Capital flight: a point to ponder

Khalid Abdul Razzak, Malaysia's Consul General in Karachi, revealed that Pakistanis had transferred 180 billion rupees (about 2.1 billion dollars) to Malaysia under Malaysia My Second Home Programme, with Pakistan emerging as one of the top 10 countries that benefited from this programme.
This programme allows a person to enjoy the country's facilities for 10 years, provided a sum of 300,000 dollars is transferred to a bank account held in Malaysia. Thus the number of Pakistanis who have benefited from this programme to date is around 700 people. While at first glance this may not be a large number of people, yet significantly it does reflect a disturbing trend: the wealthy, whether they are industrialists/service providers/rich farmers are seeking alternate residences given the increasing lawlessness in this country.
The Consul General also revealed that most of the 700 individuals are from Karachi which must, one hopes, bring it home to the city's administrators that something needs to be done on an emergent basis to reverse the deteriorating law and order situation in that city. It is a foregone conclusion that if politics is allowed to hold the economy hostage then Pakistan's financial capital as well as the rest of the country would suffer from sustained heavy capital flight.
The general perception in this country is that there is a continuing and sustained deterioration over a range of issues. Inadequate electricity supply, third year running that is accounting for several hours of loadshedding each day, is throttling the life blood of economic activity in this country.
This has accounted for many businessmen investing abroad. Additionally the Bangladesh government has succeeded in getting preferential trade deals with the European Community which has led to many a Pakistani textile manufacturer opting to relocate factory units in that country. However, a request by the EU for extending such a deal for a limited period in support of Pakistan's flood victims remains pending in the WTO because of Indian objections.
But there are other factors that account for a general lack of interest in investing in Pakistan, other than law and order problems as well as the ongoing energy crisis. One such factor is the perception that the country's education system is not up to international standards which, in turn, has accounted for the children of the country's elite opting to take the British GCSEs and, upon completion, to go abroad for studies. This accounts for the fact that the number of Pakistani students going to UK institutions is one of the highest in the world. Within this context, it is unfortunate that the outlay on education remains well below the UN target of 2 percent of GDP per annum.
Successive Pakistani governments have been unable as well as unwilling to dramatically change the expenditure priorities which account for large annual injections into current expenditure with defence and interest payments as well as salaries of civil servants contributing to the bulk of expenditure; while the dearth of physical infrastructure with an in-built element of corruption/nepotism in the award of contracts - considered a much more attractive prospective for politicians than investment in the social sectors like education - account for the bulk of allocation in the Annual Development Programme.
It is, however, extremely disturbing that the national budget, which is the economic treatise of a government for one year, has suffered and continues to suffer from a lack of appropriate debate in parliament due to the predominance of other negative factors in our country including the challenges facing the security agencies, post-Osama bin Laden, the energy crisis, corruption/nepotism in appointments in autonomous entities leading to ever-rising bail out packages, failure to render the tax structure more equitable and last but not least, the failure to have an economic vision premised not on foreign loans but on indigenous resources.