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The Ugly Truth About Pak Economy: A Brief History

Verve

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Sir,

Thank you for this wonderful thread and your excellent thought provoking posts. A lot to say but patience to pen it all down is running thin these days, some sort of a fatigue has set in. So i'll be brief, but will attempt to add more later ...

Aren't we capable of Original Thinking based on certain Prinicples

We sure are but for that the short vision mentality needs to be overcome first.

Jinnah model you said, and he was very clear on what that model is. Unfortunately in Pakistan and elsewhere the mention of a system based on Islamic Principles is frowned upon and the strong biases bring out the worst turning a potentially fruitful and sensible discussion into a disaster. There is an argument that current constitution is based on Islamic principles but it is not, it is in serious breaches and the economic system has nothing Islamic about it but then some will just get hung up on Blasphemy laws and derail the discussion. It is the narrow focus that's a serious hindrance.

As I see it, this system is the
.. Third Way

As you said that some sort of economic stability will be followed by a system change. If the new system encompasses the interest-based economy, it will lead to failure again down the road - it just will not work in Pakistan despite the counter argument that it works in other countries. Unfortunately for us, Jinnah left us before the banking system was established. Later on the Constitution was painted as Islamic but it was filled with much of anything but, and the parts that are have been blatantly ignored by the criminal elite to line up their pockets.
 

Mangus Ortus Novem

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Sir,

Thank you for this wonderful thread and your excellent thought provoking posts. A lot to say but patience to pen it all down is running thin these days, some sort of a fatigue has set in. So i'll be brief, but will attempt to add more later ...



We sure are but for that the short vision mentality needs to be overcome first.

Jinnah model you said, and he was very clear on what that model is. Unfortunately in Pakistan and elsewhere the mention of a system based on Islamic Principles is frowned upon and the strong biases bring out the worst turning a potentially fruitful and sensible discussion into a disaster. There is an argument that current constitution is based on Islamic principles but it is not, it is in serious breaches and the economic system has nothing Islamic about it but then some will just get hung up on Blasphemy laws and derail the discussion. It is the narrow focus that's a serious hindrance.

As I see it, this system is the


As you said that some sort of economic stability will be followed by a system change. If the new system encompasses the interest-based economy, it will lead to failure again down the road - it just will not work in Pakistan despite the counter argument that it works in other countries. Unfortunately for us, Jinnah left us before the banking system was established. Later on the Constitution was painted as Islamic but it was filled with much of anything but, and the parts that are have been blatantly ignored by the criminal elite to line up their pockets.



My dear Pak,


We do live in a world in continum of last 500 years. Jinnah did a great interview with the Voice of America before he died. Should be in the Pak Archives....

Why do Pak media, politicians and State hide his speeches from the Paks?

Of course, the differece between credit and debt is the what is enabling condition of truly Humanistic economy.

Jinnah gave a clear framework for Pak state from governance to education, from economy to foreign relations.

I shall await your input to this thread...when you can compose your thoughts in the manner you want.

For now let us welcome contribution from others who wish to see Pak become a Free, Sovereign and Welfare-Just State.

Take good care.

Regards,

Mangus
 

Agito

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Economic Solutions' Framework: Laying the Foundation for a Sustainable Economy

All economies and their performace is the refelction of politics.

Dollar dominance is the result of politics.

Yuan management and slow, controlled trading is result of politics. Japanese property boom and bust was result of politics. ASEAN 'miracle' boom/bust/boom...politics. Buying T-bills is result of political decision.

Euro is purely a political decision. Had no underlying economic need other than trans-atlantic decision making and tightly nitting mainland Europe into a political entity. Ask PIGS the price they are paying for this. Greece, let us not forget.

The point is all economies mean political expression i.e. political economy. Just have a look at resource rich countries and their political make-up and their related economic performace.

If we look at the Pak economic history... apart from mere 7-9 years period of 1960s... primarily Pak economy has been a rentnier economy living off loans and aid packages. This is evident at both macro and micro level. The industrial, banking and export sector has the same behaviour. Just enough investment to keep things going.

No business or tech innovation. Getting the money out of the country or creating foreign shell (trading) companies to either under or over invoice. In any case just looking at the conoutry, consciously or unconsciouly, as a colony. The elite has all its assets abroad. An estimated $200 to $300 Bln is total net capital or assets abroad. Not all of it belongs to politicos.

In other words, if only Paks can invest in Pak then no foreign investment is needed. BD export boom in textile is Pak investor driven. Malaysia another destination. Again not all of it criminal produce but rather escaped capital due to 20 years of WOT and Karachi Burning.

We could indulge deeper about money sent back form Overseas Paks... through hundi... but the picture is there.

The Point!?: Pak is NOT a poor country.

What is a Developed Economy:

We can go into standard, known, features such as ease of doing business and all that jazz... however, let us focus on the quint essence of a developed or developing economy with solid foundations.

In essence a strong economy is a Giant Rules Engine with strong Exception Management System. Everything designed for Flow in the Process. Nothing else.
Without this there cann't be any innovation or business growth. Even in a communist political system of China one can easily find this fact.

A passing look at Pak's economy or general taxation system will show that the entire legislation is designed to retard economy activity. Or in other words a system designed to squeeze as much as possible from citizens and Pak State.

This in nutshell is the current Political Economy of Pakistan.

What Could be the Pak Political Economy?


Socialism? No!

Neo-liberal Capitalism? No!

Humanism? Yes

The very Idea of Pak was driven by a sense of this. To have a place where Paks could become Free Humans according to their unique Civilisational Heritage. Why else swim through ocean of blood?

Do the laws, regulations enable the advancement of Human Condition in Pak at the moment? Or do these enable the oppositie? Be it courts, civil services or daily life?

Except for 5 years under Ayyub Khan... Pak has been primarily a parlimentary system with British laws. These laws were designed to govern a Colony not a Free State. Yet Pak is still under the same laws. The entire legal framework is geared towards Control rather than progress.

This, however, is a separate discussion. Nevertheless, extremely relevant. But not now....

Creating a Humanist Economy:


With more than 50% living under the poverty line and 64% youth buldge redical steps need to be taken to Save The Social Fabric.

As an Artificial Intelligence dominated world is here... creating jobs for all these young population is a tremedous challenge.

Given the scope of this Framework I am forced to briefly highlight areas of focus and reform. Each element requires a Whitepaper in its own right.

1) Land Reforms:

Serfs living in Sindh or South Punjab are good to vote for Never Dying Bhutto but to elevate them from sub-human levels it is necessary that the landless farmers be given land from the Unionists who opposed the very Idea of Pak i.e. today's electables

2) Population Act:

A two child policy needs to be implemented under National Emergency Act. Easy said than done... but it must.

3) Education Act

A unified, standardised educational system from GB to Gawadar. In order to create ease of mobility in the job market later this is essential. Salaries of the teachers be the highest of any government employee. Only the best and highly educated should be hired through qualification exames. Only for 5 years. For renewal qualificaiton exame.

Free food and books. Any mismangement or theft means life in prison. You can forgive murders but not those who steal from educational instituitions. Compulsary education till 18 with focus on science, tech and paractial industrial skills. Urdu as medium. English as second.

4) Public Services Act

No more permanent government jobs. An AI based performance management system for all government employees. Except for Foreign Office.
Dismantle CSS. Direct hiring based on experience in business.
Create a country wide Rules Engine based on open source Enterprise Architecture spread across the country on Blockchain.

5) One Tax Act

Paks, poor ones, are criminally taxed through indirect taxes. On the other end corporate sector has the worlds highest tax ratio. This again is the reflection of rentnier mentality/system.

No sales or wealth tax.

A single Tax % for everyone living above the poverty line. This % has to be the same i.e. propotional to the income. If some earns a million he/she pays same % relative to income to someone who earns less. Justice in taxation.

Dismental tax office. Bring in AI solutions. Custom duties also be governed by unmanned systems. Pak State will have more revenues this way than any other schemes.

6) Agriculture Revolution

Per hectre yield of Pak farming lands is horribly low. This needs to become threefold at least. This is far easier way to reduce poverty than anything else.

The entire value chain related to Agri i.e. irrigation, machinery, fertilizers, storage, farm-to-market needs to be Pak made. Herein Value Addtion and Food processing/packaging is critical. Easily done. Just take out the parasites and redtape.

Biotechnology parks for Pak tech firms be established with 10 year tax break... provided there is complete tech transfer and skills development of Young Pak techies... Also essential that these have to be JVs only. No foreign firm be given this. Ban GMO except for cotton seeds.

Genetic Sciences and Tech centres of excellence and related business spin-off with subsidy and tax breaks for ten years.

7) Industrial Revolution

There is no luxury of time... from pure mannual labour intensive to high tech Pak must establish SEZs in all areas. Higher tax breaks for high tech. The key policy is to make Everything in Pak. Period.

Electronics, manufacturing and processing industries must be the focus in the first phase. Focus on transportation i.e. cars, buses, truck, high PK tractors etc. More competition the better. #BanSuzuki

8) IT Cities

There is a scope for at least four IT cities in Pakistan. Same as 7 policy should be to part of each step of the IT value chain. With Social Responsibility Act required of all IT companies to train young Paks through Skill Centres and Internships.

9) Banking Sector Reform

Pak banking sector is lazy. It has been fattening up by lending to government. Pak must allow competition by creating a Credit Issuing Agency.

Banking sector is owned by the same #CriminalEnterprise which own IPPs. Go figure!

10) Energy Act

IPPs be opened and tried under Economic Terrorism Act by special courts. Furthermore, renewable must form at least 50% of the energy mix. Dams. Dams and more dams.

Also, the need for Intelligent National Grid is critical. Nobody has paid any attention to transmission for last 30 years.

11) 10 New Cities

Firstly, Master Plan for Gwadar needs to be revisited with an eye on making it a second Karachi. Apart from this 10 small and medium seized cities needs to be planned using best practices available, in accordance to geography.

The cities must have a long term perspective to make them viable i.e miroc economically viable centres. Time to look at cities a different lens.

12) Free Karachi Act

Pass law to declare Karachi a Federal City or Second Capital of the State. Free Karachi from all political mafias.
Make Karachi go up. Must also be done for Lahore as well.

13) Tourism Yes, Disneyland No

There is no country like Pak. From GB to Gwadar... However, it is equally important that the 10000 years old Civilisation does everything possible to retain a distinct cultural and social hue.

The very distinct Pak Hospitality... the essence of Pak culture... is a Brand like no other. It is not just the landscape but the Pak People. It needs to be markted wisely.

Welcome to the Land of Dancing Horse

Welcome to the Oldest Living Cities

Welcome to the Oldest Civilisation

Paks are NOT whites... so trying to become would be useless. Then neither would be white nor Pak. Something which requires deep meditation!

14) Free Internet

With 5G coming this should enable in economic transformation. Fintech and Alibaba... can help women and young to have their goods /handicrafts sold worldwide.

Pak must also lauch statelites in this regard to provide free highspeed internet to all Paks.

15) Trains, trains and more trains

At the moment the entire train infrastructure is in shambles. Pak must plan for longterm and high speed trains... electric transmission. In this regard apart form track agreement... local manufacturing agreement with China needs to be signed.

Here blindly follow Chinese strategy.

16) China Model Yes, China Model No

China could do all those things because China is China. China doesn't have #DieselMullahs or ZAB or NS or #CriminalEnterprise

So following Chinese Model is not that easy. However, the elments of the Chinese Model can be implemented in Pak development.

A Thinktank of Sino-Pak Socio-Economists can become part of Sino-Pak Strategic Cooperation Framework.

17) MIC Pak & Co.

The expansion in Pak MIC and vertical integeration of private enterprises is needed. Not just lipservice. The export potential in product and services is huge and needs to become part of Military and Economic Diplomacy.

18) CPEC... to be a Road or a Bridge


CPEC can only deliver fruits for Paks if there is actualisation of SEZs, financial/trading centres and related services industry boom in Pak for China, MENA and Africa.

If Pak becomes just a road for China then the loss will be immense. Something to ponder.

And finally....

19) Financial System

At the moment Paks hold more gold privately than the State. Not bad for the people but bad for economy. RekoDig needs to be given protection under National Security Act. And all that gold must go straight to the State. PKR must have some underpinning of gold. It is miserably exposed.

#PetroPKR ??? Well it can be done but nobody has the guts to do it. Besides... too early in the game... so no flying horse just yet

Pak needs to plan today if and how it wants to escape the middle income trap...... the only solutions is spending equally on education as defence... perhaps double.

#2047PakAt100

@Reddington @zulu @Dubious @Khafee @niaz well gents, first attempt. Obviously, requires more detail in each facet. But then it becomes a book on Transformation!

Ambitious, I like it. The problem though is sustained political will, this will take at least a decade to set up correctly. Political parties need to stop playing politics and focus on policy. If only the parties could set aside their differences and focus on implementing a unified vision.
 

Mangus Ortus Novem

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Ambitious, I like it. The problem though is sustained political will, this will take at least a decade to set up correctly. Political parties need to stop playing politics and focus on policy. If only the parties could set aside their differences and focus on implementing a unified vision.


https://defence.pk/pdf/threads/paks-criminal-enterprise-can-the-state-free-the-people.614517/

I fear, my dear, we need a total new start... the current political parties and system is not going to allow any substantial change....

A new system is necessary for Pak Political Economy to become people oriented... development is science!
 

ps3linux

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While I agree with many of the contents in the thread I have few thoughts on the matter, I mean for around 2 decades I am in the financial sector I have seen ups and downs of the economy the later more often. Although it is true that economic mismanagement and corruption has finally caught up with us, we are in deep deep trouble for one thing but on the other hand for the last 10 months I am seeing a concentrated effort by international players fully aided by their funded media joker that Pakistan is in dire straits due to incumbent Govt. I have never seen ADB/WB/IMF so active in comparing GDP growth during one Govts time with the previous one ( I have no political affiliation, people in my line of business cannot afford to have one, if they are to make sound financial decisions/analysis/advisory) let me give you an interesting example:

ADB says that GDP growth during incumbent growth is 3.9% YoY
World Bank Says it is 3.4% YoY
IMF says it is 2.7%

It is the first time I have seen such a huge discrepancy, when we are talking about GDP (Nominal) of 303 billion US$ it becomes significant and when we talk about 1.06 Trillion dollars of GDP (PPP) it become phenomenal, something tells me the situation though bad is not that bad, incumbent Govt managers too are idiots they are not coming up and telling the people the previous as***les pledged majority of Govt future receivables to commercial bank as collateral's, that is why the Govt could not provide any relief to the public because it has no money. Never have I seen ADB/WB/IMF trying so enthusiastically to discredit any Govt in Pakistan, they did not have any problem with the best figure fudging duo of Ishaq dar and Pious Mulla waqar.

Food for thought.

I have given few thoughts about other aspects here:

https://defence.pk/pdf/threads/insolvency-bankruptcy-law.615252/
 
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Mangus Ortus Novem

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While I agree with many of the contents in the thread I have few thoughts on the matter, I mean for around 2 decades I am in the financial sector I have seen ups and downs of the economy the later more often. Although it is true that economic mismanagement and corruption has finally caught up with us, we are in deep deep trouble for one thing but on the other hand for the last 10 months I am seeing a concentrated effort by international players fully aided by their funded media joker that Pakistan is in dire straits due to incumbent Govt. I have never seen ADB/WB/IMF so active in comparing GDP growth during one Govts time with the previous one ( I have no political affiliation, people in my line of business cannot afford to have one, if they are to make sound financial decisions/analysis/advisory) let me give you an interesting example:

ADB says that GDP growth during incumbent growth is 3.9% YoY
World Bank Says it is 3.4% YoY
IMF says it is 2.7%

It is the first time I have seen such a huge discrepancy, when we are talking about GDP (Nominal) of 303 billion US$ it becomes significant and when we talk about 1.06 Trillion dollars of GDP (PPP) it become phenomenal, something tells me the situation though bad is not that bad, incumbent Govt managers too are idiots they are not coming up and telling the people the previous as***les pledged majority of Govt future receivables to commercial bank as collateral's, that is why the Govt could not provide any relief to the public because it has no money. Never have I seen ADB/WB/IMF trying so enthusiastically to discredit any Govt in Pakistan, they did not have any problem with the best figure fudging duo of Ishaq dar and Pious Mulla waqar.

Food for thought.

I have given few thoughts about other aspects here:

https://defence.pk/pdf/threads/insolvency-bankruptcy-law.615252/




My dear Pak,

Nice post. You are heading there...

https://defence.pk/pdf/threads/paks-criminal-enterprise-can-the-state-free-the-people.614517/

IN the above thread I asked for someone like you to calcualte the conservatie size of Pak economy. If you have time... give it a shot!

Pak economy will remain hovering between 3.5% to 4.0% in current fiscal year. Perhaps one after that. Not bad.
Given that the markup currently is unnaturally high. Further, inflation figures are about 1.5% to 2.0% higher. There was some #CriminalEnterprise behind it.

MinFin is a den of financial mafia... all the way to SBP.

The System is totally occupied/compromised. This not how the system of state functions.

Economy and geography are interlinked. Please, closely look at the Pak Map... also there is a one fundamental question: Why so far Pak State has not allowed to bring out the total Value of Pak natuaral resource?

I support this decision of the Pak State... given the blackmailing mafia in the name of democracy and foreign added terrorism/insurgencies...

The fundamental problem has been import feulled / loan funded economic growth of Nawaz League ...moneylaundering mafia.

The figures were totally wrong. IMF/WB looked the other way and now all of sudden they want to impose harsh conditions. Why?

The import-export imbalance of the previous regimes has been equal to high treason. A grave crime. PKR is NOT a global reserve currency...yet the trade imbalance was even more so than the US per % points.

If this is not #EconomicTerrorism then what is.

I still stand by my contention that #CriminalEnterpise see Pak as colony not as their home.

There has not been a Pak Political Economy since last 60s. Only a rentnier policy where both aid and loans were parked somewhere else. All of the rulers were in it. Civlian and military alike.

So, question to you is: What should be Pak Political Economy?

Thanks for constructive contribution!

Regards,

Mangus
 

ps3linux

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My dear Pak,

Nice post. You are heading there...

https://defence.pk/pdf/threads/paks-criminal-enterprise-can-the-state-free-the-people.614517/

IN the above thread I asked for someone like you to calcualte the conservatie size of Pak economy. If you have time... give it a shot!

Pak economy will remain hovering between 3.5% to 4.0% in current fiscal year. Perhaps one after that. Not bad.
Given that the markup currently is unnaturally high. Further, inflation figures are about 1.5% to 2.0% higher. There was some #CriminalEnterprise behind it.

MinFin is a den of financial mafia... all the way to SBP.

The System is totally occupied/compromised. This not how the system of state functions.

Economy and geography are interlinked. Please, closely look at the Pak Map... also there is a one fundamental question: Why so far Pak State has not allowed to bring out the total Value of Pak natuaral resource?

I support this decision of the Pak State... given the blackmailing mafia in the name of democracy and foreign added terrorism/insurgencies...

The fundamental problem has been import feulled / loan funded economic growth of Nawaz League ...moneylaundering mafia.

The figures were totally wrong. IMF/WB looked the other way and now all of sudden they want to impose harsh conditions. Why?

The import-export imbalance of the previous regimes has been equal to high treason. A grave crime. PKR is NOT a global reserve currency...yet the trade imbalance was even more so than the US per % points.

If this is not #EconomicTerrorism then what is.

I still stand by my contention that #CriminalEnterpise see Pak as colony not as their home.

There has not been a Pak Political Economy since last 60s. Only a rentnier policy where both aid and loans were parked somewhere else. All of the rulers were in it. Civlian and military alike.

So, question to you is: What should be Pak Political Economy?

Thanks for constructive contribution!

Regards,

Mangus

Goodness gracious what they call in urdu is "darya ko koozay may band kar diya hai" or as they say in English to build a bridge over the sea.

Will be adding my thoughts to this thread in my opinion:

Get rid of 18th amendment ASAP, it is a major hurdle in the economic development of the country.
When it comes to Pak economy I always suggest to look at GDP PPP figures because 70% of our economy is undocumented.
 

Beethoven

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Could be hired as head clerks for other service cadres as this is the only job they are good at
Jokes apart...our bureaucracy is really powerful and it will do anything to preserve its position and perks thats why even a dictator like Musharraf couldnt reform the civil services despite all the power that he had...
 

Mentee

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Jokes apart...our bureaucracy is really powerful and it will do anything to preserve its position and perks thats why even a dictator like Musharraf couldnt reform the civil services despite all the power that he had...

Partially correct assessment bro. But He did set them in their place at district and division level that's why his era witnessed the unprecedented socio-economic revolution. But he had to manipulate the politicians so at provincial and federal level they were given free hand
 

ps3linux

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@Mangus Ortus Novem , @Mentee , @Beethoven

You know my view has been that our corrupt, incompetent bureaucracy is the biggest hurdle in the development of Pakistan, are you guys following Dr. Ishrat's committee for transformation of bureaucracy, what they are coming up is abolition of CSS structure, they want it restructured around British/American model of public service, I know for sure IK and few team members are desperately trying for structural reforms but problem is this bureaucracy.

During last 10 years our economy has really been screwed and if you look at the finance secretaries during the last 11 years you ll be amazed to find one name repeatedly coming up, isn't it time while criminal investigations are being carried out against politicians this kind of people should also be put behind bars as abettors in all crimes.

Make a guess who owns the petrol pump next to Islamabad club?
 

Beethoven

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@Mangus Ortus Novem , @Mentee , @Beethoven

You know my view has been that our corrupt, incompetent bureaucracy is the biggest hurdle in the development of Pakistan, are you guys following Dr. Ishrat's committee for transformation of bureaucracy, what they are coming up is abolition of CSS structure, they want it restructured around British/American model of public service, I know for sure IK and few team members are desperately trying for structural reforms but problem is this bureaucracy.

During last 10 years our economy has really been screwed and if you look at the finance secretaries during the last 11 years you ll be amazed to find one name repeatedly coming up, isn't it time while criminal investigations are being carried out against politicians this kind of people should also be put behind bars as abettors in all crimes.

Make a guess who owns the petrol pump next to Islamabad club?
I dont see that happening....the lobby is simply too powerful and it will do all it can to retain its glory and charm
 

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