘Right of First Purchase’ in land/property transactions and also principle of ‘Right of First Purchase’ in imports.
Published in Daily Times, January 17th 2019.
