Pakistan’s exports have been declining since fiscal year 2011 where they stood at $25 billion. The current exports of the country are recorded to be around $21 billion.
As compared to other countries, the export to GDP ratio and the import to GDP ratio, both have declined since the last decade. Pakistan’s ranking has also dropped from 77 to 141 in the World Bank’s Ease of Doing Business indicator. Apart from the sudden increase in Pakistan’s economy due to CPEC, the country’s foreign investment has also been witnessing stagnancy.
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The main reason Pakistan is facing this problem is due to the establishment of different organizations for the same purpose. The development and analysis of different branches of private sectors is done by the different organizations despite the fact that all of them deal with the same goal. Trade policy, sectoral regulatory policies, industrial policy, taxation policy, investment policy, monetary policy, energy policy, information technology policy, and other sectors are all dealt by different organizations.
Most of these organizations had been initiated between the 1970’s and 2000. However, the needs of the private sectors have changed by a large margin and thus, organizations and their policies need to be upgraded.
Investments made by foreign Pakistani citizens and the investment made by Pakistan in other countries is currently more than that of CPEC. The main question remains that what should the country do to increase the exports and private sector investment in the country.
Private sector ministry
Out of all the largest economies in the world, one thing that is common is the state and institutions supporting the private sector. This act has made these countries rich in exports and private sector investments. The development of the private sector in these countries is either done by a Ministry of Economy and Trade or by other agencies that are built only for that purpose. Hence, Pakistan really needs a Ministry of Private Sector Facilitation in order to boost things up.
This ministry should be created by merging all related ministries such as Ministry of Commerce and Textile, Board of Investment, Ministry of Industries and Production, some attached departments of the Ministry of Information Technology and almost half of the Planning Commission. After doing this at a federal level, provincial governments should also follow in the footsteps. Recently, Prime Minister Khaqan Abbasi has reorganized a number of ministries and the establishment of a private sector facilitation ministry would be a significant step in the economy of the country.
If the job is done, it will prove to be very beneficial towards the country’s economy. The development of organizations in the public sector is quite quick. However, the government mostly fails to achieve the purpose of creation of such organizations.
Mechanism of the ministry
The ministry should be created in order to develop an environment where the private sector can thrive. On the other hand, the establishment of such ministries leads to the separation of organizations as all of them consider themselves as self-proclaimed regulatory bodies. This in turn creates difficulties to achieve the very goals these organizations were created to achieve. An accurate example of such a case is the establishment of the Engineering Development Board which was created to promote the engineering sector and ended up slowing its growth even more.
Hence, while establishing the Ministry of Private Sector Facilitation, preventative measures should be taken so that the ministry doesn’t see the same fate as every other public sector organization which starts off with big goals and ends up collapsing on itself.
A guiding document for the new ministry can be served by the Planning Commission’s Framework of Economic Growth as the framework advised to focus on the software of economic growth in 2011.
Moreover, the ministry should be inclined towards improving business environment, monetary matters and exchanging rate dynamics, reforming complex, archaic and cumbersome laws and regulations, managing public-private dialogue, giving policy recommendations on taxation, facilitating domestic and international trade, and sponsoring research on entrepreneurship, innovation and technological development.
In addition, it also has to pay special attention to women entrepreneurs, start-ups, innovative business ideas and young entrepreneurs, and technology-oriented companies. Moreover, the ministry should be aware of the loopholes in the financial management system beforehand.
The ministry should be given authority over appropriation and expenditure of the budget in order to meet its desired goal. A chief strategy officer and a chief financial officer should also be appointed to deal with financial and planning matters.
A panel of professionals should also be appointed to review the ministry and provide suggestions wherever possible. The ministry should also take a look at all the other ministries being merged as some of them are completely outdated for their desired purpose. There are also some redundant public sector organizations such as the Trade Development Authority. Organizations like these need to be completely removed or updated to meet the current economic requirements of the country.
Finally, the government, chamber of commerce and industry, and other related organizations should focus on the issue at hand. If this issue is not faced by the government properly, the country will continue to see stagnant growth in both, public and private sectors. What the country needs now is ways through which it can develop the public sector in order to meet the services required by the private sector.