Why does Pakistan have to face this situation?

4 Jun 2019

There was a time when Pakistan had ample natural resources, including sufficient water resources. After the construction of the Mangla and Tarbela dams, Pakistan had abundant water, which was used to significantly support the agriculture sector. The problem was that those who ruled the country lacked forethought. What is even worse is that, despite the fact that more than 70% of Pakistan is directly or indirectly associated with agriculture, the taxes levied on agriculture remain negligible. Worst of all, this sector is also granted subsidies. This means that the poor, whose tax is deducted, kept getting poorer while the big landlords, who own large pieces of land, get richer. We would not be facing such a bad situation today had this landlord class been taxed appropriately and then had those taxes been spent on education and planning for the future of Pakistan’s infrastructure. Not only is no tax levied on wealthy industrialists, but those taxes collected from the working classis then utilized as a subsidy for those same wealthy industrialists.

Similarly, after being discovered in Baluchistan, the Sui gas field was consumed extravagantly. Later on, in the ’90s and afterward, this was devoured as compressed natural gas (CNG) in vehicles. The Sui gas field dried up after being sold off as cheap fuel for cooking and use in vehicles. While this all was endurable, an extremely detrimental approach was adopted during the era of Musharraf when the large industries were also offered Sui gas at cheap rates. Then, the industries started to create their own electricity by installing generators which used this low-cost gas. Many industrialists preferred the electricity generated from gas over the one sourced from the Water and Power Development Authority (WAPDA).They argued that they generated and consumed electricity generated using Sui gas because of loadshedding. However, despite the availability of WAPDA electricity, this low-cost gas was used to increase profits.

There was no check on this behaviour from the government’s side and so the industrialists kept on making money. Many industrialists who did foresee the future situation made huge profits during that period and then shifted their industry to Bangladesh and other countries. This was the time when the government was supposed to control the industrialists’ profits and levy taxes on them. These taxes were to be spent on research, development, and education. This would have allowed highly educated and skilled labour to be created within Pakistan. However, this never happened.

For things to get better, we will have to improve our relations with our neighboring countries. For example, if Pakistan’s relations with Afghanistan were to become more friendly, an excellent trade route could be created that could include Russia and former Soviet states

The last three decades were wasted due to collusion between the government, the ruling class, and the industrialists. The industrialists spent their profits on their own lavish needs, on the purchasing of properties abroad, and on the shifting of their businesses while, at the same time, Pakistan became weaker and weaker. According to the industrialists, they could foresee the future circumstances that awaited them due to ineffective planning by the government and had to shift their business abroad. After that, the decade of the ’90s was characterized by sectarianism and violence against minorities. Those with investments and any type of skill-be it medical or engineering-were left with no option but to leave the country. This is how Pakistan lost both its investors and its skilled labour.

Now we are faced with an absence of gas and are being forced to meet our energy requirements by generating electricity from imported fuel. Because of this, inflation is increasing and our industry sector has crumbled. There are two key reasons behind this phenomenon. First, because the electricity in our country is produced using imported fuel, any products produced using this expensive electricity cannot compete with those cheaper, high-quality products produced in other countries. The other problem is that the free trade agreement with China has destroyed our industry. We have opened our doors to them while collecting no taxes or tariffs on items imported from China. In addition to this, it is unfortunate to note that India-Pakistan trade has nearly come to a halt. As a result, Pakistani consumers have to buy low-quality products from China at higher rates since the only remaining competitors are those products produced in Europe and other countries, which lie out of the reach of the Pakistani consumer due to their cost and the long-distance land routes. If we were to carry out trade with India, investors from India and China would have to compete with each other for the Pakistani market. This would give the Pakistani consumer access to cheaper and higher quality products. But this will not happen due to our foreign policy.

For things to get better, we will have to improve our relations with our neighbouring countries. For example, if Pakistan’s relations with Afghanistan were to become more friendly, an excellent trade route could be created that could include Russia and former Soviet states. The Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline could also cross this route, which would do a world of good to the Pakistani economy. As far as Iran is concerned, it has installed a gas pipeline up to the border and Pakistan has not done its part with respect to laying its part of the pipeline. As a result, Iran has claimed damages due to non-execution of the project by Pakistan. Currently, liquid gas is being imported all the way from Qatar. This is much more expensive than the gas that we could have been importing from Iran. The urgent need of the hour is to improve our relations with these three countries in order to allow us to improve our dwindling economy through trade with them.

Published in Daily Times on 04-June-2019

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