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A significant shift in paradigm is taking place in the power sector in Pakistan with the move towards competitive bidding for power projects now becoming a reality. There had been much criticism from various stakeholders including the government itself that the currently used upfront tariff mechanism resulted in disproportionately higher tariffs being awarded.
On Wednesday, the investors at the Pakistan Stock Exchange went through a roller-coaster ride. After a historic positive-closing streak of 15 days, the benchmark KSE-100 finally closed in the negative zone just below 47,000 points. In December alone, the index had gone up more than 10 percent and profit taking was due.
Textile exports continue to spell disappointment, as the numbers for November released from PBS tell the story. On a year-on-year basis, November brought 9.7 percent more dollars - the same growth as October - but the 5MFY17 numbers are still down around two percent year-on-year. %D¯or the five months from July to November, raw cotton exports are down over 55 percent in volume terms, owing to another year of low cotton production. Yarn exports are up six percent year-on-year in quantity, but eight percent lower in value. Cotton cloth exports have plummeted by 14 percent in volume.
Power corrupts. Absolute power corrupts absolutely. The PMLN government in its quest to fully empower ministries is compromising the true independence of regulatory institutions. The government, especially in the power sector, is virtually assuming the role of the private sector as majority of mega projects are to be run by the public sector. In the process, regulatory institutions prudence was not letting them meet tough deadlines; and today the power of regulators is somehow crippled to make them subservient to relative ministries.
That shouldn't be a question as it is clear from the projects under CPEC that coal imports are set to increase from their current level. Right now, Pakistan is importing around five million tons of coal annually, majority of which is being consumed by the cement sector only.
Despite signing multiple trade agreements; almost 11 that are currently in force (Asia Pacific average: 7.5); Pakistani exports have been getting a tough beating in the international market and exports are dangerously falling month after month. Insofar as preferential or free trade deals are concerned, the business community remains wary and the government acknowledges that these agreements have not helped as much.
Joseph Schumpeter, an economist and a political scientist, sees economic development as a continuum of series of new processes, new markets, new sources, and new organizations all of which are a product of entrepreneurial activity. The last couple of years or so have seen a significant number of start-ups and entrepreneurial ventures in Pakistan - especially in the tech world - along with mushrooming incubators, accelerators (see illustration) and facilitations such as workshops, seminars and interactive sessions. Not only that, entrepreneurship has also felt the thrust at the university level. Even the results have been encouraging; some very crude and unique ideas have been successfully launched.