The Pakistan Economic Forum (PEF) is an event sponsored by the Pakistan Business Council (PBC) with the objective to bring into public discourse major issues confronting Pakistan – both economic and social.
The theme of the fifth edition of the PEF which was held in Islamabad in December 2018 was “Make-in-Pakistan”. Pakistan is deindustrialising at an alarming rate, from a high of 17.5% of the GDP, the share of manufacturing stood at 12.1% in 2018. This drop in share of manufacturing in GDP has led to a reduction in the share of manufactured goods in Pakistan’s exports and a reduction in Pakistan’s share in global exports.
The Make-in-Pakistan theme is about creating jobs, increasing exports and import substitution of both goods and services – in short making & doing more in Pakistan, and leading to an increase in government revenues. Domestic industry faces multiple impediments which have over the years eroded its capacity and competitiveness.
Fragmented and inconsistent policies, coupled with poorly negotiated trade agreements have hurt industry’s ability to build scale and compete in the global market. In addition, the relatively higher cost of production in Pakistan makes the local businesses unable to compete with regional partners. The fiscal policy places disproportionate burden on the manufacturing sector while dis-incentivizing capital formation, this further undermines industry’s capacity. The country has developed an increasing trade account deficit over the past decade due to over-reliance on imports and stagnating exports. The recurrent external account crisis, coupled with the persistent fiscal account deficit, has resulted in the country going to the IMF 12 times in the last 30 years.
The PBC realizes, and this was highlighted at the PEF, that fundamental structural reforms are required to remove impediments which hamper operational effectiveness of domestic industry. The footprints of the grey and black economy need to be significantly reduced while leakages through under-invoicing and smuggling need to be dealt with effectively. This calls for a fiscal regime conducive to local business, as also regionally competitive energy costs.
The Prime Minister in his address at the concluding session promised his government’s unequivocal support for local businesses, he reiterated his belief that business needs to make a profit to allow it to grow and to reinvest – leading to the creation of jobs, exports / import substitution and an increase in government revenues.
The Pakistan Business Council (PBC) is a think tank and business advocacy body composed of 78 leading private sector businesses, including multi-national companies in Pakistan. Its members’ sales represent every ninth Rupee of the country’s GDP and they contribute 25% each to the national tax revenue and annual exports. Together they employ over two million in their value-chains. PBC members thus have a very significant stake in Pakistan’s economy and a deep commitment to fostering its growth.
The Pakistan Business Council (PBC) is a think tank and business advocacy body composed of 78 leading private sector businesses, including multi-national companies in Pakistan. Its members’ sales represent every ninth Rupee of the country’s GDP and they contribute 25% each to the national tax revenue and annual exports. Together they employ over two million in their value-chains. PBC members thus have a very significant stake in Pakistan’s economy and a deep commitment to fostering its growth.
