KARACHI: The Pakistan Business Council (PBC) has urged economic managers to ensure that the existing industry is not undermined by special economic zones (SEZs) being set up under the China-Pakistan Economic Corridor (CPEC).
In a document titled Agenda for the Economy released on Wednesday, the policy advocacy platform comprising the country’s prominent private sector businesses called for making net job creation and correcting the trade imbalance with China a cornerstone of the CPEC.
“There needs to be greater transparency on how the CPEC will impact the competitiveness of existing domestic industries and the safeguards that will be deployed to prevent it from becoming a channel for cheap imports,” it said.
Referring to the experience with the Afghan transit trade that involved “leakages”, the PBC said repeating the same mistakes in the transit of Chinese goods can wipe off many domestic industries.
The 12-point agenda calls for a number of measures aimed at creating jobs, value-added exports, import substitution, wider tax base and sustainable development.
The PBC called for renegotiating the free trade agreement (FTA) with China, noting that Pakistan’s trade deficit with the country grew fivefold to over $15 billion following the FTA. It also opposed the ongoing talks on FTAs with Thailand and Turkey. The two countries are trying to get access to Pakistan’s automobile, auto-part, chemical, plastics and rubber markets, which will undermine the existing industry, it said.
Proposing a “Make in Pakistan” policy, the council said the government should address the fragmented and often conflicting policies of federal ministries and provinces in respect of the industry and exports.
For example, it said, the Federal Board of Revenue (FBR) is driven by the immediate need for tax revenue. In contrast, the Ministry of Finance is occupied in juggling the fiscal deficit by delaying tax refunds while the Ministry of Commerce is motivated by exports through FTA, oblivious to the impact on imports, trade deficit, local industry, jobs or tax revenue.
The PBC also criticised provinces for not taking account of global competiveness in setting minimum wage rates. As for the agriculture sector, the PBC said land fragmentation has eroded productivity, resulting in per-hectare output of most crops “well below global best”.
Noting that the country’s cotton output is now a third of India’s, the PBC said the neighbouring country benefited from genetically modified seeds. “The government-guaranteed purchase price for wheat and sugar has led to unmanageable surpluses and it discourages diversification of crops,” it said.
Published in Dawn, November 30th, 2017
