Pakistan is a blessed country and is capable of converting its economic defeat into success. This country has been sanctified with natural resources, which if used prudently and intelligently, can covert this country into a heaven on earth. However, to achieve this objective certain areas need to be focused and efforts need to be diverted to obtain sustainable results. Before the road map to success is drawn it is essential to analyse the extent of economic debt and potential to turn around the economy.
This situation was mainly attributed to unorganized nature of private sector, lack of focus in Government policies and little institutional investment (in public and private sector projects) in this sector.
Pakistan’s exports of fishery products stand at about 0.25% of world exports. A rough estimate based on maximum sustainable yield figures, existing value addition, and foreign benchmarks, puts our total export potential from this sector at around US$ 1.0 billion from existing natural resources. If we include the high potential area of aquaculture, our fisheries sector can yield even higher export earnings[2].
Improve Tourism
Pakistan has a large amount of internal and external debt. PKR4754 Billion as per State Bank statistics for external debt and increasing. Internal debt stands at PKR 4,893,301 million out of which PKR 1,456,184 million against saving schemes and 235,997 million against prize bonds. Each year Pakistan is paying 76,797 million as interest on foreign debt.
The country has an income of PKR 2107Billion and expense of PKR2559 Billion leaving the country with no option but to borrow PKR452 billion just in 2011-12 to meet the deficit. (Budget 2011-12)
In order to turn around this adverse economical spiral some bold steps are required with strict implementation. This paper will discuss some factors contributing to economy and analyse how turn a around can take place.
Expenditures
First thing which Government of Pakistan has to do is to reduce it expenses by at least 20%. Question is how it can be done. 20% of expenses mean to reduce an amount of PKR462.9718 billion. If this magic figure is achieved then an immediate stop to any further borrowing by the government from local banks will take place. It seems to be a very big amount but putting the pieces of puzzle in right places can provide a very viable solution.
Proposed Reduction | Saved Amount (PKR Billions) | Balance (PKR Billions) | Remarks |
Targeted Reduction | 462.9718 | Present bank borrowing stands at PKR452 billion | |
100% Benazir Income Support Program | 50 | 412.9718 | This element is only adding 50 billion a year to internal debt and devaluing existing currency. It is inculcating a culture of begging among masses. Moreover, PKR1000 cannot do much for people in this shattering economy. |
10% reduction in executive and legislative organ | 130.89 | 282.0818 | These expenses are related to President, PM, MNAs and their associated perks therefore a 10% reduction should be done to set precedence of austerity drive. |
20% reduction in broadcasting and publishing | 0.66 | 281.4218 | This amount can be saved by stopping unnecessary full page colour ads for self publicity at the cost of public money. |
100% Grant to Railway | 255 | 26.4218 | Railway is fully capable of generating its own revenues; rather it has potential to generate revenues for the government. It needs professional management and improved controls. Railway Ministers and Bureaucrats will only add to its misery. |
50% Grant for contingent liabilities | 75 | -48.5782 | These expenses are just loop holes to siphon money. |
50% Misc Grants | 15 | -63.5782 | Again a loop hole to siphon money |
100% PIAC Equity | 3.8 | -67.3782 | PIA can very well look after itself by rationalizing its expenses. Best airlines of the world are operating with an aircraft to staff ratio of 1:40 to 45. PIA is the only airline having more than 350 staff per aircraft. In such scenario how can the airline go into profits. The airline has to be managed more professionally. Government obligation to subsidize non profit sectors can be done through profits earned. |
10% PSDP Expenses | 1.56 | -68.8782 | This is just an eye wash of rewarding blue eyed bureaucrats. |
50% Lump sum grant mentioned under Table-33 | 7 | -75.8782 | Again a loop hole to siphon money |
100% NHA | 39.9 | -115.7782 | NHA is generating sufficient revenues through toll. Therefore, they should meet their own expenses. It should collect revenues from those who use National Highways and all the citizens should not be taxed. Any amount for construction of new roads be given as recoverable loan. |
50% from FATA /GB Wheat Purchase | 0.5 | -116.2782 | The amount allocated is for almost 1 million tons of wheat. Is this wheat being distributed free of cost? If not then it should not be shown as an expense instead it should come in as a loan returnable on recovery. |
100% Import of Sugar | 1 | -117.2782 | Private sector should be allowed to import sugar this will help keep the sugar prices low with no cost. |
10% Economic Affair | 5 | -122.2782 | It can afford to reduce in cost by 10% under the umbrella of austerity drive. |
1% Defence Budget | 4.93 | -127.2082 | Defence can very comfortably reduce its budget 1%. This can be done by putting a ban on money spent to renovate houses of star officer’s each year. The amounts as so high as if the people living in those houses took everything with them or used it like class 4. Furthermore, there is potential of controlling the expense through negotiations and reduced kickbacks. |
The above analysis shows that budgetary deficit of PKR452 billion can be easily converted to surplus budget of PKR 127.2082 billion, without disturbing repayments on loans, education, health, environment, etc. This amount can be utilized to waive petroleum levy of PKR120 billion all together. This will reduce burden on common man and will also support economic activities; leaving a surplus of PKR7.2 billion to support activities like tourism, health, horticulture, public, social security etc.
Next step is to increase this surplus by generating more revenues. Pakistan should target at increasing its revenues by 20%. Again the question is how this amount of PKR 305.7658 billion can be raised.
Pakistan is an agricultural country and agricultural sectors contribute 23% of its GDP. This share of GDP is derived through 25% of land available. First thing which needs to be done is to bring agriculturist in tax net. This in no ways implies that an agriculture tax should be imposed. Imposing an agriculture tax would amount to burdening the masses and letting the agriculturist scot free. An agriculturist farming mangoes and vegetables on an area of 10 hectares earns approximately 5-6 million a year. His total expense, including losses due to theft, aabiana, electricity, etc is approximately 1-1.5 million a year. This leaves him with a tax free profit of almost 4 million a year. Even if he is taxed at same rate as salaried person, an owner of 10 hectares should pay a minimum PKR600,000 as tax every year. Let’s take only 50% of this amount as target income tax collection. In 2010-11, 23.67 million hectares were sown, thus a potential of PKR 710.1 billion exists and is untapped.
Pakistan is an agricultural country and should concentrate on increasing its yield, through innovative methods. Therefore, those who own agriculture land and do not indulge in farming should be subjected to non utilization tax. In 2010-11 total of 32million hectares were unutilized for agriculture. Considering 50% of such land to be unutilized due to floods, therefore 16 million hectares should be taxed at the rate of PKR10,000 per hectare; thus generating revenue of PKR160billion.
There are more than 195 countries in the world; Pakistan stands among top 20 countries in some of the produces. According to FAO 2009 Statistics Pakistan ranking as per quantity produced.[1]
Pakistan Top Production 2009
Rank | Commodity | Production (Int $1000) | Production (MT) |
1 | Buffalo milk, whole, fresh | 8193169 | 21622000 |
2 | Cow milk, whole, fresh | 3553048 | 11985000 |
3 | Wheat | 3507547 | 24033000 |
4 | Cotton lint | 3087080 | 2160000 |
5 | Rice, paddy | 2799901 | 10324500 |
6 | Indigenous Buffalo Meat | 1986501 | |
7 | Indigenous Cattle Meat | 1906560 | 705774 |
8 | Sugar cane | 1479006 | 50045400 |
9 | Mangoes, mangosteens, guavas | 1035360 | 1728000 |
10 | Cottonseed | 978187 | 4138200 |
11 | Indigenous Chicken Meat | 925487 | 649735 |
12 | Indigenous Goat Meat | 639523 | 266903 |
13 | Potatoes | 473059 | 2941300 |
14 | Hen eggs, in shell | 438851 | 529126 |
15 | Indigenous Sheep Meat | 418001 | 153519 |
16 | Dates | 375508 | 735276 |
17 | Onions, dry | 357917 | 1704100 |
18 | Maize | 350890 | 3261500 |
19 | Oranges | 288418 | 1492400 |
20 | Goat milk, whole, fresh | 241282 | 719000 |
Total | 33,035,295 | 139,932,733 |
Surveys have proved that up to 25% of grain produced in Pakistan is wasted due to poor storage conditions, improper transportation, birds consumption and insect damage. This wastage can be reduced by employing modern storage and transportation techniques at farms, warehouses and ports. A 10% saving on wheat grains can generate US$350 millions for Pakistan and help reduce trade deficit. Likewise, 30% of the milk produced in Pakistan is wasted due to poor handling. This saving can generate US$437million for the country.
Western world prefers meat with fat; to cater for their demand countries like Australia are maintaining farm fed animals. Whereas, people from Middle East prefer lean meat and would certainly prefer to buy meat with sufficient nutritious value yet without extra fat. Supporting concept of free grazing- lean meat farming can develop product for Middle Eastern region. Any revenue earned through development of this sector will add millions into reducing trade deficit. What we need to do is develop goodwill and credibility in international market by developing workable strategies. Pakistan’s foreign missions should be tasked objectively to achieve these goals rather than setting up their own businesses abroad.
Dates grow in tropical desert area and Pakistan has abundance of such area. Presently only 75,000 hectares are being utilized for date cultivation. Potential to develop date farming in Balochistan and Sindh exists, which can safely reduce trade deficit by another US$100-150 million per annum.
Our strenuous efforts have ensured that Pakistan is used as synonym for all the wrongs, which certainly does not commensurate with the literal meaning of Pakistan. Our business community is making all efforts to ensure that this image is further tarnished through their unethical practices in trade. In 2011 almost 1.5 million tons of wheat was exported from Pakistan. Despite the fact that this was premium quality wheat, yet Pakistan was unable to obtain premium price. Credit of this misfortune goes to our business community, which was more interested in their personal extra dollar against country’s image. This perspective and image needs to be changed. This change cannot take place without toiling efforts. World has to be made aware of Pakistan’s effort in improving quality of export related products and quality has to be assured for getting premium price for exported products. This can be made possible only by educating all stake holders with strict supervisions while regulations are implemented.
Government should invest in building of silos for grain storage and encourage private investors to install such silos. Ports need to be equipped with modern evacuators for loading and unloading of grain. These modern storages and handling facilities will contain wastage of grains, decrease trade deficit and also earn money for silo investors.
A similar situation prevails in fisheries sector as well. Due to our negligence Pakistan’s fisheries products are not acceptable in premium markets of European Union. We have a total coastline of 1,090 km and a total fishing area of approximately 300,000 sq. kms. Pakistan’s fishing waters are termed as highly rich in marine life with a vast variety of species having commercial value. However, this potential is not reflected in the export earnings from fisheries sector. The exports of “Fish and Fish Preparation” were at $134.5 million (with a volume of 93,214 tons) in 2002-03. (Source: EPB)
This situation was mainly attributed to unorganized nature of private sector, lack of focus in Government policies and little institutional investment (in public and private sector projects) in this sector.
Pakistan’s exports of fishery products stand at about 0.25% of world exports. A rough estimate based on maximum sustainable yield figures, existing value addition, and foreign benchmarks, puts our total export potential from this sector at around US$ 1.0 billion from existing natural resources. If we include the high potential area of aquaculture, our fisheries sector can yield even higher export earnings[2].
Regularisation of Weapons
Weapons are part of every culture may it be western or eastern. Our religion also patronizes holding and maintaining weapons for self defence and as a deterrent to the enemy. It is the right of every individual to maintain a respectable defence mechanism. Deweaponisation of common man on the pretext of increase in criminal activities is invalid; because crime is not committed with legal weapons. Only precaution needed is - verification of licensees’ character, residence and reputation, which will dictate issuance of weapon license.
FATA has traditionally been making small arms since long. They have mastered this skill and are earning bread and butter through this profession. Closing down a source of income for these people will nurture criminal activities. Need of the hour is to patronize this arms industry and regularize it. Thus another source of income for the government will be created, increase export revenues will take place and product quality will improve with experience. It will also create trail of weapons to control crime . In this time of advanced traceability, it is very easy to trace each and every chicken lying in grocery store and toy displayed in stores. Therefore, creating traceability of weapons can also be done with ease and transparence. Though, monetary estimates are not available for this industry, but it will be safe to say that this industry will be able to generate revenues in millions of dollar.
Development of Mineral Resources
According to a report published in 2006 by government of Pakistan total global trade of precious and semi-precious stones, other than diamond, stands at US$1.8 billion. Pakistan’s share in this trade is less than US$50 million. Despite the fact that Pakistan has 5th or 6th largest reserves of precious and semi-precious stones like ruby, topaz, sapphire, aquamarine, emerald, tourmaline, etc. Pakistan’s revenue are negligible in comparison to other gem exporting countries. Revenues from gemstones can increase by 30-100 folds just by adopting modern lapidary techniques. An investment of PKR187 million, in latest lapidary equipment, can open doors of opportunity for this nation in the form of higher export revenues, jobs generation and stronger PKR[3]. By employing modern technologies Pakistan’s income can reach US$1.5-2 billion. Jobs created will contribute to income tax collection. Considering 2% of income tax generated revenue amount projects PKR2.5-3.5 Billion for the country in terms of direct tax.
Thar has a coal deposit 175 billion tons, though it is not of very good quality, yet it does have calorific value of 3,000-10,000BTU/ lb (on dry basis)[4]. Converting 25% of these deposits to energy, considering calorific value to be 5000 btu/lb, can produce approximately 82 quadrillion BTU. Energy value of this coal reserve is considered to be more than energy value of oil possessed by Iran and Iraq combined[5]. By a safe estimate Iran and Iraq combined have 251 billion barrels of crude, which is equal to approximately 38 billion MT. Crude has BTU value of 19000 PMT[6] which gives total calorific value of 722 trillion BTU. It can be safely estimated that for next few decades Pakistan would neither be required to pump its own oil nor it will require imported oil to support its economic activity. It will also help reduce electricity charges to support businesses and migrating industry[7].
Recko Diq has been talk of the town in recent past. estimated at 5.9 billion tonnes with an average copper grade of 0.41% and an average gold grade of 0.22 g/tonne[8], there are other 14 porphyries having an estimated total deposit of 500million tons of copper. A safe estimate indicated presence of 12.98 milion tons of gold and 2.4 Billion MT of copper in Recko Diq. From this reserve approximately 100,000 ounces of gold can be extracted each year. Pakistan should look into the aspect of mining this gold itself. Professionals should be hired to run the operation and funds should be generated by floating shares to only people of Pakistan. Gold explored should be bought at controlled rate (say 10% less than market rate) by government of Pakistan. To convert this asset into immediate benefit, Pakistan should shift its focus from multicurrency based exchange rate to gold based. Thus, value of PKR will improve in international market. In just five years Pakistan will be able to strengthen its currency and bring it at par with strongest international currency, hence bringing prosperity to common man. This exploration business will provide dividends to the shareholders and strengthen PKR in international market; while creating employment for local resources, thus reducing influx of people in metropolises for employment opportunities.
Improve Tourism
Tourism is a leisure activity, yet helps countries in generating revenue directly and indirectly. Direct revenues are in terms of cash spent by tourist in the country and indirect revenue is in shape of trade and image building. Pakistan is one of few countries which have broad range of terrain and weather. Most important factor to support tourism activities is the sense of security to visitors. Tourist are mostly those who are not looking at luxurious lifestyles during their vacations, but are more interested in being close to nature, people and be in markets to explore local products. So the first thing government needs to invest into is the security, rest all investment will automatically flow in from private sector; contributing directly to the economy of Pakistan. Very few countries have this advantage of offering tourist activities throughout the year. If Pakistan can develop its tourism to attract just 100 tourists a day and estimating each tourist spending US$1000 during his or her stay in Pakistan, an amount of US$30-35 million can flow into Pakistan’s economy from other economies of the world. Indirect effect of this money inflow will be in the shape of increased tax collection, considering only 2% adding to the tax collection, will generate approximately PKR 51 million. Further it will also develop local tourism and continuous support jobs generated.
Summary of Potential Revenue Generation Streams
Proposed Reduction | PKR in Billions | PKR in Billions | Remarks |
Desired increase of 205 in revenue | 305.7658 | ||
Bring Agriculturist into normal tax net (Does not mean Agriculture Tax) | 710 | 1015.2342 | |
Nonutilization tax of Agricultural Land | 160 | 1175.2342 | |
Tax income from Precious and Semi-precious stones | 2.5 | 1177.7342 | |
Tourism contribution in terms of tax | 0.051 | 1177.7852 | Surplus equal to almost 50% of Pakistan’s annual budget. This amount can be utilized to improve security, development, education and health. |
Development of Nationalism
Nationalism is not an inbuilt factor; rather it is cultured in individuals. To inculcate nationalism, it is essential that patriotism is developed through resonance of national anthem, nationalistic thoughts, national songs, recognition of national heroes, etc. This is how soldiers are convinced to give their life for motherland. Is it only the duty of armed forces to give their sweat and blood for the country and nation? Citizens do not owe any thing to this country and nation? If a person is living in this country, earning bread and butter from here and using the resources of this country; it becomes mandatory for him or her to contribute something towards solidarity and protection of this country. Only way which will lead them to discharge their national obligation is by developing nationalism.
Unbridled media has been able to change cultural and moral values of this country through slow brain washing. People seldom hear national anthem on television or radio. Actors, singers and fashion models have become national heroes instead of Hasan Sardar, MM Alam and Rashid Minhas. Entertainment anchors are projecting their families on media and involving viewers in nonproductive, nonsense and nonintellectual discussions. These channels do change the colour of their logo to match national flag on Independence Day, but continue to air contents comprising of Indian item songs, Bollywood movies and implied anti state material. Irrespective, who is national idol in this 20th century, it is important to project national culture rather than foreign cultures. These individuals can play vital role in building moral values for Pakistan and can be catalyst in changing destiny of this crowd into that of a nation.
Media is a very powerful instrument; it can change thought process of a nation. A code of ethics, with well define national morale boosting objectives can prove to be a wonder drug. It should be mandatory for these channels to air patriotic and nationalist contents like it is done in Thailand; where it is mandatory for all television and radio stations to play national anthem twice a day at pre-defined time. It is mandatory for media to air nationalistic programs and indoctrinate a culture of nationalism among the masses.
Reduction in Imports
Pakistan’s trade deficit is increasing day in and day out. It stands at $10.265 billion as of August 2011[9]. One of the factors for this trade misbalance is import of petroleum and related products. Fuel is life for all business activities; therefore, Pakistan will have to live with this expense. Pakistan’s fuel import bill may touch a figure of US$13 billion[10]. But, based on the facts mentioned above do we really need this fuel? However, dependence of imported fuel in shape of crude or product can be reduced by taking diabolic measures. One of the major consumption of fuel is by power sector. Pakistan needs to invest in renewable energy resources. Apparently many steps have been taken to incorporate renewable energy, but unfortunately all those measures have become victim of bureaucratic approach, investors’ lust for more profits and vested interests of power corridors. Another use of fuel is transportation; this particular requirement can be reduced by developing respectable mass transit systems like already being run in Thailand, Singapore, Malaysia, Europe and America. A secure, respectable and affordable mass transit system can not only reduce dependence on petroleum products, but will also reduce traffic load on roads, thus making it more manageable. A fair estimate indicates reduction of 40% traffic load on roads by introduction of mass transit systems. But security and safety remains pre-requisite for such system.
Leaving aside political rhetoric and adhering to admittance of fact, India has become an economic power. It will not be wrong to give its credit to Indira Gandhi, who disallowed imported goods for almost a decade. She advocated local production of goods; though generation of that time missed luxuries which could have been imported. But today’s generation of India is reaping the fruits of her decision in the form of luxury products produced within the country and available to consumers on reasonable prices. It is said that better be late than never; Pakistan should disallow import of luxury goods and advocate local production. In this modern time Pakistan will require less than 5 years to be self-sufficient. The pain and discomfort of those who are used to such luxuries is understandable, but its long term benefit does qualify for such decision to be taken in national interest.
Political Change
Any effort to turn around economic situation will not bear fruit unless political will is present. Problem with present political setup in Pakistan does not have representation of true majority. Main reason for this anomaly is non-implementation of election rules and lack of transparency in electoral process. To ensure that right people are in respective assemblies, certain difficult decisions and strict implementation of Constitutional provisions are needed. This of course is not an easy task as those who can amend the constitution at this point in time do not want to change present set up, as it suits their re-election into legislature circles. Nonetheless, to satisfy the objective of this paper it will be highly unfair if solution to the core issue of Pakistan is not addressed.
Pakistan has been brought to the brink of disaster by those who have no stake within the country. They come here to rule, make money, enjoy the privileges of the post and leave to relish the memories, money plundered and businesses developed. It is now become inevitable to stop such people from reaching national and provincial assemblies. To deny such opportunities to these opportunists, it is essential that all those who hold dual nationality, have bank accounts in foreign countries and having their businesses outside Pakistan, be disqualified from contesting any sort of elections in Pakistan. All those desirous of contesting election should be asked to surrender their foreign nationality, bring their riches in the country and adopt permanent residence within Pakistan.
Electoral candidates should only be allowed to contest the elections if they are Pakistani national by birth, living within Pakistan for at least 10 years, have been living for at least five years in the same constituency from where nomination for candidature are filed and have the right to vote. These individuals will be influencing policy making therefore, they should have a minimum qualification of graduate.
Present procedure for electing college of legislators in Pakistan is susceptible to blunders and unfair practices in elevating people to House of Representatives. Elections for national and provincial assemblies are conducted on one day and political parties can manipulate results to suit their objectives. Another drawback in such type of elections is complete turnover of legislators; thus consist national policy cannot be maintained. A procedure similar to Senate can bring consistency in government policy. Present electoral system brings into power political amateurs, who do not have acumen, vision and capacity to be a leader, a politician and/or a statesman. Political parties install puppets to serve their objectives rather than national interests.
To address this anomaly complete system of provincial and national assemblies needs to be revamped and redesigned. Provincial assemblies can serve as political training institutions. Proposed model of electoral system can result in training of statesmen rather than politicians.
Proposed Electoral System
The system of elections needs to be changed from Parliamentary to Presidential form of government. Elections for the President of Pakistan should be through public balloting. President then will have the right to choose six or seven ministers from senate or national assembly, to run the affairs of government. Likewise, Governors should be elected through public vote from each province and allowed to select 8-10 ministers from existing provincial assemblies to run the affairs of government. President and Governors should be entitled to have maximum two terms of four years each. Presidential and Governorship election should be independent and staggered.
- Number of seats in each province should be based on population of that province.
- Total number of seats in each provincial assembly should be divided into four segments. Each segment is subjected to election every four years. Thus at any one point in time 3/4th of provincial assembly will be experienced and familiar with current policies; thus it will be able to maintain consistency and act as trainers for new entrants in the field of politics.
- Candidate for a provincial assembly should have lived in the geographical boundaries of constituency of candidacy for at least three years immediately preceding the election and should continue to live in the same geographical perimeter, till completion of term with the House. He should be residing in the province of candidacy for five years immediately preceding the elections and residing in Pakistan for 10 years immediately preceding the elections.
- Any one person can serve in the provincial assembly for maximum 2 terms.
- Election of MPA should be through vote of people of relevant constituency.
- Only those candidates who have served in Provincial Assembly for 2 years should be eligible to file candidature for National Assembly.
- Voting for National Assembly candidate should be by members of relevant provincial assembly.
- Size of National Assembly should be less than and dependent upon size of provincial assemblies, based on population ratio.
- Similar to Provincial Assembly, National Assembly seats should rotated every four years. Thus consistency on national policies can be achieved.
- Likewise, members of National Assemblies should be entitled for only two terms of four years each.
- Members for Senate should be elected through vote of National and Provincial Assemblies combined.
- Candidate for the position of Senate should have served in National Assembly for a period of two years.
- A Senator may be entitled for maximum two terms of four years in the senate.
- Maximum age for being member of National Assembly, Provincial Assemblies, Senate, Presidency and Governorship should be limited to 65 years subject to medical fitness.
Factors discussed in this paper are just a few, there is room for improvement in all the fields. Sincere efforts, right supervision and strict implementation of law can change destiny of this country. Only then the name Pakistan will suit this geographical outline and there will be substance in: Pakistan Paindabad
[1] http://faostat.fao.org/site/339/default.aspx
[2] http://www.pakissan.com/english/agri.overview/fisheries.sector.in.pakistan.shtml
[4] http://www.ppib.gov.pk/COAL%20BOOK.pdf
[7] Value based on current import values per month approximated to 2010 import values based on 50% increase in estimated demand.
[8] http://www.antofagasta.co.uk/interior/operations/explora.php
[10] http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/Business/02-Mar-2011/Oil-import-bill-may-reach-13b
