In an interview with a news agency, Advisor to the Prime Minister on Commerce and Investment, Abdual Razak Dawood said that the process of reforms would continue to further improve Pakistan’s ranking in the World Bank Ease of Doing Business Index. He said that improvement by 20 points is expected, which will place the country at 88th position on this index, facilitating Foreign Direct Investment (FDI) in the manufacturing sector.
Razak Dawood said that a package of 74 reforms actions has been worked out the implementation of which will appreciably enhance business indicators. He referred to fast-tracking few reforms of procedural nature such as registration of companies in one day by Security Exchange Commission of Pakistan, revision of Consumers’ Services Manual by National Electric Power Regulatory Authority for accelerating the process of getting industrial and commercial electricity connection, and end to end integration of 9 provincial departments to streamline the procedural mechanism, relating to setting up new industries.
More reforms of procedural nature will not help bring substantial positive change in economic environment. Likewise, the cut in interest will not increase fresh investment by the local and foreign entrepreneurs unless buttressed by tax and tariff reforms. There are no bold indications that focus of decision makers is still on removing the key impediments that depressed not only output of the manufacturing sector but also shied away FDI. The glaring examples are the automobile sector and lack of interest in making investments by foreign companies in the Allam Iqbal Special Economic Zone in Faisalabad. Far reaching economic reforms need to be priortised including, regionally competitive tariff structure of energy inputs, reduction in the number of indirect taxes, import and regulatory duties, facilitation of induction of new technologies, and above the much need skill development of local workforce.
President Islamabad Chamber of Commerce and Industry, Muhammad Ahmad Waheed has urged the government to reduce power tariff proportionate to the lowered prices of petroleum products. The demand is rational and justified as thermal power plants in private sector are being run on diesel and furnace oil. However, government is reluctant on downward revision of electricity tariff because of the clout that major stakeholders in IPPs still enjoy in the corridors of power and abnormally swelled power sector circular debt. This debt has become the Achilles’ heel of Pakistan’s economy, which will certainly contribute to downfall if not removed. The cartel of independent power producers is still applying pressure tactics and does not seem inclined to hold serious negotiations with the government on changes in the shady power purchase agreements made with past governments to make them transparent and consumers’ friendly. In its meeting on Friday, Economic Coordination Committee of the Cabinet (ECC) deferred decision on the summary of Power Division to raise Rs.200 billion from the capital market for circular debt retirement, which has bulged to Rs. 2 trillion.
