Passive policies & passionate Pakistan written By, Muhammad Nadeem Bhatti

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Due to inflation and economic Crisis worldwide, Pakistan’s economy reached a state of balance of payment crisis. “The International Monetary Fund bailed out Pakistan in November 2008 to avert a balance of payments crisis and in July last year increased the loan to $11.3 billion from an initial $7.6 billion. By October 2007, Pakistan raised back its Foreign Reserves to a handsome $16.4 billion. Exceptional policies kept Pakistan’s trade deficit controlled at $13 billion, exports boomed to $18 billion, revenue generation increased to become $13 billion and attracted foreign investment of $8.4 billion.

Since the beginning of 2008, Pakistan’s economic outlook has stagnated. Security concerns from the nation’s role in the War on Terror have created great instability and led to a decline in Foreign Direct Investment from a height of approximately $8b to $3.5b for the current fiscal year. The Gross Domestic Product (GDP) measures of national income and output for a given country’s economy. The GDP is equal to the total expenditures for all final goods and services produced within the country in a stipulated period of time. In Pakistan was worth 236.62 billion US dollars in 2013. The GDP value of Pakistan represents 0.38 percent of the world economy. GDP in Pakistan averaged $56.23 billion from 1960 until 2013, reaching an all time high of $236.62 billion in 2013 and a record low of $3.71billion in 1960. GDP in Pakistan is reported by the World Bank Group.

The actions taken by a government to influence its economy. Types of economic policy actions can include setting interest rates through a federal reserve, regulating the level of government expenditures, creating private property rights, and setting tax rates. Economic policy refers to the actions that governments take in the economic field. It covers the systems for setting levels of taxation, government budgets, the money supply and interest rates as well as the labor market, national ownership, and many other areas of government interventions into the economy. Most factors of economic policy can be divided into either fiscal policy, which deals with government actions regarding taxation and spending, or monetary policy, which deals with central banking actions regarding the money supply and interest rates. Such policies are often influenced by international institutions like the IMF or WB as well as political beliefs and the consequent policies of parties.

Ruling group only take interest to rule over for their mentioned duration like 5 years and not stay responsible for their indecent deeds. In this regard nation had to bear inflation, second step situation of law and order. These types of meditation and actions are not faithful for the innocent and uneducated nation. Policies should be fully lawful but in the favor of nation otherwise policies will stay passive and result will remain unproductive and in these circumstances an economy will not have the worth of to be tiger or dragon in future.

The Asian Tigers or Asian Dragons is a term used in reference to the highly free and developed economies of Hong Kong, Singapore, South Korea, and Taiwan. These nations and areas were notable for maintaining exceptionally high growth rates (in excess of 7 percent a year) and rapid industrialization between the early 1960s and 1990s. By the 21st century, all four had developed into advanced and high-income economies, specializing in areas of competitive advantage. For example, Hong Kong and Singapore have become world-leading international financial centers, whereas South Korea and Taiwan are world leaders in manufacturing information technology. Their economic success stories have served as role models for many developing countries.

Despite a World Bank report crediting neoliberal policies with the responsibility for the boom, including maintenance of export-led regimes, low taxes, and minimal welfare states, institutional analysis also states some state intervention was involved. The World Bank report acknowledged benefits from policies of the repression of the financial sector, such as state-imposed below-market interest rates for loans to specific exporting industries. However, it also pointed out free trade and less government spending were the driving force. As a result, these economies enjoyed extremely high growth rates sustained over decades. A period of liberalization did occur, and the first major setback experienced by the Tiger economies was the 1997 Asian financial crisis. While Singapore and Taiwan were relatively unscathed, Hong Kong came under intense speculative attacks against its stock market and currency necessitating unprecedented market interventions by the state Hong Kong Monetary Authority, and South Korea underwent a major stock market crash brought on by high levels of non-performing corporate loans. As a result and in the years after the crisis, all four economies rebounded strongly. South Korea, the worst-hit of the Tigers, has managed to triple its per capita GDP in dollar terms since 1997.

Prior to the 1997 Asian financial crisis, the growth of these four Asian tiger economies (commonly referred to as, ‘The Asian Miracle’) has been attributed to export oriented policies and strong development policies. Unique to these economies were the sustained rapid growth and high levels of equal income distribution. A World Bank report suggests two development policies among others as sources for the Asian miracle: factor accumulation and macroeconomic management. But as well in Pakistan is still unable to enjoy the GSP standardization due to energy crises which is still a challenge since last 6 years. I think this is only because of passive policies, otherwise it was not a problem way back.

By the 1960s, levels in physical and human capital amongst the four countries far exceeded other countries at similar levels of development. This subsequently led to a rapid growth in per capita income levels. While high investments were essential to the economic growth of these countries, the role of human capital was also important. Education in particular is cited as playing a major role in the Asian miracle. The levels of education enrollment in the four Asian tigers were higher than predicted given their level of income. By 1965, all four nations had achieved universal primary education. South Korea in particular had achieved a secondary education enrollment rate of 88% by 1987. There was also a notable decrease in the gap between male and female enrollments during the Asian miracle. Overall these progresses in education allowed for high levels of literacy and cognitive skills.

The creation of stable macroeconomic environments was the foundation upon which the Asian miracle was built. Each of the four Asian tiger states managed, to various degrees of success, three variables in: budget deficits, external debt and exchange rates. Each tiger nation’s budget deficits were kept within the limits of their financial limits, as to not destabilize the macro-economy. South Korea in particular had deficits lower than the OECD average in the 1980s. External debt was non-existent for Hong Kong, Singapore and Taiwan, as they did not borrow from abroad.[9] While South Korea was the exception to this as their debt levels during 1980-1985 was quite high compared to their GNP ratios, it was sustained by the country’s high levels of export. Exchange rates in the four Asian tiger nations had been changed from long-term fixed rate regimes to fixed-but-adjustable rate regimes with the occasional steep devaluation of managed floating rate regimes. This active exchange rate management allowed the 4 tiger economies to avoid exchange rate appreciation and maintain a stable real exchange rate.

Export policies have been the de facto reason for the rise of these four Asian tiger economies. The approach taken has been different among the four nations. Hong Kong and Singapore introduced trade regimes that were neoliberal in nature and encouraged free trade, while South Korea and Taiwan adopted mixed regimes that accommodated their own export industries. In Hong Kong and Singapore, due to small domestic markets, domestic prices were linked to international prices. South Korea and Taiwan introduced export incentives for the traded-goods sector. The governments of Singapore, South Korea and Taiwan also worked to promote specific exporting industries, which were termed as an export push strategy. All these policies helped these four nations to achieve a growth averaging 7.5% each year for three decades and as such they achieved developed country status.

Due to existing policies which are purely burden for a common man and industry of Pakistan. Now sales tax policy by the imposition of SRO 608, showing their side effects upon investors and industrialization. Moreover according to me it would enhance a new door of corruption in both ways; in short the treasure of government will be unable to have the real values of the collection of taxes. Now people are disappointed and discussing upon showing a heavy mandate, they are fully disappointed by the policies and getting more passionate. In this regard, since last 15 years nobody could have played a vital role to enhance the rate of GDP and economy suffering and incoming future Pakistan could not achieve the regional targets. The promise of massive production of energy is still a dream and the night is getting mare. So in this way how long any kind of government makes a better survival of local economy comparatively other economies without taking loans from IMF. In industrialization policies should focus the domestic growth for a better economy. But everybody crying for patriotism and producing Dharnaas for new Pakistan. But I don’t know why they do not making better existing Pakistan.

The Chamber of commerce and industries is the hub for doing better promotional activities to generate employment. But sorry to say, they have been part of political chambers. In Lahore two groups after the 14 years collaboration to working together, now they are getting separate but when we focus their working progress that is less than zero and they have adopted chambers of commerce as a club of community due to in vain activities and selection of incompetent person as a president in Lahore, how can we expect better trade and commerce with the help of these chambers. Moreover their activities don’t consider as a real activity for a better economy evaluation. Even they can speak at the front any foreign delegation without written statement. Everybody trying to generate groups but not delivering results. So progress is still as a point which not moving forward, so the real industrialist does not consider these chambers should move as they are moving. Because they love their country and want to live in it but due to these circumstances they are helpless to think upon what to do either should move from Pakistan or close their industry. If they do according to this it will be a big challenge for the government to run country smoothly without collecting taxes.

 The writer is Chairman of Federation Pakistan Chamber Garments Industry Committee