“We can easily forgive a child who is afraid of the dark: the real tragedy of life is when men are afraid of the light’’ Plato
Dr Ruskin described ‘economy’ as the bastard science of darkness1 . He developed the idea of the Economic Man2 . A material thought that now governs how the world views its activities – alwaysin search of one’s own national interest, regardless at the cost to the interest of others. Walter Block, further expanded on the idea of an economically driven world and went on to explain that this science of economics led to a ’brutish’ world where morality was not a priority3 . Rand in its analytical paper ‘The future of warfare in 2030’4 explains how wars are not only fought because of economic objectives to acquire what one does not have, from those who do, but goes on to establish that economy itself could now be an instrument of war. This is especially so now as wars become more total as opposed to being limited in application, and the masses themselves, become a target. Hunger and deprivation are the road to coercing a political decision amongst the civilised world today5 . So as economy begins to matter more and more, Pakistan is in dire states where its economy is concerned. With a debt to GDP ratio at 84.8% ($278Bn in 2019)6 , trapped into a vicious cycle where there is limited possibility of the economy ever improving if policies continue in the same manner and method, obstinately sticking to the same plan over and over again, hoping for a change – a sign of insanity, as concluded by Albert Einstein. The GDP has to grow substantially to keep up with the debt repayment and retirement of external and internal dues, while ensuring adequate economic growth at the same time. New solutions are needed urgently to address the existential economic problems that limit the space for any economic recovery. This recovery is essential for developing an autonomous structure to make independent fiscal decisions in the interest of the people, the sovereignty to make long-term financial plans in the interest of the State and to be able to exercise the liberty of political choices as an independent Nation.
Sustainable growth, is defined in financial terms, as the maximum growth rate a company can sustain without having to increase financial leverage7 . These leverages are through debt and equity. The first is related to loans and the second to shareholders. This theory can be expanded up to the national level as well where loans are getting more difficult as well as expensive to acquire and there are no significant international shareholders, in terms of Joint Ventures or direct foreign investment. Yet while one talks of best practices and future growth, it implies, in all sincerity, that one should somehow manage to meet ones current needs without compromising the needs of future generations8 . This is not what is happening and with each passing day, the present is criminally trespassing into the sustainability of the future. Someone needs to not only take an account of this but put a stop to it; red lines need to be defined, limits must be established. Yet to discuss economic growth and sustainable development in a vacuum by itself makes no sense. One cannot make any recommendations that are oblivious to the influence and role of the government, its policies, interventions. The first and foremost step would be political stability, certainty, continuity and security. Without such stability, economic activity becomes disorganised, unpredictable and the risks are too high for any sort of individual, institutional or foreign investment. The second issue is that of an effective foreign policy to establish a national standing amongst the comity of nations viz. viz. trade, corporate undertakings and commercial activities. Business evolving around inter–state enterprises, joint ventures and foreign investments, both incoming as well as out-going, cannot be done in isolation. A sensible foreign policy is a must to integrate the nation’s fiscal endeavours into the global economic process and developments. Yet the current scenario is characterised by the poor international image of the country and its low ranking at the global level in almost all fields of governance. Pakistan has a bad reputation and lacks credibility for investors, as reflected in some of the more pronounced indicators, amongst many others: it stands 129 out of 1659 in the sustainability index, 140th in corruption out of 180 countries10 and the judiciary ranks 130 out of 139 in judicial propriety11. These matters must improve and governance needs to develop a credible face; in fact, as a nation in general and a society in particular, there is a need to get out of the denial where society seems to remain suspended in time, seeing no wrong in itself, promoting false pretences of a superior culture with an overstated and hyperbolic perception of its history. Patriotism is not about bragging that one’s country is the best only because one was born in it – there are other far more measurable and defined parameters which must come into the equation before one can claim any level of ranking in any field. Begging the world for funds to survive while at the same time projecting national pride, is a big contradiction. However, since this paper is about economic reforms, it shall restrict itself to those areas only that are relevant to economic growth, but with total acknowledgment of the fact, that political and administrative reforms must also be undertaken for which a separate paper/papers is needed. Such reforms are essential to make any prospect of economic growth and development a realistic possibility. So keeping this in mind, some of the most salient aspects, considered essential for economic growth only and focusing on the national economy only, are described in the following paragraphs.
Developing Human Resource
To address the future economic equation, it is of utmost importance to first recognise and then address the greatest liability that is impinging on growth. This dubious distinction, uncontested and unchallenged can be safely attributed to the population – its current volume and growth and then the quality of human resource that this country is churning out. The current estimates are around 230 million12 . It is growing at 2% annually and by the year 2050 it is estimated to be 310 million13 . Pakistan ranks 5 th in the world by population14. This impacts directly on food security and the water resources. Living space, pollution and environment all take a hit because of such a mass of humanity. Yet, while taking a look at the annual budget, one of the major contributors towards the national income lies in foreign remittances. This was $31.2 Billion for 21-22,15 growing by 6 % annually and may even increase to 8 %16 . Remittances at present, are estimated to be, about 9% of total GDP as opposed to an international average of 5%17 . However, this is mostly from unskilled labour that largely works in the Middle East, undertaking menial jobs and who wallow at the lowest rung of employment within this region. One must be realistic and come to terms with the fact that a large part of the population in the country will never acquire the literacy needed to find a white-collar job and as such qualifying for a blue-collar job must become a focus and be a desirable goal to sustain an average family financially. In fact, one finds it difficult to define any national policy that can differentiate between literacy and education, with the former relating to a defined level of certified qualification (leading to a white-collar job) and the latter more related to technical skills integrated into the wisdom of the street and conforming to the local way of life (leading to a blue-collar job). There would be a positive impact on the overall population as well as be in Pakistan’s economic interest if substantial part of the focus was to shift towards technical qualifications and expertise leading to blue-collar employment. Technical skills must be developed and standards established through recognised international certification. The country needs to set up globally recognised poly-technic institutes with a third party accreditation that would allow Pakistan to export skilled labour instead of unskilled labour, the world over. Preparing skilled labour in recognised established institutes, technically trained as plumbers, electricians, vehicle mechanics, masons, builders etc. would contribute immensely towards the GDP as well as towards nation building. If these institutions are setup based on international affiliations and are recognised and certified by the European, Australian, American, Canadian and British guilds etc. employment for the younger populace could be easily found and facilitated globally. Considering that the projected population in 2050 in Pakistan would be close to 310 million people, such an endeavour where young people may be facilitated for gainful employment the world over, is an extremely important aspect of economic growth and development of human resource. Also standards within the country would improve such as construction skills, mechanics and technicians who currently learn their respective trades through apprenticeships taught from father-to-son or othersuch family connections. All these recommendations mentioned, in no way impinge on or imply that method and means to contain and limit the population growth at some defined level, should not be undertaken concurrently and with equal enthusiasm. To maintain a large population does not make for a sustainable Pakistan in the future for the obvious impact it has on the natural resources. However, also, no nation can go forward in this techno-savvy world without imparting compatible education to its future generations at the high-end level, allowing them an opportunity to compete at the global plane. After all, as was recognised, “After bread, education is the first need of the people’, Georges Danton 1792. The expertise within the country lacks competence and continues to drive the education system based upon a self-defined syllabi and curriculum that is regressive in nature and limited in scope. With global developments and outlook in digitisation, artificial intelligence, robotics and disruptive technologies, Pakistan has a lot of catching up to do. The present curriculum, method and medium are all outdated and at times, can even be obscurest. Future generations are inadvertently denied building intellectual capacities or acquiring progressive knowledge because of criminal indifference towards global standards and internationally compatible education systems. Pakistan’s youth need to keep abreast and survive in a world that is making headway, in leaps and bounds, in the realms of science and technology. A generation stands to suffer and is held back on account of the lack of intellectual competence compatible to international standards aggravated by a heavy madrassa influence corrupting contemporary education values – there is dire need to get out of the paralysis of denial and face reality as it stares all in the face. The ‘Single-National-Curriculum’18 recently introduced may address the needs of people with limited language skills and poor awareness but it also subsidises mediocrity and lowers standards to accommodate those who cannot rise to higher standards. The fatwa banning the printing press in Turkey in the 15th century19, ensured thatIslamic Civilisation would never rise or ever again have a competitive edge over western knowledge in sciences, medicine and art. Similarly, it appears, the government is bent on repeating the folly of yesteryears. This is a self-inflicted wound caused by an ignorant and politically self-serving administration in search of cheap popularity, playing to an ignorant gallery. There are only six universal languages in the world where all education, scientific developments, medical progress, business etc. evolve around.20 These languages are universal only because they acquired a recognition and global respect as mediums of communication in the expansion and illustration of sciences, literature, general knowledge, development of civilisation, social and civic sciences as well as functional financial transactions and practices. They represent developed societies that were emancipated and liberated allowing for large scale global developments. Pakistani society does not have any such pretensions or aspirations being indifferent to global progress in every field. Pakistani Schools and Colleges never promoted modern scientific study, because of which we suffer a backward society, drowning in superstition, magic, divinity and extremism – the nation never evolved and remained suspended in history in a false and exaggerated account of its past. Now to expect that the international community will respect or recognise Urdu as a useful or functional language, is a wishful thought. If the nation continues to obstinately stick to this medium, it will never allow Pakistan’s younger generation to go global in thought or live an enlightened and progressive life. Generations will remain hostage to what is considered as tradition, custom and local convention. Pilots cannot fly and no plane can be operated by a crew that does not know the international lingua-franca. So whereas it is alright to have high national spirit and display emotional patriotism, yet these values must never be blind or lead to a dead-end. Urdu should be promoted and taught as a subject but the medium of education must be English to allow everyone an equal opportunity to go for higher education anywhere in the world. Let Pakistani society grow and first contribute to civilisation, be recognised as a partner in a free and liberated world before one can expect one’s language to become an instrument of custom, progress, learning and wisdom. In fact, as it’s now, a basic right is being denied to future generations, by politicising the education system and justifying its current mediocre standards through an ideological rhetoric. There is a need to immediately acquire internationally recognised and acceptable syllabi and programmes. All exams must be third party evaluated allowing for internationally recognised certification. This is the right way in empowering the youth as they are sent forth into the world to represent their country – not slogans without substance.
Agriculture
The largest sector of our economy rests in agriculture that contributes only 24%21 to the GDPbut involves about 65% of the total population22. Even the largest manufacturing industry, which is cotton textiles23, is agriculture based. Here there is a need to introduce reforms that include, crop management, fertilizer and pesticide application, better irrigation techniques and improved farm practices. The soil is totally devoid of NPK (Nitrogen, phosphate and potassium), and needs to be revitalised24. There is a need for radical reforms to improve farming practices, today Pakistan has the lowest yields in every major crop when seen against any international data. Pasteurization of milk is the need of the hour to control disease and waste. Such plants can be set up centrally in all regions where milk can be easily brought in. Unfortunately, the parliament did not find it within itself to pass the relevant law for the pasteurization of milk and succumbed to the pressures of the local milk-vendors who sell polluted milk.25 This is now leading to stunted growth in children. Meat processing is ad hoc and must also be properly regulated. The type of feed to the animals must be properly defined for quality and type and should then be suitably regulated and supervised. If proper regulation is undertaken and ‘foot-and-mouth’ disease eradicated, something which Pakistan is inflicted with; it would allow the export of meat. These measures would allow rural areas to generate a better income. The migration from rural areas to urban is causing saturation of humanity in the cities and overloading services in them26. Rural life must be improved all-around to discourage such migration. Emancipation of women would help in changing the way of rural life. Let women lead in the poultry and livestock industry through soft loans27. Better schools, sports and scholarship for children could assist in improving the way of life. Some important steps to improving food security are suggested as follows:
How fertilizer is manufactured and applied needs to be reconsidered. Fertilizers must be blended after soil analysis on the farms. Specific areas have specific needs which need to be customised. An atlas has already been structured on these lines highlighting the peculiarities of the soil from region to region28. Fertilizer manufactures now need to integrate the farmers from every region. Mobile labs need to be deployed to ascertain the type of soil and its needs in every area. Modern blenders mixing suitable NPK (Nitrogen, phosphate, potassium,) ratios in accordance to the needs of the lands should be done on the spot and only then companies should sell this customised fertilizer to the farmer. This experiment was done and a 30% increase in cotton yields was observed.29
• Nutrients need to be examined such as sulphur and zinc etc. These are catalysts to release the NPK at the right time for the plant.
• Drone technology with suitable AI must be introduced to predict, assess and deal with pests. Controlled pesticides allow for a healthier plant, enhance yields while saving resources and money30.
• Water management need to be controlled and regulated. New best practices using drip and capillary irrigation must be introduced rather than flood irrigation as is the common practice today.
• There is a lot of talk about constructing dams to store water, yet no one ever stops for a moment to consider how the water resource was depleted, that is the existing sub surface aquifer. One may be able to store more water with more dams but without appropriate regulation one shall misuse that stored water as well. This is not a sustainable practice.
• A policy to regulate regional crop management must be structured. This should define the cash crops and food crops from region to region keeping in mind the climate, water resource and the agricultural based industry. Marketing strategy to include exports can then be based on a proper coordinated plan.31
• Burning of roots after harvest of rice and sugarcane is a horrible practice and must be banned. The roots can be easily converted into compost using an appropriate rotorweightier plough. It will allow for a healthier soil.
• Tree plantation and afforestation must be undertaken as a project under national emergency. Pakistan had 6% forests in 1947 and now has only 3% as opposed to international standards 25%32. The overall land cannot sustain such destructive practices.
Encouraging the Private Sector.
Pakistan’s greatest burden is of course debt repayments. This impliestaking a relook at the loans taken out by the government and how best to retire them. To facilitate debt repayment, steps must be taken to off load many of the State Owned Enterprises, (SOEs) that now amount to 200 such enterprises, which according to the World Bank are a liability. A study conducted over the last 5 years reveals that these SOEs show a consistent liability towards the GDP by about 12% -18%, which in absolute terms amounts to Rs429 Billion33. In any case, the Government must not be in the business of doing business. Instead, it should only be coordinating, facilitating and defining, strategic goals, economic objectives, providing focus and direction, that then must be met by the private sector. This is as opposed to the government, that likes to itself getting into corporate activity, which, in turn, creates serious imbalances in the national corporate structure.
As it stands today, there is over regulation which leads to redtapism and corruption. Illogical laws, rules and regulations are stipulated and just to illustrate a few: the GIDC which was a black law34 that was implemented and the axle-load Law35 which was a good law but could not be implemented. The former blackmailed industry into providing funds without setting up the promised infrastructure and the latter, allows trucks to ply on the roads tearing up the surface. This further burden’s the government substantial revenue on repair and maintenance of these roads without any reciprocal payment made by the trucks based on the loads that they subject them to. Unnecessary regulation and government oversight discourages investment and growth, slowing down development significantly.
Services are about choices available to clients. Potential clients should be able to choose between one or the other on the basis of cost, quality, availability and reliability. Privatisation of the energy system, its production and distribution would go a long way in developing more efficiency and a competitive environment encouraging growth. To develop alternative energy is another goal that should be implemented in letter and spirit but through the private sector. Alternative energy, electric transportation, public charging stations and recycled resources are where the future lie. Such measures would generate more revenue and save expenses. Line losses can be substantially reduced by investing in HVDC (High Velocity Direct Current) transmission lines allowing more energy to the consumers on competitive plans and payment methods. Energy must be harnessed with efficiency regardless of whether it is fossil based or alternative energy. The national Grid must have flexibility, depth and capacity to supply energy to all parts of the country under all circumstances since life must never come to a standstill from want of an infrastructural collapse or disruption.
Fixed Tax in a Cashless Economy
‘I shall easily show that it is impossible to tax further, ruinous to be always borrowing and not enough to confine ourselves to measures of economy,’ Charles Calonne,1887. The tax system is one of the greatest hurdle to development and progressif not properly figured out. One cannot tax oneself into being a rich State. As it stands, in Pakistan, the system is skewed; it is unfair since there are huge amounts of regressive taxes that are borne equally by the rich as well as the poor. The system is an extremely narrow based resource limited to very few with only 1.2% (2.8 million people) who are registered as taxpayers36; it fosters corrupt practices, which is why it is totally stacked against growth, development and expansion37. An out-of-box solution is being suggested but it must be examined by experts as well as the government, for its efficacy and functionality and after having been suitably modified to accommodate any necessary changes, must be adopted as oon as possible. With irreversible damage already done to the national economy, the stage is now far past, to expect that conventional or regular interventions may make any positive difference; and so it is time for radically different solutions to be structured and tested taking the country out of the present fiscal quagmire. The one being suggested, is to introduce a relatively tax-free economy in general, yet, to introduce a fixed-tax system for all financial transactions in a newly structured digital fiscal system. This will immediately control inflation, lower prices, improve economic activity and allow people/entities and institutions better opportunities for investment in industry, manufacturing and production. This already does exist as a system in some countries in the world today38 . The CPEC which is now coming of age would become a haven for all kind of investments, local as well as foreign, accelerating industrial growth, manufacturing and production, astride all three CPEC corridors. This is an obvious road to economic development, a huge employment boom, generating much more financial activity and large financial transactions (taxable) as well as exports. A government’s views on economy were amply described by Ronald Reagan when he said, if it moves tax it, if it keeps moving regulate it and if it stops moving subsidise it, so we desperately need to get out of conventional governance of economic activity, as it is today, which in fact is stifling and discourages growth. Since the government would now have no visible source of income and revenue, it is suggested that a fixed tax be imposed on all financial transactions, the efficacy of which is explained below.
Parallel to such a radical step, that of introducing a relatively tax-less society, would also be to gradually remove denominations of paper money from circulation and to enforce all financial transaction through digital banking. A fixed percentage of all banking transactions should be taxed and as such everyone would pay tax compatible to the expenditures they undertake or their respective capacities. The rich with a greater expenditure would pay more than the poor who have a limited spending spectrum. The figures determining revenue generated by the system being proposed needs to be properly evaluated and the efficacy of the method needs to be validated by qualified economists. However, so as to establish some benchmark to carry the argument forward, World Bank figures for Pakistan’s per capita GDP has being taken as a bench mark from where the reasoning has been further developed. The working has been attempted on the lower end of the value spectrum so as not to exaggerate the resultant figures.
With a total population, estimated to get to 240 Million people, and using international figures of the per capita GDP, i.e. $ 1500/- as a bench mark39, applying 5 % tax deductions to it, the annual revenue of the Government goes beyond $18 Billion. When commercial and corporate transactions are added to this, which actually account for far more in revenue than per capita GDP, it is assumed the overall revenue would at least go up by another 100% making it around 36 billion. This is as opposed to $35 Billion, recorded for June 202240. Today with 17% indirect taxes41, individuals who pay taxes, pay about $255/- annually, on essential commodities in indirect taxes at the very least but in the proposed system one would be paying out only $75/- which is 300% less than what it is now.
By introducing a digital economic system that is cashless, another benefit would be securing the informal economy. At present the undocumented economy is almost as big as the formal economy and has been estimated to be plus of about 35.6% which represents $542bn at GDP, PPP levels.42 If this also gets into a taxable circulation it could immediately double the revenue even further where the revenue may easily touch anything between $60 to 70 billion. Individual overall purchasing power would improve as a consequence of cheaper prices and lower cost, more industry would be set up because of lesser taxes, greater investments would also be made for similar reasons. It is thus expected that a natural consequence of the phenomenon would provide better employment opportunities with much more financial activity and as such the revenue returns would grow even beyond what has so far been worked out. This would improve cash flows and generate substantial liquidity for development at the State level.
Yet the greatest benefit from a digital economy would be to allow very limited space for corruption. It would speed up financial activity, make all transactions transparent and ensure that everything is accounted for with an institutional memory and record. A cashless society has existed ever since time in one form or other and various systems have come and gone such as the barter system and even now the Block Chain -so it’s not really a very new concept. The examples of nations that have taken this road include, Sweden with UK, Netherlands, Norway, Finland, New Zealand and China closely following.43. However, there are four major impediments towards the introduction of a relatively tax-free society and a cashless economy. First and foremost, are international money regulators such as IMF and the World Bank. Since these have been strongly politicised by the United States and the Western World, the odds are stacked up against a country like Pakistan in breaking conventional rules and setting up an autonomous system. Regulations based on WTO etc. would come into play, triggering sanctions. Yet, a means must be found in managing such a shift and if it is managed, Pakistan would be far less susceptible to international influences and would acquire a sovereign capacity to reform its foreign policy and political thought. The second, most important spoiler would be Pakistan’s very own politicians, its system and the people in power. A cashless system would limit corruption or application of illegal influence and thus there would be resistance to it from within. However, with political will, a suitable process can be constructed so that any resistance to the recommendation is overcome. One of the ways is to remove the economic process from the political process and structure it to become an independent standalone discipline/ department/sector. The third serious impediment is the existing low level of technology that exists within the country today. This would not permit a fully digitised system to be established and the little that is set up would be vulnerable to intrusion and hacking. It could easily be disrupted thus causing identity theft or even a national financial crisis but safe guards against such a threat can be developed and applied. Given that the process will take time, but it would have to gradually evolve and mature, yet the system being recommended, would be slow in implementation. The last problem related to the recommendation lies in losing one’sindividual privacy, yet this too can be mitigated by protection through suitable laws and regulations; however, it is the price that society would have to bear to own such a system. An alternative to the suggestion explained above is to stick to the conventional economic system as far as possible but lower taxes significantly. There should be a gradual shift towards digital economy to encourage the informal economy into mainstream circulation and government must privatise the SOEs at the earliest. It is expected that there would be some improvement in the economic situation but in comparison, it’s the original suggestion that carries the germs of a game-changer.
National Assets
Pakistan’s national potential lies deeply integrated in three major assets.
These are: Thar Coal, Riko-dek and the Coast line to include Gwadar Port. This does not imply that there are no other minerals, sources or other economic activities which are any less important but that the three mentioned can lead to economic progress at a substantial volume and speed if properly activated.
a. Thar Coal
Thar Coal is estimated to be the sixth largest reserve in the world. It is estimated to be 175 billion tons44. Some have even described its potential to be greater than revenues generated by Saudi Oil and Qatari Gas put together. Pakistan is currently suffering from an energy crunch. Shortage off energy resource stunts industrial growth. Thar has already constructed three plants that have come up i.e. two that are 660 megawatts and one that is 330 megawatts, with overall production going up to 2000 megawatts by another year45. Yet, even more plants to generate electricity can be set up immediately, provided water issues are resolved in the desert. Scarcity of water can be dealt with by setting up desalination plants through the private sector. The location of such a plant should close to the coast line and Rahim Ki Bazar from where the water would need to be piped, i.e. about 200 kms. The capacity should be modular and serial in design so it can expand and cater for a growing industrial city in the vicinity of the coal mines. Gasification of coal gas is estimated to be a 3 billion equity based project46. Monetization of gas is best served by manufacturing fertilizer. Pakistan already produces 6 million Tons but is likely to need even more in the future as more land gets cultivated. A bag of Urea today in Pakistan is Rs2250/- while the international price of urea is Rs9250. 47The delta is almost Rs7000/- . This allows for a huge profit margin, acquiring foreign exchange and generating revenue. Russia is the biggest fertilizer producer in the world but is currently under sanctions. Europe at present is in dire need of fertilizers. This is a big opportunity for Pakistan to capture and sustain itself in the global market provided it moves quickly. Gasification also allows gas to run industries as well as provides fuel for domestic use thereby giving a lot of relief to the country as a whole.
Gasification further permits the manufacture of polypropylene and other plastics. These materials are exportable and are important components of almost every industry. The environmental issues connected to use of coal can be addressed with new modern best practices.
These involve carbon capture and re-inserting carbon back into the ground. If stored, carbon di oxide, has a commercial value which could be organised for sale within the country as well as exported. Pollution and environmental contamination is further mitigated by other measures such as an appropriate tree plantation campaign and afforestation, which must be organised as a national effort.
b. Riko-Deq
The Riko-Deq reserves are considered to be one of the largest gold and copper mines in the world with a 5.9 billion of ore grading 0.45% copper and gold reserves amounting 41.5 million oz.48 This requires a refinery to be built in the vicinity instead of exporting raw minerals and adding substantial value to the export. A refinery would take care of Pakistan’s Defence needs in copper and much more.
Mishandling of the mines by the government as well as the judiciary has caused grievous loss to Pakistan’s economy.
c. The Coast-Line
Pakistan must come to terms with its own relevance in the globe to establish a place for itself amongst the comity of nations. The coast line is of amazing geo-strategic importance. Exploiting the location for better trade, connectivity and economic activity could actually be a singular cause to the substantial economic turnaround for Pakistan. It also establishes Pakistan’s global relevance in its recognition as an international trade corridor – a singular factor that merits serious consideration. With Pakistan, fortunate enough to have a Continental Shelf that extends 350 nautical miles into the sea, all ports along the coast line take on a great significance49. The Continental Shelf itself is larger than any province on land and has more resources in it than anything available on land. With a number of ports along a long coast line (1046 km), Pakistan needs to assert proper control of its Continental Shelf which is currently being plundered by external elements. This would boost fisheries, minerals, regulation of seafaring traffic generating revenue and ‘right-ofway’ tariff for the deployment of pipelines and cables etc.
However, coming to the Gwadar Port itself, Gwadar is a natural deep water port and is central to the eastern and western hemispheres, making it very important to international shipping. The Port is currently being constructed by China through a CPEC (China Pakistan Economic Corridor) arrangement, a flag ship project of China Belt and Road Initiative (BRI). The region as a whole, to include the Subcontinent and China is home to 25% of the global population50 and remains a lucrative international market and a huge consumer of food and energy. These ports are of great significance to the landlocked Central Asian Republics allowing them access to the world for trade when connected by road and pipelines. Russia, on the other-hand, has limited port facilities all year around and has always been in search of warm water ports, which at present is limited to Sevastopol, Crimea. Gwadar can provide and facilitate such an all yearround port to Russia on account of its warm waters, if, Russia and Pakistan can come to a mutually beneficial bi-lateral agreement. This gives Russia an alternative to Sevastopol, mitigating the Port’s strategic vulnerability as well as its limited capacity. So it is no wonder that all three super powers, the US, China and Russia along with the EU either already have stakes in the subcontinent or are in search of them for the future. This has led to competing interests in relevance to Pakistan’s Coast Line with economic as well as political interests and present opportunities as well as challenges. Pakistan must play its cards very carefully and not play one power against another. Take China for instance: its trade is basically through the Malacca Straits now commonly addressed as the Malacca Dilemma. It amounts to 16 million barrels of oil51 passing through daily and a 100,000 ships carrying cargo annually52. Control for the Malacca Straits is now being contested. The US is asserting itself and has aligned other countries against China53 and its trade interests. China has had to seek an alternative to the Malacca Straits and has found it in the BRI of which the CPEC is a significant component.54
So why does CPEC become so important? The distance from the Western China to the Pakistani Coast Line is less than the distance it takes to transport goods within China to the Chinese ports; currently the distance travelled is 16000 kms, taking 2 to 3 months, which would reduce to 5000 kms or to 1 month at the most55.
Thus from a strategic angle, CPEC is more important to China than Pakistan but remains a game-changer for Pakistan as well. Because of CPEC, China has begun the industrialisation of its South Western regions since these are now easily accessible logistically; it also implies that in the future, Afghanistan and Central Asia could benefit similarly and bring in mutual economic expansion and growth.
Gwadar port has the potential of being one of the world’s largest ports56 when it is completed in 2030. The berths at Gwadar can accommodate 200,000 ton tankers and other ships as well, which along with the newly constructed oil pipelines, fibre optics etc., makes Gwadar an ideal regional transhipment port. It out-does the Long Beach Port at Miami and has greater capacity than all the Indian Ports put together57.
With its potential as a future transhipment port in the region, the Saudi Government is contemplating investing in Gwadar in the construction of one of the world’s largest refineries.58 The future of such a Port if managed correctly allows for huge development and international connectivity.
The trade hub and conduit at Gwadar establishes Pakistan’s relevance in the region as well as the world as a trade corridor, connecting the east to the west; a key component in global trade as well as a supplier of oil and gas. If manufacturing industries develop within these CPEC corridors the potential for economic growth is huge for the country.
Pakistan stands at a defining moment in history. With a background of missed opportunities and failed initiatives, the country is suffering from self-inflicted irreversible damage. Lack of sustained economic policy and with gross indifference towards the well-being of its own people, Pakistan remains wallowing in abject poverty. It blunders on from day to day, unmoved, as it is denied a respectable position, amongst the comity of nations.
The world in general and the region in particular, (China, India and Bangladesh) on its march towards development and progress has left Pakistan trailing behind, barely surviving on hand-outs, as it limps on from one day to another. It’s time for bold decisions and brave initiatives, grappling with the situation with courage, grit and determination, putting all national resources to work.
The suggestions in this paper can be improved upon and there are many more aspects to economic development that can and may be examined but what has been stipulated in this document is the bare essential that must be executed at the earliest, if, for only and foremost, the well-being of the people as well as future generations.
“There can be no keener revelation of a society’s soul than the way it treats its children”
-Nelson Mandela.
1. John Ruskin. Essay iv. Ad Valorem.
2. Homo economicus, Will Kenton, updated, June 15, 2022.
3. Morality of the Market: Religion and economics perspective Walter Block, Fraser Institute, 1985.
4. Rand Corporation, The future of Warfare in 2030.
5. The Politics of Food and Starvation. R Bush, 1996.
6. World Economics
7. Sustainable Growth, Prysmian Group.
8. Securing a sustainable future. WWF.
9. Sustainable Development Goals (SDG) 2021. The News, Nazakat Hussain, Political Economy, May 8th 2022.
10. Trading Economics, https://trading economics.com, World Bank Corruption Index.
11. World Justice Project’s (WJP) Rule of Law index 2021, published October 2021.
12. Worldometer. Pakistan Population.
13. The World Counts. https://www.theworldcounts.com
14. Worldometer. Pakistan Population
15. Trading Economics, Pakistan Remittances.
16. Dawn, WB Report, 13 May 2022.
17. Global Economy.com Pakistan: Remittances, percent of GDP.
18. Single National Curriculum. Ministry of Federal Education and Professional Training. Government of Pakistan.
19. In The Name of Modernity, The Dawn, February 26th 2009.
20. Official Languages, United Nations. https://www.un.org.
21. Agricultural Statistics. Pakistan Bureau of Statistics, https://www.pbs.gov.pk
22. Agriculture. https://www.finance.gov.pk
23. KCAA, Pakistan Industry – Pakistan Customs Agents Association.
24. FFC study, FACE, food and agricultural center of excellence, 2021.
25. Pasteurized milk essential to attain SDGs, The Tribune, Durdana Najma, October 20, 2022
26. ‘Our Cities Unfit to Absorb Migrants’, Dawn Nov 3 2022. 14.5 million people over 19 years migrated to urban areas, i.e. 750,000 people a year, ‘Our Cities Unfit to Absorb Migrants’, Dawn Nov 3 2022.
27. FFC study, FACE, food and agricultural center of excellence, 2021.
28. FFC Study on Soil 2021.
29. FFC study, FACE, food and agricultural center of excellence, 2021.
30. Ibid.
31. Ibid.
32. The Tribune, Forest Cover Reduced to 2 %. Shamsul Islam, October 4, 2011
33. Business Recorder, World Bank Report, Tahir Amin, June 30th 2021.
34. Business Recorder, GIDC collection remains as elusive as ever, editorial, Sept 30th 2022.
35. GVS, Implementation of Axle Load Limit Regime: When and How? Najma Minhas 5th Dec 2019.
36. Trading Economics, Pakistan Personal Income Tax Rate, https://trading economics.com
37. Confiscation and Recovery of Assets, FATF. https://www.breorder.com/news
38. $ Countries Without Income Taxes, J.B Maverick, July 24th 2022, Investopedia.
39. GDP per Capita, World Bank National Accounts Data and OECD National Accounts data Files.
40. FBR Data.
41. Ibid
42. World Economics, London, Quarterly Informal Economic Survey (QIES). Pakistan’s Informal Economy Size.
43. NFCW, At the heart of the contactless ecosystem since 2008, Tom Philip, 16th Aug, 2022.
44. Profit. Going the Thar Route, Asadullah Kamran, 21 Aug, 2022.
45. Ibid
46. FFC study, Higman, 2020.
47. FFC marketing Office.
48. The Mineral Industry of Pakistan. https://www.minerals.usgs.gov.2011
49. The tribune. Pakistan Granted extension of Continental Shelf:FO. Kamran Yousaf, 20th March 2022.
50. Population of South Asia, Worldometer.
51. China and the ‘Malacca Dilemma’, Warsaw Institute. EXCLUSIVE FOR DEFENCE JOURNAL 66
52. High Traffic, High Risk in the Strait of Malacca. The Atlantic.
53. America’s Security Role in the South China Sea, Testimony before House of Foreign affairs sub Committee, Michael D Swaine, July 23, 2015.
54. Overview Belt and Road Initiative Forum, 2019
55. Geostrategic Imperatives of Gwadar Port for china, The Korean Journal of International Studies 18-2 (august 2020)
56. The Potential and Prospects of Gwadar Port, Mir Sherbaz Khetran. https://www.issi.org.pk.
57. Gwadar Port Pakistan, Gwadar info.com.website 20 January 2018.
58. Saudi Arabia to set up $10 Billion oil refinery in Pakistan. Business news, January 13,2019.
