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trend Going
down, dangerously spending Industrial
atmospherics legality On
the wrong side Too
late? revenue
Let’s call a spade a spade
trend Generator gap Prolonged power outages give a lease of life to the business of generators By Shahzada Irfan Ahmed The sight of
customers standing at petrol pumps to get plastic cans or bottles filled
is quite common and so is the reluctance of the staff to accede to their
requests, without properly questioning them. Though people ask for petrol
on the pretext that their vehicles have run out of fuel, the careful
sellers send their employees with them to ensure that this is really the
case. Of late, another breed
of petrol buyers has emerged on the scene. They visit petrol pumps in
large numbers and every other day, carrying containers of all sizes. They
come on foot, motorbikes and cars. At many places, separate filling
machines have been dedicated to them so that they do not have to wait for
long queue. These are the people who
have generators in their houses and offices and have to do the refueling
on a regular basis. Their number is increasing day by day and the business
of generators, which can run on petrol, diesel and gas, is progressing
unbelievably fast. Over the last few
months, the drastic increase in load-shedding hours minimized the utility
of Uninterrupted Power Supply (UPS) systems. As an alternative, generators
are the best option. When power supply
remains suspended for four to five hours at a stretch and is restored for
hardly an hour, there is no way a UPS can be fully recharged. This
ultimately leads to demand for a better alternative — the generators —
which have always been there but not in such a large number as now. In the
past, they were a luxury and the prerogative of a few but now a necessity
of every other person. A review of the
generator industry in Pakistan shows the prices of generators have come
down a lot due to import of Chinese generators and the used ones coming in
the form of scrap or through unofficial channels. Muhammad Ateeq, a dealer
in Misri Shah scrap market, tells The News on Sunday that apparently old
and faulty generators can be found in the market for Rs 200 per kg to Rs
250 per kg. “There are a lot of self taught mechanics who have bought
these generators and successfully repaired them.” Ateeq says the prices of
Chinese generators have almost doubled over the last three years or so but
they are still much cheaper than their Japanese counterparts. “A 1 kva
Chinese generator which produces 1000 watts energy is available for
between Rs 30,000 to Rs 35,000 depending on the make and model. A gas
conversion kit can be added to the machine for an additional cost of Rs
1500 to Rs 2000,” he adds. Ateeq tells TNS that
though the capital (one-time) cost of a generator has come down due to
increased competition and cheaper imports from China, that of running it
is too much, especially for commercial consumers. “Running them on
natural gas is a viable option, but that too has been declared illegal in
many parts of the country including those served by the Sui Northern Gas
Pipelines Limited (SNGPL).” The Sui Southern Gas Company (SSGC),
however, has imposed extra charges on use of gas-run generators and the
figure varies according to size and capacity. “The expansion in
generator business, on the whole, owes mainly to domestic consumers,
shopkeepers, offices and small-scale manufacturing units. The large-scale
industry does not find this option feasible anymore after the suspension
in gas supply to it by the government,” says Arif Bhatti, senior manager
at Style Textile, an export-oriented apparel unit based in Lahore. He tells TNS a generator
run on diesel produces electricity for as high as Rs 30 per unit whereas
the cost comes down to Rs 6 to Rs 8 if it’s run on gas. That’s why, he
says, textile units are importing coal plants from China which are
reliable and cost-efficient as well. Generator rental service
is another business which is booming nowadays. The providers of this
service offer powerful generators on rent for a specific period and the
maintenance, repair, refueling, etc, are their responsibility. They have
generators of different capacities available with them which can be rented
out on hourly, daily, weekly or monthly basis. The clientele ranges
from marriage halls, departmental stores, hospitals, clinics, educational
institutions and individuals holding family functions to manufacturing
concerns, cinemas, theaters, restaurants, and hotels. Businesses which need
uninterrupted power supply, refrigeration, and lighting opt for this
service and get rid of all tensions caused by endless power failures.
Shakir Rasool, a dealer in second-hand imported generators, tells TNS that
heavy-duty machines up to 700 kva are available with them. As this generator costs
between Rs 2.5 million to Rs 3 million, not every body can afford it or
wants to block such a huge amount for this purpose. “The best option for
them is to get generators on rent,” says Shakir adding: “We offer
seamless service and appoint qualified technician to take care of the
generators at clients’ sites.” Besides, he says, they have standby
generators at their disposal which can be moved in immediately if the main
generators develop faults which cannot be fixed on the spot. He tells TNS their
business does not always remain the same as there are highs and lows and
depends on various factors. For example, he says, “in winters people
have the option to hold events in the afternoon and do not need extra
light and air-conditioning whereas in summers they cannot do without
these.” Similarly, some concerns
like stitching units, apparel manufacturers hire their services when they
feel they miss the deadline set by exporters, etc, due to load-shedding. Besides, there are
clients whose demand remains the same throughout the year. For example,
high-rise buildings with commercial and residential flats need generators
and technicians to operate their elevators round the year. Amin Mughal, a generator
assembler in main generator market at Brandreth Road, Lahore, fears a
slowdown in the business in days to come. The effect, he says, will be the
most in areas falling under the jurisdiction of SNGPL. He tells TNS
domestic consumers are attracted to generators mainly because they find it
highly affordable if run on gas. “As SNGPL is warning
people of fines and imprisonments if caught running generators on gas,
they are revising their plans to make their purchases,” he adds. The
dealers he thinks have little to fear as there is no law in place to check
sale of gas generators. Besides, he says, it is hard to separate most
petrol/diesel generators from gas generators as only a gas kit is required
to make the conversion. Electricity produced
from petrol-run generators is quite costly but the energy-starved
consumers are left with no other option. Based on the consumption level of
generators, it is observed that 1.3 kva generator consumes 0.97 liter per
hour, 2 kva generator consumes 1.15 liters per hour, 3.2 kva uses 2 liters
per hour, 4 kva 2.5 liters per hour and 5 kva 2.91 liters per hour. caption — Photo by Rahat Dar
Going
down, dangerously Twice a week,
Muhammad Asgher, a businessman, uses at least five gallons of water to
wash his car in his house’s garage, an exercise he can do just with a
wet piece of cloth or less water. It is not just him, many others in the
street of a posh locality in Lahore do the same twice a week. And this is just one way
of looking at the issue of wasting water and people’s wasteful behaviour
in urban areas where water crisis goes severe in summer. Pakistan’s water
level, according to country’s annual Economic Survey, is going down
every year. Overall, it has decreased around 13.4 Million Acre Feet since
2003, a study of the figures shown in this official survey reveals. While
the Planning Commission envisages that without additional storage the
water shortfall will increase by 12 per cent over the next decade alone. Experts fear it would
further go-down and the chances of coming up are quite low. The country
they say is facing water crisis from both sides, firstly because of
gradually lowering actual surface water level, and, secondly, because of
the continuous water wasteful behaviours because of lack of education and
lack of awareness to realise the importance of this blessing. “Pakistan’s at least
35 MAF quite useful water flows into the sea becoming waste because of
lack of planning and policies to have reservoirs,” says Bashir Malik, an
expert on water issues, adding, “While, on the other side, the world
assumes that 45 percent water of Pakistan wastes through different
means.” Though we have not
improved our habits but still have an efficient irrigation and water
system. That means almost 70 to 80 percent of the normally wasted water
through taps goes down in the soil. But we cannot get the huge amount of
water wasted into the sea. The decrease in the
actual water level can also be seen in the backdrop of growing number of
tubewells and lift pumps during the last two decades. They get the water
from a low point through electrical and mechanical means. Pakistan’s official
Agriculture Machinery Census 2004 (till now the last census as next will
be done in 2014), which has covered all types of tubewells and lift pumps,
tells that the number of tubewells and lift pumps meant for irrigation
purposes, as reported in this census, were 931,048 in the country. In
1984, their number was 237,990, which increased to 454,257 in 1994. The count of tubewells
and lift pumps increased by 91 per cent from 1984 to 1994, and by 105 per
cent from 1994 to 2004. The increase during 1994-2004 in the number of
tubewells and lift pumps may be termed as a record increase since
independence. Though this can be a
silent factor for increased crop production in Pakistan this discloses how
the means to drain water from the soil are going up with the passage of
time. A golf course, in
Pakistan, consumes around 50,000 litres of water a day that is required to
meet the needs of 10,000 families. While potable water is used carelessly
and immensely in the cities grounds with out any consideration. Water and Sanitation
Agency, Lahore, says water usage is increasing day-by-day and so is water
scarcity. “We need conservation policies to save water and build
reservoirs,” a WASA official says. The current water level of Lahore is
55 feet to 125 feet; people have to drill 300 feet to 700 feet to get
potable water while potable water, generally starts after 300 feet. Agriculture is not only
suffering from this decreased level but is also one of the reasons of the
decreasing. Irrigation is one of the first activities in Pakistan in which
huge amounts of water is used. “According to the
sustainability of population formula, Pakistan water resources and sources
are sufficient for 150 million people and currently we have almost crossed
the figure of 180 million,” Mr Malik says, adding, “This shows we are
speedily moving towards water shortage and scarcity.” Pakistan’s
agricultural soil and water will be at critical stage after 2020. We are
speedily losing the balance because of huge difference in demand and
supply and that is because of ill planning and increasing population. By 2025, according to
the studies, the country’s population will be touching the figure of 221
million and, in the light of this estimate, we are far behind in planning
and building water reservoirs and storages. Population management
and building water reservoirs should be every government’s top priority,
otherwise we will be in a huge crisis in coming years. “Definitely,
there will be load shedding due to water shortage but people will forget
about electricity supply and would be asking for water. Water will be
their top demand but there will not be water if we do not plan.”
vaqargillani@gmail.com Table showing the
numbers of tubewells and lift pumps vide 1984, 1994 and 2004 censuses: Source: Pakistan
Agricultural Machinery Census 2004 Administrative Unit
1984
1994
2004
%age increase %age increase
1984 to 1994
1994 to 2004 Pakistan
237,990
454,257 931,048
91
105 KP
9,217
14,365
21,524
56
50 Punjab
214,106
414,188 837,904
93
102 Sindh
9,481
16,236
50,683
71
212 Balochistan
5,186
9,468
20,937
83
121 Table showing the
figures of Actual Surface water Availability (Million Acre Feet) as given
in Economic Survey of Pakistan 2011-2012: Source IRSA Period
Total water level
%Age incr/decr
(both seasons)
over the age 2003-04
97.4
-5.9 2004-05
82.2
-20.6 2005-06
100.9
-2.5 2006-07
94.3
-8.9 2007-08
98.7
-4.6 2008-09
91.8
-11.3 2009-10
92.3
-10.8 2010-11
88.0
-15.0 2011-12
89.8
-13.4
spending The 2012-13
budget cannot be said to have been greeted with great joy by anyone. If
there is one exception to this rule, that’s its claim of “peoples’
budget”. The budget plan for next financial year normally contains the
expression of two main elements of any budget, i.e., expenditure and
revenue. This budget of 2012-13
ignores one of the major elements of the budget revenue on which the other
factor of expenditure is actually dependent. The public sector
expenditure is increased particularly for Benazir Income Support Programme
(BISP), subsidy on power sector, adhoc increase in pay and pension of the
government employees as well as on defense expenditure. On the spending side,
the budget does not limit itself to the prospected income; whereas fiscal
deficit is already reaching to 7 percent of the GDP whereas discretionary
spending is increasing. Instead, it goes beyond just a budget statement as
these programmes have come out of election agenda. As one wonders, what
baseline we have to compare these programmes with when revenue
mobilisation is missing in the budget. Let’s turn now to the
revenue side of the people’s budget. Total budget lay out is Rs. 2.96
trillion and out of which the revenue target is set at Rs. 2.504 trillion
and non-tax at Rs. 730 billion with the projected deficit reduction to 4.7
percent. If we compare this with
last year tax collection where lot of efforts were made to increase tax
collection and mobilisation, the tax collection in the first 10 months of
the year amounted to Rs. 1,4449 trillion, where it is also claimed that it
was already 25 percent increased as compared to the same period of last
year which was Rs. 1,250 billion and claimed that it was unprecedented in
the given history of tax collection of Pakistan. The fact remains that
this increase is mostly on account of customs duty as a indirect and a
significant sources of collection of federal taxes. Out of total $33 (b),
oil import bill surged to an all time high in this year to the level of $
12.58 billion during last year (10 months), 44 percent increase so this is
on account of import duty and that ultimately contributed toward tax
revenue and indirectly goes to the people burden when government collects
Rs. 46 per as tax on fuel and if this tax is reduced to the half to Rs. 20
per litter it will add an adverse effect on fiscal deficit. The revenue claim does
not seem to be on merit vis-à-vis the tax collection performance. As per
FBR 700,000 notices were issued to new prospected tax payer in the last
financial year, whereas the revenue collection comes only from 34,000 tax
payers, which is less than 5 percent increase in tax collection in the
last year which shows very dismal performance. What disappoints about
the revenue target of the budget is the degree of the new tax mobilisation
which has shown no sign in the given budget. Even the no-new-tax base
is increased and also the existing tax slab is reduced from 350,000 to
income of 40,000 is now exempted, which will reduce naturally. The budget
reflects a loophole where tax base has not broadened and no new tax
mobilization plan is given. The real ‘peoples’
budget’ must represent a real alternative for the revenue collection
plan; it takes on some sacred cows to be taxed sitting in the parliament
(or outside) to improve the national balance sheet. There are additional
reasons to be suspicious about the dreams and targets of the budget. The
much debated sector is agriculture, which grew by 3.1pc against the target
of 2.4pc. It is 21 percent of the national growth (which is also
shrinking) but contributing only one percent in the national revenue
share. The usual defense is
given that 95 percent of the country farmers have landholding which is
less than 12 acres, which means they maintain only substance level so they
do not have paying capacity. While the price of wheat
has been increased tremendously in the last few years in Pakistan, the
input cost is also subsidised. Not only the wheat but also almost all the
major commodities, such as rice, sugar, cotton, sugar cane and maize have
risen to international rates, which brings in substantial sums of money to
the rural income, benefiting the landlords and not the landless people who
are real worker on the land. Therefore, on the one
hand, these landlords get government subsidy, incentive and exemption and
on the other hand they are exploiting their production and yet they are
outside the tax net. This, in turn, increases
their political and economic power. Pakistan is losing Rs1, 900 billion
because of tax evasion and non-imposition of taxes by the government.
According to an assessment, the government can raise tax to GDP from 9
percent (which is lowest even in the region) to 16 percent it will add in
tax revenue up to Rs 14 Billion more. So, with this balance
sheet of government expenditure and revenue, it will at some point bring
us to a default situation like in 2008 as one cannot fund 50 percent of
fiscal deficit without proper tax mobilisation. One of the current
biggest challenges is domestic debt in addition to foreign debt, as money
is being printed for money supply in the market which will also bring a
sharp rise to inflation. The answer lies in the
development of capital intensive industry but, unfortunately, there
appears clearly that policies in Pakistan have always been biased towards
the élite and against the industrial sector. Already, the industrial
sector is going through a critical stage due to power crises, price hike
of power rates. Rent-seeking for incentives rather than a competitive
environment of entrepreneurship results in our uncompetitive product in
the international market. The bottom line- There
is simply no way that immediate payment on account of debt servicing of
IMF and circular debt can be managed under the present revenue recipients
and by not raising taxes to the higher level. There will be ultimately
no choice when foreign aid and assistance is restored along with coalition
support fund to the earlier level, particularly in the present fractured
relations between Pakistan and United States.
Till the time we really
work on increase of tax system we will keep on hearing in our budget
speeches invariably that we are facing a crisis. That our economic
performance still grew and we want to take appropriate action and we want
to increase tax-GDP ratio, etc, which was again reiterated in this budget
speech of our Finance Minister on June 01, 2012. The fact remains that
the failure or success of an economy is measured by its impact on the
people, the level of satisfaction with at least the basic needs and not by
just reiterating the vows. Will the dream of the
budget be realised? Not likely. One feels unable to fill the template of
analysis while comparing challenges of the government in the budget, as it
seems neither revenue nor real growth. The fiscal plan does not
provide much detail on how spending will be met without tax plan. It seems
that everyone in this country will be suffering except billionaires and
corporations, and landlords unless budget is presented for real GDP plan
for Pakistan’s future.
Industrial
atmospherics Like most of
other south Asian countries, traditionally, Pakistan’s economy has been
centered on agriculture. However, in the recent past, manufacturing and
services have also emerged as major contributing sectors. The share of
manufacturing sector, from 18.3 percent in 2007 to 30 percent by 2030, has
been envisioned in Vision 2030. With the increasing industrial and
agricultural activities, energy demands, urbanisation, traffic density and
population growth, the degradation of all segments (air, water and land)
of environment is alarmingly increasing and remains a grave concern. The unsound management
of chemicals, especially in the manufacturing and agricultural sectors,
have further compounded the environmental issues. Twenty percent of the
registered industries in Pakistan are considered highly polluting. Under
the Self-monitoring and Reporting (SMART) programme for the industry in
Pakistan, in category A (most hazardous) there are 23 and 11 industrial
sectors for industrial effluents and gaseous emission, respectively. Major industries are in
textiles, leather, steel, oil refineries and mills, chemicals, ceramics,
pharmaceuticals and food. Most of these are located in Sialkot,
Faisalabad, Multan, Hyderabad, Lahore, Peshawar and Rawalpindi cities.
More than 10 industrial states are functional and a few new ones are
developing.
Industrial waste water
discharge from industries in the country has been estimated at 6.25 (in
2010) to a projected value of 12.25 million cubic meters/annum (in 2010).
A combined pollution load (BOD, COD & TDS) in waste water discharged
to inland water bodies has been estimated at 28.6 (in 2010) to a projected
value of 58.6 million tons/annum. Degradation of water
quality, both for human consumption and irrigation, due to industrial
wastewater discharge with high pollution load and its resulting impacts on
public health and environment are most obvious. In a recent SDPI survey
of 38 polluted sites in the country, it was shocking to observe waste
water from the industrial estates and industrial units being discharged
into mostly agriculture fields for cash crops but also in a few for food
crops and vegetables, both on large and small scales . Water and soil are known
and well established pathways for toxic chemicals (metals, non-metals and
organics) getting into food chain and ultimately into human bodies,
besides, to a lesser extent through air. In a recent industrial
site survey by SDPI monitoring team, 37 chemically polluted sites have
been identified and assessed in Punjab (25 in 7 cities), Khyber
Pukhtunkhwa (5 in/around 3 cities) and Sindh (7 in/around 2 cities). Two
polluted sites were identified and assessed in and around Islamabad. There
are nine priority polluted sites for which immediate remediation actions
are required. Industrial chemicals
manufacturing and use, obsolete pesticides stocks and hospital wastes are
potential sources of hazardous wastes in the country. Substantial quantum
of hazardous industrial wastes is also released by old or expired
ship-breaking yards and non-formal industrial sectors (SMEs), including
very small scale recycling units run by un-skilled and illiterate labor,
which are scattered across the country. To the best of
accessible information, district based inventory of these by
district/provincial EPAs are yet to be developed.
Air pollutants can be
transported across states and national boundaries, therefore, pollutants
produced by one country, as well have adverse impacts on the environment
of neighbouring countries. Trans-boundary air
pollution, which is also impacting some areas of Pakistan, as evident by
increased fog in winter months, is an emerging environmental issue that
demands critical attention. Downwind areas of the countries are likely to
be affected more than the upwind areas. The impacts of climate
change on chemicals characteristics, hazardous wastes and sites and the
resulting impacts on environment and public health have not been realised
in Pakistan and other developing countries. High temperature and low
precipitation would enhance volatile chemicals levels in the air and the
increased evaporation would enhance non-volatile chemicals levels in water
bodies and soil. Low temperature and high precipitation or snowfall would
transport back air pollutants to water bodies and land.
Enhanced air, water and
land pollution due to climate change and in the event of high flood the
spread of hazardous waste dumps into cities at the polluted sites could
play havoc with the environment and health. Over the years,
environmental protection agencies (EPAs) and Ministry of Environment have
done well in establishing institutions, developing and to the extent
possible, implementing with the involvement and support of stakeholders,
environment policies, action plans, strategies and legislation to regulate
industrial pollution. Phasing out lead from
gasoline, reduction in sulfur content of diesel and furnace oil,
conversion of vehicles to CNG on a massive scale for transport,
substantial technical and financial support towards ISO certification by
industries, setting up of revised national environmental quality standards
(NEQS) and launching of self-monitoring and reporting program for
industrial sector across the country, etc, have been great initiatives and
arrangements. Progress on these
initiatives and arrangements has been slow but steady. There has been
increase in ISO certified industrial units (from 59 (2005) to 200 (2008),
IEE/EIA reports submitted to EPAs (from 37 (2000) to 437 (2008) and
environmental investment by the industrial sector of Rs. 7,570 millions
(1996) to estimated 25, 520 millions (2011 – 2025). The self-monitoring and
reporting programme developed and promoted a culture of monitoring and
reporting by an industry to provincial EPAs, which were not in existence
in the country. Several environment protection orders (EPOs) have been
issued to non-compliance industrial units and cases referred to
environmental tribunals. The responsibility of
slow progress referred to above needs to be looked at the performance of
three main stakeholders to the environment issue, the government (MoE/EPAs),
industrial sector (FPCCI, provincial and district CCI and industrial
associations and representatives of civil society and their constraints in
meeting the challenge of a clean environment. There seems to be a lack
of political will. Environment has not been among the priorities of the
past or present governments. Hardly any political party manifesto
prominently speaks of environmental issues. All along the
governments’ preference has been a voluntary approach and not a strict
approach in regulating industrial pollution. Pakistan environmental
protection council (PEPC) meets once a year to monitor and expedite the
implementation of environmental policies. Implementation of the
approved environmental policies can take so long that the situation over
time changes drastically and these may not remain feasible or need to go
through another process of updates and revision, as evident by revised
NEQSs, self-monitoring and reporting programme. Lack of capacity
building, expertise, technical know-how, and human resource are other
major constraints not only for the government to enforce compliance but
also for the industry. In the early years of
environment policy and legislation, industry through FPCCI not only
supported government initiatives but also played an important role as an
active member of National Standards Committee and NEQSs implementation
committee. FPCCI not only agreed to payment of pollution charge but also
proposed the amount of the base rate for non-compliance with NEQSs. However, the
government’s response to the FPCCI proposed financial incentives and
lack of credit availability for environmental technology or investment has
not been up to FPCCI expectations. While the industrial
sector seems willing to invest in pollution control measures, technology,
its cost, and durability have not been readily accessible. Establishment of
“Provincial Sustainable Development Fund” to support industry with
soft loan for the purchase of pollution control equipment and installation
of industry specific treatment plants was agreed upon both by the
government and the industry but it could not be institutionalized due to
diversified opinion regarding its operating mechanism. The civil society can
also play a vital role towards industrial pollution control by building
awareness for all stakeholders and sections of society, providing relevant
information and help to vulnerable groups (women, children, elderly and
sick) and by carrying out national and local campaigns to protecting
environment exposure to toxic industrial releases. Civil society needs to
be involved both at the policy and implementation phases as is now
obligatory to governments under Stockholm Convention on POPs, Strategic
Approach to International Chemicals Management (SAICM) and -negotiations
UNEP draft text of the legally binding instrument on mercury phase out The writer is Senior
Adviser, Chemicals & sustainable Industrial Development with
Sustainable Development Policy Institute, Islamabad. Pakistan
legality Post 9/11, the
UN Security Council (UNSC), through its Resolution No. 1386 (2001),
sanctioned the International Security Assistance Force (ISAF) for
Afghanistan. The question is that from where the North Atlantic Treaty
Organization (Nato) came into picture as the UNSC resolutions neither
mentioned Nato nor ever sought Nato’s involvement in Afghanistan. From the available
record it appears that in August 2003 Nato itself assumed the strategic
command, control and coordination of ISAF. This was done by Nato only to
pave its way into Afghanistan as to date, not only all UNSC resolutions
but ironically Nato’s own literature also refers to the mandate given by
UNSC for ISAF. After bulldozing its way
into Afghanistan, the one obvious thing Nato required were supply routes
for the supply of various goods, including weapons and war materials. For
this purpose, Pakistan, with its perpetual socio-political and economic
flux, seemed as the easiest of targets to manipulate and prey upon. Living on a thin
constitutional legitimacy, Pakistan’s then military dictator Musharraf
buckled under the US ultimatum to “bomb Pakistan back to the Stone
Age” and joined the war on terrorism. Under what deal the Nato
supply routes were opened can easily be comprehended as by doing so,
Musharraf achieved two things: (1) his own legitimacy, and (2) incessant
mayhem in Pakistan by jeopardising Pakistan’s sovereignty at the hands
of those for whom Pakistan has never been more than a mere pawn. Reality resoundingly
testifies that by opening the supply routes a worse crime against hapless
innocents was committed. A cautious estimate suggests that over 35,000
Pakistanis have been killed between 2004 and 2010 and over 40,000
grievously injured — majority of them being women and children. In any event, Pakistan
opened the Nato supply routes in 2001; however, these routes were
suspended for one week in 2010 upon killing of Pakistani soldiers within
Pakistani borders by Nato helicopters. The incident was repeated on the
Pakistan-Afghanistan border on November 26, 2011 with the killing of 24
Pakistani troops. Pakistan blocked the supply routes and they remain
blocked as of date. Since the blockade,
Pakistan has been severely condemned and criticised by the international
community. The recent two-day Nato summit held in Chicago was overshadowed
by the tensions between Washington and Islamabad. Obama was categorical
when he said that it was in the interest of Pakistan to work with the US
to ensure that Pakistan is not consumed by extremists. If history is any guide,
successive US administrations have always used Pakistan to advance its
interests and ditched it after its objective was achieved. What can be
expected from the US when it has always supported the country’s tiny
kleptocratic elite, be it civilian or military, but neglected the welfare
of the Pakistani people. Unfortunately, the
Pakistani leadership has become so addicted to US financial assistance
that like a drug addict, who would do anything for a shot of morphine or
whatever drug is addicted to, Pakistani rulers are ready to bend backwards
to receive another dose of US aid at any cost. The November 26 attack
killing two dozen Pakistani soldiers has once again soured Pakistan-US
relations to its deepest ebb. However, a pertinent question is whether
Pakistan should allow the transport of war supplies and weapons that have
repeatedly been used to violate Pakistani borders and kill Pakistani
citizens and soldiers. Under international
conventions dealing with land locked states and their right to transit
goods through neighbouring countries with access to the sea, Afghanistan
has the right of transit for goods destined for other countries, through
Pakistan. However, these conventions and principles relate to peaceful
trade and not the transit of dangerous goods and war materials. By ending Nato supply
operations, Pakistan has neither contravened the Convention on Transit
Trade of Land-locked States (even though Pakistan is not a signatory to
the Convention) nor the bilateral transit trade agreement she signed in
the year 2010 with Afghanistan. Nato wants the transit
routes restored but it forgets that it does not have a locus standi as an
entity on this legal question. It is the state of Afghanistan that can
request use of transit access through Pakistan for these supplies, a
request that Pakistan can consider. But Afghanistan has not
made any such request. Having said this, even if such a request is made
Islamabad will be in its legal right not to grant such permission on
grounds that the war material would also be used against it, as has been
inhumanly happening. It is to be borne in
mind that no international law makes it incumbent upon a state to allow
transport of military supplies to a country from where the same can be
used — and have been used in the past — against the state granting
such transit rights. Pakistan has been
cajoled through paltry statements like “Pakistan is an important
stakeholder in the way of the US involvement in Afghanistan” and that
the US respects Pakistan’s “sovereignty, interests and democratic
institutions”. These statements are mere lip service as Washington
continues to press Pakistan to “do more” through its carrot-and-stick
policy. Pakistan’s military
and civilian ruling elites need to salvage some national dignity. The
military should stop acting as a mercenary force for the US. The price we
are paying is simply too high — not simply in money terms but in social
and political terms as well. The total failure of the state to protect its
citizens and assert its writ has led to the present despicable situation.
This is exactly what Pakistan’s enemies are vying for; why are we
seeking the same? The truth is that the US
is increasingly becoming a hostile state towards Pakistan under the Obama
administration. It is time to alter course. This is as good an opportunity
to reclaim our bases and applaud the US in gaining new routes for Nato
supplies. We need to find our own means of countering our issues–rather
than helplessly waiting for the US kindness. It is time for the Pakistani
nation to carry out a reality check, take a fresh stock of the cost
benefit asymmetry and make a distinction between reality and myth of the
US aid. On
the wrong side Another budget
seems to have dashed people’s hopes. The welfare measures and economic
targets set in the budget for Fiscal Year 2012-13 (FY13) leave the
question about whether the government would achieve them. The budget for Fiscal
Year 2012-13 allocated only 18.2 percent of total outlay — Rs. 3.203
trillion — for the masses and the rest of the money goes to the current
expenditure. The major share of the
budget goes to debt-servicing and defence expenditure, which is 52 percent
of the total outlay, so how can one say it is a pro-poor budget? The power sector will
again bear the cost in the current FY13 and subsidies given WAPDA and KESC
is Rs. 185 billion, which is
lower than previous year’s allocated budget for them. These subsidies will not
facilitate to reduce its circular debt which is currently stands at Rs.
398 billion so they would not meet their shortages of demand, which would
bear the cost to industrial sector and decline their production activity. Additionally, the
subsidy which has been given to the cement sector by Rs. 100 PMT and
stands at Rs. 400 PMT from Rs. 500 PMT will be ineffective when oil prices
would be revised to again Rs. 500 PMT in the local market. The government does not
plan to boost economic activity and has optimistically been set its taxes
target at Rs. 2.504 trillion. But weak supply side will challenge the
government to raise revenue. This new target will transfer the cost to
producers in the shape of taxes and producers will pass on them to
consumers which would decline consumers’ purchasing power and they will
reduce production demand. It will cut the
production supply and fall investment to GDP ratio than 10.5. The taxes
will raise government administration and other cost and will lift up its
current expenditure. Shortage of funds from
internal and external sources like taxes and aid from donors will put
pressure on development expenditure to cut it which is allocated in the
current budget at Rs. 591 billion. The issue of trust
deficit between the government and the donors has declined external aid.
Similarly, tough conditions with US on NATO supply and other reasons had
declined the budgeted aid by $13.8 billion for FY12 and raise uncertainty
to get $8.2 billion for FY13. Another interesting
question is how the government would increase employment by 100000 as
announced in the budget. The shortage of funds of government and rising
current expenditure will expand fiscal deficit more than the set target
4.7 percent of GDP of FY13. To finance this deficit,
the government would borrow money from the banking sector or raise money
from public debt. Both activities would pressurize the private sector to
cut down their production further because borrowing will rise inter bank
market rate and would reduce investment. The borrowing will also
increase money in circulation and will make it a difficult task for SBP to
control inflation. The external market will also be challenging for
Pakistani producers. The imposition of new taxes will reduce competition
in the international market for Pakistani goods as they will get high
imports bills and add up this cost in their export bills. This will
decline their demand when they would compete with other countries and the
question of quality of goods remain the same. It is difficult for
foreigners to give their consignment to local producers in the absence of
regular power supply and rising cost of inputs, and security problem. It
appears that the government is not serious to entertain the quality of
goods issue which is bringing a bad name to Pakistani goods day by day in
the international market and making them less competitive. The budget is also not
helpful in attracting foreign investment earning exchange reserves to
finance trade deficit because it would not lessen the cost of doing
business. Consequently, worker
remittances would also become low and increase the current account deficit
which will be greater than $4.98 million set in FY13. The upcoming year is for
election, now the government should rethink how it would make policies
with shortage of money to gain vote and to take office in the next
election. The writer is Research
Associate, Pakistan Institute of Labour Education and Research
Too
late? We do not seem
to be good learners — disaster (mis) management is a case in point. We
keep on repeating the mistakes due to two core reasons. First is ignorance
and second is not getting ourselves prepared for any future challenge. Super floods in 2010 and
2011 that left millions of people homeless and destruction of
infrastructure to massive level was not enough to teach the lesson to our
policy makers because people who are vulnerable to such floods are still
prone to flooding after passage of two years to the floods of 2010. The government whose
basic responsibility is to serve the people and work in the interest of
its citizens is busy in some other things (memogate, family gate, and
other corruption scandals) which aimed at benefiting their future without
even considering what is happening in the country. The people of this
country, even if they are not aware of the situation, should keep one
thing in mind that water resources are diminishing to a level that more
and more people would be deprived of safe drinking water. Last year, United
Nations had alarmed Pakistan before the start of monsoon season that
nearly 5 million of its citizens are again at the risk of being affected
due to repeated floods this year due to poor reconstruction. This year our
very own National Disasters Management Authority (NDMA) was the first to
share its forecast about possible effects of floods of 2012. According to the warning
of NDMA, upcoming monsoon season between mid-July and mid-September might
trigger floods and affect some 29 million people across the country. The chairperson of NDMA
ringed alarm bells by urging the provincial governments to multiply their
efforts to meet the threat and advised them to invest in disaster
preparedness well in time to minimize losses. Twenty nine districts
have been identified as prone to the impact of flooding. including Badin,
Thatta, Tando Muhammad Khan, Tando Allah Yar, Mirpurkhas, Sanghar, Umar
Kot, Tharparkar and Dadu in Sindh; Dera Ghazi Khan, Muzaffargarh, Rajanpur,
Layyah, Bahawalpur, Rahim Yar Khan, Bhakkar, Mianwali and Faisalabad in
Punjab alone are likely to be hit by heavy rains and floods directly
linked to changing weather patterns. These cities and
districts are the ones which have faced hardships due to negligence and
ignorance of concerned quarters will bear the brunt once again because we
have not incorporated the learning’s into our policies. Since the passage of the
18th Amendment, provinces are responsible for making disaster
management and contingency plans but knowing the fact that provinces are
not completely equipped, there is a need for providing support for such a
plan, otherwise people would be at risk once again. The role of state is
really important and also the wake up calls from watchdogs like media. The role of media is
highly important in situations such as disasters and, more specifically,
floods but there remain several gaps in reporting and covering the floods
and its aftermaths. Reasons for these gaps are many but two main reasons
could be easily identified. First is lack of in-house resources and second
is lack of research pool available for the reporting teams. The causes of floods are
countless but the authorities responsible for managing the water are well
aware of the fact that water mismanagement has been major reason for the
decline in water storage capacities of existing reservoirs. This also brings us to
the point that state and government are only answerable to their people
when there is a mechanism of check and balance by the people who are being
governed but such a mechanism is missing. The report of flood
commission formed by apex court is also an eye-opener but was not taken
into account for reasons best known to authorities concerned because it
clearly indicates the gaps and shortcomings which if taken seriously could
help in minimizing the losses of disasters. Rehabilitation efforts
and emergency preparedness cannot be done in isolation and government and
civil society organisations should coordinate with each other. Disasters are not a new
phenomenon for Pakistan and millions of people suffered due to disasters.
Preparedness is the only way to face and counter such challenges. The writer is a
freelance journalist, working as Acting Manager Operations in Rozan
Islamabad: Email:adeelahyd@yahoo.com
revenue Tax investment
incentives play an important role in attracting foreign direct investment
(FDI) — which has nosedived in Pakistan during the last four years. Tax
policy constitutes an important, if not a major element, in determining
investment behaviour. Unfortunately, the
Pakistani budget makers have always been preoccupied with revenue targets
— main thrust of budget 2011-2012 confirms this — and have never
bothered to provide some long-term investment-oriented tax incentives for
infrastructure development, without which sustainable economic development
is not possible. Even special economic zones, where tax incentives are
available, nobody is investing for lack of proper infrastructure. Over 60 percent decline
in foreign direct investment during the current fiscal year is a great
cause for concern. Now even Pakistani industrialists are establishing
industries outside — sick of power shortages, rising costs of doing
business, hostile tax policies and worsening law and order situation. Foreign investors prefer
a place that characterises stability, consistency and excellent
infrastructure facilities — we lack all these. Tax incentives come in
later. Thus, mere announcing policies on paper, as has been done by our
policymakers, can never induce foreign investors. While gangsters and
extremists are challenging writ of the State in Karachi and elsewhere, we
are witnessing massive flight of capital. When life is not safe why should
people risk their investments? It is a matter of record that tax
incentives announced in the 1994 Power Policy, Investment Policy of 1997
and many others were flouted by the Federal Board of Revenue (FBR). Tax officials under one
pretext or the other extort tax not due from foreign investors — at the
time of investment they were lured with a zero corporate tax regime. It is a bizarre
situation that after promising tax incentives, negative tactics and
highhandedness were employed to screw taxes. In the case of IPPs even the
Supreme Court, siding with FBR, passed per incuriam judgements. This kind
of attitude has tarnished our image in the international community. Pakistani tax
administration has only one focal point; meeting of targets through any
means no matter how imperious. For decline in investment, the real
culprits are high-ups of FBR. They force the field officers to meet
budgetary targets by hook or by crook — the recent tinkling with tax
rates of oil and gas companies testifies to it. The taxation officers,
having no will to bring tax evaders into tax net, are always keen to
squeeze the existing corporate taxpayers and foreign investors —
creating huge tax demands by abusing their vast discretionary powers.
Taxation should serve as a catalyst for industrial, commercial expansion
and economic growth. But in Pakistan, ill-directed, illogical, regressive
and unfair tax regulations have devastating effect on the industrial and
business growth. Had our financial and
tax managers concentrated on economic growth and productivity, tax
revenues would have risen substantially. They have failed to realise that
investment-related tax incentives not only boost revenues but create jobs,
whereas oppressive taxes destroy economy and give rise to poverty. The priority of our
rulers, military and civil alike, on achieving revenue targets, fixed
irrationally every year without bothering to tax the rich and mighty, is
the core problem. Fixing revenue targets
in isolation without making necessary efforts to improve productivity and
economic growth has forced Pakistan into a dilemma where it can neither
afford to give any tax relief package to the trade and industry [due to
growing fiscal deficit] nor can it achieve a satisfactory level of
economic growth [due to retrogressive tax measures]. This is a vicious circle
in which our policymakers are now trapped. They must find ways and means
to come out of this tangle to make Pakistan a competitive place where
investors find satisfactory conditions to live and invest. In a country
where there is no security of life or property, notwithstanding the
availability of some tax benefits, investors will never come forward. FBR has been
single-handedly destroying Pakistan’s trade and industry by withholding
undisputed refunds payable to the taxpayers, making excessive tax demands,
flouting court judgments, harassing foreign investors through complicated
tax procedures and resorting to all kinds of negative tactics and
highhandedness to meet its budgetary targets. In June 2012, they crossed
all limits. Our parliamentarians are
criminally overlooking the actions of tax machinery that are destroying
business and industry. While FBR, despite all highhandedness, has failed
to tap the real tax potential of Pakistan, its oppressive tax policies are
pushing millions below the poverty line. There cannot be two
opinions about complete shifting of our economic priorities. We as a
nation must concentrate on increasing our productivity, efficiency and
economic growth, which alone can ensure more revenues for the State. The main cause of our
prevalent pathetic situation is unholy alliance between inefficient and
corrupt politicians and repressive and criminal governments/ institutions,
which do not think about the welfare of the common people. They also force
the business houses to indulge in malpractices as no genuine work is done
without bribery. Successive
governments’ onerous tax and regulatory policies have pushed millions of
people below the poverty line. We will have to move quickly and decisively
to reverse this trend by restoring Pakistan’s undeniable geo-strategic
and business competitive position in the region. We need to rapidly
develop an infrastructure for industrialisation. Rational taxation is
essential in correcting macroeconomic policies because alternative ways of
financing government expenditure — money creation, mandating larger
required reserves, domestic borrowing and foreign loans — have very
harmful effects on the economy. Like civilisations, tax
systems evolve over times. Harley Hinrichs in General Theory of Tax
Structure Change During Economic Development has mentioned five stages
through which tax structure has changed historically as economies have
developed. These are: First Stage: A
traditional society relies primarily on traditional taxes like taxes on
land, livestock, water rights, etc. Second Stage: Society
breaks away from old ways and indirect taxes become more important,
especially external indirect taxes (i.e. taxes on foreign trade). Third Stage: Traditional
direct taxes decline relative to national income and governmental
revenues. Fourth Stage: Domestic
commodity production increases and internal indirect taxes (excise duties
and sales taxes) grow rapidly to replace customs duties. Fifth Stage: Economy
gains maturity and modern direct taxes like personal income and corporate
profit taxes become dominant. Pakistan is still
lagging far behind the Fourth Stage, what to talk of coming closer to the
last stage, which is most desirable for sustainable social democracy. It
is high time that our economic managers re-evaluate the entire tax system
and take immediate steps to use taxation as a tool for economic
development rather than fixing of irrational targets and creating problems
for business houses. Economy cannot be
revived through harsh and illogical tax measures. We need to develop a
consensus on national tax policy. The tax potential of Pakistan, as we
highlighted in earlier articles, is much higher than the one presently
fixed. We can easily generate tax revenue between Rs. 6000-7500 billion
provided that taxes are imposed through democratic process, eliciting
national consensus through public debate and expert input. The writers, tax
advisers and authors of many books on taxation, are members of visiting
faculty of Lahore University of Management Sciences (LUMS)
Let’s
call a spade a spade The summer of
discontent moves on in Pakistan with an eventful pace. The uncontrollable
frenzy of the masses unleashed in the form of destruction of public
property that came their way in the wake of power protests (read riots) is
one dreadful episode. The length and breadth
of the Punjab has been reverberating with this politically motivated
cataclysm for weeks. The dastardly bomb attack on a university bus in
Quetta in what is believed to be undertaken by a banned sectarian outfit
displays the feeble status of public safety as well as law and order in
Balochistan. The exit of Prime
Minister Yousaf Raza Gilani marks the expected outcome of the undesirable
standoff between higher judiciary and the government. It turned into a
stunt that has cast unnecessary gloom on the overall murky scenario of the
national political landscape. Whereas procedural
changes are likely to follow in each of the events mentioned above, the
element of hope is evidently conspicuous by its absence. An energy
conference in response to power shortage; administrative inquiry to
‘fix’ responsibility of the attack or even getting a new face as prime
minister may not end the woes of the masses. Political masters are
found uttering hollow rhetoric without a sense of purpose and direction,
causing ordinary souls to get confounded in this pall of gloom. What is
needed is a policy of hope reflected through the solid deeds of the
leadership. One finds the present
leadership in many minds. It does not know how to mobilise its people for
reposing confidence in the future, collective action and struggle to
eliminate the looming perils. And the confused and unclear minds obviously
deliver words that are hollow, least coherent, most unimpressive and far
away from the inner souls of the masses. For example, the nation
wishes to know about the policy and plan so far formulated to combat
suicide attacks and other acts of terror in Balochistan. Doused in
naivety, the leadership is harping on the theoretical merits of democracy,
none of which is translated into action. People are interested to
learn about the ways and methods of dealing with economic quagmire and
ensuing repercussions. What they painfully observe is a reckless attempt
of new appointments for faces that have been tested and found ineligible
for respective assignments due to past performances. The people want to see
role models of political acumen, statesmanship and wisdom draped in the
lifestyle of the common man on the street. In contrast, they have to bear
second-rate (or less) and snooty drones often tainted with background of
corruption. For obvious preferences,
such leadership chooses birds of the same feathers to run departments,
organisations and units of national importance. In short, peoples of
Pakistan are entangled in such quagmire of circumstances where
hopelessness and despair are too overwhelming to be ignored. It is common knowledge
that complex questions have complex answers. But every complex combination
can be disaggregated into a sequence of simple steps. Without causing
earth-shaking changes, many positive measures can be adopted by the
present leadership. Effective and meaningful
communication is the first factor. Words of the leaders are important and
weighed accordingly. Caution must be applied in delivery of utterances,
especially on important occasions. If the leaders have had no past
experience of the same, then they must resort to self education and
training to fit into that role. At the same time, the
people wish to see their leaders amongst themselves during trying times.
When they are braving out threats and damages of the worst kinds, it is
their natural demand to have the top leadership within themselves to
console and enact hopes for the future. In other words, the leadership
must evolve a sense of association with the masses. Security threats must
not send them into display of spinelessness. It does not fare well with
the descendents of the slain leader who embraced martyrdom in public
despite knowing full well all the dangers that surrounded her. In the true sense of the
word, she led from the front, spreading signs of hope amongst her
audience. Disappointingly, folks can be seen occupying high offices behind
faceless walls of Presidency, Prime Minister Houses and Ministerial Lodges
in disregard of that glowing example of bravery! It goes without saying
that leaders take tough decisions with courage in the hours of need and
stand by them like a rock. They set examples by strictly observing the
decisions themselves to let the masses emulate such bold attempts. The reverse is true for
Pakistani. The leadership gloat about democracy but stops short of
practicing it. One does not even find the crucial policy decisions taken
through the platforms of central executive or working committees of
parties or equivalent organs. In a quasi feudal style,
sensitive matters such as key appointments, fiscal, financial and
administrative decisions are taken which adversely affect the performance
of the overall system. In existing difficult
economic circumstances faced by the common people, it is an eyesore to
find national leadership displaying the most ostentatious life style.
Motorcades, police escorts, palatial residences, lavish banquets, frequent
trips abroad and hefty roles of personal wealth belie the claims to
populist roots. When the first prime minister of this country was
martyred, he had a few rupees left in his balance! A new prime minister has
now been sworn in office. Ordinary folks have pitted very little hope. But
one must keep the optimism alive. Who knows that the new leader may prove
the pundits of doom wrong. Few small steps can make a difference. The new premier must
develop working comradeship with the peoples he claims to represent. By
being with them in the hours of need and radiating inspiration, he can
bring a turnaround in the society. It should not be forgotten that much of
what this country is suffering from has been the doing of leadership.
Decisiveness, performance and truth telling about issues can make a
difference.
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