Probably Pakistan's Biggest Need: Charter of Economy

[Bilal Khan (Quwa)]

The way China progressed was manufacturing products for non-Chinese users like iPhones, nikes, etc . IDK whether such things can be replicated now but it was popular to move industry to economical countries. So it avoids high risk, expensive HQ products for rich countries so eliminates the local market fear as public is poor (it will help more). Overall, we need to provide, cheap land/labour/power so that locals can learn/produce but for foreign market. In summary some good collaboration is required.

Besides lower costs, I suspect a big reason why China became a manufacturer of all those goods was because localization was a condition to accessing the Chinese market. When you have a big population, you have a big market, and that's leverage. However, Pakistan never leveraged it correctly.

There's no reason why we can't be on the same track as Vietnam, Indonesia or Malaysia as a supplier in the automobile and consumer electronics industries. Yes, it would take us time, but we have not put ourselves on the same track, much less move forward.

I suspect one reason why localization hasn't happened in Pakistan is because the foreign investors paid off the right decision-makers (or our decision-makers were just too ignorant of economics).

 

[Goenitz]

When you have a big population, you have a big market, and that's leverage. However, Pakistan never leveraged it correctly.

Vietnam, Indonesia or Malaysia as a supplier

Yeah man, even Vietnam is progressing a lot. Companies moved to Vietnam after China. Anyway, we import a lot of cutlery from Vietnam.

is because the foreign investors paid off the right decision-makers (or our decision-makers were just too ignorant of economics).

I think they were paid off. You know, Tajikistan charged 1800$ per NATO truck, and Pakistan didn't.
Anyway, do you think 3D print take away the cheap labour requirement.?
Edit: i cannot find the assembly hearing minutes or news on it. But a 2012 report suggest it was first time Pak govt thought of charging NATO trucks.

Pakistan likely to charge $ 1000 for every NATO truck

A firm run by the Pakistani military will collect a fee of 1,000 dollars for every container truck passing through the country under new conditions for the reopening of NATO supply routes, according...

www.deccanherald.com

"The government has claimed that the NATO trucks have damaged roads, bridges and other infrastructure from Karachi to Torkham while the country has charged nothing from US and its allies."

 

[Bilal Khan (Quwa)]

Anyway, do you think 3D print take away the cheap labour requirement.?

Possibly, it's worth checking out.

 

[Goenitz]

@Bilal Khan (Quwa) @JamD @CriticalThought
Do you want to write a paper/article on these bunch of thoughts on economy/education/security (minus collaboration with Turkey/S.Africa ) with possible help from PKeconomy channel? Though I am busy right now, as just submitted the thesis and need to write a paper afterwards.
Anyway, I will keep notes of important points, and in future write something rough and then we can discuss. But main writing will be on education and policing and why we need to change colonial era structure.

 

[JamD]

@Bilal Khan (Quwa) @JamD @CriticalThought
Do you want to write a paper/article on these bunch of thoughts on economy/education/security (minus collaboration with Turkey/S.Africa ) with possible help from PKeconomy channel? Though I am busy right now, as just submitted the thesis and need to write a paper afterwards.
Anyway, I will keep notes of important points, and in future write something rough and then we can discuss. But main writing will be on education and policing and why we need to change colonial era structure.

I'll have to excuse myself very very busy times for me. I've already spent way too much time on the chart lol.

 

[Bilal Khan (Quwa)]

@Bilal Khan (Quwa) @JamD @CriticalThought
Do you want to write a paper/article on these bunch of thoughts on economy/education/security (minus collaboration with Turkey/S.Africa ) with possible help from PKeconomy channel? Though I am busy right now, as just submitted the thesis and need to write a paper afterwards.
Anyway, I will keep notes of important points, and in future write something rough and then we can discuss. But main writing will be on education and policing and why we need to change colonial era structure.

tbh I'm booked with work and contracts in Q2, so it'll have to be a Q3 thing at the earliest

 

[Patriot forever]

Yep and that's the main "business class" in Pakistan right now. No one cares about local manufacturers or suppliers, but the fronts that sell imported goods. Unfortunately, I don't know how many of these guys are willing to pivot to production work; it's capital intensive, higher-risk, and requires more work (everything a pure import trading business is not). Perhaps if there are more local production outfits, the import traders will pivot to finding low-cost raw materials from overseas to feed manufacturing?

Exactly, there is an entire ecosystem developed around it. The goal should be to shift this service ecosystem to local products over time. That should be our target which will lead to sustained economic growth. This transition period is critical and we have to be patient.

The big established players go for upgrade, expansion or diversify. That is where the specialized schemes such as TERF comes in. Such schemes are not routed through he government instead through commercial banks by SBP. The amount of approved projects and financing amount is encouraging, as these industries feel there is sufficient space/demand in the market. New investments will follow through as our economy becomes more stable. Economic zones are vital.

Most of local businesses follow demand, if local products start substituting imported ones with time their inventory portfolio will change.

 

[Indus Pakistan]

The point is to prevent some foreign car manufacturer from selling cars to Pakistanis unless 70% of

I disagree. Such a outlook will mean a giant country like Pakistan will always be just a knock shop for car companies from South Korea, Japan etc. Given Pakistan's size it should have had at least two giant Pakistani auto companies. By that I mean headquartered in Pakistan, designed in Pakistan and owned by Pakistan. Like everybody knows Hyundai is Korean or Toyota is Japanese.

For this to happen Pakistan would need to manufacture a reverse engineered car 100% like say Suzuki Mehran. That car is good design to copy as it is easy and would have large local market - the target should have been about 200,000 cars to begin with. The sales pitch would be cheap as chips and even try to eat into the motorbike sales. Meaning a mass produced peoples car like what Hitler did with VW over 80 years ago.

This process should have began in early 1990s with state support and should have enjoyed monopoly so sales could go over 200,000 annually. By 2000s the Pakistani company making these copies of Mehran should have gained sufficient experiance to begin designing a new car from scratch and if needed buying in foreign experts. Maybe a locally designed car on a foreign platform would have done the trick. Then the company could have began to export abroad using cheap price as marketing.

Once having established a market the company could then invest into move upward in product quality and range. In early 1980s I had a Ford Cortina which saw production end by 1982 when Ford introduced the Sierra. Few years later or about 1988 I began to see a car by a new maker calle Hyundai which I learn't was Korean. This was bit of a surprise because I did not even know South Koreans made cars leave alone exported to UK. The car was keenly priced. However on inspection you could see the car was just a cheap copy of the decade old Ford Cortina I used to have. It has just recieved a makeover and sold as Hyundai Steller.



The Hyundai Stellar (Hangul: 현대 스텔라) was a mid-size rear-wheel drive automobile produced by the Hyundai Motor Company to succeed the soon to be replaced Ford Cortina that Hyundai were building under licence. The Stellar was launched in July 1983.



Ford Cortina 1980.

Hyundai Steller 1990.

Today Hyundai is a global brand with nearly 5 million cars annual production.

 

[Bilal Khan (Quwa)]

I disagree. Such a outlook will mean a giant country like Pakistan will always be just a knock shop for car companies from South Korea, Japan etc. Given Pakistan's size it should have had at least two giant Pakistani auto companies. By that I mean headquartered in Pakistan, designed in Pakistan and owned by Pakistan. Like everybody knows Hyundai is Korean or Toyota is Japanese.

For this to happen Pakistan would need to manufacture a reverse engineered car 100% like say Suzuki Mehran. That car is good design to copy as it is easy and would have large local market - the target should have been about 200,000 cars to begin with. The sales pitch would be cheap as chips and even try to eat into the motorbike sales. Meaning a mass produced peoples car like what Hitler did with VW over 80 years ago.

This process should have began in early 1990s with state support and should have enjoyed monopoly so sales could go over 200,000 annually. By 2000s the Pakistani company making these copies of Mehran should have gained sufficient experiance to begin designing a new car from scratch and if needed buying in foreign experts. Maybe a locally designed car on a foreign platform would have done the trick. Then the company could have began to export abroad using cheap price as marketing.

Once having established a market the company could then invest into move upward in product quality and range. In early 1980s I had a Ford Cortina which saw production end by 1982 when Ford introduced the Sierra. Few years later or about 1988 I began to see a car by a new maker calle Hyundai which I learn't was Korean. This was bit of a surprise because I did not even know South Koreans made cars leave alone exported to UK. The car was keenly priced. However on inspection you could see the car was just a cheap copy of the decade old Ford Cortina I used to have. It has just recieved a makeover and sold as Hyundai Steller.



The Hyundai Stellar (Hangul: 현대 스텔라) was a mid-size rear-wheel drive automobile produced by the Hyundai Motor Company to succeed the soon to be replaced Ford Cortina that Hyundai were building under licence. The Stellar was launched in July 1983.



Ford Cortina 1980.

View attachment 730617

Hyundai Steller 1990.

View attachment 730618

Today Hyundai is a global brand with nearly 5 million cars annual production.


View attachment 730619

I agree. The shift to EVs presents a "clean slate" so to speak. Since Pakistan doesn't have an existing auto R&D base, it could be worth investing directly into domestic EV development.

If we can hard-shift to EVs (with shared public-private equity corporations, state policies, tax breaks, etc), we could fundamentally change our energy disposition. We would only need infrastructure-level power, and we can source that via hydel, coal, nuclear, wind, etc.

Basically, we can become energy independent, though we would need to seriously up our game in handling the overseas raw materials supply chain (e.g., rare earth metals).

 

[CriticalThought]

Bro you hit the nail with education part.

I would like to add one more thing, rule of law.

The only way to educate our politicians is to hang them in public for their wrongdoings, not give them NRO's. Make them pay for their wrong doings so that others don't commit the same mistakes.

The only way to educate the people is to make them take responsibility for their choices. For example people who voted for Plmn should be charged for the premium for IPP's with rates and agreements written on their bills. Distribute the transmission losses in proportion to their relative terms in government for all political parties.
Make them accountable, so that they do not try to scape goat others for ones mistakes to satisfy their political inclination.

Dynasties want complete ownership of land and it's people transferred to successive generations, close this path by limiting one to 2 terms with their family automatically not eligible at all levels.

The only other solution is to pack up this system and introduce an authoritarian regime like China and Bangladesh.

Don't blame the system, blame the people. You don't want anyone from the current lot becoming a tyrant or dictator. ANYONE. Also, don't blame the ordinary people. To only way to educate people is to start from 3 year olds and give them proper primary and secondary education. In 12 years time you will have hundreds of thousands of young people who understand rule of law and want to improve the country.

What we need is graduate from universities like NUST, GIKI, UET, NED, NUCES etc coming into local government, provincial government and parliament. These are the people who should be running the country.

You have to understand the point here isn't to try and develop cars on our own.

The point is to prevent some foreign car manufacturer from selling cars to Pakistanis unless 70% of the value of that car is sourced from Pakistan. It's a strict market access rule that puts the country spending its money in the driver's seat with big investors.

So, if Toyota tells us, "well you should learn to make power tools, then talk cars," we can tell them to either show us how to make cars, or GTFO. With a 200 million market -- of which tens of millions can access hard or foreign currency via remittances -- someone will play by your rules to access your market. It might not be the Japanese, but perhaps the South Koreans or Chinese.

In the worst case scenario, you create incentive for the local market to develop its own solutions, which then necessitates domestic investment (which we lack) and the rise of local businesses. This is the hardest and longest route, but it generates most of the rewards in the long-run. However, in most cases, someone will crack and agree to your terms.

@JamD one thing I'd caution about the agriculture-to-manufacturing-to-services continuum is that it's actually investor-centric -- that viewpoint (ultimately) benefits the person trying to maximize ROI. That's why the US 1% pushed for outsourcing (to make manufacturing cheaper), but the US transitioning to a service-based economy hasn't been beneficial in microeconomic terms, and it's starting to impact human development in the US.

IMHO the 'balance' the Germans and French had achieved is likely closer to where we want Pakistan to wherein the % output of your GDP favours services, but without causing decline in real agriculture and manufacturing output. Basically, you grow the economic pie with services, but you don't reduce your agriculture or manufacturing in real terms.

Let's say in 2021 Pakistan is $100 B (all fake numbers, just an example):

• 50% agriculture ($50B)
• 25% services ($25B)
• 25% manufacturing ($25B)

By 2031 you want to be at $200 B, but like this:

• 40% agriculture ($80 B)
• 30% manufacturing ($60 B)
• 30% services ($60 B)

By 2041 you want to be at $300 B:

• 30% agriculture ($90 B)
• 30% manufacturing $90 B)
• 40% services ($120 B)

Basically, all sectors should grow, it's just that the majority of your growth in the long-run could come from services. This is natural if your agriculture and manufacturing are also growing because those sectors need services. E.g., a car manufacturing plant will need an eco-system of retail, banking, education, real estate, etc.

One issue we have right now is that our services growth wasn't supported by manufacturing or agriculture growth, but by the injection of liquidity via aid (Musharraf-era) or loans (Nawaz Sharif-era).

We think alike. And in Australia the government is finding the problems with a service economy during pandemic times and is now starting to support local manufacturing and eventually exports.

 

[CriticalThought]

Besides lower costs, I suspect a big reason why China became a manufacturer of all those goods was because localization was a condition to accessing the Chinese market. When you have a big population, you have a big market, and that's leverage. However, Pakistan never leveraged it correctly.

There's no reason why we can't be on the same track as Vietnam, Indonesia or Malaysia as a supplier in the automobile and consumer electronics industries. Yes, it would take us time, but we have not put ourselves on the same track, much less move forward.

I suspect one reason why localization hasn't happened in Pakistan is because the foreign investors paid off the right decision-makers (or our decision-makers were just too ignorant of economics).

No, China has become a manufacturer because their leadership wanted it so, and in many cases, they went out and simply bought out many manufacturing companies. Read this article to understand what the vision of Chinese leadership is:

https://www.washingtonpost.com/news/worldviews/wp/2017/01/18/finally-china-manufactures-a-ballpoint-pen-all-by-itself/

 

[Indos]

I'll have to excuse myself very very busy times for me. I've already spent way too much time on the chart lol.

Bro, just ask some journalist that you know in your circle Whatsapp number or email of your President advisor or any important minister, send your writing to them. It is if you care enough with your nation. Ranting in this forum is not enough.

 

[Indos]

And make a thorough article and publish it in your mainstream media. Look like PDF should find some best mind in economics to do that. @JamD is Pakistani who get educated in US and has information from his friends in PAK critical institution, so maybe his background can make media give the opportunity to let more Pakistani know more about his view.

You can also make a summary of many opinions of member who are seen as knowing the real problem and understand the best solution of it.

 

[JamD]

And make a thorough article and publish it in your mainstream media. Look like PDF should find some best mind in economics to do that. @JamD is Pakistani who get educated in US and has information from his friends in PAK critical institution, so maybe his background can make media give the opportunity to let more Pakistani know more about his view.

You can also make a summary of many opinions of member who are seen as knowing the real problem and understand the best solution of it.

You give me too much credit. Economics is not my forte and there are other people that can understand and argue these issues better.

However, that being said I do write material in my field, outside this forum that makes it way to people that matter and I have received feedback that that material was being read. What happens after that is beyond my power.

 

[Indos]

You give me too much credit. Economics is not my forte and there are other people that can understand and argue these issues better.

However, that being said I do write material in my field, outside this forum that makes it way to people that matter and I have received feedback that that material was being read. What happens after that is beyond my power.

You dont need to make a pure economic writing, you can use your point of view as an engineers who understand the different between The West and Pakistani society and the different of both education system. You also have insider information of some PAK critical institution that can be valuable input on the writing.

You also can ask some of good mind of Pakistani living in US to make a good assessment of Pak economy and bring solution on it, and then pass those two writings (yours and him/her) to some ones important/decision maker Whatsapp/email in PAK gov.