The recent Pak-Japan MoU to strengthen bilateral investment is indicative of saner heads finally prevailing in decision-making circles. Recent developments, though seemingly isolated incidents, actually tell of attempts to put a cohesive growth narrative in place, realising the importance of increased investment, both indigenous and foreign, to break off of the choking cycle of stagflation we find ourselves in.
It was only natural for different pieces of the puzzle to fall into place once the central bank allowed increased liquidity by relaxing the interest rate regime. Immediately, KESC unveiled an ambitious program of attracting serious investment parties to help exploit Thar coal reserves, lighten burden on furnace oil demand, reduce strain on electricity supplies and help push down high prices. Concerned quarters must now identify areas where targeted – and facilitated – investment can alter the low-growth status quo.
The coming together of Japan and Pakistan, when both economies are struggling to find high growth, presents the ideal example to follow in uncertain times. Pakistan’s economy has been stagflated for the last half decade, with consumer spending dried by increasing unemployment and rising prices. Japan, stagnant for two decades, has been put horribly off course by the recent tsunami, at a time when global uncertainty drove up the yen and compromised the only feather in Tokyo’s cap – exports.
Going forward, step number one will obviously be identifying bottlenecks to incremental increases in production and subsequently trade earnings. With regard to Pakistan, this will mean revisiting the security debate, in addition, of course, to reducing bureaucratic red tape, etc. Also important will be the government’s own position, compromised as it is because of its debt binges and resort to printing money.
Simply put, prompting investment for pick-up in growth is right, but that will require the government to trim excesses and play facilitator to local and foreign investment, an exercise with no room for complacency, corruption and adhocism.