Sustainable growth: Entrepreneur for fixing long-running fiscal, tax problems

Recent surge in direct foreign investment and improved macro-economic indicators should not make Islamabad complacent as it must meaningfully fix long-running fiscal and tax problems to achieve sustainable growth, a leading American-Pakistani entrepreneur said.

"I am always troubled when governments claim economic success because the fruits of such growth are hardly visible on those on the lowest rung of the ladder," Mossadaq Chughtai, the agriculture and technology investor said.

Secondly, he said, the current fixes to current account deficit or balance of payment are just temporary measures like IMF loans and help from friendly countries and they are not the result of growth.

Similarly, the buildup of foreign exchange reserves is just a cushion, not a guarantee that the country would be able to pay billions of dollars in loans in 2020 fiscal year and also meet development requirements, Chughtai pointed out.

"It is good that our standing in terms of ease of doing business has improved and foreign direct investment is on the rise in energy and automobile sectors. "But over the long-term, the way out is not dependence on foreign sources but indigenous, most notably incentives that spur growth, boost exports and expand tax collection," the Virginia-based entrepreneur with several businesses in the United States and Pakistan said.

On all these three counts, he said, the Imran Khan government is lagging behind as it has cut down the development budget and increased electricity tariffs as well as fuel prices.

The austerity measures and spiraling energy prices hardly inspire confidence or stimulate economic growth, which last year remained just over 3% and is predicted to be just over 2% in 2020. "The tax base has to be expanded and energy infrastructure coming up as a result of American support over the last few years and massive Chinese investment in CPEC projects should be geared to making a difference."

For example, import of raw materials for exports in sports and machinery in the textile sectors should be made easier. The manufacturing will create jobs and bring buying power to consumers. Then, he said, there is the question of transparency. "The international investor wants a smooth process, not any hiccups like the woeful working of the Board of Investment," he concluded.