An infrastructural face-lift for Pakistan
Prime Minister Imran Khan gave a detailed, at times personal speech at the World Government Summit in Dubai on Sunday, detailing his vision for a Pakistan built on accountability, justice, and meritocracy.
Towards the conclusion of his talk came the most important parts of his speech, where he outlined various economic reforms to attract investment and export opportunities. In these points, he specifically spoke of tourism development and how it could be a huge source of funds for the exchequer.
On tourism, there is no doubt that the government deserves appreciation. The cumbersome old visa process which often took between 8-10 weeks for some nationalities, has seen a change with new rules of e-visas and visas on arrival.
But the more difficult aspects of implementing the Prime Minister’s reforms is the missing business and tourism infrastructure in Pakistan. Perhaps an even more elementary argument could be whether the country even has the capacity to implement large infrastructure programs on its own.
While an updated national level infrastructure implementation capacity analysis is long overdue, previous assessments by the likes of the World Bank and Sustainable Development Policy Institute, analysed the state of the business environment, human resources, materials, equipment and existing machinery to complete and create new infrastructure projects. To implement a greater federal level public sector development program, as well as provincial annual development programs, these assessments recommended four key reform areas.
First, that Pakistan would need to rationalize the taxes, tariffs and non-tariff measures in its construction sector. The cost of construction in housing, for example, in industrial estates and services establishments still remains high compared to Pakistan’s peer economies.
This is a complicated task for the PM’s economic team as tariffs and para-tariffs are currently not only levied on construction activity by the federal government but also by provincial revenue authorities.
The construction activity in Pakistan is slapped with over 55 taxes. Additionally, there are permits and No Objection Certificates required from about two dozen departments at the national and sub-national level. This contributes hugely to the cost of doing business for bigger entities and is a key barrier to entry for small and medium sized firms in the sector.
But the more difficult aspects of implementing the Prime Minister’s reforms is the missing business and tourism infrastructure in Pakistan. Perhaps an even more elementary argument could be whether the country even has the capacity to implement large infrastructure programs on its own.
Dr. Vaqar Ahmed
The second recommended reform referred to the public sector enabling infrastructure and improvements in human resource capacity. Currently, most public sector schemes in energy, water, clean drinking water, sanitation and other sectors are marred by cost and time overruns.
The PM’s team on institutional and civil service reform needs to look into creating incentives to attract and retain the best minds and real technocrats in the government.
For example, the lack of procurement specialists in the public sector has resulted in frequent mistakes by staff in announcing large bids and processes related to the hiring of services. The courts are choked with complaints on grounds which can be addressed easily if merit was strictly observed in recruitment and promotions in the public sector.
Third, regulatory oversight needs to be rationalized. There is now a vast body of literature on Pakistan to suggest that accountability bodies in the country exist at the federal, provincial and local levels and that these have overlapping mandates. Without information sharing mechanisms, different accountability bodies end up sending summons and notices to the same project managers simultaneously. This has discouraged both creativity and initiative in public sector employees.
Finally, the government needs to pull out of components of the infrastructure supply chain which could be better managed by the private sector. The government’s fetish for running public sector enterprises, state-owned entities, large public works programs, low-cost housing construction are all projects which can be run far more efficiently by the private sector.
Ultimately, the role of the entire state in economic activities needs to be reimagined. In the end, it is the un-learning of the state’s systemic development habits and the reinvention of new ones, which will reduce the burgeoning fiscal deficit and rising public debt.
• Dr. Vaqar Ahmed is joint executive director of the Sustainable Development Policy Institute, Pakistan. His book ‘Pakistan’s Agenda for Economic Reforms’ was recently published by the Oxford University Press. Twitter: @vaqarahmed
