Make in Pakistan: Need to concretize the slogan “Make in Pakistan” – Supplements
TEXT: “Make in Pakistan” is a visionary approach to reshaping our economy through industrialization and self-reliance that will spur job creation and investment – hallmarks of any growing economy.
We face the daunting task of creating more than a million jobs every year to keep pace with a growing population and a young workforce that may be talented but has training and skills. weak. It is through ‘Make in Pakistan’ that we can hope to become self-reliant and diversify our export-oriented industries to combat the continuing deficit that triggers a vicious cycle of currency depreciation, inflation and indebtedness.
But as we have seen countless times in the past, a vision is useless if it cannot be executed or if its implementation is stifled. “Making in Pakistan” is a primary goal but to achieve it and implement it in its true spirit, we need to adopt a short-term tariff protection policy and take a sector-by-sector approach as each industry has its own unique challenges, threats and needs.
To live up to the “Make in Pakistan” mantra, tariff protection will play an important role in the short term due to the situation in our country. We currently rank quite low among countries on the Global Competitiveness Index (published by the World Economic Forum) and we have a similar poor performance on the Ease of Doing Business Index (reported by the World Bank). As such, it is no surprise that the cost of doing business is extremely high in Pakistan; energy prices are higher than those of global competitors and continue to rise; our low global rankings indicate an uncompetitive logistics infrastructure; large number of taxes and high tax rate.
Moreover, the lack of long-term political guidance and a boom-and-bust economic cycle have frequently tested Pakistani businessmen, tainted investor appetite and hampered wealth formation. The conclusion is rather obvious – domestic industry will need tariff protection until the government can address the multitude of problems we currently face to make us competitive with imports and begin to diversify our export-oriented industries.
This is where sectoral roadmaps become the essential starting point for implementing ‘Make in Pakistan’ in a sustainable way. Ten-year roadmaps must be drawn up for each major industry with a view to eventually reducing protection, generating surpluses and moving towards exports. Developing industry roadmaps is not an easy task, it should include stakeholder consultation with industry experts and leaders, academia, consultants and government officials , but it can be assumed that the main players in the private sector can play a leading role. The problems of export distortion, inefficiency and abnormal profits that arise from protection can also be examined in such sectoral analysis to ensure that tariff protection is only used as a stopgap measure until structural problems are resolved over a defined period of time. While the private sector may need incentives to be nudged in the right direction, the difficult question is whether government will be able to tackle all the issues of cost of doing business, ease of doing of business and infrastructural bottleneck within a reasonable timeframe.
Most importantly, ‘Make in Pakistan’ should be owned by all government institutions and decisions should be made with this overarching goal in mind. Institutional misalignment may be the greatest threat to “Make in Pakistan” and industrialization in general. We talk too often about global competitiveness but the difficult decisions are not taken; tariff anomalies are not resolved for revenue reasons, substandard manufacturers are not regulated due to the backlash, and tax evaders are not tackled head-on but regulated indirectly by placing an additional burden on the industry documented .
We must learn from China, an economic success story unprecedented in history. They did not become an economic power by liberalizing trade and reducing import tariffs. They developed a strong manufacturing base between 1980 and 2000 by limiting imports, focusing on manufacturing in China, building infrastructure, creating jobs and developing skills. India has also followed a similar pattern. The government will take the right step by adopting and promoting the spirit of the ‘Make in Pakistan’ model, now its implementation is where all attention should be.
Malik Javed Iqbal,
Chief Advisor of the Pakistan Association of Major Steel Producers
Copyright Business Recorder, 2022