Miftah Ismail’s Solution to the Economic Crises of Pakistan – Exports, Exports and More Exports

Key Takeaways:

•  No foreign investor is willing to invest in Pakistan for export purposes
• Government Policies are the sole reason to blame
• Education system and corruption are further aggravating this situation
• In 1999, Pakistan contributed 0.18% of global export, today it is only 0.12%.
  

 

It was perhaps the prestigious and historic Bukhari Auditorium of the Government College University (GCU), Lahore; or the bitter betrayal from his own party; or perhaps both that nudged Miftah Ismail and Shahid Khaqan Abbasi to finally start admitting the problems of Pakistan on 29 April, 2023.

It is worth noting that only two years ago Miftah claimed that all of Pakistan’s problems began and would end with one person, Imran Khan. Even the reduction of the amount of cocomos in a packet of Miftah's own brand (Ismail Industries) was the fault of Imran Khan. The age-old proverb “Der aye, durust aye” could not be better fitted in a situation where the economy is now going in a tailspin.

 

The Problem:

It is not hard to identify the problems in the economic sector of Pakistan. It could be easier to identify what’s right, and the answer to that is horrifying. Nothing about Pakistan’s economy is right. For decades, we have not avoided bankruptcy, but simply delayed it. The government was always focused on vanity projects rather than those which would bring sustained development. The Metro Bus project in Lahore and the twin-cities of Islamabad and Rawalpindi is running entirely on subsidies, so will the Peshawar BRT Project. Even now, simply securing a loan is seen as a huge achievement for the Finance Minister.

Some factors contributing to this is the education system of Pakistan. The majority of students in government schools are failing in Math and Science; subjects essential for any entrepreneur or technological innovator. Furthermore, the Higher Education Commission promotes research papers rather than patents which could be translated to technological innovation and finally as products which could be exported to the global market.

But perhaps the only factor that counts is the wrong policies of the government of Pakistan. We never intended to create an economy favoring exports. This is evident from the fact that in 1999, Pakistan contributed to 0.18% of total world’s export. Today this is only 0.12%. This already minute number should have increased if we were to ever stand a chance against competing with the world.

Because of heinous policies such as nationalization of industries, high duties and whatnot, the trust of foreign and local investors has been completely broken. Further mandates of revenge ensure that the projects initiated by one government do not see the light of day if the government changes, which is often. No Prime Minister of Pakistan has been able to complete his term in office. The abolition of the Sehat Card of PTI's government is just one example of inconsistent policies, creating further distrust between governments and investors.

Even if policies exist, corruption in the system ensures that the people do not get to avail them.

 

The Solution:

It is sad to see graduates from Wharton who became politicians are only now realizing the solution that economists have been pleading for decades to say the least. Miftah Ismail reaffirmed the need to increase exports, although this realization came after he had to put up his resignation as the Finance Minister. We can only hope that the current Finance Minister Ishaq Dar heeds the bitter but true advice of his predecessor, which seems unlikely keeping ground realities in view.

LoCs (Letter of Credits) for the textile industry are not being honored. Raw material imported is left rotting in ports by the government. If some of this raw material is processed and exported, Pakistan could start seeing a reduction in its circular debt, but the government is focused only on promoting imports such as food and basic necessities. This is further aggravating the current economic situation.

It is still not too late. Default can still be avoided, circular debt can still be reduced, if only those in power can listen to the slivers of wisdom coming from their own parties now. For the rest of the people, the answer is not tailor-made to everyone’s own personal skills and resolve.

“Ask not what your country has done for you, but what you can do for your country.” - John F. Kennedy

   

     To watch the full interview, click here.   

     

      Let us know what you think about Miftah's views in the comments. Is there any other way to improve Pakistan's economy?