Pakistan Economic Forum (PEF), a consultative body sponsored by Pakistan Business Council (PBC) will be holding its second session next week to present its recommendations to policymakers for taking urgent measures under a National Economic Agenda (NEA), to revive the economy. This was stated by Sikandar M Khan, Chairman Pakistan Business Council, while talking to Business Recorder on Thursday. Sikandar shared the key features of the NEA with special focus on uniform tax treatment for all sectors of the economy without any discrimination. An urgent plan has been proposed for revival of economy under policy measures to generate additional revenue by promoting regional trade with documentation of economy. Sikandar M Khan, who is also the Chairman of the Millat Group of Companies, proposed increase in the tax-to-GDP ratio to 15 percent in the next 5 years through better collection of existing taxes, through reform of the tax system by expanding the tax base in the country, reducing subsidy to the loss-making public sector enterprises and encouraging investment in Pakistan.
He also shared other proposals on the behalf of the Pakistan Economic Forum (PEF). These will now be collated by the PBC for an event at which the PEF's recommendations will be presented to the decision makers at the highest level. The PBC is a non-political think-tank cum Policy Advocacy Institution representing 42 of Pakistan's largest corporations/Business Groups including MNCs that have a vested interest in the country's rapid economic growth to meet the rising aspirations of its people. Under the roadmap for revival of the economy, he said that the NEA has focus on six reform areas which need to be addressed urgently. The reform areas covered better macroeconomic management of the economy, energy for growth, protecting poor, educating for future, regional trade as growth driver and water resources and its importance.
Sikandar M. Khan further stated that the National Economic Agenda (NEA) has been designed to promote economic welfare of all the citizens of Pakistan. The adoption and implementation of this national economic agenda would lay the foundation for sustained annual GDP growth rate in excess of 6 percent accelerating to 8 percent, as reforms take hold and a virtuous cycle of increased savings and investments is put into place. The implementation of the NEA would ensure reduction of inflation to a single digit level and reduction in unemployment/underemployment rates.
There would be a substantive reduction in poverty through a combination of reduced inflation, higher job creation, significantly increased targeted social protection programs and skill development of the people, the elimination of load shedding and gas shortages, elimination of crowding out of private sector from the credit markets and enhancing the ability of the private sector to increase investment. A 50 percent increase in the next five years in the percentage of children in this country who enroll in, and stay in schools can also be expected. There would be significant new economic opportunities because of greater integration of Pakistan's economy in the larger regional economy. An improvement in the underlying conditions which create both an internal and external security threat to the nation will also result, said Chairman Pakistan Business Council.
The NEA revealed that better macroeconomic management of economy would be done under various measures - reduction in the fiscal deficit to 3-4 percent of the GDP in the next three years through bringing all sectors into a uniform documented tax net and setting a target of 10 percent. Reduction in public sector waste both at the federal as well as the provincial level through implementation of the recommendations of the National Commission on Government Reforms.
This would also be done by eliminating Public Sector Enterprise (PSE) losses by empowering professional boards and management to reform and restructure these institutions without political interference. The NEA has also proposed elimination of non-targeted subsidies and phasing out the role of government in commodity operations. Once the fiscal situation stabilises, gradually bringing down corporate tax rates to make them competitive with other emerging economies.
On the issue of energy for growth, the NEA disclosed that the government should take urgent decisions to fast track the import of LNG; carry out an urgently needed revamp program for the existing assets in the power generation and distribution system; rationalise price distortions between different fuel sources and different consumption segments and revisit the gas prices being offered to E&P companies to encourage accelerated exploration and development of indigenous gas resources.
Other energy-related issues highlighted by NEA that the government should carry out focused development work on other indigenous fuel sources particularly hydel and Thar coal; put in place a structured program to deregulate the energy sector in the next 3-5 years.
Water a depleting resource needs to be bought into focus to enhance water storage and better management. The NEA has given top priority to the regional trade as growth driver with the policy to revisit the national security paradigm especially with respect to regional trade. The government should develop a strategy for trade policy to use it to strengthen linkages with our neighbours and beyond, invest in supporting infrastructure; grant India MFN status; and address non tariff barriers on both sides and create an environment which fosters cross border investments, and an even playing field. There being a large Trust Deficit; political issues have to be resolved to ensure trade and business relations.
Under the measures to protect poor, the NEA proposed to ensure government spending on social protection is increased from under 1 percent of GDP to close to 3 percent of GDP which is close to the regional average; subsidies intended for the poor should be targeted and monitored to ensure that the poor are the actual beneficiaries. All non targeted subsidies must be eliminated; fully leverage the capacity created in the public-private partnerships as delivery vehicles for targeted programs for the poor; new social protection programs in the areas of nutrition , employment and health insurance need to be designed and implemented and rationalise and consolidate the existing social protection instruments to eliminate duplication and overlap.
Sikandar M. Khan explained that the current system of education will not be able to take the Country to the next level of development; a major shake-up is required before we are able to become a knowledge economy or are able to put our young population to productive use. The major areas requiring immediate consensus are the starting point is political will. Demonstrate at federal and provincial level that education is priority one; implementing legislation already in place to ensure that the government increases the education budget by at least 0.5 percent of GDP per annum so that it reaches 5 percent of the GDP; liaise with the provinces so that after the 18th Amendment provinces have a common curriculum; retain HEC and modify its role in consonance with the provisions of the 18th amendment; substantially increase scope of technical and vocational education; incentivise private/not-for-profit sector participation; mainstream madrassah education and revamp exam boards and text book boards, he added.
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