Pakistan’s potential as a key South
By Mahrukh A. Mughal
the South Asian context, Pakistan is the second largest
It is a pity therefore
that while other nations in the region are achieving goals
of progress and development, Pakistan is fast becoming a
country that can be likened to a patient afflicted by
The ogre of terrorism does
not impact any other country in the region as seriously as
Pakistan and the country’s economy is a serious cause for
In fact, Pakistan’s
progress has been brought to a naught and the country now
faces serious problems concerning its future as it continues
to face a worsening economic crisis – the mother of all
The country’s forward momentum seems to have come to a
complete halt due to the lack of a stable economy and the
various indicators emanating from it.
South Asia is home to well over one fifth of the world’s
population, making it one of the most populous geographical
region in the world. While Pakistan is the second biggest
country in this region, it is also the one fraught with the
most problems and it is still one of the poorest countries
in the world with many of its citizens living in abject
Pakistan is, in fact, so prone to malfunction that it faces
almost every problem that restricts its progress – law and
order situation, energy crisis, economic woes, corruption,
deteriorating educational and health system, inflation, bad
governance, nepotism, etc.
Whenever a new political
leadership comes into power in Pakistan, the first thing it
does is go around begging for loans to the IMF and the World
Bank and to other lending institutions.
The crisis faced today is
because of the fiscal indiscipline that has been practiced
over the past years. Previous governments did not do what
they had promised to do and, as a result,
Pakistan continues to depend
on foreign aid which increases the national debt and this
severely aggravates the economic crisis. Today, Pakistan
faces an internal loan of more than 14000 billion rupees and
an external loan of more than 60 billion dollars.
Pakistan may be one of the
richest countries in the world in terms of natural resources
such as coal, oil, gas, minerals, agriculture, labour,
skilled manpower, energy, geography, etc. but it is also one
of the poorest countries in terms of management of these
resources. Efficient management of resources is vital to
achieving national prosperity.
The country’s political
leaders should learn how to use their resources so that the
country may prosper and does not have to depend on heavy
loans from the world’s financial bodies.
Today, the country’s economic development is stunted because
foreign direct investment is discouraged from coming into
the country due to the prevailing law and order situation
and small businesses find it impossible to fend with the
‘’start-up-cost’’ because of corruption.
The importance of an
infrastructure is imperative for sustained growth. It plays
a pivotal role in development and is a major contributor to
the growth of a country. Pakistan is ideally located and
while it can use its infrastructure for its own growth, it
can also help other countries in this and adjacent regions.
Investment is very important for any country’s economic
stability. But it is very unfortunate for both local and
foreign investors that they find the infrastructure very
poor in Pakistan.
Besides the severe crisis in
terms of prime inputs like electricity, gas and water, the
justice system is bad in the country, corruption is rampant
and there is no end to the worsening law and order
In these circumstances, local
entrepreneurs are moving their businesses to various
regional countries such as Bangladesh, China, Sri Lanka,
etc. Similarly, foreign investors do not find a favorable
environment to put their billions in the country. This
reduction in infrastructure investment in turn causes more
poverty and leads to economic instability.
Another factor that adds to the country’s economic problems
is that of foreign remittances from overseas Pakistaniswhich
is a very important source of capital for a developing
Unfortunately, the country
provides hardly any or no incentive to remittance senders.
Whatever incentives are given are misused by institutions
and individuals which adds to the economic instability.
Tax is the backbone of any
economy. While Pakistan is an agriculture-based country,
there is no tax here on agricultural production. Seen in the
economic backdrop, it is important to state here that the
country has the lowest tax-to-GDP ratio in the world, with
only 0.9% of the people paying taxes.
The taxation system is
characterized as being unjust and discriminatory and is
unable to generate enough revenues to break free from the
shackles of the IMF and other donors. The amount of tax
evasion in the country as estimated by the NAB (National
Accountability Bureau) as being Rs. 7 billion per day.
The corruption figure comes
at a heady Rs. 12 billion per day and is growing at an
unchecked pace. The Federal Board of Revenue has miserably
failed in its duty to deliver and it is really unfortunate
that the country has such a corrupt, incompetent and
incapable FBR with a weak tax collection machinery and its
inability to collect taxes from agriculture.
This is a country of over 18 crores where only 27 lakh
people actually pay income tax. According to the new
taxation policies, only those earning Rs. 3 lakhs or more
annually are taxed.
Agriculture is the dominant
sector and contributes 21.4 percent to the GDP, while it
employs 45 percent of the country’s labour force and
contributes in the growth of other sectors of the economy
but it is not taxed. In these circumstances, economic
stability would not surely be a far cry.
The import and export sector too is adversely affecting the
country’s economic health. Pakistan needs to greatly
increase its exports through utilization of all available
resources. In fact, exporters are using legal channels for
money laundering as they receive money through formal
banking channels against export orders of less worth and for
tax exempted consignments.
According to an
official, this mafia is so strong and involves such
influential personalities that the relevant departments and
authorities are unable to enforce money laundering laws
The country is importing
goods of high worth and paying the cost in dollars since
these goods come under the exemption regime. As a result,
Pakistan is facing a heavy trade loss of 20 billion dollars.
The trade deficit only in July 2013 was PKR 172,754 million.
The factor of corruption is a complex one and though
corruption is present in all other South Asia countries but
inPakistan it is an especially hurtful social, political and
economic phenomenon that undermines democratic institutions,
slows economic development and contributes to governmental
Many big loan defaulters
exist in Pakistan who borrow billions from banks and then
default. The Public Accounts Committee estimates that the
number of loan defaulters has reached more than 1500.
According to the Constitution of Pakistan, a financial
dispute cannot be stayed by a court for more than six
There are a large number of
financial cases in Pakistan that have been stayed by the
courts since the 1990s, pending decision.
Pakistan is a major South Asian country and a proud member
of SAARC but it is also a country where corruption,
terrorism, nepotism, injustice, robbery, murder and gambling
are social evils with no answers.
The country must find the
right answers if it is to rise above its economic and social
ills and move forward as a modern and progressive nation –
something that it is completely capable of.