Karachi as a province

S. Akbar Zaidi
January 11, 2014

THERE is little disagreement on the suggestion that Pakistan needs many more provinces than the existing four (five, if one includes Gilgit-Baltistan). From aspects of political economy to being able to better administer smaller units, many arguments support the idea of numerous new provinces.

The argument that more provinces would break Punjab’s hegemony over the rest of Pakistan and parts of what currently constitute Punjab itself are equally valid. A Seraiki and Hazara suba are a key requirement for the people of those regions. It has been suggested that the older 12 divisions of Pakistan, with modifications, should become provinces or autonomous administrative units. One of them was Karachi Division.

The issue of making Karachi a province is laced with emotion. Any such demand is seen as incendiary and challenges the supposed integrity of the Pakistani nation-state. Karachi’s political economy must be studied to consider whether a city of 20 million could exist as a province or even as an independent territory.

Is PDA a crime in Pakistan?

Young couples, know your rights the next time you're stopped by a cop

KARACHI: As evening falls in Karachi, Ahmed* and his girlfriend Manahil* head out on a dinner date. This wasn’t just any date, the 24-year-old wanted to surprise his girlfriend with the news that his family had agreed to their marriage. But fate had another surprise in store for them: a stark reminder of the fact that they live in Pakistan, where love costs a thing or two.

On the way back from dinner, Ahmed took a detour and stopped his car on the service road. The couple shared a kiss. “It was nothing more than that,” says Manahil. “But before we knew it, two uniformed law enforcers on a bike came out of nowhere and one put his pistol on the window,” she recalls.

Ahmed opened the door and stepped out of the car, only to be hit by the personnel on his head. “They took my partner away and took away our mobile phones and wallets,” she says.

The policemen continued to harass the young couple for almost 20 minutes. They threatened them with jail time and said they would only be released if their parents came to the police station. “I started crying. They even called me a slut,” Manahil recounts. “They took Ahmed to the nearest ATM and let us go only after taking a total Rs17,000 from us.”

Higher taxes will increase cigarette consumption

ISLAMABAD: The price differential between duty paid cigarettes and illicit products would considerably increase after imposition of Health Tax on cigarettes in the upcoming budget.

The taxation measures to be taken in coming budget on tobacco industry would have following repercussions: People will shift from legal brands of cigarettes to illicit due to increase in price difference between duty paid and non-duty paid cigarettes, major increase in smuggling due to higher prices of documented brands.

Violations of health laws and warnings by the illicit cigarettes manufacturers will continue to go unchecked by authorities giving them further edge over duty paid cigarettes. The component of local tax evasion on cigarettes is already very high and any move to impose Sin Tax would further encourage tax evasion at domestic stage. The proposed 'Sin Tax' on tobacco industry would result in production of local tax-evaded cigarettes and increase in tax evasion in tobacco sector.

The Ministry of National Health Services, Regulations and Coordination with the help of the FBR will have to take appropriate measures to check illicit cigarettes in Pakistan, reflecting serious violations of health laws/rules and regulations by the 'illicit' industry.

The alarming figures of consumption of illicit cigarettes on daily basis cannot be ignored by the Health Ministry. These illicit cigarettes mainly include non-duty paid cheap cigarettes whose sale is openly violating all kinds of rules and regulations of the Ministry of Health.

The situation would become worst after imposition of Health Tax and additional FED from July 1, 2019.

As per Oxford Economics Study, Pakistan ranks 1st in illicit trade of cigarettes in Asia, with a total volume of 326 billion illicit cigarettes consumed in 2017. The primary reason for existence of illicit manufactures is the tax-driven price differential between legal and illicit brands, which currently stands at 130%.

The documented tobacco industry is repeatedly urging the government to adopt a balanced fiscal approach with effective enforcement measures to curtail the sale of tax-evaded cigarettes, which would generate revenue over and above Rs 115 billion by the end of 2018-19.

The documented tobacco industry has estimated that the revenue collection is expected to cross Rs115 billion by the end of 2018-19 and will increase further if the government retains this excise structure.

The lowest tier should remain intact in coming budget to provide an opportunity to the local units to come into the tax net and enforcement efforts need to be geared up to avoid losses.

The FBR has acknowledged the fact that two multinational cigarette manufacturing companies would contribute over Rs115 billion to the FBR by the end of 2018-19, reflecting contribution of record revenue from documented tobacco sector.

However, the most dangerous aspect in consumption of illicit cigarettes is the blatant violations of the health regulations by the local manufacturers of Non tax paid cigarettes as well as non-payment of applicable rates of Federal Excise Duty under FED slabs notified by the FBR.

Ministry of Health had proposed imposition of 'Sin Tax' on tobacco industry and beverages to generate additional revenue. At the same time, apparently there is no system in the Health Ministry to check or control or monitor the manufacturers, suppliers, sellers and impact on consumers of illicit production of cigarettes. Moreover, in the absence of authentic data on illicit trade consumption of cheap cigarettes in the country, this huge consumption has not only destroyed the documented industry but also serious health problems for those consuming illicit cigarettes in Pakistan.

Health tax is another form of excise tax which will again increase prices of legitimate brands but have no effect on the 33 percent illicit market that will continue to sell even below the minimum price in the country. Therefore, the enforcement against this black market is necessary and coordination amongst various departments is necessary to take inputs and industry on board.

Furthermore these illicit cigarettes violate other health laws such as advertising, targeting youth, giving gifts, incentives and lucky draws, all of which are prohibited under the health ministry laws.

Currently in Pakistan, tax increases are counterproductive in achieving the government's revenue and health objectives since they are encouraging people to smoke cheaper cigarettes that are more affordable. This results in attracting the youth to initiate smoking due to cheap prices as 1 cigarette is available for Rs1.

The experts have apprehended that the massive raise in taxes on tobacco would immediately result in increase in smuggling and business of non-duty paid cigarettes in 2019-20. Without realizing the fact that over-burdening any sector with additional taxation would be a disaster for that sector, the government is mulling to impose Health Tax and additional FED on tobacco and beverages.

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This article appeared in https://www.thenews.com.pk on June 5, 2019.

'Government go-slow', as Pakistan's anti-corruption drive bites

ISLAMABAD (Reuters) - An anti-graft crusade promoted by Pakistani Prime Minister Imran Khan has led to swathes of arrests of politicians, but critics say the economy is suffering as vital projects are put on hold by officials fearful of being caught up in the dragnet.

Khan won power last year vowing to root out corruption among what he cast as a venal political elite and views the probes into veteran politicians - including jailed former premier Nawaz Sharif and ex-President Asif Ali Zardari - as long overdue.

While few dispute the need to clean up Pakistani politics, the National Accountability Bureau (NAB) campaign has become a topic of fierce political debate.

Some in the business community say they worry the drive is hurting an ailing economy, which has just received a $6 billion International Monetary Fund bailout.

And the focus of the NAB so far on the new government’s political foes has prompted accusations it is a one-sided purge backed by Pakistan’s powerful military, which is seen to favor Khan. The government denies targeting political opponents.

NAB did not respond to a request for comment. The military also did not respond, but in the past it has denied interfering in politics or influencing NAB, an independent body within Pakistan’s legal system with its own investigators and courts.

The crackdown has also ensnared civil servants, who say they have become collateral damage in the accountability drive.

Six high-ranking officials who spoke to Reuters painted a picture of a civil service in disarray and decision-making at a standstill, with senior officials avoiding signing off projects or making decisions that could open them to bribery accusations.

“If a project works out, I don’t get a gold medal,” said one senior federal official. “But if it doesn’t work out, I might go to jail.” A second official spoke of an administrative “go-slow” amid a climate of fear in the bureaucracy.

POLITICAL CASES?

The government rejects accusations that NAB is impacting the economy, calling such allegations opposition propaganda, and says graft is to blame for Pakistan’s current economic woes.

Khan last month launched a commission to investigate projects and agreements that helped increase overall debt between 2008-2018, staffing it with members of NAB and military intelligence agencies.

Science Minister Fawad Chaudhry said government officials make up a small number of NAB cases, but their concerns had reached Khan and a special cell had been created within NAB to deal with bureaucrats’ issues.

“The rise of Imran Khan is basically a middle class revolution against corruption,” Chaudhry added. “You can’t expect from us that we will take the issue of corruption lightly.”

NAB last month arrested former President Zardari and his sister over alleged false bank accounts and money laundering. They both deny wrongdoing and call the arrests politically motivated.

Since Khan assumed power last August, NAB has continued investigating jailed former Prime Minister Sharif, who has alleged the military’s hidden hand is behind many of the anti-corruption cases against his family.

Fresh probes have also been opened involving Sharif’s brother and many of his closest allies, including at least eight ministers from the previous government. They all deny wrongdoing and say they are victims of persecution.

“Everybody who is against this government has a NAB case,” said one opposition politician who was a minister in the previous government.

Inquiries have also been launched against some prominent businessmen.

“KILLS CONFIDENCE”

Pakistan’s new liquefied natural gas (LNG) infrastructure, erected at breakneck speed by the previous administration, has emerged as a major anti-corruption battlefield.

LNG terminals built in 2016 and 2017 were vital to ending a decade of electricity shortages and turned Pakistan into one the world’s hottest LNG markets, with Qatar and Italy’s Eni signing long-term gas deals worth billions.

But Khan’s Pakistan Tehreek-i-Insaf (PTI) party has for years alleged corruption. In April, on NAB’s instructions, the government barred former Prime Minister Shahid Khaqan Abbasi, ex-Finance Minister Miftah Ismail, and six bureaucrats involved in the Qatar deal for the first terminal from leaving the country. They all deny wrongdoing. No allegations of wrongdoing have been made against the Qatari side.

Abbasi, who as petroleum minister masterminded Pakistan’s embrace of LNG, said he had to take a lead role because many officials were afraid of multi-billion dollar projects.

“Nobody wanted to do anything as they were scared of NAB,” said Abbasi, who said bureaucrats were now paying a price despite helping end electricity shortages. “We had good people who stuck their neck out and they’re all suffering today.”

A third LNG terminal and a new gas pipeline needed to keep up with rising energy demand have been on the “backburner” for more than a year as no decision making is taking place across ministries, according to an energy official.

“Bureaucrats being barred from leaving the country kills confidence,” he said. “We are going to have a (energy) crisis in a year or two.”

The result, say the officials who spoke to Reuters, is that senior colleagues nearing retirement are refusing to sign off on projects due to fears of being dragged out of retirement to answer NAB inquiries for years.

“If I have to make a decision about a $10 billion refinery... I’ll sit on this file for six months, and get the next guy to make that decision,” said the first senior federal official.

A senior civil servant in the Khyber Pakhtunkhwa province said he hasn’t approved any major project since late 2018.

“All bureaucrats know that once you are tagged with NAB, no matter if you’re innocent or you really did some corruption, you have no future,” he said. “You’re finished.”

Reporting by Drazen Jorgic; Additional reporting by Asif Shahzad; Editing by Alex Richardson

Source: https://www.reuters.com

Why Pakistan needs a ‘Private Army’?

The services of private contractors are used around the world. P. W. Singer, author of Corporate Warriors: The Rise of the Privatized Military Industry says, “In geographic terms, it operates in over 50 different countries. It’s operated in every single continent but Antarctica.” According to stats, in the 1990s there used to be 50 military personnel for every 1 contractor, and now the strength ratio is 10 to 1.

...... These private military company (PMCs) will actually serve as alternative forms of power application abroad through irregular means, without violating international law, without causing troubles in the domestic or public policy, or too many international repercussions.

According to the US State Department, thousands of private military contractors served and are serving in Iraq and Afghanistan. In Iraq, these contractors mostly provide security to high profile personalities or protect sensitive installations such as oil refineries. In Afghanistan, these contractors are quickly replacing US military and are engaged in training the Afghan National Army and police. These contractors are also expected to take a lead role in anti-Taliban/ISIS operations in the war-torn country after the withdrawal of US forces. This has raised fears of increased war crimes since International Humanitarian Law consider private contractors as unlawful combatants since they generally do not respect laws of war and do not carry any military insignia which may help identify their allegiances.

......

We need them

Pakistan has a standing army of almost 560,000 soldiers and officers in addition to almost a 100,000 reserves. The army is stationed across the length and breadth of the country and is involved in counterinsurgency and counterterrorism operations. The army is often called to assist civilian administrations especially during natural calamities or to curb civil unrest.

......

"However, unfortunately, Pakistan’s economic growth has stagnated and declined over the past decade. This has made it practically impossible for the military to be rearmed with the state of the art weaponry which has resulted in a conventional disadvantage viz-a-viz its arch-rival. Pakistan’s deterrence capabilities are enough to neutralize any threat from the east but the emerging hybrid threats within the country has overstretched the army.

For example, the army had to raise an entire new division to protect CPEC from asymmetrical threats in Baluchistan and Gilgit-Baltistan. The army was also tasked with training the police and paramilitary forces and providing backup to them whenever necessary. This strained the military’s resources. But it has a pragmatic solution. Private Military Companies.

Many soldiers and officers retire from the army at a young age. These men are forced to move to the private sector which neither suits them nor are they trained for it. By establishing such companies (the current private companies are sub-standard) having international standards, Pakistan can not only provide job opportunities to thousands of men but also relieve pressure on the over-stretched security apparatus of the country.

These trained men can be employed to protect vital infrastructure, trade routes, high profile personalities, train law enforcement agencies in addition to being a strategic reserve in case of a major war. " ......

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Excerpted from an article written by Zeeshan Munir at https://www.globalvillagespace.com/

Sugar shortages: Why price controls don't work

Originally published as 'Will price controls on sugar work?' on dawn.com on September 07, 2009.

The Lahore High Court ordered the Punjab government Thursday to keep retail sugar price at Rs40 a kilo — Rs7 less than its current level — across the province.

It also directed the government to procure the sweetener from mills at Rs36 a kilo instead of Rs45, the ex-factory price fixed by the federal government for the entire country less than a couple of weeks ago, to ensure that its retail price did not exceed in Punjab beyond the court-fixed level.

The millers refused to accept the order because it meant a loss of Rs9 a kilo to them. They intend to appeal. Stockists and dealers too got worried because they had purchased the product at the federally fixed rate and stood to suffer huge financial losses if the court order was implemented.

The Punjab government pledged to implement the order and deployed on Friday revenue and police officials at the mills to seize stocks and prevent the millers from removing the same. But its food minister told a TV channel that it would take a couple of days to enforce the court order. He seems to be buying some time for the dealers and retailers to exhaust their existing stocks before the court-fixed rate is enforced.

But sugar had already begun disappearing from the retail markets at many places in Punjab by that time as retailers did not want to risk arrests and penalties on charges of flouting the court orders.

In less than two weeks the consumers were once again facing shortages and running from one place to another to purchase the sweetener for their use during Ramazan and on eidul fitr.

Sugar has been at the centre stage of what millers call as politics for almost a month. Initially it was the federal government that asked provinces to take action against stockists and mills for allegedly hoarding the product to make windfall in view of its rising global prices due to worldwide shortages.

The government soon realised its folly as administrative actions caused the sweetener to disappear from the market. After talks with the government,the millers agreed to lower their maximum prices to up to Rs49.50 a kilo inclusive of sales tax. The federal government thought it to be good bargain as imported sugar would cost consumers around Rs65 a kilo.

In the meanwhile, the Punjab government continued its crackdown against the mills to force them reduce their price to Rs45. The millers refused to oblige and the provincial government deployed its officials at their warehouses and seized their stocks. The matter was resolved after the prime minister waived 50 per cent sales tax on sugar and re-fixed the millers' price at Rs45.

The market was functioning quite smoothly and the product was available for Rs47 s kilo in spite of reports that some millers were delaying the release of their stocks when the court decision came in to topple the market upside down once more.

Price controls have always been very popular with governments worldwide including Pakistan because of their mass appeal. The possibility of political fallout of higher prices makes governments to frequently institute controls to regulate prices, particularly in times of soaring price inflation and shortages.

Before 1990s when Pakistan began to pursue free market policies, governments usually tried to control the general level of prices, regulating the prices of a whole range of commodities and products. But the trend changed after the country embarked upon the path of economic deregulation and liberalisation with successive governments selectively imposing price control on specific food and drug items.

Some times producers and suppliers are forced to lower their maximum prices to certain level called price ceiling. On other occasions, governments intervene in the market through state agencies like the Trading Corporation of Pakistan to remove the supply and demand imbalances for keeping prices down, though at a heavy cost. In a few cases governments subsidise the producers' cost of production to prevent prices from rising above the “desired” levels, although not all consumers consider the official determination of that price level as fair to them.

Price controls are meant to prevent prices from exceeding a certain maximum level. The idea is always to protect the segments of population that cannot meet price increases.

But do they work and produce the intended results?

“Price controls never work,” insists Shahid Kardar, a leading economic expert. “It is a supply and demand issue. Do you think that a shopkeeper will sell you a product for Rs10 if another customer is ready to pay Rs12 for it?” he asks.

Experts argue that price controls fail to protect most consumers. At the same time, these hurt others.

The negative implications -- temporary and long-term, direct and indirect -- of institution of price controls far exceed its benefits to the consumers, contends an economist.

“The artificial pricing mechanism never succeeds. It always results in shortages due to sudden increase in demand owing to panic buying as we recently saw in case of sugar and wheat flour in Punjab,” he says.

Official controls also discourage production of quality goods and encourage cuts in output. “Price controls offer incentives for hoarding, blackmarketing, production cuts, etc, forcing many consumers to pay for a product or an item a lot more than what they would have to pay if price controls were not in place,” he argues.

The official controls on drugs have invariably resulted in disappearance of cheap life-saving medicines from the market. The list of negative ramifications of price controls is long.

“It encourages smuggling if the global prices are higher than domestic prices of a product and if your borders are porous,” says a Karachi-based analyst. Price controls could not work effectively in countries like Pakistan unless governments have proper tools to enforce them -- like sealing the borders, he says.

Take the example of wheat which crossed borders into Afghanistan in huge quantities when the government tried to keep down the prices lower than the commodity's global prices a couple of years ago.

“That forced the government to import wheat -- in spite of a good domestic crop which was initially surplus to our consumption requirements -- at a much higher price to cover the shortages created by smuggling,” the analyst says.

More importantly, the prices rise more rapidly once the controls are lifted, triggering high price inflation. “As soon as the official controls are removed the hidden inflation surfaces suddenly. The rapid inflation is always bad for the economy as well as consumers, whom the official price controls intend to protect, than a slower and steady rise in prices,” the economist argues. In addition to the economic costs of price controls, there is also an administrative cost to such an action. We have recently seen almost the entire bureaucracy in Punjab involved in the management of 'sasta' atta (cheap wheat flour) in the province. Yet the administration was unable to ward off long queues of consumers scrambling to purchase an extra bag of cheap atta. Shortages, albeit temporary, also emerged in the normal supply chain and people who did not want to avail of the opportunity to purchase subsidised flour were forced to pay extra amount to get it or do without it for days.

Economic experts, however, acknowledge that price controls do provide some kind of relief, though only temporarily, to the poorer people battered by soaring prices.

“But the economic and administrative cost of this short-term measure is so high that prudent governments would not tread this path,” the analyst says.

The best way to help the poorest of the poor is to directly support their incomes through targeted cash subsidy, argues Kardar.

“It should be left for the recipients of the cash to decide what do they want to do with it. They should be able to decide whether they want to buy flour or sugar or something else,” he contends.

Women lawmakers suggest ‘sterilization of men’ - Karachi

KARACHI: The women lawmakers in Sindh Assembly demanded “sterilization of men” as a measure to control growing population of the country. During the debate on a resolution “to control population and launch of awareness campaign,” all political parties except lawmakers from religious parties, MMA and TLP, supported the resolution in the provincial assembly.

Rana Ansar

Muttahida Qaumi Movement – Pakistan MPA Rana Ansar moved a private resolution and said, “There is no proper planning in controlling population in the province. We lack resources and attach great importance in giving birth to more children. It’s a population bomb and we need to devise a comprehensive strategy to deal with it.”

Referring to the significant chunk of population living under poverty line, she said that all countries including China, Iran and Russia were making all-out efforts to control and plan their population, but here people consider women to be a machine to produce more children. “We should include this issue in our syllabus and start mass mobilisation in every nook and cranny of Sindh. Not only women, but male health workers should be appointed to sensitise men,” she said.

Nusrat Seher Abbasi

Nusrat Seher Abbasi of Grand Democratic Alliance (GDA) supported the resolution and said that women had suffered more in every field, so it’s high time for men to render sacrifices. “Even in family planning, only women are being sterilised to prevent pregnancy. This causes serious complication to the mother’s health.  Why are women being made the scapegoat and forced to give sacrifice of their lives? There should be a strict law which ensures male sterilization,” she said. The women sitting on treasury and opposition benches welcomed the idea by Abbasi.

Shehla Raza

Minister for women development, Shehla Raza, however, stood up at her seat and congratulated Rana Ansar for moving the resolution. “Women are also human and we should care and protect them. When women give birth to more babies, there is greater risk of mothers dying and giving birth to weak and abnormal children,” she said adding, “It is not possible for a poor man to feed a dozen children and provide education and other facilities. We can only compete in the world when you have mentally and physically healthy people in society.”

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Source: https://tribune.com.pk

Ex-PM Shaukat Aziz: Government and Bussiness should not mix

Former Prime Minister of Pakistan, Shaukat Aziz is known as one of the rare politicians to not mix ‘Government and business’ together. During his leadership, Mr. Aziz oversaw the successful privatization plan of Pakistan’s state assets. He led Pakistan when it was in near financial ruin but managed to steer the country towards unprecedented economic growth. He shares his views on the success of Pakistan during his tenure as Prime Minister from 2004 to 2007 with Interview of the Day host, Bilqis Bahari.

Read the full interview here.

"When I came into Government, there was no privatization. There were some – one or two but not in a massive way. I strongly felt that it is not the business of Government to be in business. Government should be the enabler. Government should prepare the ecosystem for the economy to grow. Government should introduce structural reforms to improve and enhance and develop its operating ability of the economy. But they don’t have to manufacture everything. They don’t have to control every market. Let the market forces work. They should be having supervision. They should be having their eye on the ball so that things are under control. Any country which has done structural reforms of the economy in a good way has got the dividend from it. Pakistan is an example. We had for example all the banks in the state sector. We sold every bank except one. One we kept, which we listed. Even if you are not selling, although I prefer everything being sold and then you have a strong regulator whose watching it, but you can have one bank in the public sector, one or two. But they too, list them in the stock market. 50% can be Government, 50% can be private enterprise. The corporate culture must come into the public sector enterprises. The privatization has to be transparent. There should be no restriction. The asset still remains your asset. Your country’s asset. Even if foreigners own it, it doesn’t take away your control. Banking is a very controlled sector. The Central Bank is always looking at them no matter who owns the bank. So we shouldn’t worry. We got independent financial advisors and banks to handle the transaction. No control auctions, public. All the main auctions, we showed live on TV to the whole country. For example, I sold our state telephone company. Again, public open bidding. So I said let’s all this on the TV and everybody has to be prequalified before their bid. Why? Because you’re giving a major state asset to a private party. Local or foreign, we didn’t differentiate. And they have to be prequalified, prejudged by independent advisors. It has to be transparent. That being the case, we got the whole nation watching the sale of the telephone company. There were a lot of criticisms before it happened.  When you privatized, you must have an independent regulatory authority overseeing that activity. We created Pakistan Telecommunications Authority, which was a Government entity, which was overseeing the industry, not operating the company. And then we opened it to private sector, more competition to it. So now we have five or six mobile providers and the connectivity, the increase in subscribers went through the roof because we introduce mobile phones. Private sector came in. They put in new exchanges, new numbers, competition, special packages. It’s a totally different environment. More jobs created for the people. We had one phone company, Pakistan Telecom. Now we have 10 and its been in hindsight a very good experience. But it has to be transparent, the sale of the assets. That’s why we got in the end no criticism. Even the unions were quiet.

...... our telephone auction was on TV. Everybody then said ‘oh, we saw it. It was okay, you know,’ rather than rumors starting and all that. I think there is a way. Each country is different. I’m not saying what we did is the best way to do. There are maybe better ways. But I am a great believer in the value of privatization and I’m a great believer in opening it up. There’s no difference between local and foreign. That is also a myth. Nobody can put a telephone exchange in his briefcase and take it away to a foreign country. You know, it’s a system. It can’t leave. It has to be in the country to be operated. All these taboos will have to be broken and then you do what is in the best interest of the country. This is the way to go in my humble opinion.

What’s Really Keeping Pakistan’s Children Out of School?

The demand for education is already high. Pakistan’s education crisis is a supply-side problem created by Government regulation.

"Less than half of third graders in Pakistan can read a sentence in Urdu or local languages. Thirty-one percent can write a sentence using the word “school” in Urdu, and 11 percent can do it in English.

Children in government schools report that teachers have them clean, cook, massage their feet and buy them desserts. Children are categorized as smart or stupid as soon as they start school. Corporal punishment is severe. Parents will send their kids to a private school if they can afford a few dollars a month, but they do not see government schools as worth it.

Since 2010, Pakistan has more than doubled what it budgets for education, from $3.5 billion to $8.6 billion a year. The budget for education now rivals the official $8.7 billion military budget. The teaching force is as big as the armed forces.

But Pakistan has a learning crisis that afflicts its schoolchildren despite much debate and increase in funding for education because policy interventions by the government and foreign donors misdiagnosed what is keeping children out of school.

Although aid programs of the United States and Britain contribute a mere 2 percent of the education budget, those countries and the local elite, whose own children go to high-end private schools, have emphasized that Pakistanis demand education and that more children should be enrolled in school.

But the demand for education is already high, evidenced by the mushrooming of low-cost private schools that now enroll 40 percent of students in the country and charge as little as $2 a month."

Pakistan’s education crisis is a supply-side problem. Enrollment rates are used as the measure for progress because Pakistan has the second-largest population of out-of-school children in the world. But the proportion of 5- to 9-year-olds in school is the same as it was in 2010: 57 percent. With teachers chronically absent from school at a rate of 20 to 30 percent and most of the education budget going into their above-market salaries ($150 to $1,000 a month), doubling the budget was never the solution to Pakistan’s education crisis.

"The problem is that donors have created too much noise. Convinced by their own solutions and backed by foreign expertise and international consensus, foreign donors have run high-profile advocacy campaigns and monopolized the attention of bureaucrats, party leaders and the version of civil society that Pakistan has developed in response to them."

"But to turn schools into places that provide education will require a local constituency asking the right questions. The hottest issue regarding education in Pakistan right now is limiting the fees that high-end private schools charge. If elites mobilized as effectively around issues that affect the majority of Pakistanis, we would see faster and more meaningful change."

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Excerpted from: https://www.nytimes.com/2017/10/18/opinion/pakistan-education-schools.html

(Emphasis added)

Why don’t we pay taxes?

WHAT’S the most depressing economic statistic that is churned out repetitively in Pakistan? It’s the number of taxpayers. Time and again, the government and donors embarrass us for doing our nation a huge disfavour. In his first address, Prime Minister Shahid Khaqan Abbasi lambasted Pakistanis for not paying taxes.

Yet these are just myths. The fact is, we are one of the most overtaxed nations in the world. Simple arithmetic will do. Let’s start with disproving the most widely quoted number: only 1.21 million citizens pay income tax, ie less than one per cent of the population. But statistics (like the State Bank of Pakistan annual report) suggest that there are more than 57.5m employed people in the country. Since they are employed, they must be earning something and incurring expenditures on goods and services.

There is no good or service in Pakistan that is tax-free. Therefore, around 58m people are paying income tax one way or the other since their expenditures obviously come from their income.

"It is crass anti-intellectualism to repeat this old, tired mantra."

Pakistan must push trade, shun protectionism

Let’s not shun imports; let’s shun protectionism, inefficiency and rent-seeking.

ISLAMABAD: In his talk with businessmen in Faisalabad last month, Adviser to Prime Minister on Commerce Abdul Razak Dawood outlined his vision for economic development in these words: “Industrialisation through import substitution coupled with export growth through diversification.”

To help achieve this vision, Dawood disclosed the intention of the government to announce a comprehensive industrial policy to shun the culture of importing everything and emphasised the need for “Made in Pakistan”. He also criticised the free trade agreements (FTAs) which Pakistan had signed with different countries by citing the rising trade deficit with China, Indonesia and Malaysia. The adviser also reminded his audience that all Asian tigers had relied on government’s support for “self-sufficiency”.

This vision emanates from an old yet common fallacy: mercantilism.

Before analysing Dawood’s statement, let me first explain a few basic points. Trade takes place between individuals and firms and not between countries. The so-called trade deficit is between two countries only notionally. Realistically, the trade deficit, or surplus, is an aggregate of trade transactions between firms in two countries. It is only a construct of macro-economics. Therefore, any discussion on the so-called trade direction should be driven by an analysis of firms.

Consider this example by my favourite professor, Christopher Lingle. In all likelihood, if you have bought any goods from Amazon, you would have paid from the money which you have earned elsewhere. However, it will be quite foolish to say that you are running a trade deficit with Amazon as you will probably never sell anything to Amazon. If it is foolish to worry about this fictional deficit between the two private parties, it is futile to worry about trade deficit between two countries. What should be discussed is the overall trade volume and its direction for a country with the world.

Let’s now think about import substitution. First of all, it is not new. Pakistan has followed this strategy since the 1960s. Import substitution entails local production to shun imports. Can we, for example, shun the import of car engines, fuel and phones and switch to producing car engines, refined fuel and mobile phones ourselves? Do we need to re-invent the wheel?

The government has continued to provide direct support for textiles in the form of concessionary loans, subsidies or tariffs. As a result of this protection, most of the textile firms have not been able to grow. On the other hand, the government has generally failed to fulfil their minimum demand – a reliable and competitive energy infrastructure.

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Ali Salman
PRIME Institute

(Emphasis added)

Source: https://tribune.com.pk/story/1892970/2-pakistan-must-push-trade-shun-protectionism/

Where are the medicines?

Shahid Mehmood explains the crisis in Pakistan’s pharmaceutical industry created by Government regulations

Let me ask you a simple question: how many times has it happened that you go to a chemist and ask for a medicine, and the reply you get is that it is not available? Chances are that you have experienced this quiet a few times. That’s because even ordinary, inexpensive, lifesaving medicines tend to disappear off the shelves. And this happens every year. In other words, Pakistan experiences persistent medicine shortages.

Now here’s the perplexing part: there are more than 700 drug production units all over Pakistan, and more than 70,000 drugs are officially registered for production. Of these, hardly 10,000 are being produced, and even these experience supply shortages. All this, in the end, endangers the lives of those who need medicines for survival. Let us examine the root causes behind this worrying situation.

Pakistan’s pharmaceutical industry was once a very vibrant industry. In the 1990s, more than 40 international pharmaceutical firms of repute (multinationals) were operating in Pakistan, producing not only quality medicine but also contributing towards setting standards and providing employment opportunities. These years also saw the tremendous growth of domestic pharma firms. A study by McKinsey concluded that Pakistan’s pharmaceutical industry could be a ‘sunshine’ industry, meaning that it had tremendous future potential. By now, all those predictions have bitten dust. There are only a handful of multinationals operating in Pakistan, while others have wound up their businesses and left for greener pastures. Domestic manufacturers are also facing difficulties in their operations.

"The main responsibility for this dismal state of affairs falls upon the government, especially the way it regulates the pharma industry"

Bara tribesmen to move court against tourist centre

LANDI KOTAL: Elders of Shalobar tribe in Bara tehsil rejected the proposed creation of a tourist centre on Besai hilltop and announced that they would move the court if the plan was executed.

They also declared that they would consult elders of all sub-tribes in the area on the matter before deciding about the final course of action. The announcement was made during jirga here on Saturday.

During a visit to Besai hilltop on Jan 16, Khyber Pakhtunkhwa Governor Shah Farman had announced the establishment of a tourist centre at the hilltop and construction of a road to it overlooking Hayatabad Township and parts of Jamrud and Bara areas.

The elders warned that they would move the Peshawar High Court if the government tried to occupy their combined property by force to develop the proposed tourist centre.

They called for a dialogue between local elders and relevant officials on the matter saying promotion of such activities goes against tribal norms and traditions.

The elders said they won’t agree to the establishment of any such facility without consultation.

They demanded the revival of over 100 stone crushing units at the lap of Besai hill saying the closure of such machines has rendered hundreds of local residents unemployed.

Source: https://www.dawn.com

Private Schools in Pakistan Are Being Suffocated By Red Tape

Over the last decade, private school education has become a way of life for many Pakistani children. Unfortunately, private schools are being continuously “suffocated” by undue state bureaucracy.

Public vs Private Ownership — Case of PIA

PIA has become a classic example of the failure of public ownership. The key reasons are political interference, abuse as a platform to extend patronage to supporters, corruption, inefficient management, overstaffing and a powerful trade union.

Who’s afraid of Imran Khan’s Pakistan? Almost everyone.

There is much in Khan to be afraid of. During his poison-tongued, invective-laden campaign, he pushed his supporters to the verge of war with news channels that criticized him. He has suggested that those who opposed him were “agents” of Pakistan’s archrival India and the “international establishment.”

He has supported a draconian blasphemy law that has led to at least 69 vigilante killings since 1990. Day after day on the campaign trail, he started fires and fanned flames, calling upon his followers to suspend disbelief and vest faith in conspiracies. And for someone who has for decades asked Pakistan’s young people — 64 percent of the population is under 30 — to join his revolution to overthrow the corrupt old political order, he has been much too quick to partner with turncoat politicians, Islamist hardliners and power-hungry soldiers.

Many have pointed to Khan’s mild-toned victory speech of July 26 to suggest that he was capable of grace and gravitas. But the fact is that his call for a more open, responsible foreign policy, even overtures to India and Afghanistan, ring hollow in the backdrop of years of peddling isolationism. His constant pandering to the religious ultra-right during the campaign and increasing support of conservative ideals suggest there is little reason to believe he is the person to lead Pakistan out of the clutches of extremism.

If he has indeed come into power with the help of the military, and there is much evidence that he has, then it is likely that the military will want its pound of flesh. He will need its help in finding allies and cutting deals, and the military will want even more space to control foreign and economic policy (with a 1.1 trillion rupee defense budget out of a total budget outlay of 5.9 trillion, no one cares more than the Pakistan army about what happens to the economy).

Read complete article

Govt imposes duty on cheese, mobile phones and 568 other products

The government has not even spared Christmas trees and baby bicycles from the levy of duties, also describing these items as luxury.

The development came despite the fact that all such measures have failed to yield the desired results in the past.

Out of 570 tariff lines, the FBR has introduced duties on 80 items for the first time. Those are live animals, meat, fish, eggs, paper and paper board, motorcycles, bicycles that will now be subject to 5% to 10% of duties, according to the FBR.

On the remaining items, the FBR has significantly increased the duties. Some of the items are fish frozen & fish fillets, cheese, curd, fruits and nuts, juices, tobacco, motor cars.

Read more: https://tribune.com.pk/story/1827517/1-govt-notifies-duties-570-products/

Privatization of PIA and PSM: Significance for Pakistan

State of PIA

PIA, the national flag carrier, was one of the best airlines in the world back in the 60s and the 70s. It was equipped with the high levels of safety standards, quality and punctuality. It is the first airline to fly the Lockheed Super Constellation and second to have the Boeing 707 air jet. PIA also helped a number of leading airlines in the world like Emirates by leasing them its aircrafts and providing technical and administrative assistance to them.

Despite its illustrious legacy, PIA has been in shambles since the start of the 21st century because of the increasing competition in the airline industry and its inner inefficiencies, overstaffing and debt burden. PIA has the second worst employee to aircraft ratio, standing at almost 700 employees per aircraft while the world average is at 150-200 employees per aircraft. It currently has 18,331 employees and 21 aircrafts.

The founder of PPP, Zulfiqar Ali Bhutto introduced massive nationalism into the country and is held responsible for ruining the economy, whose effects can even be felt today.

While state owned companies are not as efficient as private enterprises, there are some examples in the world of national enterprises performing on par with private organizations. Emirates, with a fleet of 212 aircraft, has employee-plane ratio of 220 to one. For Turkish Airlines, another important regional carrier with 236 planes, it is far lower at 81 employees per plane. Air India’s ratio of 127 per plane at Lufthansa (38,000 employees: 299 aircraft), 140 at Singapore Airlines (14,000 employees with 100 aircraft) and British Airways 178 employees per aircraft.

Overemployment is not the only issue of PIA. Inefficiency and mismanagement are also causing huge losses to the national exchequer. It has accumulated a debt of Rs.319 billion in the past four years.  According to a statement by PM Abbasi, it is causing loses worth Rs. 150 million every day to the treasury. It produced revenue of Rs.89 billion in 2017, 2 billion less than the previous year while its debt servicing has reached to Rs.146 billion.

State of PSM

The Pakistan Steel Mills (PSM) was founded in 1971 with the help of the Soviet Union. It has the production capacity of 1.1—5 million tonnes per annum of steel and iron foundries, making it one of the biggest steel mills in South Asia. The PSM is facing similar issues as the PIA. Former Prime Minister of Pakistan Shaukat Aziz tried to privatize it back in 2006 but the Supreme Court intervened and stopped its privatization.

It is currently facing an Rs.370 billion deficit: Rs.160 billion in losses and Rs.190 billon in payable debt liabilities. The government has also given it Rs.85 billion worth of injections to keep it from shutting down. They have proved unable to operate it in its full capacity as it has only been operating at 30-50% of its maximum capacity. The technologies used by it have become obsolete and competitors are produced steel at a much cheaper rate with advanced technologies.

Common problem among the two

Both of these enterprises have been causing huge loses to national exchequer and it is unfair for the people of Pakistan to support it with their tax money. Poor governance is one of the biggest issues of Pakistan. Most governments in Pakistanis proved to be inadequate to govern necessary matters of the state, governing a business enterprise is similar to adding more weight to a broken back. Business experts believe that the lack of ownership and incentive in public sector organisations is one of the major reasons for their inefficiency.

In private enterprises, individuals cannot afford to withstand any huge amount of loses, efficiency is must for survival of any private business and bailout packages by the government aren’t easily available to private organizations. Once the stakeholders have something to gain by increasing efficiency and making the organizations profitable, they’ll adopt every method and technique to make it done.

Why are the PPP and the PTI opposing privatization?

The 2018 general elections are just around the corner. Privatization would mean that a number of people would lose their job and providing jobs is one of the best strategies for gaining votes and popularity among the public. PPP claims itself to be a leftist party with socialist leanings. Their motto: Roti, Kapra aur Makan (food, clothes and home) also highlights the nucleus of their manifesto. The founder of PPP, Zulfiqar Ali Bhutto introduced massive nationalism into the country and is held responsible for ruining the economy, whose effects can even be felt today. The PPP is merely following the ideology of its founder.

The PTI, on the other hand, is flowing with the popular public sentiment with its sensational agendas. Their position appears to be merely opposition for the sake of opposition rather than for the sake of betterment. They have not provided any alternate solution to save the crumbling institutes but merely opposed it to side with thousands of people who will lose their jobs if privatization takes place.
As the world advances and evolves, old jobs are abolished but new jobs take their place, we must not fear change but accept it. The archaic ideas of protectionism and jingoism have no place in the modern world. While dissent is vital in every political discourse and democracy, it should focus on creating solutions rather than criticizing problems.

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March 22, 2018
Source: Global Village Space

Malik Riaz vows to build dam in Pakistan but on one condition

ISLAMABAD – Amid Chief Justice of Pakistan Mian Saqib Nisar’s major focus on mitigating water crisis by building dams, Chief Executive of Bahria Town Malik Riaz on Thursday informed the court that he was willing to construct the Daducha Dam at his own expenses with a condition that bureaucracy of Punjab would not interfere in it.

SC hints at asking govt to nationalise private schools

ISLAMABAD: The Supreme Court (SC) on Thursday hinted at issuing direction to the government to nationalise all the private schools across the country. The apex court restrained the private schools from charging fees during summer breaks and directed for issuing a public notice in Urdu and English dailies of the country.

The chief justice observed that state under Article 25-A of the Constitution is duty bound to impart education to the children free of cost. The CJP was hearing an appeal filed by various private schools against Khyber Pakhtunkhwa (KP) government’s policy binding the educational institutions to charge 50 percent fee during summer vacation. He said that currently more students are enrolled in private institutions than in government schools. Article 25-A of the Constitution relates to right to education reads: the state shall provide free and compulsory education to all children of the age of 5 to 16 years in such a manner as may be determined by law.

The chief justice further said that a poor man’s child cannot afford to study in a private institution due to the massive fees, adding that it’s government’s inefficiency that it could not ensure free education to all the children. He said that parents would be happy for not paying school fee in the summer break, and would have spent it on the leisure of their families.

During the course of hearing, the chief justice hinted at nationalisation of all private schools across the country. The chief justice said that there is no bar on nationalization hence, “why we should not issue directives to the government to take over all the private schools.”

The chief justice said that the previous governments did not give preference to the country’s education sector. He said that they have already formed a commission for the enforcement of Article 25A of the Constitution.

Earlier, the Peshawar High Court (PHC) had rejected a petition of private schools. Now, they have approached the apex court. However, the bench has refused to give interim relief to private schools.

The chief justice said that they cannot grant relief to the management of private schools without hearing the viewpoint of parents. Later the court adjourned the hearing for July 12 after giving direction for issuing public notice on the matter in Urdu and English dailies.

Source: https://www.thenews.com.pk/