Islamabad:
Contrary to popular belief, if we just go by the numbers and add up the incomes of our 250 million population, we come up with an annual $375 billion, which is about $1,500 per capita per year or $125 monthly or $4 daily income.
The world population is 8 billion and we make up about 3% of the world’s population. By comparison, the world’s total income is $100 trillion, of which our share is about 0.4%. Global imports are $32 trillion and our exports are $32 billion, or 0.1%.
Even though we find some of our people in the media venting their anger on rich and supposedly dishonest individuals (our socialist mentality; wealth and the rich are abhorrent, believing, like Mario Puzo, that behind every great fortune there is a crime), our richest people don’t even come close to dusting the world’s richest lists.
There are 2,783 people in the world with more than one billion dollars and no Pakistani is in a reliable list like Forbes. The 100th richest person in India has $2.6 billion. Our country’s total external debt is $130 billion, while Reliance’s Mukesh Ambani alone has a net worth of $116 billion, and the total assets of India’s 100 billionaires are close to $800 billion.
But it wasn’t always like that. In the mid-1990s, India had only two billionaires, and today in 2024, even after a search and merger of companies, the wealth of Engro and Lucky Group is considered to be about $1 billion per group. Is it possible that 30 years from now, like India, we will have 130 billionaires with a collective wealth close to $1 trillion?
Quite unlikely due to missed opportunities over the past three decades, but the growth rate of China, India and Vietnam over the past 30 years suggests that it can certainly be attempted.
Many of our people believe that our country has been looted too much since its founding and that the loot has been taken abroad, but since 2010, due to somewhat strict international regulations, it has become difficult to hide wealth abroad.
Recently, in the Dubai leaks, out of the $400 billion worth of Dubai real estate, only 2.5% of the properties, from around 17,000 Pakistanis, (Rs 160 million per person) were found. This is less than the value of a two-channel house in Defense. The properties of individual Pakistanis, even from unverified sources, appear to be worth no more than $50 to $200 million, at current market values.
Strangely enough, even our dishonest individuals are a puny minority compared to the wider world. The primary reason is the simple lack of wealth (convertible into dollars) in our country.
The point is, what do we have that can be immediately converted into dollars? Any oil, natural gas, precious metals, coal, grains, chemicals or fertilizers we export? Any ships, machinery, submarines or computers we build? Are there educational institutions, health institutions or large banks or stock exchanges whose services are purchased by foreign countries?
Our opportunities for so-called dishonesty (convertible to dollars) are limited to underpricing exports and underpricing imports.
Besides, the transfer of dollars abroad depends on the remittances of our 10 million expatriates who, if they want, can invest abroad themselves or use Hawala/Hundi to let the rich in Pakistan do the same. Note that this system is also under considerable scrutiny by institutions (such as the FATF).
In 1991, India’s development plan was created with just a few pages of Ahluwalia’s ‘Document M’, which freed the economy from government control and by creating medium to long term policies and their enforcement, transformed the economy from 2%. so-called annual “Hindu growth rate” at a constant 8% annual growth rate. But that was 1991 and today is 2024.
Moreover, from 1947 to 1991, there had been huge government investments in education (even otherwise, India got a better share in education, business and skills during partition). Second, they had abundant resources of coal, iron, and aluminum.
Then came the base of the industry: steel and plastic granules. Compared to our own steel mill (1984 to 2015), they had 30 mills and against our unfulfilled dream of a naphtha cracking plant, India had seven naphtha crackers.
The result was as expected. Indian industry, having gone from state control to the private sector in 1991, had no chance of stopping its growth, while we remained poor even after everything was privatized.
In the third decade of the 21st century, economists believe that two things will form the basis of growth for countries like Pakistan in the next 10 years: exportable industrial production and quality IT services.
Fortunately, we live in an age where the acquisition of technology does not face significant limitations, but capital is lacking. Machines and plants require capital and human capital development requires IT and industrial/managerial skills. Due to a lack of natural resources, metals and plastic granules must also be imported, as well as oil and natural gas.
This investment is beyond the capacity of the government, but at least it can make this investment easier for the private sector through a long-term industrial policy and IT policy. Currently, the government cannot provide cheap loans, tax breaks or significant discounts on electricity, natural gas or petrol.
The government has six possible ways to promote the development of industrial and IT sectors for exportable goods and services:
One – Select 15 to 20 industrial sectors, based on foreign markets, and focus all government attention on them. (Not all areas have resources).
Two – Adjustment of tariffs (customs duties) for these industries, reducing them generally to zero and allowing all businesses related to these industries to thrive.
Third – Eliminate the hundreds of government approvals and oversights imposed on industries (which lead to bribery) and achieve government security goals through remote methods.
Four – Diversion of capital to export sectors by heavily taxing all easy profit-making opportunities available in the market, except industries and IT.
Five – Provision of plug-and-play industrial parks, funded by the government’s development budget, allowing immediate start-up on a rental basis and evicting those that stop production after two months. Land and infrastructure, about 60% of the total investment, can be provided for free.
Six – Conversion of micro-enterprises to small, small to medium and medium to large enterprises through management by government institutions such as Smeda.
Everything seems easy when said, but achieving them requires 10 years of consistent efforts in the right direction, and the thing is that even the very intention to take such steps is lacking. If that didn’t happen, we too would be a country of 200 billionaires (in dollars) today.
The author is a career civil servant and public development policy practitioner
Published in The Express Tribune, June 10u2024.
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