By Adeem Niaz
ISLAMABAD: Private businesses play a very imperative role in the economic development of Pakistan and are considered the backbone of the economy, said Zahid Mehmood Akhtar, a PhD scholar at the National University of Modern Languages, while talking to WealthPK.
He said almost 75% to 80% of the labour force was employed by private companies, showing their huge contribution towards reducing unemployment in the country.
“Private businesses are more labor-intensive and tend to lead to a more equitable income distribution. They are crucial for creating jobs and reducing poverty by frequently offering jobs at fair pay rates to employees from low-income households and also to women who have few other options for earning.”
Furthermore, he said private enterprises were a major contributor to the country’s technological innovation, which was a major part of economic growth. A variety of business operations can be conducted in these sectors, in both rural and urban areas of the country.
Akhtar said, “Private businesses make a significant contribution towards income generation, and reduction in unemployment and poverty but there are also some hurdles they face such as lack of capital and [lack of] access to the cutting-edge technology. There are also flaws in the trade policies and the government needs to address them.”
“Goods’ exports result in a rise in the country’s gross domestic product (GDP). But being a developing country, there are production barriers faced by the private firms due to which they cannot export goods. Pakistan has thus been unable to take full advantage of exports as it should have taken. The government should focus on these issues and develop policies to make production easy, as the country can be economically strong due to exports,” said the NUML scholar.
Responding to a question about the barriers faced by the private sector, he pointed out that electricity was one of the main barriers since its consumption was increasing on a daily basis. Access to financing and macroeconomic instability are also important barriers, according to Akhtar.
He said foreign direct investment could also benefit the country if it was easy to start a new private business and if it had strong investment policies that accommodate private companies.
Investment is considered to be an important indicator of growth and Pakistan needs to focus on provision of a business-friendly environment to safeguard the interest of investors, he said.
Akhtar further said private businesses, including short, medium and large enterprises, were beneficial and contributed widely to the growth of economy.
“These institutes cover a large number of the country’s labor force which reduces the level of unemployment. Additionally, maintaining a stable private sector is crucial to attracting foreign investment to the country, he added.
