Page 17 - CMA Journal (Mar-Apr 2023)

Focus Section

But this all comes packaged in stringent parameters “ The fact is that Pakistan, as a
impacting not the population at large, but the taxpayers
- a small segment of salaried class and business hub, is not thriving. It is a
corporate/businesses in Pakistan.
company of 240 million employees
The widespread apprehension surrounding the potential
social and political ramifications of stringent IMF challenged with basic literacy and
conditions is valid. The prospect of increased taxes and
reduced subsidies has raised concerns about skill development, with an elite
exacerbating the burden on an already strained tax base,
potentially leading to social unrest and economic senior management enjoying the
instability. To mitigate these risks, the obvious answer is profits as rewards, and that has no
improvised tax reforms, including broadening the tax
base to encompass historically exempt sectors such as permanent or unified authority for
agriculture, real estate, and retail trade, long-term
framework of investment policies to attract FDI, and decision making “
favorable initiatives for the local investors. In fact, I would
like to quote the State Bank of Pakistan’s (SBP)s Former
Governor Salim Raza, at the “Agri connections 2023”, (ASEAN) is a fitting example of market expansion for
stating that Pakistan’s agriculture sector has the potential individual growth of each member nation. The strategic
to overcome the current account deficit and location that Pakistan has, puts it directly in the path of
balance-of-payment crisis within six years. With this level China and Russia both, and a perfect path for the double
of potent capacity for resolutions, our reformative work landlocked Afghanistan and the Central Asian Republics
remains suspended. (CARs.) With 91% of its border aligning with India, Iran,
Afghanistan, and China, Pakistan could not make a
The government infrastructure would necessitate the success of either Regional cooperation for Development
Ministries of Finance, Revenue, and Investment to
(RCD) with Iran and Turkey, or South Asian Association for
spearhead the financial regulatory drive, but we have Regional Cooperation (SAARC) and lately China Pakistan
SIFC tasked with ensuring fiscal relief, while maintaining
Economic Corridor (CPEC). What prevents us is primarily a
market clarity. This is a replication of roles and
lack of vision, which is directly associated with
assignments and indeed stands to create complexity ‘incompetency’ – a word that I have used repeatedly as
with the new government taking charge. In the interest
the foremost reason for the drag.
of consolidation of democratic infrastructure, the public
institutions should be prioritized, yet supported with Kazakhstan, with a population of 20 million managed to
the collaborative framework of public, private and secure an impressive US$28 billion in FDI in 2022. They
military stakeholders. are hoping to up it for 2023 and of 2024 will show a
remarkable surge. They are a true example of focused
The China-Pakistan Economic Corridor (CPEC) came as a
work with facilitation for the investor. Pakistan must aim
game changing opportunity. The traditional critics of to emulate such successes, catalyzing its economic
the Pakistan economic policies could not stop praising
progress, and fostering a favorable investment climate
the project and its future outcomes for the country. Yet
for both domestic and international investors.
the hurdles mentioned above landed the stellar project
into hibernation. The overseas Pakistanis remitted US$2.4 billion in
January 2024, registering an increase of 1%, compared
Meanwhile, the Chinese government has progressed with US$2.38 billion received in December 2023.
with its regional plan, currently overlooking Pakistan's
Similarly, compared with the same month of 2023, there
significant strategic location asset. Beijing's strategy aims
was a significant uptick, with remittances rising by 26%
at utilizing economic and political collaboration to to US$1.9 billion.
bolster the political and economic objectives of the
South, contributing to the establishment of a fair and The overall remittance inflows for the first seven months
equitable international order. A central aspect of China's of FY24 (July to January) stood at US$15.83 billion,
foreign policy is to secure African support globally, posting a 3% year-on-year decrease of US$386 million
especially within the United Nations. China endeavors to from the US$16.32 billion recorded in the same period of
secure African backing by highlighting commonality as FY23. Remittances are not investments and though the
developing nations, underscoring shared strategic numbers generate hope, they are way behind our
interests and a unified stance on major international competitive economies.
issues, effectively minimizing potential disagreements. The key understanding is that domestic policies always
Pakistan stands as a crucial conduit in this context. attract and optimize FDI. It must be emphasized, even at
Regional economy and regional collaboration are the the risk of repetition, that without addressing policy
new requisites for planning an upward trajectory for issues and facilitating existing investors, sustainable FDI
nation’s business. Association of Southeast Asian Nations cannot be attracted.
ICMA’s Chartered Management Accountant, Mar-Apr 2024 15