KARACHI:President, Karachi Chamber of Commerce and Industry (KCCI), Agha Shahab Ahmed Khan said in an interview that Pakistan is undergoing turbulence and adoption of conventional ways would not get it anywhere; hence, innovative ideas are needed. Pakistan needs to focus on E-commerce, especially B2B ecommerce to increase exports. One way they can do this is by creating a cross border E-commerce zone in Karachi similar to the Chinese cross border ecommerce zone of Hangzhou, he said
Agha said that the governments at both the federal and provincial levels are focusing on development of new Special Economic Zones in various parts of the country. While the renewed zeal of developing new SEZs is appreciable, the govt. must ensure in the first place, proper functioning and provision of essential facilities to the already existing SEZs, which in many cases, are encountering multiple operational problems. Investors hitherto have been unable to reap wholesome benefits of the existing SEZs, and it makes little sense to develop new SEZs without making the existing ones fully functional.
He said that China was moving towards producing higher value added goods and was looking to move a portion of its manufacturing sector to other developing countries. Pakistan must try to get as much of China’s relocating manufacturing as possible by setting up joint ventures with the Chinese under CPEC. More work in needed on Ease of Doing Business so as to attract foreign investment. Government must not become complacent by continuously patting itself on the back on the recent improvements in this ranking and must work tirelessly to improve further, he said.
Pakistan lagged behind in the 3rd industrial revolution but it is highly critical that it does not repeat the same mistake in the 4th industrial revolution, and produce a wide range of higher value added goods and services that reach a diverse geographical market. Greater focus also needs to be on creating a knowledge based economy so that
He said: “To bring stability to the exchange rate, Pakistan needs to reduce its trade deficit. This can be done by creating innovative export friendly policies and capacity enhancement of its manufacturing sector on the one hand, while reducing imports dependence on the other. To cover both facets, Pakistan needs to lay extra emphasis on import substitution as unnecessary imports at cheap tariffs have caused enough damage to the local industry. Of course, policies would have to heavily incentivize domestic industries to incorporate value addition in their products, as the domestic industry cannot survive and thrive barely on the basis of basic goods. Pakistan’s services sector also needs to focus on exports and search for other avenues apart from the IT sector.”
If we examine China as to how it pulled out millions of people out of poverty we can see that China’s industrial and service sectors growth, was actually based on the fundamental agricultural reforms introduced 30-40 years ago. Modern farming methodology entails a paradigm shift towards technological advancement to increase crop yields, a concept alien to tenant farmers. This practice needs to change as the landlords themselves would need to adopt modern technology and cultivate the land themselves. The 2nd phase of CPEC provides landowners the ideal opportunity to bring about a change in their farming practices.
The KCCI chief said Pakistan also needs to encourage formation and proper functioning of skill development institutions. Regional competitors have systematically developed the skill levels of its human resource leading to a sustained growth in exports and enhancement of value addition levels in the production chain. Pakistan also needs to pursue a similar level so that its exports, domestic commerce, productivity and employment levels increase substantially, he said.
Agha said Pakistan had weak state institutions, and this has a negative effect on both the implementation of anti-poverty programs and the provision of key social services and infrastructure to the people, which needed urgent improvement. Instead of making the poor dependent upon free food handouts, it would be better if industries should be supported so that people could buy food themselves, he said.
To improve the business sentiment, government needs to make business and trader friendly policies that focus on reducing the cost of doing business and the trust deficit between the business community and government institutions such as NAB and FBR. It needs to restore the confidence of businessmen in FBR for economic development and elimination of corruption. The conversion of FBR to Pakistan Revenue Authority should not just be a change of name but it should be an actual change of mindset, with reforms to continue unabated, Agha concluded.