In the short term, SBP needs to start cutting interest rates.
I agree with you but remember the interest rates, themselves a sin, are high to control inflation.
You aren't going to control inflation without drastically reducing imports which you aren't going to be able to accomplish without killing the FTA with China, frankly all FTA's past governments have signed need to go, and raising import tariffs while simultaneously raising other sources of tax revenues (ex. income, property, etc...) to invest in domestic industry initially to substitute imports for domestically manufactured products along with an initial focus on our primary sector industries (i.e. agriculture and mining). Only once your own domestic industries have total control of your domestic market and are able to compete on a global scale do you open up your economy to FTA's.
Just to give you an idea of how STUPID our FTA to China is back in 2006 when it was signed 50% of Pakistan's total exports in dollar value were textiles yet China had a textile industry larger than the entire GDP of Pakistan even now its textile industry is almost the size of our entire economy.
Why did Musharraf sign this and why didn't Zardari and the PPP or Nawaz Sharif of the PML-N or even Imran Khan and the PTI scrap it?
Even the Pakistani Business Council confirmed in 2013 what I've been saying for years that Pakistan can't utilize those FTA's:
They confirmed that:
“Many believe that the product coverage of the FTA should be increased i.e. increasing the number of products part of the current FTA. Given the low utilization (5%), this would be an exercise in futility. A more appropriate measure would be to renegotiate the FTA in such a way that products that have high potential of exports as well as enjoy a comparative advantage against the rest of the world are given higher concessions”
Yet what does Khan and the PTI do? They sign FTA 2.0
Pakistan's economic complexity over the years, particularly since signing the FTA with China, has dropped:
These deals are brought to you by people like Musharraf and kept in place by the same people and political parties that were just a while ago calling for nationwide lock downs which I put up a post about citing that they made absolutely no sense in light of clinical data and were dangerous for the country.
Now everyone is going on about how great CPEC will be for the country just like they were going on about the FTA with China years earlier in 2005-2006.
stop over regulating the economy
reduce corporate taxes
end transaction taxes nonsense
make a free zone like dubai ( gwadar)
invest in renewable and give cheap elec to textile
get back control of state bank from Rotschild BIS
We can look over what laws and regulations are hampering economic success but I doubt there are more than a handful. Regulations are important for example they tell companies they can't dump toxic waste into our rivers or garbage on the side of roads to save money, need to abide by standard manufacturing practices so as not to make Pakistani industries look like trash, etc...
Transaction taxes (i.e. VAT) are exactly what Pakistan needs particularly in light of our massive import bill. Short of raising tariffs and cancelling our insane FTA's with China you need the taxes collected from VAT's to invest in local industries. The same way companies need to be paying taxes in order to collect revenue for directed investments into key industries.
Dubai's economy is unsustainable. Something like 70-80% of the countries population are expats who don't have citizenship in that despotic Arab sh*thole. What happens when people no longer need to go to the UAE for work? What happens when people stop traveling there on vacation?
upgrade agriculture technology increase yields and produce better quality export surplus second step setting up processing industry and market Pakistani products ij international market agriculture alone can earn Pakistan 5-6 billion a year but for that govt needs to implement good policies!
I agree, initial focus should be on the development of our primary sectors industries (i.e. agriculture and mining) and low income housing which itself will spur growth in our steel and cement manufacturing industries allowing them to produce on competitive market of scales for global export.
This is particularly important because Pakistan has the worst housing shortage in the region just shy of Afghanistan which also represents an immense opportunity for growth:
However, there are a host of investments we can make into existing industries to substitute imports of products we order large enough quantities of to produce on a very competitive market of scale (ex. chemicals like Diammonium Phosphate, P-Xylene, ethylene glycol, various medicines, etc...).
We had an industrial base. It has suffered due to high cost of manufacturing. You can not compete in international market with high cost of manufacturing.
I agree but costs go down as you scale up your production hence you're buying larger quantities of raw materials, including electricity, reducing cost of acquisition.
Simply put Pakistani industries get little to no subsidies, have been neglected for years since you never had government lead investments into our manufacturing and they're being made to compete against much larger industries from around the world like China in light of our FTA with them.
Spend on infrastructure, boost literacy rate, democratise and form a workable and trustworthy republic for investors and citizens, etc.
I personally wouldn't spend a penny on education or healthcare I'd direct all money into industry. You don't need to be literate to work in an assembly line while the country already has more than enough degree holders to take on the jobs that require them.
As for FDI it should be conditional with a host of rules attached.
Trust me, we in banking industry do know that not every FDI is beneficial for us.
Couldn't agree with you more.
