BEWILDERED by the odd interplay that was at work between the government and the judiciary last week, an exhausted business community of Pakistan hopes against hope that outstanding issues in Islamabad will soon be resolved amicably, enabling the government to address multiple economic challenges.
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Experts who see the unprecedented events of the last week as a reflection of readjustments in the power equation in the country have not been able to clearly identify the conflicting interests and their alignments. Major political parties such as the PPP and the PML-N also remained mostly on the sidelines during the tumultuous week.
The cautious top tier of the business class opted not to offer any comment and was reluctant to even discuss the issue privately. Those who did speak took a generic long-term view and hammered the need for a general course correction.
The next tier of businessmen, active in chambers, federation and sectoral bodies, used the occasion to vent their frustration with the current set of rulers. They stretched their criticism to doubt the commitment of the economic team to the country and the people.
Business community’s nervousness was demonstrated in the suppressed market activity in most sectors during the concluding week
The leaders of chambers aired scathing criticism of the government for sacrificing the growth for economic “stabilisation”. From over 5.5 per cent, the GDP growth rate has halved to 2.4pc under Prime Minister Imran Khan’s watch and inflation has almost doubled from 8pc last year to over 13pc now.
The large-scale manufacturing is shrinking, agriculture growth is less than expected and the expansion of the service sector has moderated amid demand-suppression policies. As factories scale down operations to adjust to a significant dip in demand, joblessness grows mounting pressure on households teetering on the margins.
Business community’s nervousness was demonstrated in the suppressed market activity in most sectors during the concluding week. Bazaars were deserted and investors lay low.
The exporters bombarded with queries from overseas trade partners spend better part of the week trying to calm them as the news of political turbulence reached wider world audience. The memory of Pakistan instantly slipping in to long spells of chaos, interruptions in production and disruption in supply schedules is not lost on long-term trade partners.
“The PTI government’s political missteps are triggering ripple effects across the economy, further eroding the already low consumer and business confidence,” commented a businessman who was not ready to own his opinion as he feared the ire of the government for speaking his mind in public. “More than a recession we dread collective depression gripping the society. Expectations from the prime minister’s team have dashed, as its members are proving their ineptitude and incompetence with every step of the journey.”
He added that enduring the crushing pain of hiking living costs and vanishing economic opportunities was hard enough for people to now deal with the government’s clumsiness aggravating the messiness of the system.
Without commenting directly on the issue of army chief’s tenure extension, CEO Cyan Ltd and Dawood Hercules Corporation Abdul Samad Dawood, who also sits on multiple company boards, was not flustered. He indirectly defended the government, offering views on what he finds necessary for stable economic progress.
“The current macroeconomic adjustments are unfortunately painful, especially for the more vulnerable segments of the society. That being said, they were needed for stability and recent signs show they are working on the external front,” he argues.
“The positive effect on the real economy will become apparent in the next few quarters. However, the medium term dynamics are still quite uncertain. Our economy tends to crash as soon as it picks up because the quality of growth is poor and the competitiveness of the local industry is challenged. There are many reasons for this, such as tax policy, government’s excessive role, poor trade policies and shortage of quality human talent,” he says.
Unless there are fundamental reforms in these areas, “the sustained growth is highly unlikely”, he asserts. “Unfortunately, we are running out of time. The exponential pace of technological change as well as climate change will rapidly reshape global value chains, and Pakistan will find it harder to locate areas of global competitiveness to boost exports.”
He said work should be done on a war footing to invest in world-class talent and partner with Chinese friends in technology. “The government of Pakistan should have an expatriate programme under which anyone with over $500,000 can come to Pakistan and enjoy income tax–free status for the first 15 years,” he says. “If we can get 1,000 to 2,000 talented people to arrive here, imagine the impact that will have on developing scalable competitive businesses.”
Majyd Aziz, president of the Employers’ Federation of Pakistan, opposed the extension of tenure in principle but favoured retaining Gen Qamar Javed Bajwa as the chief of army staff for his insight of economic issues and acknowledgement of the private sector’s role in the country’s progress.
He believed that the comedy of errors played out in Islamabad dented the government’s image, and advised against ad hoc measures that hurt the economy. “People should understand that institutions and not individuals are important,” he said over the phone from Islamabad.
Zubair Tufail, a former president of the Federation of Pakistan Chambers of Commerce and Industry, sounded worried and nervous. “The fiasco will not benefit anyone. I just hope and pray for Pakistan and its future.”
Khalil Ahmed Nanitalwala, the founder of many local pharmaceutical and cosmetics brands, was critical of Prime Minister Imran Khan’s government, which he said acted at the behest of donors with little regard for growth drivers or masses and their problems.
Published in Dawn, The Business and Finance Weekly, December 2nd, 2019