You cannot expect them to be stupid enough to expect returns from a sinking ship!
They kept the dollar artificially low so that they can move their looted money oversea. If you have 100K rupee, and want to convert it to dollar, its better for the rate to be lower.
This is just an example:
100K @ 164 = $610
100K @ 124 = $810
That is why they kept the dollar low using loans that this country couldn't afford. Move their ill gotten money oversea.
What I said, and explained in the sentence, is to manipulate the currency like China and Japan did, but to our advantage. When we needed to import, we needed an artificially lowered USD; when we start exporting above our weight, we should then devalue the rupee. Devalued rupee when we still need to import has hurt us real bad. We should have kept a parity between imports, exports, remittances and debt servicing until our local industry was well established for lowing of imports by offering local alternatives as well as moving towards higher exports.
China and Japan have a strong economy, and foreign reserves (3trillion China/ 300billion Japan) that can be used to keep dollar low. We barely have a foreign reserves of $15 billion to burn. Yes keeping the dollar low helps, by allowing us to import machinery at lower price. However, if you look at the data, imports of machinery was low compared to other goods. Because of low dollar, we started importing finished goods, instead of raw materials or machinery for our local industry. This killed our local industry. This was one of the factors that forced textiles business to move to Bangladesh. When you have such a competitive environment, business will always choose the route that gives the most profit. And when business shut down, you get higher unemployment.
‘EU and other major markets give preferential treatment to Dhaka industry’.
tribune.com.pk
Foreign Exchange Reserves in Japan increased to 1254898 USD Million in September from 1235700 USD Million in August of 2024. This page provides the latest reported value for - Japan Foreign Exchange Reserves - plus previous releases, historical high and low, short-term forecast and long-term...
tradingeconomics.com
https://tradingeconomics.com/china/foreign-exchange-reserves
As for subsidiaries, yes they help the lower income people. But how do you pay for it. When you subsidize something, government pays a part of the cost, so that it will be cheaper for the end consumer. If you got no business operating in Pakistan, how can you collect tax to use on subsidiaries. And if you take loans from other country, Its going to be expensive, and those loans have to be paid back one day, and without any plans of generating income that is difficult.
If you subizied lets says clothes or shoes, using foreign loans, the only way those loan can generate income for you is on the tax collected when consumer buys the product. But if your tax system is already terrible, there is very little hope of you generating any sizeable income to pay the loan off.
Now if you were to use the loans to subsidized machinery or help the local industry, you get a bigger income to collect tax from. They will have orders from all over the world, a much bigger customer segment to generate taxable profit for business, not to mention the locals would have a job. Those employed people will also have money to buy goods to keep the economy going. If there is no business, there is no employed person, and if there is no employed person, there is no money flowing through the economy.
asiatimes.com
