Pakistan Plans for Post-Pandemic Economic Recovery
By Elaine Pasquini
Pakistan’s economic outlook, following a year of stagnant growth exacerbated by the Covid-19 pandemic, was the topic of an April 6 online discussion hosted by Washington, DC’s United States Institute of Peace.
Khurram Husain, business editor at Dawn newspaper, discussed the importance of attracting foreign investors to Pakistan in order to grow the country’s economy, and the necessity for innovation. “I’m struck with how disparate the challenge is for investors already operating in Pakistan, and those invited to come,” he said. “We do not hear the voices of investors in the high-tech sector and innovation. I don’t think their voices even reach the policymakers. The conversations remain wedded to very old-fashioned brick and mortar issues. I think things need to change in this regard.”
While the China-Pakistan Economic Corridor (CPEC) has slowed down, it is not dead and the Pakistanis still need the United States, Husain said. “The only thing that Pakistan is really looking for from any partner is cash bailouts to underwrite the country’s chronic economic dysfunction,” he argued. “And the Chinese have a very limited appetite for that kind of thing. They don’t do bailouts, particularly ones of chronic dysfunction. China may be an emerging power in the region, but Pakistan continues to need good relations with the United States and they are trying to find their way back to the place where they used to be before the relationship began to fray.”
From her on-the-ground small business vantage point, Naila Naqvi, founder and CEO of Pie in the Sky cafés, gave her views on government policies needed to spur growth.
Founded in 2001, Naqvi heads a staff of 400 among the 20 branches of her popular bakery in Karachi and Hyderabad.
In Pakistan, Naqvi noted, “At least one of the main sources of entertainment people have is food, so I am lucky that I am part of that sector.”
Rising energy rates, she explained, are extremely worrying, and it is unknown what actions the government may take to ease the burden of these costs for small business owners.
“It has not been an easy year and I do not see it easing up any time soon, depending on what the government decides,” she said. “The pandemic was a shock to all businesses, but the way that we have bounced back highlights the resilience of Pakistan’s retail sector to some extent. It is fascinating how it works.”
Taxation is definitely something that needs to be regulated, Naqvi continued. “Sometimes you think you are taxed to the point where it is just not profitable anymore to run a business.”
But, Naqvi stated, Pakistan is her home and she is very patriotic. “It is where I was born and live. I can’t see myself living anywhere else,” she said. “What gives any entrepreneur satisfaction is being able to employ people and make a change in their lives to have better lives for themselves and their families. This is what drives me as an entrepreneur.”
Safiya Ghori-Ahmed, a director at McLarty Associates in Washington, DC, gave her perspective on the need to strengthen Pakistan’s economy, and obstacles preventing international investments.
“For Pakistan to really talk about economics and emphasize economic cooperation they have to enhance their value as an economic partner, which means they have to strengthen their economy,” Ghori-Ahmed explained, pointing out that Pakistan is currently the US’s 56th largest goods trading partner, while India is the US’s ninth trading partner.
Unfortunately, one risk to foreign investors is that Pakistan is still on the FATF (Financial Action Task Force) grey list, which is the global money laundering and terrorist financing watchdog. “The last thing a US company wants is to be on the front page of the Washington Post or the New York Times because they were operating in a country whose funds were misappropriated or laundered in some way or financing terrorism in some way,” she pointed out.
Secondly, high tariff and tax rates and the overall inconsistent tax policy is an issue, Ghori-Ahmed said.
Other problems include the need for speedy resolutions of intellectual property or commercial issues and more funding invested for research and development.
“We see Pakistan lacking both from the private sector and the government in investing in their own research and development,” she said.
In closing, Husain noted that innovation is the way out for Pakistan. “Yet we see in the highest levels of policymaking the doubling down on the old priorities which is to muddle through rather than make reforms,” Husain said. “There must be a high-level realization that business as usual is not working. We need more done to actually promote innovation, to unlock the potential of the youth in this country, to value and understand the new arenas that are opening up with the high-tech economy coming in. Until this happens, I think it will remain business as usual.”
(Elaine Pasquini is a freelance journalist. Her reports appear in the Washington Report on Middle East Affairs and Nuze.Ink)
-----------------------------------------------------------------------------
Back to Pakistanlink Homepage
