KARACHI: Pakistanis are ranked as the 4th most intelligent people in the world, according to a survey by Institute of European Business Administration in 2012.
Furthermore, Pakistan is endowed with so many valuable natural resources as well. So how come one of the most intelligent people with so many resources can’t sort out their issues. What is the true potential of this country and how can it be achieved? Let’s investigate.
Our honorable finance minister said in 2014 that Pakistanis have deposits of $200 billion in Swiss banks. Many people doubted these figures back then, but somehow in the post Panama era, these figures seem more realistic. As per the State Bank of Pakistan (SBP), Pakistan’s external debt is around $80 billion. So with a little bit of arithmetic, we can understand that if we can convince our people to bring a fraction of foreign exchange back, we can repay our external debt.
It’s not only about Swiss banks; we are overflowing with economic strength within Pakistan as well. Our stock market and real estate too are largely over-invested.
You can find stocks trading at a multiple of a staggering 30 times over and above their book value whereas you will rarely find a stock being traded at its book value or below. This means that people are over-investing in stocks. Similarly, the balloon of real estate boom has almost maxed out. The over-investment in stock market and real estate is again evidence that Pakistanis have too much money. Our economic resources are parked abroad and over-parked within Pakistan. Hence we have a lot of potential so how do we realise this potential? Where can we best invest this money?
As per a recent study, Pakistan will grow by 6% in the next decade and we have heard this right from the Harvard’s mouth this time. This growth rate is much higher than the growth rate projected for most developed countries and it is not very difficult to understand why.
Everything is done and dusted in the developed world. All the bridges have been erected, all the dams have been constructed, and all the road routes have been developed. There is very little room for further growth. Compare this with Pakistan and it won’t take an Einstein to discover that we have too much room for development and growth here.
So if Pakistanis bring back their money amicably and willingly and invest it here they will get better returns. Money can be channelled from the over invested stocks and real estate towards productive small businesses and employment generating manufacturing firms.
For the country, the investment from Pakistanis will also be free from the caveats of FDI. When foreigners bring investment, they take away dividends and again put the current account under pressure.
The government needs to engage with all Pakistanis. People who have taken money abroad have their own reasons. They have seen nationalisation and freezing of foreign currency accounts. Hence, their fears and apprehensions have firm grounds. On the other hand, these Pakistani investors can hardly find other better destinations for their economic resources as Pakistan’s projected growth is much higher than most countries.
However, there are some pre-requisites to the realisation of this economic potential. The government needs to improve its policy making, ensure the continuity of its policies and must ensure improvement in necessary infrastructure. Some good work has been done on the power generation front. We need to establish national priorities that transcend beyond the tenor of any government. These non-negotiable priorities must be religiously followed. The government machinery must be improved so that people can feel safe about their investments.
Furthermore, small businesses have greased the wheels of such growth all around the globe. They distribute the fruits of growth to all segments of society, decrease unemployment and hence improve law and order as well. They raise income levels and living standards and also provide valuable exports which help improve current account deficit. So the government must make robust policymaking framework regarding small businesses.
To conclude, I must say that we are truly one of the most intelligent people with many economic resources. Most importantly, we have a young population with the most valuable desire to change their lives. Imagine if these young people can find an environment where they can turn their desires into reality. So much can be done.
The writer is a corporate banker and teaches economics
Published in The Express Tribune, July 31st, 2017.
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