For any country, the planning commission is of vital importance. It sets the long-term growth policies for the country, implementation of which results in the better use of resources to attain economic growth.
Pakistans planning commission has presented 9 five-year plans so far. Unfortunately, not one has been successful. The plans were scrapped by the democratic and military governments, and the policies became mere records in the files. In the current situation, it is important that we review the strategic plans of countries in the region that face peace and security issues but have managed to achieve economic growth targets.
During Benazir Bhuttos government, a high-level delegation led by Asif Ali Zardari went to Korea to assess their impressive economic and industrial growth. During a conversation with the Korean ambassador, I was informed that Korea successfully implemented a 5-year plan that was made by our Dr Mehboob-ul-Haq for Pakistan. It led to remarkable growth in Korea, but it is unfortunate that we draft excellent policies but never implement them.
Recently, the Planning Commission of Pakistan has prepared the 10th five year plan (2010-2015) under the leadership of Deputy Chairman Dr Nadeem-ul-Haq and his team. Dr Haq thinks that the role of the government must be restricted and the private sector be made the engine of growth.
The private sector will be the centre of economic growth, whereas the government will ensure the implementation of good policies, an enabling environment, good governance, supremacy of law and transparent accountability, with the goal of creating new jobs and reducing poverty in the country.
Public sector development plans should be based on the foundations of private investment. The private sector should be encouraged to participate in public-private partnerships, where market based returns are employed to compensate private sector investors.
Growth plans that require foreign support should be avoided as they take long time to reimburse. Often such plans are impractical because of delays and cost overruns. And it is for this reasons that the old models of government plans have not reaped visible economic growth.
According to the latest plan, by 2050 Pakistans population is estimated to reach 350 million. The governments biggest challenge will be to provide jobs to the 236 million labour force. After 2035, the number of men between the ages of 15 and 64 will increase, which will be beneficial for the country. Similarly, as the number of people aged 65 will rise, they will become more dependent on social services of the government and strain resources.
The 6-point growth agenda suggests that instead of hardware, software and human resources are the foundations for public and private investment. Similarly, to make private sector investment attractive, the government will have to reduce the cost of production, lobby for market access to improve their competitive capacity. Apart from this, to boost the agricultural sector, industries that rely on agriculture as raw material will have to be supported.
Indonesias 5 year plan (2010-14) focuses on developing social infrastructure, Thailands (2007-11) plan includes investment and trade competitiveness, Malaysias 5 year plan that was presented in 2010 emphasises human resource development and the domestic economy, Chinas 5 year plan (2006-10) centred around institutional strengthening and harmonisation with the social sector, Indias plan (2007-12) targets education and urbanisation, Bangladeshs plan for 2010-11 includes good governance, digital Bangladesh and improvement in regional cooperation, while the Philippine plan (2004-10) focuses on financial market reform, research and development and the acquisition of modern technology.
Keeping these statistics in mind, Pakistan will have to post 8 percent GDP growth consistently for many years. Otherwise, there will be a rise in unemployment. Unfortunately, in an effort to contain inflation the SBPs discount rate tightening has led to banks lending rates shooting up to 16-17 percent, which discourages investment.
Law and order situation, gas and electricity load-shedding, decline in FDI, and the slow pace of privatisation have all severely impacted economic growth. Therefore, government policies must encourage industry, agriculture and service sector businesses. Bank lending rates and reduction in electricity and gas load-shedding must be ensured. This will encourage investment and create new jobs. I hope that the current plan by the planning commission will be able to achieve its goals.
Dr Baig is an Advisor to Prime Minister on Textiles. He can be reached at drbaig@pakdenim.com.pk