Reasons why Pakistan's economy on failed stage

[VCheng]

Taliban is not dangerous for Pakistan, they just give some trouble but not really a threat for Pakistan.

That assumption may have held true before, but certainly not now.

 

[Ssan]

Okay so very few people on this forum know this. But Pakistan actually could be energy independent if it was willing to pay more for the energy that it produces locally.

The problem, again, is our political economy. People feel that they deserve/are entitled to low prices. So we sell/ buy locally produced gas at 10% of what we import it at. This makes the further development and exploration of local gas uncompetitive. If you priced it reasonably, you wouldn’t need to import gas and could use it as a replacement for oil.

The problem is people would have to be charged at least the international market price which is 10X what we were used to paying.

Pakistan also produced 25-40% of our oil need domestically. Here we could benefit to a lesser degree from free market reforms too.

The biggest thing is for Pakistanis to no think that a more expensive dollar is bad for them. Yes it hurts in the short term, in the long run, after J -curve period of 2 years or so, it could be quite good for exports.

Finally, we need to implement market reforms across the board. This will make things more expensive but will also enable us to compete fairly with the world.

Talking about cuts in defense is less important. We are a security state thanks to India. Nothing can be changed there except to reform the army and make them stick to doing their jobs

 

[Burger_King]

Let me explain economic challenge faced by Pakistani policy makers.

Assume Pakistan is a large island with stable population of 10mn people with birth cancelling deaths. Assume Pakistan produces surplus food but is dependent on imports for energy needs. Assume Pakistan trade is in equilibrium i.e. exports cancel imports.

Now assume a university student in Pakistan comes up with wonder drug that extends the life of average citizen by 20 years. Assume, in two years, population of Pakistan rises to 15mn from 10mn.

How should policy makers deal with new reality? Let me explain.

Since people will live longer, food production will have to go up. And so will energy imports since increased population equals higher energy consumption.

So Pakistani policymakers will have to deal with double whammy: Not only will country have to produce more food for internal consumption, but also additional amount will have to be produced to finance higher energy bill. Also assume that due to geopolitical reason, price of energy doubles in the period when population goes up by 50%. This scenario will cause an even bigger headache.

So this, in simplistic terms, is the economic challenge Pakistan has to overcome. In the last 20 years, population of Pakistan has increased by an amount which is equal to the entire population of Great Britain! Such a high rate of population growth requires high rate of economic growth otherwise demand will exceed supply hence rising inflation which is the norm in Pak. Other exogenous factor that has an inordinate impact on Pak economy is energy prices since energy imports accounts for 80% of total consumption. Pak economy enters a crises period when we see sharp jump in oil prices which is what happened at the end of Musharraf's rule when oil went to around USD140/bbl and at the end of IK's govt when oil rose to USD120/bbl.

How have other countries dealt with the challenge? They have increase population productivity i.e. education which is a long term process. The other big failure of Pak policymakers is that they have failed to make the country an attractive destination for foreign investors which India has done hence its high currency reserves. Pakistanis otoh love playing democracy democracy because that is what the gora master wants. Pakistani elite is the most patriotic group of people on Earth. Unfortunately for awam, elite is patriotic towards goraland because that is where elite settles down after extracting whatever surplus they can extract from mothership.

But awam likes hungama and masala and nothing can top entertainment provided by Porno Nani and her khussi billa so on and on we go.

 

[VCheng]

How have other countries dealt with the challenge?

Let's defund all the population control programs, or give them to mullahs to manage. Oh wait, guess who did that?

 

[Sam6536]

Taliban is not dangerous for Pakistan, they just give some trouble but not really a threat for Pakistan.

Last i checked Taliban sort of gives protection to the elements which are anti Pakistan and were involved in the recent bombings. Also Afghanistan wants a porous unregulated border it seems. It's not a threat in a national emergency sense but still a big headache.

Remember there are 200 million of your people that have sympaty to Pakistan that can be used for bringing terror inside India.

Big issue here is that you're presuming every Muslim to be anti India which is not the case. The number is actually quite lower. Muslims actually enjoy the same constitutional rights, serve in the army, judiciary, executive, are politically active and qualify as Indians on world stage. I won't say there are no anti national elements but they constitute a minority.
I have a Muslim classmate who is feminist plus a communism supporter, everyone has their own opinions and belief.

 

[Burger_King]

Let's defund all the population control programs, or give them to mullahs to manage. Oh wait, guess who did that?

This is a very good point. Neighbouring countries have been able to control population growth because women enter the workforce which automatically translates into lower family sizes and higher material quality of life.

In Pakistan, especially in backward parts, due to social norms, women don't join the workforce in great numbers which translates into bigger family. The other issue is demographic bulge i.e. because population is young, absolute numbers will still increase even if size of family goes down.

In a nutshell, there is no other solution other than to increase population productivity i.e. raise education standards while implementing policies which grows exports and attracts foreign investment. In Dollar Dar, we have someone who does the opposite.

But awam is sucker for punishment so let them get their love of Dollar Dar and Porno Nani out of the system

 

[ziaulislam]

After listening to interviews and reading economic papers. Found a few issues.

1. If you check Dar era, he always supports and advocates import based economy. IMF also raised this issue and advised this trend needs to be changed if Pakistan needs to get out of this economic disaster.
2. Since we give China MFN trade status our local small manufacturing totally evaporated and the market is now full of Chinese low price products, which our local producers can't complete.
3. Pakistan has no long term economic plans, in every budget Govt proposed 5 year plans ends prematurely.
4. Our elite perks and privileges need to be reduced, which is over 17 billion dollars a year, beyond embarrassing when our leaders go to GCC countries for financial help.
5.Right person for the Righ job.

And your take please .

O today I bought a partha for my little nephew for 685 rupees, where the tax was 50 rupees,

Just one reason..

"Military inc,"

 

[VCheng]

This is a very good point. Neighbouring countries have been able to control population growth because women enter the workforce which automatically translates into lower family sizes and higher material quality of life.

In Pakistan, especially in backward parts, due to social norms, women don't join the workforce in great numbers which translates into bigger family. The other issue is demographic bulge i.e. because population is young, absolute numbers will still increase even if size of family goes down.

In a nutshell, there is no other solution other than to increase population productivity i.e. raise education standards while implementing policies which grows exports and attracts foreign investment. In Dollar Dar, we have someone who does the opposite.

But awam is sucker for punishment so let them get their love of Dollar Dar and Porno Nani out of the system

For entertainment, please read all the threads on PDF about how a large population is a great resource and a huge market that the world is dying to access, specially a few choice ones by Brofessor RiazHaq.

 

[Burger_King]

For entertainment, please read all the threads on PDF about how a large population is a great resource and a huge market that the world is dying to access, specially a few choice ones by Brofessor RiazHaq.

Oil is an asset for Norway and curse for Nigeria.

Pak population can be an asset or curse depending on which way elite takes the country. I see no discussion in Pakistan on how to meet demographic challenge other than boomer uncle solution which is belt tightening which wont work in Pakistan as belt tightening does not increase resouces.

Even relatively sane leaders like IK has not offered any solution other than selling the khawab of repatriating USD200bn from Swiss banks. And I better not say anything on his other shtick - "Riyasuthay Medina" lest I get tagged for blasphemy.

 

[nahtanbob]

So which of the following imports can Pakistan realistically replace and with what impact?

View attachment 915776

the bottom 4 are ideal candidates for import substitution

Oil is an asset for Norway and curse for Nigeria.

Pak population can be an asset or curse depending on which way elite takes the country. I see no discussion in Pakistan on how to meet demographic challenge other than boomer uncle solution which is belt tightening which wont work in Pakistan as belt tightening does not increase resouces.

Even relatively sane leaders like IK has not offered any solution other than selling the khawab of repatriating USD200bn from Swiss banks. And I better not say anything on his other shtick - "Riyasuthay Medina" lest I get tagged for blasphemy.

Norway has 5 million. Nigeria has 250 million

 

[HAIDER]

Just one reason..

"Military inc,"

Well, that was 2016 and they were doing very well. Doubt they need govt funding. Owns huge business chunk in by 2022. In 2016 dollar was 66 rupees and businesses worth 20 billion dollars.
Now the dollar is 270 and worth around 80 billion dollars or more.

50 commercial entities being run by armed forces​

Amir Wasim Published July 21, 2016



ISLAMABAD: The Senate was provided on Wednesday details of commercial entities being run by various wings of the armed forces in the country.
In a written reply to a question asked by Senator Farhatullah Babar of the Pakistan Peoples Party, Defence Minister Khwaja Asif informed the house that there were nearly 50 “projects, units and housing colonies” functioning in the country under the administrative control of Fauji Foundation, Shaheen Foundation, Bahria Foundation, Army Welfare Trust (AWT) and Defence Housing Authorities (DHAs).
According to the details provided in the reply, eight DHAs were established in major cities. These DHAs — mostly created through ordinances — are in Karachi, Lahore, Rawalpindi-Islamabad, Multan, Gujranwala, Bahawalpur, Peshawar and Quetta.
Besides, there are 16 “projects/units” functioning under the AWT, 15 under the Fauji Foundation and 11 under the Shaheen Foundation.
The house was informed that Bahria Foundation was not administrating any housing colony in Pakistan, “however, an offshore tolling type LNG project is under its consideration”.

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Bahria Foundation not administrating any housing colony, Senate told​

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The projects/units being run by the AWT are:

1. Two stud farms in Pakpattan and Okara
2. Army Welfare Sugar Mills, Badin
3. Askari Project (shoe and woollen), Lahore
4. Army Welfare Mess and Blue Lagoon Restaurant, Rawalpindi
5. Real estate comprising three small housing schemes in Lahore, Badaber and Sangjani
6. Askari General Insurance Co Ltd Rawalpindi
7. Askari Aviation Services, Rawalpindi
8. MAL Pakistan Ltd Karachi
9. Askari Guards (Pvt) Ltd, head office (HO) in Rawalpindi
10. Askari Fuels (CNG) with HO in Rawalpindi
11. Askari Seeds, Okara
12. Askari Enterprises, Rawalpindi
13. Fauji Security Services (acquired from Fauji Foundation), HO in Rawalpindi
14. Askari Apparel, Lahore
15. Askari Lagoon, Faisalabad.

The projects/units under Fauji Foundation are:

1. Fauji Cereals
2. Foundation Gas
3. Fauji Fertiliser Company Ltd
4. Fauji Cement Co Ltd
5. Fauji Oil Terminal and Distillery Co Ltd
6. Fauji Kabirwala Power Company Ltd
7. Foundation Power Co (Dharki) Ltd
8. Askari Cement Ltd
9. Askari Bank Ltd
10. Foundation Wind Energy (I and II) Ltd
11. Noon Pakistan Ltd Lahore
12. Fauji Meat Ltd
13. Fauji Fertiliser Bin Qasim Ltd
14. Fauji Akbar Partia Marine Terminal Ltd, HO in Karachi.

A company under the name of Pakistan Maroc Phosphore SA was set up in Morocco by the Fauji Foundation in 2008.
Similarly, the projects, units and housing colonies under the administrative control of Shaheen Foundation, which is a trust of the Pakistan Air Force, are:

1. Shaheen Airport Services
2. Shaheen Aerotraders
3. Shaheen Knitwear
4. Shaheen Complex, Karachi
5. Shaheen Complex, Lahore
6. Shaheen Medical Services
7. Hawk Advertising
8. Fazaia Welfare Education School System
9. SAPS Aviation College
10. Air Eagle Aviation Academy
11. Shaheen Welfare Housing Scheme, Peshawar.

The Senate was told that Shaheen Foundation was established in 1977 under the Charitable Endowment Act 1890 “to promote welfare activities for the benefit of serving and retired PAF personnel, including civilians and their dependents, and to this end generate fund through industrial and commercial enterprises”.

Turkish people supported​

Later, the house unanimously passed a resolution expressing solidarity with the democratic government and people of Turkey. The resolution was tabled by Azam Swati of the Pakistan Tehreek-i-Insaf.
“The Senate admires, congratulates and pays its tribute to the brave people of Turkey who displayed an uncommon courage by upholding democratic norms and defeated military coup and saved their country from anarchy and civil war,” says the resolution.
“It was so moving to see common Turks took to the streets and world witnessed that human flesh stopped steel tanks on just a single call of its leader, President Recep Tayyip Erdogan,” says the resolution, which “admired all opposition political parties for their historic and unprecedented resolve to protect democracy.”
During the question hour, Law Minister Zahid Hamid informed the house that India had made 460km-long fence along the Line of Control (LoC).
He said the issue of LoC violations by India had been raised at the UN Security Council through a letter that had also been circulated among all its members.
Published in Dawn, July 21st, 2016

 

[VCheng]

Oil is an asset for Norway and curse for Nigeria.

Pak population can be an asset or curse depending on which way elite takes the country. I see no discussion in Pakistan on how to meet demographic challenge other than boomer uncle solution which is belt tightening which wont work in Pakistan as belt tightening does not increase resouces.

Even relatively sane leaders like IK has not offered any solution other than selling the khawab of repatriating USD200bn from Swiss banks. And I better not say anything on his other shtick - "Riyasuthay Medina" lest I get tagged for blasphemy.

Exactly. That is also why selectively picking data or making generalizations only highlights confirmation biases and leads to erroneous judgments. In just about everything.

 

[Khan_patriot]

Disclaimer: I am not an economist and this is my very layman opinion.
The main problem is see is that our entire political is based on who gives the most handouts/ subsidies (financed by loans). The leader who delivers the most subsidies (at the cost of forex) is elected and hailed as a messiah. We aren’t an oil producing country for example, why did we always subsidise it? Electricity again, why do we subsidise it and rake up losses when there are millions of people who don’t even pay their bills.
Our policy makers need to wake up and smell the coffee, this model is not sustainable at all. But who will bell the cat by letting the free market decide the cost of commodities? It’s going to be a hard road but is the only long term solution.

 

[HAIDER]

Disclaimer: I am not an economist and this is my very layman opinion.
The main problem is see is that our entire political is based on who gives the most handouts/ subsidies (financed by loans). The leader who delivers the most subsidies (at the cost of forex) is elected and hailed as a messiah. We aren’t an oil producing country for example, why did we always subsidise it? Electricity again, why do we subsidise it and rake up losses when there are millions of people who don’t even pay their bills.
Our policy makers need to wake up and smell the coffee, this model is not sustainable at all. But who will bell the cat by letting the free market decide the cost of commodities? It’s going to be a hard road but is the only long term solution.

agree, imagine "More alarming is the estimated Rs 53 billion worth of power theft in Pakistan in 2018 which is assumed to have risen since."

 

[epebble]

So which of the following imports can Pakistan realistically replace and with what impact?

View attachment 915776

This list shows the folly of focusing only on economizing imports. Pakistan should focus on Creation of Wealth i.e., work hard in creating goods or services that the world wants and is willing to pay for. Focus more on earning than living frugally. Focusing mainly on frugal living will simply make everyone poor as in Myanmar, North Korea or Cuba. Look instead at Bangladesh, Indonesia and Malaysia.