Pakistan Business Council (PBC) has launched a 100-day economic agenda for the new government in Pakistan. Chief Executive Officer of PBC Ehsan Malik said Pakistan cannot rely on short-term loans to run the government affairs and IMF programme becomes inevitable for long-term sustainable funding.
The government and opposition must work together and avail this opportunity in order to boost local manufacturing. Short-term solutions are only required to manage the crisis whereas Pakistan needs to fix the fundamental flaws in the economy which leads to IMF after every 2 to 3 years, said Ehsan.
He further said, boosting local manufacturing is of utmost importance, Pakistan should create more than 2-3 million jobs per year, Pakistan should exports more of value-added products rather than commodities, we should also encourage substitutes for imports, we are more than 200 million people and have a potential to be as competitive as other developed nations, he added.
The local manufacturing is being hit by the trade agreements, rising energy costs, unstable exchange rates and favor of imports, these issues must be addressed if we have to fix the overall economy. We also need investment in the water on an urgent basis for domestic and industrial use. The entire country is in turmoil due to water shortage including Karachi, which needs serious attention and solutions like desalination on large scale.
There should also be a complete transparency of costs, finances, and benefits of CPEC projects besides ensuring that CPEC special economic zones would not undermine the local industries.
In order to boost the local manufacturing and exports of finished products, the FTA with China must be renegotiated to fill the widening gap in the trade deficit. He further said, trade agreements with Thailand, Turkey, and some other countries at the cost of local jobs would only hurt the economy and should not be pursued.
A notable comment he made is “Tax policy making should be separated from tax collection to discourage knee-jerk short-term revenue measures over a long-term growth-oriented fiscal policy.”
He also urged the government to lower the corporate tax rate to 25 percent gradually including social levies, and lower the sales tax also which is too high 17 percent for the economy which is poorly documented.
However, Pakistan is avoiding IMF which has associated drawbacks, it would require to provide the details of CPEC projects and many other restrictions that are not in Favor of Pakistan. Fitch ratings also indicated that Pakistan should go to IMF in order to fix its economy.