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We need a greater commitment in the form of a parliamentary pledge that this country will never have a law that contravenes the rights of the people By Peter Jacob Finally, the bill that shall give birth to a National Human Rights Commission (NHRC) is on the National Assembly’s to-do List. Though it will still take some time to pass the bill in both houses, have approval of the President and put the Commission in place, yet it is good news. Many nations have found NHRCs useful for: strengthening norms and values based on human dignity and rights, reducing burden on the justice delivery system and dealing with rigidity of obsolete laws. As ‘The Statement of Object and Reasons’ attached to this bill explains, 56 countries have this arrangement in place recommended by several UN bodies and international treaties. A
small beginning Data-based Drowning
in debt Rules
of the market Politics
of free trade firstperson
Saying
“no more” to cartels
analysis One of the most enduring myths of the modern age is that of the state. By this I do not mean that the state is complete illusion, but that a particular popular conception of the state persists despite ordinary peoples’ very incongruent everyday experiences with state power. Benedict Anderson has written about the almost transcendental quality of modern nationalism, about its ability to make people who will never know one another feel as if they share some primordial bond. The state is the structure within which nationalism has been nurtured, and it is thus hardly surprising that it has come to acquire a larger-than-life quality. Pakistanis in particular
tend to be very ‘grateful’ for the fact that they have a state at all.
The particular narrative of Muslim nationalism in British India that we
are fed from an early age necessarily makes us feel like we would have
been completely devoured by the spiteful Hindu if we had not carved out a
separate state in 1947. This socialisation reifies the concept of both
state and citizen in a way that has little to do with the actually
existing state and the reality of Pakistani citizenship. Of course, those
of us who have never been on the receiving end of state excess remain
convinced of the pristine image of the Pakistani state — it is this
particular group of ‘citizens’ that tends to be the most vigorous
defenders of the guardian of the state itself, the Pakistani military. On the other hand, in the eyes of ordinary Pakistanis, the myth of the Pakistani state is only sustained through a dualistic understanding of state power. The majority of ‘citizens’ in this country are routinely subject to excess on the part of state functionaries (thana, katcheri, etc.) and are thus hardly deluded about the character of the ‘local’ state with which they come into regular contact. At this level, it is a cruel joke to even suggest that any meaningful notion of citizenship exists; it would be not be incorrect to argue that state functionaries treat ordinary people more like ‘subjects’ than citizens. However, many ‘subjects’ at the local level still remain convinced that they are ‘citizens’ of the state, thus reinforcing the eternal myth. In other words, ordinary people distinguish between the state functionaries that oppress them at the local level and the proverbial benevolent rulers with whom they will never come into contact. ‘If only they knew what their subordinates were doing to us, they would never allow things to come to this’, is not an uncommon refrain. This is not to suggest that ordinary Pakistanis do not dwell on the self-aggrandisement of those in the corridors of power in Islamabad (due in large part to the prodding of the corporate media). These days there is incessant focus on a handful of individuals and their ‘corruption’, particularly President Zardari. But herein lies the primary obfuscation at the heart of the state myth — we go on and on about those currently in government, particularly if a Zardari-type ‘bad guy’ is in the mix, yet functionaries of the state at the highest echelons tend to be completely exempt from public scrutiny. And here I refer particularly to the men in khaki. Most Pakistanis rarely come into contact with military personnel (although populations at the receiving end of brutal military operations are notable exceptions). Add to this the influence of formal education and the popular media and it is easily understood why the myth of the state is associated most closely with the ‘selfless’ defenders of our borders. To be sure, this myth of the military as the ‘only institution that works’ and the reason why we still maintain a modicum of ‘sovereignty’ has been cultivated for decades on end, and continues to be. Popular perception of the ‘bureaucracy’, including its higher level, tends not to be as positive, presumably because ordinary people have plenty of contact with this bureaucracy at the lower level and recognize that individuals higher up the hierarchy are likely to be no less committed to personal gain. Nowithstanding ordinary people’s experiences, the bureaucracy is not targeted in the popular media in anything like the same way as politicians. Thus a false binary of
state versus government is constructed and maintained. Indeed, while there
is, to an extent, a recognition amongst some ordinary people of the
distinction between the permanent state institutions (like thanas and
katcheris) and the elected government — let’s just say the distinction
between ‘sarkar’ and ‘hukoomat’ — it is actually the (urban)
middle class that tends to be largely silent about the structural
dimensions of state power whilst constantly going on about the
‘corruption’ of ruling politicians. An example will help illustrate the point: this past Thursday and Friday (1-2 December), around 3 dozen people from Muzzaffargarh district held a token hunger strike outside the office of the World Bank (WB) in Islamabad — not for the first time — to register their protest against the WB and the Punjab Irrigation Department for continuing to paper over the social and ecological fallouts of the WB-funded Taunsa Barrage Emergency Modernisation and Rehabilitation Project (TBEMRP). The protestors also demanded that the WB shelve its plans to dole out more money to the provincial bureaucracy to rehabilitate the Jinnah Barrage, seeing as the latter project suffers from the same basic design flaws as the TBEMRP. For the record, the provincial irrigation bureaucracy — not only in Punjab — has been inflicting pain and suffering upon local communities under the guise of ‘development’, with the gracious support of the WB and Asian Development Bank, for the best part of four decades. In recent times the banks have been forced — due to pressure from activists across the world — to ensure that ‘development’ projects that they fund conform to basic environmental and social norms. So, for example, any WB or ADB project that causes involuntary displacement must be accompanied by workable plans for resettlement and compensation. Despite the haughty claims of social responsibility on the part of both the WB and Irrigation Department, affectees of the TBEMRP have spent at least half of the compensation money paying bribes to officials of the said department. In this case, and many others like it, there are no politicians fleecing ordinary people. It is the bureaucracy (and donors) doing their bidding at the cost of local communities. I believe that the institutionalized exploitation of the actually existing state — the civil bureaucracy and the military — is far greater in scale and scope than the ‘corruption’ of Zardari and his cohorts (or whoever else is in power, for that matter). Yet the popular myths that project the permanent state apparatus as the epitome of everything good about Pakistan persist. It is clear that some Pakistanis believe that it is necessary to maintain the myth of an omnipotent and inclusive state in the face of ‘external threats’ to our ‘sovereignty’. What about the sovereignty of the tens of millions of ordinary Pakistanis whose basic rights — including the basic right to life — are violated on an everyday basis by the very state of which we are ostensibly proud? Is this ‘internal threat’ — posed by the state itself — not bigger and more urgent than the abstract ‘external threat’ that apparently brings us all together in an ode of deference to our ‘guardians’?
We need a greater commitment in the form of a parliamentary pledge that this country will never have a law that contravenes the rights of the people By Peter Jacob Finally, the bill that shall give birth to a National Human Rights Commission (NHRC) is on the National Assembly’s to-do List. Though it will still take some time to pass the bill in both houses, have approval of the President and put the Commission in place, yet it is good news. Many nations have found NHRCs useful for: strengthening norms and values based on human dignity and rights, reducing burden on the justice delivery system and dealing with rigidity of obsolete laws. As ‘The Statement of Object and Reasons’ attached to this bill explains, 56 countries have this arrangement in place recommended by several UN bodies and international treaties. Besides the significance
of reporting this development to the UN Human Rights Council’s session
in October 2012 that shall review human rights situation of Pakistan
(second time during the incumbency of this government), forming a human
rights institution will have an added value in the present circumstances
of Pakistan. There is a tremendous potential in this proposition as it
seeks to build an institution over universally agreed upon standards of
rights and liberties. Minus any expediencies and bureaucratic hurdles, a
truly independent and effective NHRC can give new life to the dream for a
democratic and autonomous Pakistan, much beyond the political rhetoric. Nevertheless, it would be a big challenge for the NHRC to function and deliver in the midst of feeble government machinery, massive human rights abuses and high expectations. Just imagine the flood of complaints that is bound to pour in the good offices of the proposed Commission, with given misunderstanding among the citizens on the difference between rights and charity. The 11 member body is going to need an elaborate arrangement and mechanism to process and respond to a huge number of complaints of human rights violations. While an adequate number of motivated and skilled staff is a must, the provincial governments must either be required to provide an outreach infrastructure to match the needs of a large demographic and geographic spread as Pakistan or legislate to form such Commissions at provincial levels as well. India, for instance, has one for each of its States besides a NHRC. The Provincial autonomy will have to be given a due regard, however, parochial approaches will have to be discouraged. The South Korean NHRC model would be also good to look at that dealt with the aftermath of prolonged autocratic rules in their country. The impact of this initiative will largely depend on the role assigned to this institution, its formation and autonomy with regard to rules of business. A clause in the bill that requires NHRC to report to the government, which would be some ministry, looks an impediment as far as autonomy of the new entity. It would serve the purpose well if the proposed Commission should only report to the Parliamentary Standing Committee on Human Rights once a year, in collaboration with but without the approval of any ministry. With the experiences at hand of such Committees and Commissions in the past that could deliver a little and met enormous difficulties owing to the lack of financial and legal autonomy, the parliament will have to abridge these gaps in the bill. Without restricting the mandate of NHRC in the area of human rights, choices will have to be made with regard to its terms of reference. A distinction in gross and systematic human rights violation will help the course of action and modes operandi of remedial as well as investigative work of the Commission. Bringing Directorate of Human Right under the NHRC would be logical. Apart from the logistics and modalities there are challenges regarding the conceptual issues and education of the citizens in human rights? The biggest challenge is about building a culture for human rights in social, legal and political systems that have become averse to rights and freedoms. What plans the well-intentioned people in the government and in civil society have to go about this? If the political parties claim a commitment to peoples’ rights, this commitment needs to be reflected in serious and result oriented actions. Along with the proposed NHRC, we need a greater commitment in the form of a parliamentary pledge that this country will never have a law that contravenes the rights of the people of Pakistan, that the country will get rid of discrimination in whatsoever form and manifestation. That equality of citizens is not going to be a bookish concept but it will become part of daily life. Once the NHRC becomes a reality the two big political parties — PPP and PMLN — can congratulate themselves for having achieved another goal set out in the Charter of Democracy (CoD). As far as institutional reforms, Pakistan also needs to have a Truth and Reconciliation Commission, something that COD pledged to establish as well. Issues concerning transitional justice are a cause of lurching confusion; be it May 2nd incident or other tragic incidents in the life of the nation. There is a long way to go in structural, institutional and sectoral reforms, through reforming laws and policies. We better make a resolute start and catch up with time. The
writer is executive head of the National Commission for Justice and Peace
established by the Catholic Church in Pakistan. He studied Law, Political
Science and Rural Development and has been associated with human rights
and peace building work for the past twenty four years. He can be reached
atjacobpete@gmail.com
A
small beginning Financial help of
farmers is necessary for the modernisation of farming and farmers’
prosperity. But small farmers who, according to some estimates, constitute
85 percent of the total 6.6 million farmers in the country, have
negligible share in the agriculture credit disbursed in the country in
general and Khyber Pakhtunkhwa in particular. Those residing in the
far-flung hilly and tribal areas are particularly affected by it. Financial exclusion of
the small farmers who have little resources to approach the research and
extension systems, coupled with their illiteracy and poverty, keep away
from commercial farming and expose themselves to low productivity,
eventually adding to severe financial hardships. They, in turn, have to
rely on informal sector for their credit needs offered at higher rates,
leaving them in a vicious debt-cycle and poverty trap. Acknowledging that
agricultural credit disbursement was worse in KP, the SBP launched some
agriculture-credit schemes as part of its financial inclusion programme
for KP but credit disbursement ratio couldn’t improve. Countrywide, less than 2
million farmers of the total 6.6 million, get agriculture credit facility.
The situation in KP, which accounts for less than 4 percent of the
national agriculture credit disbursement and where over 90 percent are
characterised as small farmers, is particularly dismal. Khyber Pakhtunkhwa
accounted for Rs 7.9bn or only 3.4 percent of the total agriculture credit
of Rs233bn in 2009. Only six percent of farmers in Khyber Pakhtunkhwa have
access to agriculture credit against 21 percent for the country. Various easy credit
schemes, support price mechanism and subsidy regimes in the past were
designed for small and medium scale farmers, but they scarcely benefited
from the schemes and big landlords were the main beneficiaries. One of the main reasons
of small farmers’ financial exclusion is their inability to be bankable
— to be able to provide collateral (the explicit or implicit guarantee
against the possible risk associated with the loan) to banks as most of
them are tenants, who don’t have any property registered in their names
or own land below the required level. Plenty of these farmers,
especially those in villages, are also influenced and kept from applying
for credit by the Riba-element, a necessary part of credit but avoided by
most on religious grounds. Small farmers have been
practically neglected in the existing provincial agriculture policy
developed in 2005. The policy has, however, yet to be updated to focus
them despite several announcements. As per the prudential
regulations for agriculture financing, banks are required to ensure
disbursement of working capital/short term loans within seven days but it
is usually delayed. “The entire formalities for any agriculture loan
require lengthy documentation and procedure and take around two to four
months to get the loan,” says a bank manager on condition of anonymity,
when asked about the process of loan delivery. “Small farmers should
be given loans on personal guarantee. Group-based credit schemes are being
followed by small banks but needs to be taken up by the main private banks
as well to improve credit disbursement ratio in the country. Crop and life
insurance is the best way to decrease the risk of farming community
against losses and of banks against non-repayment,” he adds. Some farmers hold the
banks responsible for low agriculture credit in the province. “The banks
are risk-averse. They avoid lending loans to farmers for fear of default.
Much has been said of the one-window operation but no bank as yet has come
out with a fast track mechanism for credit disbursement. The banks must
simplify and re-structure their agriculture lending mechanism and mobile
credit officers should reach farmers at their doorsteps to boost credit
delivery,” says Shahid Khan, a farmer in Mardan. Last year, the KP
government revived the erstwhile cooperative bank and promised to provide
Rs1 billion seed money for easy farm and non-farm loans to small farmers
from the bank but practically just Rs200mn were released. This year too,
Rs400mn will be released. How can credit ratio be improved with this? Under agricultural loans
scheme through the passbook system, banks are bound to allocate 70 percent
of their loans to subsistence farmers but whether the law is followed is
not clear. In group-based lending,
developed by the SBP, small farmer groups are formed by the lenders
involving 5-10 members having identical needs and registered with the
former. Collateral is generally not used and is replaced by personal
guarantee —-a joint liability agreement/undertaking — takes its place
wherein each member takes the responsibility of the outstanding debt of
all group members. In case of any change in the group, a fresh guarantee
would be signed by the members. A group coordinator acts
as facilitator of the group and agent of the bank. The bank ensure that
group coordinator is executing the assigned tasks as prescribed like
liaison with members, arrangement of meetings, etc, and if need be replace
him, with the consensus of the group, in case he fails to deliver. Group
members ensure that the bank receives timely repayments from individual
borrower/group members. But if a borrower dies, liability lies to
remaining group members. However life insurance is urged to safeguard the
interests of both the borrowers and lenders. Everyone who owns or is
a tenant or lessee over up to12.5 acres of land or have more than 40
sheep, has computerised national identity card, residence in the village
and membership in the village organisation, is eligible for crop or
non-crop loans in the scheme. Though globally 12.5
acres of land is the threshold of subsistence farming but in Pakistan one
having that much land is considered a rich person given the phenomenon of
small land holding in the country. According to an estimate, cultivated
land per person in Khyber Pakhtunkhwa stands at just at 0.2 acres. The
benchmark needs to be brought down for bank credit if small farmers are to
be benefited. Repayment schedule for
farm loans may be set as per production cycle of crops and for non-crop
activities, like livestock farm establishment, it should be three to five
years. http://tahirkatlang.wordpress.com
Data-based A census is inevitably a
blend of politics and science — politics because power and money are
linked to how many people live where, science because the technically
complex undertaking draws on many scientific disciplines. — Kenneth
Prewitt, 2011. These articles attempt
to map out issues related to census and statistics management in Pakistan
exploring cross linkages of data generation and management with politics
of gender, ethnicity, elections and resource distribution in Pakistan. Pakistan is among the 49
countries conducting census this year in 2011, which, rightly so, has been
called as the ‘global census year’. Coincidentally, acknowledging the
significance of demographic information that census generates, Pakistan
has also declared 2011 as the ‘Population Year’. Population and Housing
censuses are essential tools for policy, development planning and
monitoring purposes. Reliable, disaggregated data on socio-economic
indicators derived from censuses are extensively used as inputs for
result-based management and tracking of progress towards national goals
and international goals such as Millennium Development Goals (MDGs). Most
importantly, the census data has strong sectoral linkages with the
constitutional provisions and administrative arrangements. Since its
inception, the demographic profile of the population in Pakistan has been
the basis of distribution of funds to the provinces, determination of
seats in the parliament, recruitment and educational quota on civil posts
and educational institutions. Pakistan inherited a
long history of census undertaking that provides valuable data for
analysis, but it has unfortunately not been fully utilized. No serious
attention has ever been devoted to study Pakistan’s diverse population
and to explore the implications it holds for country’s development and
politics and ultimate stability. Pakistan’s wide diversity in
topography, weather and climate, language, ethnicity, culture, polity and
distribution of resources presents a real challenge for the census
undertaking. With the first census in 1951, Pakistan has inadequately
deployed an integral tool of development planning by being able to conduct
only five decennia lpopulation and housing census in 1951, 1961, 1972,
1981, and 1998 with increasing lapses of years. The 1998 Census puts
Pakistan’s population at 132.4 million, with 48 percent females, making
it the seventh most populous country in the world. In all five censuses
information on the following ten topics was solicited: name, sex, age,
marital status, religion, language, and literacy, employment and industry.
Certain topics were added on to the list, because of their multiple uses
for different socio-economic development policy and planning. These topics
are: enrolment into educational institutions, field of education, duration
of continuous residence of migrant population, and nature of visible
disability from which a person is suffering. For one hundred year
from the inception of decennial census in 1881 to 1981, the census have
been on the schedule. However, in the last thirty years, the census
undertaking has become an irregular practice indicating a deepening crisis
of governance. The census scheduled for 1991was delayed for seven years
and could only be conducted in 1998, thereby pushing the date for next
decennial census to 2008, which sadly still awaits completion. The delays
in holding national census, points to weakening territorial writ of the
state over its citizens but also reflects the contested nature of rights
and privileges administered to the population on the basis of census.
Every single census in Pakistan conducted under close military
supervision, had led to storms of protests from the disenfranchised ethnic
and religious groups, but without eliciting any changes in the census
structure, categories and schedule. As a result, the struggle for power
among various groups in the society draws on the imbalance between census
figures and the situation on the ground. The international
organizations such as UNFPA, UNFIEM, and UN-Habitat contribute
substantively to the effective planning, management and execution of the
Pakistani censuses, while encouraging the use of population data for
policy development. The donors have made efforts in training the
enumerators, providing the logistic supports and technical capacity
building of the Population Census Organization (PCO) for the Census in
2011, but their efforts have not brought to fruition due to lack of
political consensus on the census. Inter-agency groups of UN have invested
to jointly enhance and develop the capacity of the existing
Geographic Information Systems for the statistic divisions of census
offices in Islamabad, Karachi, Lahore, Peshawar and Quetta. They will also
help train those using the systems in modern technology and the latest GIS
software. The use of GIS will replace conventional maps with Google maps,
and will minimize the chances of errors in house and building counts. The statistics on urbanization
in Pakistan are most unreliable, given the out-dateddefinition of urban
population, and the challenges of urban enumeration, created by vested
political interest groups in the cities. In Sindh, a coalition of
political parties, has questioned the transparency of the census
procedures and disputed the results of recent household census in Sindh,
which is to provide a base for population census. The population and
household survey has not yet begun at the scheduleddate in September. As in other spheres of
citizenship, Christian population is discriminated and under reported in
the census. In the last census of 1998, the total Christian population was
estimated to be 5m, whereas the Church records state them to be around 10
M. Most independent observers estimate it to be around 13m. Attention needs to be
placed on the census categories which form the basis of public policy
planning and administration. In the past five censuses, there was no
direct question as to ethnicity of Pakistani citizens. The ethnic identity
is inferred indirectly through the question on language or mother tongue.
In a large number of cases in all the provinces in Pakistan, due to a
variety of reasons of upward mobility, migration and resettlement, the
ethnic groups lose their vernaculars/ethnic languages and adopt other
national or cosmopolitan languages. At the same time, they remain
culturally aligned to their ethnic group and follow the customs and
kinship practices and land tenure of their descent group. In other words,
language is one of the determinants of the ethnicity, and cannot be
reduced to it. With no question to document the claims to ethnic identity,
irrespective of language, it will be a sociological error to subsume
ethnic groups under the linguistic categories. The gender biases in the
census have not been addressed. To make women’s work visible, there is a
need to make structural changes in the census procedures as well as
involvement of women in census enumeration. Male enumerators have
invariably been deployed in all of Pakistan’s censuses to collect
information on the population and its characteristics, on the housing
stock and associated facilities. The enumeration generally occurs during
the day, so the enumerators usually face female respondents. As many women
in Pakistan find it difficult to disclose personal information to men,
even familiar ones, responding to the census enumerators is frequently
extremely problematic, and women may provide incomplete, inadequate or
erroneous information, or may simply refuse to cooperate. Although, the scheduled
census activities for census 2011 are underway, and the first stage in the
census operations, the household listing launched on April 5 has been
completed, amid controversies. The Council of Common Interests had already
expressed concerns about the latter’s usability in August, 2011 and the
census activities are suspended till the resolution of objections in the
CCI, whose next meeting has still not been called. According to some
reports, PML-N questioned the abnormal rate of urbanization in the house
listing census, which saw 84 percent growth of households in Sindh between
1998-2011, in contrast to 32 percent growth in Punjab. Ironically,
according to the house listing census, Hyderabad, Karachi, Jacobabad and
Jamshoro districts recorded 129, 114, 111 and 102 percent increase while
Lahore district showed only 0.94 growth in its households. Amjad
Bhatti is a development researcher, communication expert, and founding
executive director, School of Political and Strategic Communications (SPSC),
Islamabad. Dr Nadeem Omar Tarar is a development anthropologist based
in Islamabad. To be continued
Drowning
in debt Pakistan’s debt and
liabilities has increased to a record mark of Rs. 11.9974 trillion (66.4
percent of GDP) including domestic debt and liabilities 6.8280 trillion
rupees and external debt and liabilities 5.1694 trillion rupees (US $
60.12 billion) at the end of first quarter FY2011-12, according to the
State Bank of Pakistan (SBP). The debt directly owed
by the government from domestic and external sources is called public
debt. Debt is owed to manage expenditures for boosting productivity,
alleviation of poverty, generating employment, social and economic
development, and to increase economic growth. Increase in Public debt, due
to sharp increase in domestic borrowing lead to inflationary pressures on
the economy. Furthermore, debt servicing in the future hinder allocation
of funds to other sectors of the economy. Pakistan’s debt
dynamics has undergone substantial changes in the last three-and-a-half
years. At the end of March 2008 Pakistan’s outstanding public debt and
liabilities were 6.159 trillion rupees (59 percent of GDP), including
domestic debt and liabilities 3.267 trillion rupees and external debt and
liabilities US $45.9 billion (Rs2.892 trillion), the present government
has accumulated 5.8384 trillion rupees including 4.6154 from domestic
sources and US $14.22 billion (Rs1.2230 trillion) International Financial
Institutions (IFI’s) in between April 2008 to September 2011.
Furthermore, the present government has borrowed 1.473 trillion rupees in
between March to September this year, as Pakistan’s debt and liabilities
till March 2011 were 10.524 trillion rupees including external debt and
liabilities US $59.5 billion (Rs. 5.061 trillion). Behind this gigantic
debt accumulation by present government, there are two main reasons. The
first and foremost is budget deficit on average has been 6 and 6.5 as
percent of GDP over the last four years, the huge budget deficit occurred
due to continuous policy of maintaining untargeted subsidies and to
sustain the loss making public sector enterprises. The other main reason
is sharp depreciation of exchange rate as Rupee is depreciated from 62 per
dollar to 88 per dollar in the above said period. The sharp depreciation
of exchange rate, contributed to the rise in public debt; this
depreciation alone has contributed roughly, 1.3 trillion rupees of debt. Saqib Sherani, former
principal advisor to the government, is of the view that “if the same
policy of borrowing money continues and the debt situation is not
stabilised, the government will become even larger borrower in domestic
markets. Two things will happen, firstly the private sector will be denied
credit so there will be pressure on availability of credit and secondly
the government will be biting up the price of the credit, so the interest
rate will go up very sharply and for a very long time. What will happen is
that both availability and pricing of credit will be affected for the
private sector”. Large debt always causes
more interest payment and interest payment on Pakistan’s domestic and
external debt and liabilities has increased to 806 billion rupees (4.46
percent of GDP). Debt servicing is also at very higher side and it stands
at 1.4755 trillion rupees (8.2 percent of GDP), including above said
interest payment at the end of first quarter FY 2011-12. Debt-servicing and
defence expenditures eat up the mainstay of Pakistan economy, i.e.
revenues, leaving little space for development and social sector. Speaking
at Lahore Chamber of Commerce and Industry in October, Chairman FBR Salman
Siddique said, “the tax department’s almost whole revenue collections
go to debt-servicing or defence expenditures, as out of total Rs1,558
billion revenue collected by the FBR during the last fiscal year, 750
billion rupees were used for debt-servicing and 441 billion rupees were
used for defence expenditures”. Talking about debt
incurred from the IMF which is US $8.9 billion at the end of first quarter
FY 2011-12, Pakistan paid about US $267.67 million (22.9 billion rupees)
as debt-servicing, including US $174.16 (14.9 billion rupees) as interest
payment on this debt to the IMF. Because of this serious repercussion, the
aftershocks of the abstruse decision made by culpable former finance
minister Shaukat Tareen will start coming from next year and Pakistan will
be in a severe debt crisis in the next 2-3 years as the IMF debt payment
will start from February 2012 and Pakistan will have to repay almost US $8
billion to the IMF in 3 years. Curbing this situation
and increasing efficacy, former economic advisor to the Finance Ministry,
Dr. Ashfaq Hassan Khan suggests, “the only way to reduce the debt burden
is maintaining fiscal discipline, meaning budget deficit should be brought
down to 3 percent of GDP in the next three years. This will reduce the
borrowing requirements of government and the pace of debt accumulation
will also slow and debt as percent of GDP will keep on declining. Pakistan
also has to maintain stability in exchange rate, as the depreciation of
exchange rate that not only contributes to surge in public debt but it is
also inflationary by definition.” Therefore, if the
government wants to bring this debt situation under control, reduction in
fiscal deficit and stability in exchange rate are the main solutions. Strolling debt
management requires great aplomb for making onerous and pragmatic long
term planning about repayment obligations, and to deplete the debt. If the
country needs to borrow more, it should borrow prudently. On the other
hand, FBR needs to make lucrative tax policy, and the government needs to
develop such projects which further generate revenues, and also it needs
to manage expenditures without leakages. Lastly, if the trend of
borrowing is not controlled by enhancing the ability to reduce debt
through generating income from lucrative tax policy then Pakistan
development spending and other necessary non-development expenditures will
get squeezed and the inimical debt situation will have huge impact on
inflation, growth, investment and fiscal stability and the country will
stuck in stasis. The
writer is a consultant at SDPI and can be reached at umar.adnan83@
gmail.com
Rules
of the market A
Study of World Trade Organization The book under review
serves as a ready reference for not only a student of global economy
seeking to understand how the WTO works but also for knowledgeable
academics and writers. Not ignoring the
criticism on the WTO by the third world countries, the book prefers to see
the positive side of the world trade mechanism. It focuses on the rules
being followed by the global markets and how the poor countries can become
competitive in terms of bilateral trade. This shows that the author is
mindful of the room for improvement in the rules of the organization and
how the apprehensions of the third world countries can be adequately
addressed. The book encompasses the
impact of the WTO rules and regulations on the world economy, with special
reference to Pakistan’s textile and agriculture sectors. This makes it
more relevant for the Pakistan reader. Magnifying the link of
the Doha Round of Talks with the WTO, the book points to the fact that
Asia is also starting to have an influence on the WTO trade negotiations. For the convenience of
the reader, the book is divided into 11 chapters, each focusing on
different aspect of the organization and Pakistan’s textile and
agriculture sectors. The author believes that
we have to save “the very future of the WTO” which is a “trading
regime which provides opportunities for the poor”. While discussing tariff
and quantitative barriers, the book takes into account non-tariff
barriers, especially in the agriculture sector that hinder trade across
the borders. The book lays emphasis
on the changing trends in governance to promote healthy trends in trade
practices, culminating in the increased level of trade between and among
countries. The book analyses the emerging economies of China and Brazil
and their impact on the world markets. The thesis also
discusses the need of change and reforms in the current rules governing
the world trade in an attempt to address concerns of the developing world.
The book states that “the governing body of the WTO is also now
simultaneously contemplating the changes it has to adopt”. On the other hand, the
book also makes it clear to the developing nations that they will have to
bring in financial discipline to be able to realise the fruits of free
trade. China figures prominently as a nation that has shaped its economic
policies accordingly. The author also attempts to “assess the importance
of WTO on our textile sector’s future”. The research work is
user-friendly as it provides a comprehensive introduction and a list of
abbreviations and acronyms. The work also carries quite a few tables and
graphs, amply illustrating import, export and other trends in the global
economy, also focusing on Pakistan and the region at large. It also has a
long list of reference which lends credence to the information and data
given in the book. The book succeeds in
reviving a debate on the obligations of the developed and the developing
world that have wasted precious time in pointing finger at each other
instead of hurrying up to bring in the required financial changes. The
problem emanates from the fact that the two sides are not ready to take
the first step. The work enumerates the
options available for Pakistan to be a part of the WTO mechanism, which
may also mean challenging the “role that has been acquired by Brazil,
China, India, and South Africa”. After the informative
details given in some chapters of the book, the conclusion and postscript
provide a thought-provoking analysis of the options Pakistan has to
embrace the WTO rules and be more open to the global markets without
compromising on its economic interests.
Politics
of free trade “Imagine the world were one unified country. What do you suppose it would look like?” challenged Adil Najam, new VC of LUMS in one of his first public appearances after taking over the office. The occasion was the annual gathering of alums of Harvard Business School in Pakistan held on November 24thand the topic under the scanner was, “The Economics and Politics of Free Trade Agreements made by Pakistan”. In addition to graduates of the hallowed lawns of Harvard, there were noted academics, industrialists and other high profile guests. Seema Aziz of CARE foundation, former chairman of PCB Ijaz Butt and Nadeem Elahi of TRG were all seated around the dinner tables eager to hear authoritative opinions on the future of Pakistan’s trade relations. Adil Najam posited that
the globe as a whole had the likeness of a Third World Nation suffering
from abject poverty and severe resource constraints. He thus claimed that
strategic planning for global trade could learn more from the case study
of a country like Pakistan than more developed nations around the world.
He discussed the heritage of GATT and WTO and flashed colorful diagrams
that showed how the inter-linkage arising from multi-lateral and
bi-lateral treaties were making the world a more complicated place. His
parting message was powerful: “We need trade for development. We need
development for security.” Adil Najam was followed on stage by Yusuf Shirazi, chairman of the Atlas Group. Yusuf identified under-invoicing and tax evasions as major banes of the country. But he expressed hope that the robust textile sectors and untapped mineral resources would prove key assets as Pakistan attempted to build on its trading tradition. This was followed by a panel discussion. The team included noted industrialists and financiers like Razzaq Dawood and Mian Mansha, academics like Ishrat Hussain and ministers like Zafar Mahmood. The granting of MFN status on India remained in the backdrop of the analysis. All the speakers shared a positive view on trade and the belief that such trade treaties ultimately benefited all players in the market. But they differed in why they believed trade was important and the best way to approach it. Razzaq Dawood was perhaps the most exuberant. He subscribed to Schumpeter’s ideology of creative destruction which suggests that resources must be periodically re-allocated to the most efficient producers, thus putting inefficient ones out of business. While this approach may seem clinical and ruthless, it is a key tenet of the modern market economy that is a survival of the fittest. Dawood accepted that enhanced trade channels with India would mean that the most inefficient producers in both markets would be squeezed out. But he felt that this was in the best interest of both countries. He was extremely critical of the national tendency to lobby for subsidies and breaks that allowed inefficient actors to benefit. He urged businessmen to compete on a level playing field and attributed the current climate of power shortage to a misguided policy of lavish subsidies. Mian Mansha, too, was excited about the opportunity for more trade with India. Like his peers, he was fascinated by the sheer scale of the Indian market. He pointed out that a cement factory in Pakistan priced a bag at Rs350 while one in East Punjab in India would price it at Rs500. He hoped more trade with India would eliminate such inefficiencies in the market. He and Mr. Dawood were keen for Pakistani and Indian setups to source their raw material at the same price so that inefficient producers would get exposed and be forced to exit the market. While Zafar Mahmood shared this sanguine point of view, he chose to tread more cautiously. He gave the example of several countries which eliminated tariffs, quotas and barriers in a staggered manner spanning several years. He felt that such a staged process would ultimately benefit all the parties and mitigate some of the challenges of an abrupt change. Mahmood also cited the example of the NAFTA trade agreement between the United States, Mexico and Canada. He suggested that while there were concerns over free trade with Mexico, the treaty ultimately helped improve the economic situation there and counter the specter of drug trade and illegal immigration that was plaguing its porous border with the United States. All the panelists shared the optimism that trade with India would enhance peace and stability. During the interactive question and answer session, the audience adopted a more pessimistic stance on trade. Many cited personal difficulties of trading with India. Others suggested that even in the case of China, while trade relations were rosy on the surface, many traders had struggled to get the benefits they expected. In conclusion, all the speakers accepted that bilateral and multilateral trade treaties were going to grow in importance and reiterated their belief that free trade activities were bountiful and more trade with India could only make things better.
firstperson Amin Hashwani is
President of the Pakistan-India CEO’s Business Forum. Hashwani is one of
the key advocates of enhancing Pakistan-India trade relations and has been
active on various platforms, including ‘Aman ki Asha’ — a media-led
civil society movement launched jointly by the Jang Group and The Times of
India. The federal cabinet’s November 2 decision to grant the most
favoured nation (MFN) status to India has its firm supporter as well as
passionate detractors. Many businesses and industries see it as a step in
the right direction which would not just benefit the economies of the two
countries but help ease tensions between these nuclear-armed South Asian
neighbours. The News on Sunday interviewed Amin Hashwani in this backdrop,
focusing on issues of business and trade in the region. The News on Sunday (TNS):
The cabinet announced granting India the MFN status, which created great
hype in the two countries. But now it seems that its implementation phase
is still not round the corner. What’s causing this delay? Amin Hashwani (AH): The
federal cabinet approved a road map, which is about normalising trade with
India… and things are progressing the way commerce ministries (of the
two countries) chalked-out step-by-step implementation plan. It is a trade
normalisation process. Officials of both ministries are now scheduled to
meet in February where Pakistan would come up with a negative list
(banning certain imports from India), while New Delhi will identify the
non-tariff barriers, which Islamabad wants removed on four or five items
of Pakistani exports. Both sides will move forward if they feel that by
February enough progress has been made on these fronts. TNS: An impression is
being generated in the media that not all the stakeholders are on board in
the decision of improving trade and economic ties with India. What’s
your analysis? AH: I think that the
ministry of commerce bent backwards to take all stakeholders on board,
particularly the business community. The ministry sent letters to their
representative bodies well in advance to get input and make them part of
policy formulation process — particularly in identifying sectors, which
might have a negative impact because of Indian imports and can be
protected through a negative list regime. TNS: Once a country
grants the MFN status to another country, can certain goods still be
barred from imports? AH: Absolutely! There
are several measures which a country can apply to protect its domestic
market. India remains a classical example which despite giving Pakistan
the MFN status prevented certain goods from entering its domestic market
through non-tariff barriers. TNS: There is an
impression that the country’s armed forces remain unhappy about this
development. AH: To the best of my
knowledge, the army is in favour of good relations between the two
countries. Since trade is an integral part of this equation, I believe
that the impression that the army is unhappy is incorrect. However, there
can possibly be some reservations on some specific points, which I am not
aware of. But in principle, there is little opposition to the MFN. TNS: How granting MFN
will benefit Pakistan which already suffers a huge trade deficit in its
trade with India? AH: Trade between any
two neighbouring countries is perceived beneficial for their people.
Consumers get cheaper goods, industries get cheaper raw material and
through increase of exports and imports, they can realise better economies
of scale. They can also create a better environment for their businesses
through exchange of ideas and technology. In addition, whenever trade
opens up between a large and a small country, it is the small country
which benefits more because it gets access to a large market. The key,
however, is of having a level playing field, where businesses on both
sides exist in a healthy and competitive environment. Yes, the status of trade
regime between India-Pakistan is balanced in favour of India because of
the non-tariff barriers. Right now Pakistan exports only 20 percent of
what it imports from India. This status-quo does not benefit Pakistan. It
must change. But I have yet to see an alternative solution on how to
change this imbalance and create a level-playing field. MFN and removal of
non-tariff barriers (NTB) is one way out of it. TNS: Have you considered
reservations of the manufacturers, who say the local industry will suffer
as the Pakistani market will be swamped by cheaper Indian goods. AH: A prime example is
of pharmaceutical industry, which fears that granting MFN to India will
hurt their products. But this industry is not opposing MFN in general.
They have requested to put the Indian medicines on the negative list of
imports. They just want to import the raw material from India which makes
them competitive in the world for exports. The point is that the concerns
of the industry can be addressed and are being addressed. TNS: The agriculture
sector is also unhappy on granting MFN to India. They say that the Indian
agriculture sector is way too advanced. Indians manufacture most
chemicals, inputs and machinery used in this sector, while we import.
Indian farmers, who have a vast market, have already incorporated
genetically-modified crops in their system, while Pakistan is still
struggling with BT-Cotton. AH: It’s a complicated
issue. It is not possible to generalise about it in few lines. However, as
I explained earlier safety measures can be taken to protect any sector. On
the flip side, we can acquire a lot of know-how and technology from India,
including about seeds, drip-irrigation, research and other farm practices
to make our agriculture sector more productive and competitive. TNS: For many people
here, Pakistan-India relations are not just a matter of economy and
profits. They see it in the larger historical and political context in
which the two countries share a hostile past and have key issues which
remain unsettled. How will the lobby advocating peace, better economic and
people-to-people ties overcome this aspect? AH: It is now an
international norm that an increased trade and economic cooperation
between the two countries increase chances of solving political and
historical issues and disputes. China and Taiwan are a prime example.
Despite the serious and a graver nature of their dispute, they still enjoy
50 billion dollar of trade and investment. Similarly, India and China
still have border disputes, but yet they have 50 billion dollar plus
trade. Israel and Turkey can also serve as another example. They have
dispute over Palestinian issue, but they continue to trade. TNS: Religious parties
are again in the forefront in opposing the MFN status to India. Even the
PML-N has voiced concerns. How do you see this? Do you think it is a blow
to these efforts? AH: A healthy debate
about an issue is a positive sign for any society. However, it should be
based on correct facts, which are in one’s national interest — and
without challenging the patriotism of the other side. The challenge in the
MFN debate is that we have an emotive opposition, while the argument in
its favour is based on facts and technical details.
Saying
“no more” to cartels “Our competitors are
our friends, our customers are the enemy” is an actual statement made by
an executive of Archer Daniel Midland, in the famous case of the lysine (a
feed additive) cartel, which was caught on videotape by the FBI. As the
international competition community once again gears up to observe the
second World Competition Day on 5th of December this year dedicated to the
theme, “Cartels and their harmful effects on consumer”, there is a
need to reflect on measures to protect consumers from cartels, and sharpen
such measures to the extent possible. This would not only
shake up entities that have flagrantly engaged in exploitative practices,
but would also bring the average consumer closer to the process of
competition reforms in the developing world. There is need to
appreciate that consumers in different countries are affected differently
by cartels depending on the extent to which their economies have put
institutions in place to protect them against such cartels. The World
Competition Day (in response to a global call by CUTS) for this second
year allows a scope for greater discussions and dissemination of the
beneficial effects of competition on the average consumers — either
directly or indirectly. In effect, it is
expected to result in greater public understanding and support on the
issue. This year’s events should allow stakeholders to say out loud
‘No More’ to the perpetrators of cartel activities. This article urges
countries, competition agencies to stand up and protect their consumers
against the harmful effects of cartels. Indications on the
ground show that developing countries are very prone to cartels, because
they often lack effective competition regimes. For example, the latest
news is the cartelisation is in the cement sector. In India, recently the
real estate developers body National Real Estate Development Council has
approached the Competition Commission of India (CCI) seeking intervention
against alleged cement cartelisation hitting real estate developers. One
has to wait and watch how the same is handled by CCI. In other jurisdictions
too, the cement manufacturers association have been penalised along with
the colluding firms. For example, the Pakistan Competition Commission
imposed a fine of about $77 million on 20 cement companies found guilty of
operating as a cartel and raising prices under mutual agreement. Actions
were also taken by the Egyptian Competition Commission in order to break
cartel activity by referring twenty executives from Egyptian cement firms
to a criminal court for conspiring to fix prices. Across the globe, cartel
activities are being penalised. Record fines of more than $1.00bn have
been levied by the UK, US and other competition authorities on airlines on
cargo freight. There are other airlines too, such as Korean Airlines, etc.
British Airlines is also facing action under the EU laws and other
jurisdictions. Furthermore, the affected consumers in the US have also
filed for class action damages against BA. It is not difficult to
understand why the developing countries are more prone to cartels.
Firstly, firms have realised that there is a low possibility of being
punished from being involved in cartel activities, given that even in
countries with a competition law, sanctions are not too prohibitive. Cease
and desist orders and fines that are often lower than profits from
cartelisation cannot act as effective deterrents. Secondly, the
probability of getting caught is very low in many other countries, given
the absence of competition laws in them or limited provisions thereof. We have been advocating
for an International Competition Fund to be created out of fines levied by
developed country authorities on international cartels, which have an
impact on developing countries. For example, the global air cargo cartels
have affected many developing countries but have not been prosecuted in
any developing country, mainly because of a lack of capacity. Such a fund
can be used to build capacity of competition agencies and advocacy groups
in the developing world to be able to do better and more in arresting the
malaise. For many products, the
elasticity of demand is very low, which gives cartels an opportunity to
raise prices and gain more revenue. Many markets are highly concentrated
due to both behavioural and structural factors and this is often aided by
vested interest, resulting in higher prices due to limited options for
consumers. Fourthly, consumers in developing countries rarely possess the
bargaining buyer power needed to force suppliers to take them seriously.
Consumers are seldom united, like in other parts of the developing world,
which makes it difficult for them to fight against perpetrators of
cartels. Furthermore, across many
developing countries, the business associations that have been formed
across many sectors provide a platform for producers to meet and discuss
viability strategies. Although these associations are prohibited from
discussing pricing or common business arrangements in order to prevent
cartels, their discussions are rarely monitored by competition authorities
or other watchdogs. However, there are exceptions, in 2010 the Competition
Commission of Pakistan (CCP) imposed a penalty of 50 million Pakistani
rupees on the Pakistan Poultry Association for alleged cartelisation in
the chicken and egg markets and also imposed a penalty of 23 million
Pakistani rupees on the Pakistan Jute Mills Association and its ten-member
mills on the charges of cartelised behaviour and other malpractices. The prevalence of
cartels in developing countries is also a cause of concern from the
development and poverty alleviation perspective. The most critical sectors
of the economy, such as food, health and transport are not spared, leaving
consumers with no option but to pay large amounts of money for scarce
goods and services. It is within this
context that calls are being made for developing countries across the
world, through the World Competition Day, to strengthen their competition
law enforcement processes to effectively deal with cartelisation. In
countries without a competition law, consumer organisations need to
team-up with parliamentarians, media and policy makers to spread the word
around. Consumers have long being victims of exploitative practices of
firms — and let’s say ‘No more’ this December 5th! The
writer is Secretary General, CUTS International |
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