Finding the constituency for Make in Pakistan

The Make-in-Pakistan slogan raised by Pakistan Business Council (PBC) in its moot earlier this week is hard to argue with, save for uber-economic-liberals who might retort that opening the flood gates will eventually teach a feather weight boxer how to fight a heavy weight one. However, as this column wondered yesterday: which sectors are to be covered under the Make-in-Pakistan banner.

Dwelling on that at the PBC’s Pakistan Economic Forum (PEF) moot, Razzaq Dawood aptly said that ‘you are not going to make everything in this country’. Which means there has to be a sense of priority. Some of the sectors already seem to be in the government’s priority list. These relate to agricultural value-added industry, housing related industries and the traditional SME sectors; their financing and regulatory frameworks are being set up by the central bank and the SECP.

The drawing up of a list of business sectors and their specific proposals, however, is something that politics is made up of. The question that the PBC and other stakeholders need to ask is whether or not there is even a constituency for Make in Pakistan. Because that in turn is, inter alia, closely linked with the need to have constituency for reforms, especially taxation reforms. The failure to roll out VAT mode taxation does not lie in an irrelevant past; there are many other examples of failure with reference to informality, lack of documentation, under-invoicing, and evading the tax net.

Razzaq Dawood said it well that businesses too should not interfere in the duty and tax structure and bribe their way into getting SROs or other incentives. Fixing these problems in policy and governance requires a ton of political capital. Because if it were only the case of putting strong and qualified people at the top, the Musharraf/Shaukat Aziz regime would have been able to fix the then KESC ‘kundas’ and improved the tax culture as well. That regime could not do it because it lacked both political legitimacy and political capital for that kind of reforms. Their failure defined the limits of ‘khaki’ capital.

The suggestion to the PBC therefore, if there are serious about Make in Pakistan, is to reach out to the chambers, and at least explore possible synergies outside the big boys’ club. The shutter power of small boys has trumped economic reason before, and it can do so again. It ought to be dealt with in advance.

The PBC seems to be a learning organisation. Following its last PEF in Karachi, this column highlighted the absence of relevant PML-N ministers or secretary-level government officials or even politicians from opposition parties. BR Research also suggested that the PBC should take its top brass of business leaders and descend at the heart of Islamabad (See BR Research ‘PBC hands out poor marks to PML-N’ 21-Nov-2015).

This time around the PBC did just that. It held a big show in Islamabad. And also ensured a wider government presence. There was senior representation from the FBR, the BoI, commerce ministry, the PBS, over and above the presence of the advisor to PM on revenue, and the PM himself. That’s good work! Though it’s another thing that by the time a member of opposition party – Asad Umar of PTI - arrived at the venue to take part in the discussion, the programme had already ended earlier than its planned agenda. Hopefully by it holds its next PEF, the PBC will have found enough synergies with the leading chambers to signal that there may be some constituency for economic reforms in Pakistan in this century.