Less than a few months ago, criticising the economy and the underlying policies, or even mentioning that everything was not hunky dory, might even have been deemed sacrilege by all and sundry. The few voices who did dare to point out that the real economy was perhaps not moving in tandem with the speculative fervour were summarily dismissed. Quite suddenly however the winds of change are blowing, perhaps more to do more with the political upheaval which might have fostered the courage to criticise rather than a sudden change in the country's economic fortunes; economies do not collapse that suddenly. In the last week alone there are at least three newspaper write-ups which were nothing short of scathing, when discussing the economy.

No point going into minutiae, most all economic numbers and indicators, especially to do with the external economy have gone south. A presentation apparently given to the Prime Minister by the Pakistan Business Council (PBC) on 16th August 2017 probably gives a fair analysis; except you wonder why it took them so long to raise these issues. While hindsight suggests that there is perhaps a need of having an independent institution acting as a watchdog over the economy, constitutionally empowered to criticise policies which can have adverse lasting affects, but that would hardly pull us out of the current economic quagmire. The bigger question right now is: What to do?

The PBC presentation, courtesy the amazing Whatsapp, does come with a number of suggestions which focus on the age old strategy of protecting the home industry, and focusing on policies which facilitate export oriented and import substitution manufacturing. My upfront view however is that they remain rather generic, contrary to the need of the hour to be specific; for example a minimum 30% tariff on all imports. The PBC is however, clear about wanting the government to renegotiate the Free Trade Agreement (FTA) with China and cautiously pursue such agreements with Turkey and Thailand. Except that the presentation goes on to suggest that the government should secure Chinese government support and direction to target the latter's apparel market; why in the world would the Chinese agree to that after you chuck the FTA with them out the window?

The PBC also wants energy for exporters at a competitive price; which is well nigh impossible, minus a direct government subsidy, when you are importing energy, again soon perhaps mostly from the Chinese. The PBC, diplomatically also put forward their concerns about CPEC SEZ's (Special Economic Zones) undermining existing industry; this perhaps is a real risk. Domestic industry might not be able to compete with industries set up in SEZs who will enjoy a complete tax exemption and are allowed to sell in the domestic markets. A private paper on CPEC was of the view that, "China should ensure the encouragement of local industrial products manufactured in Pakistan for which the local industries work hard to produce. Chinese firms should keep in mind that the local industries in Pakistan cannot compete with China's cost effective production". This is like asking Jesse James to guard the bank; "Yeah! Sure! No worries!"

It really is remarkable that the nation continues to be divided on whether CPEC is good for us or not, even after 3 years; frankly the voices sceptical about CPEC seem to be growing during coffee table discussions. Surely, China is Pakistan's major trading partner; the problem is that they are also the primary contributor to Pakistan's trade deficit of over US$ 30 billion. CPEC may or may not create 700,000 jobs in the period between 2015-30; but why are we excited about that? We are a population of over 200 million growing at over 2% and that many jobs in 15 years is nothing to celebrate about. Frankly, the Chinese are likely to create twice as much job opportunities for themselves, in one third the time, and we will be paying for all of them.

The key concern being voiced about CPEC, which by the way seems to be the only solution we have for our economic woes, is that it apparently continues to be shrouded in mystery. We rode the IMF program for 3 years, and did a pretty good job of staying on the saddle, but it got us nowhere. We are now riding CPEC and seemingly only have a broad idea based on hope and positive feelings that it will take us over the finish line. Seriously, is keeping our fingers crossed the only answer to the question: What to do?

In substance, I feel that those at the helm of affairs are the most well informed and hence should know best which horse to ride, and in which direction. Except when after four years, rumours become ubiquitous that we might again be knocking at IMF's door in a couple of months; it does cause concerns. As mentioned earlier, you do also come across a lot of write ups which criticise and raise red flags, but when it comes to solution and a concrete plan, they too stop short. I now worry whether anyone at all has an answer to the question: What to do?

(The writer is a chartered accountant based in Islamabad. Email: [email protected])

Copyright Business Recorder, 2017