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Print

It is half full!

Published September 29, 2019 Updated September 30, 2019

A bad product can be sold by a good salesperson while a good product's prospects can be ruined by a bad salesperson. The negative outlook by people of an otherwise stabilizing economy is depicting poor salesmanship by our economic managers. Lately, the IMF, ADB and WB are generally positive about future economic outlook; however, the mainstream media coverage, is showing all gloom and doom.
Back in 2017-18, when the emphasis of these institutions was on vulnerable external account, media did not pick that, and today, when the reality is hitting us, and correction is underway, the incumbents are facing the wrath. People will talk that the ADB has lowered the growth to 2.8 percent and increased the inflation forecast to 12 percent. But nobody even notices that these are better than the IMF numbers of 2.4 percent growth and 13 percent inflation.
The WB said that with six reforms, Pakistan is becoming part of top 20 reformers globally in ease of doing business. The IMF visiting team earlier in the month said that the Programme has started at a promising note, while the ADB's press release headline was that economy continues to stabilize amid strong headwinds.
In another recent incident, Indus Motors' closure of plant for almost two weeks a month was twistedly covered to give the impression that the company is winding up the shop. According to a company executive, the main reason for almost 50 percent dip in sales is not just higher prices and skyrocketing interest rates, it is also the fear of taxman that is keeping non-filer and non-tax compliant filers at bay from buying cars. But not many talk about importance of documentation, and interpret that it is a hiccup, during an honest effort in resetting the economy.
People talk about construction slowdown and plummeting profitability of cement companies. But seeing the massive dip in PSDP and ending of CPEC phase-1, three percent decline in cement sales (9% domestic sales dip) is hardly significant. This shows the relative strength of the private sector construction. And profitability is down because cement companies went into massive expansion and the financing cost is hurting them. No one is talking about the resilience of private sector construction.
Earlier this month, Dolmen launched its mega mall construction in partnership with DHA in Lahore. Anecdotal evidences suggest that rush in existing malls and eateries remain unabated as people are still spending. However, the sales of FMGCs are falling for other reasons as well. One is that the documentation spree has disturbed the value chain - supplier and distribution, as retailers and small suppliers are not willing to share NICs on transactions.
The other reason for dip in profitability of companies in dairy and bottling businesses is due to Supreme Court ad-hoc interventions in the previous Chief Justice's tenure. Telcos and private school businesses are facing the brunt of court interventions too.
The other element of slowdown in many projects is delay in public-private partnership models as the fear of NAB is unnecessarily delaying policy actions. There are many elements contributing to the problems we face today. The issue with the incumbents is that they are not good in communication. Plus, the investment policymaking is missing - there is not much to talk on the structural reforms and investment policy for sectors like IT, tourism and other sunshine sectors. And more deep routed issue is of governance where no change is in the picture.
At top, there is no ownership of the economy. Asad Omer lacked a vibrant and energetic team. Now with Baqir, Shabbar Zaidi and Nadeem Baber (though he has conflict of interest), experts are positioned at key posts. But who is the anchor? Certainly, it is not forte of the PM. The Finance Minister lacks energy and enthusiasm. The other oldies in place for governance, civil service reform and commerce have wealth of experience, but are moving at a snail's pace. Race horses are missing.
On governance, the service delivery is decentralized. PTI has government in two provinces; but the CMs are not promising. The ruling party is losing its core strength in Punjab because of persisting with the CM. Had the economy been doing good, such problems could have been overlooked. But now these are becoming manifestation of poor governance and lack of administration control.
The last but not the least point is that of media management. PML-N, in its term cracked the model, and managed the media in its favour. Now the slowdown in media houses is even greater than many other industries. Many reporters and media persons have lost jobs and many others are facing salary cuts. The government has to manage media properly to have better communication - in the recent visit to the US, PM Imran is working on improving otherwise rock bottom image of Pakistan in international community; while here at home, more voices are critical of him.

Copyright Business Recorder, 2019

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