Mighty focused on economic revival

By Daily Independent On Jun 24, 2023

Qamar Bashir

Former Press Secretary to the President

Former Press Minister to the Embassy of Pakistan to France

Former MD, SRBC

Mr. Khaqan Abbassi was disregarded when he stated that the current dispensation of the government and its shapeless structure lack the ability and sensitivity to steer the country out of its social, political, and economic quagmires, and have been persistently and repeatedly calling for a combined and unified vision unanimously approved and pursued economic policy by all elements of the state as the only way forward to find solutions to the country’s complex problems.

Political leadership being too preoccupied with its own survival did not have time, priority, or urgency to give serious thought to his sane suggestions, but perhaps someone who had the means and ways to translate his suggestions into reality was listening to him. The Army chief, who had been assessing the precarious economic situation since he took over baton of power, perhaps realized the truth in Khaqan’s statement and came up with the novel idea of establishing a Special Investment Facilitation Council (SIFC) to target vital sectors such as defense production, agriculture, livestock, minerals, mining, information technology, and energy. Chief of Army Staff (COAS) General Syed Asim Munir, chief ministers, federal and provincial ministers, and senior government officials attended the SIFC’s first meeting, which was presided over by the Prime Minister. General Syed Asim was more specific and focused when he linked economic stability and national security and stated that SIFC will serve as the apex body to ensure economic growth, increase global competitiveness, attract foreign direct investment (FDI), and stimulate job creation, all of which will contribute to national stability and security. He pledged the full support of the armed forces to SIFC in terms of providing security, logistical support, and infrastructure development, as well as any other assistance requested by SIFC in order to create an environment conducive to attracting both domestic and foreign investment by significantly enhancing the ease of conducting business and ensuring policy continuity.

During the turbulent events beginning in April 2022, perhaps for the first time, the entire nation realized and was thoroughly exposed to the fact that politicians in power cannot survive for even a few days without the establishment’s support. We have heard the statement made by the chairman of the PTI, who refused to negotiate with the political leadership, referring to them as powerless stooges, and had been pulling all official and non-official strings to seek audience with the army chief to negotiate and discuss the way forward for Pakistan in light of the current impasse, but to no avail. Similarly, former Prime Minister Khaqan Abbasi acknowledged in one of his interviews that a vote of no confidence can only succeed if the mover adheres to the terms and conditions set forth by the establishment; otherwise, it has no chance of succeeding. Given the incompetence of civilian political leadership and the inefficiency of civilian bureaucracy, the establishment has created shadow ministries whose machinery continuously and perpetually assesses each and every sector of national undertaking and fills in the gaps where necessary and intervenes where, according to their understanding, things are not proceeding in the right direction. Possibly, as a standard operating procedure, they do not intervene until the situation in key sectors goes far beyond the declared national interests.

In established democracies, this situation may not be ideal, but in our quasi-democracy, it may be a necessity. If we remain oblivious to reality and disregard the most evident truth, which is the establishment’s influence and reach in every sector and sphere of national discourse, we will not only be deceiving ourselves, but also our people and our nation. We must acknowledge the reality that the political government has never completed its mandated term, and every new government immediately steers the country in the opposite direction in all sectors, without the slightest regard for the fact that businessmen, investors, and lenders withdraw their capital as soon as they detect wind of a policy shift or shift in priority emphasis. Unfortunately, we have witnessed policy reversals almost on average every three years, whereas for sustaining the investors’, businessmen’s, traders’, and lenders’ confidence, we require continuity of policies in all sectors for a minimum of ten years, which is the time required for setting up a large-scale manufacturing unit, putting it into production, marketing its products, and making a profit after five years. I am an eyewitness to such a scenario. Renault is one of the main three French automobile manufacturers. Renault agreed to set up a plant in Pakistan, initially in Karachi but later in Faisalabad, to produce their most popular model Duster, targeted toward the middle and upper middle classes, at a projected cost of Rs. 16,00,000 for a stripped-down model, which was significantly less expensive than other comparable models. The exchange rate suddenly jumped from Rs. 105 to Rs. 157, and the recalculated cost of the car was far beyond the reach of the middle and upper middle class. As a result, Renault shelved the project, until the exchange rate stabilized, which instead skyrocketed, and we lost an investment that could have reached a billion dollars in no time.

Keeping this in mind, our nation requires a formal and legal body like SIFC, a skeleton that remains intact regardless of which government is in power. This skeleton will ensure that every succeeding government adheres to national policies in all significant sectors, accelerates the process in the right direction with novel ideas, out-of-the-box solutions, and creativity, and cannot roll back gains made by the country in any significant sector. This system may persist for years until political maturity develops, the government ceases to change every two to three years, and the national interest guides every decision. As we know that it is unnecessary to reinvent the wheel. Numerous nations, such as China and South Korea, have effectively implemented this model and attained prosperity and growth as a result.

After 1949, when the People’s Republic of China was established, the Chinese Communist Party used the military as an instrument for economic transformation. The army participated in numerous nation-building initiatives, including infrastructure development, land reforms, and industrialization initiatives. This allowed the country to experience rapid economic development and become one of the world’s leading economies.

Following the devastation of the Korean War (1950-1953), the South Korean army played a significant role in the country’s economic transformation. The government implemented policies that promoted industrialization and export-oriented growth, with the army supporting infrastructure development, providing security, and even participating in certain industries. This contributed to South Korea’s remarkable economic development, known as the “Miracle on the Han River.”

Following the devastation of the Korean War (1950-1953), the South Korean military played a crucial role in the nation’s economic transformation. The government implemented industrialization and export-oriented growth policies, with the army supporting infrastructure development, providing security, and even participating in particular industries. This contributed to South Korea’s extraordinary economic growth, also known as the “Miracle on the Han River.”

Myanmar and Zimbabwe are examples of nations where the military’s involvement in civilian affairs devastated everything the country had. Myanmar has encountered extended periods of military rule, with the military exercising economic control. Mismanagement and corruption by the military junta have significantly damaged the country’s economy. They prioritized military expenditure over social welfare, resulting in the neglect of social sectors like education and healthcare. Control of industries and resources by the military has impeded private investment and hampered economic growth. In Zimbabwe, the involvement of the military in the economy during the presidency of Robert Mugabe was detrimental. The military played a significant role in land seizures, which disrupted the agricultural sector and decreased food production and exports. In addition, corruption, poor management, and policies like hyperinflation have contributed to the economic collapse and high unemployment rates.

China and South Korea’s success factors were centralized economic planning, which allowed for the strategic coordination and direction of resources. The military played a crucial role in the execution of these plans, contributing to the development of infrastructure and industrialization. The hierarchical structure and discipline of the military were utilized to mobilize large numbers of individuals and resources for nation-building initiatives. This allowed for the efficient execution of development initiatives and ensured stability during periods of rapid economic change. Adoption of targeted Industrial Policies to target key growth sectors, including manufacturing, infrastructure, and technology. Participating in defense-related industries and conducting technological research and development, the military actively supported these policies. A leadership that understood the significance of economic growth and pursued pragmatic policies. They utilized the organizational strength and discipline of the military to effectively implement industrialization programs. China and South Korea both prioritized investments in education and skill development, with the military playing a role in providing technical training and education to ensure a competent workforce to support economic growth. They emphasized export-driven development and the production of goods for international markets. This strategy was supported by the military by providing the necessary security, stability, and infrastructure for export-oriented industries to flourish. The governments of China and South Korea maintained close military, government agency, and private sector cooperation. This cooperation facilitated the efficient allocation of resources, transfer of technology, and coordination of development efforts.

Consider why Myanmar and Zimbabwe were unable to attain economic growth. The primary and most important cause was mismanagement and corruption. In both nations, the involvement of the military in the economy was accompanied by pervasive mismanagement and corruption. The diversion of economic development funds for personal advantage weakened institutions and undermined public confidence in the government. This has led to inefficient resource allocation, a lack of accountability, and a decline in investor confidence. The military institutions lacked the knowledge and experience required to manage complex economic systems. Economic decision-making necessitates a comprehensive comprehension of market dynamics, policy formulation, and international trade. Therefore, the military’s emphasis on security and defense issues is incompatible with effective economic governance. The military’s involvement in Myanmar and Zimbabwe was accompanied by a lack of transparency and disregard for the rule of law. This discourages foreign investment, inhibits entrepreneurship, and impedes economic growth. Myanmar and Zimbabwe both suffered from political instability characterized by authoritarian rule and violations of human rights. The military’s involvement in the economy was used to consolidate power and quell opposition. Such political repression and instability discourage foreign investment and discourage economic growth. The control of the military over key economic sectors, coupled with unpredictable policy changes and political unpredictability, undermines investor confidence. Without a stable and predictable economic environment, businesses do not invest, resulting in limited capital inflow and economic stagnation. In both nations, military involvement has frequently trumped investments in social sectors such as education, healthcare, and infrastructure development. This disregard for social sectors contributes to socioeconomic inequality and hinders sustainable development over the long term.

Where our success of this new and creative endeavor will require commitment, intelligence, knowledge, innovations, and out-of-the-box solutions, we must benchmark the best practices of such successful models, which are abundant, while also learning from the mistakes and blunders of those experiments that deprived the people of a decent living and their dreams and led the country to total destruction and avoid them.

The new endeavor may also take into consideration the necessity of recreating an ecosystem capable of sustaining prosperity and growth by pursuing an all-encompassing strategy and giving all sectors the attention they deserve which included but not limited to establishing stable and transparent governance systems that support the rule of law, accountability, and anti-corruption measures encourages investment and fosters confidence among local and foreign stakeholders. Diversify the economy by expanding several sectors to lessen dependency on one industry or product. Promote tech, manufacturing, services, and innovation. Invest in transportation, power, telecommunications, and digital connection. This promotes economic growth, investment, and productivity. To satisfy rising industry needs, invest in education and skill development. Educational reforms and lifelong learning promote creativity and entrepreneurship. Open trade policy, lower trade barriers, and actively pursue trade agreements to access worldwide markets. Offer incentives, streamline rules, and make business easier to attract foreign direct investment (FDI). Create R&D centers, innovation hubs, and technology parks to promote industry-academia-government collaboration. R&D and technology transfer boost innovation and competitiveness. For population well-being, prioritize healthcare, social welfare, and poverty reduction. Health and education boost productivity and economic growth. Access markets, technology, and information through regional and worldwide relationships. Join regional integration initiatives and use international forums to attract investments and create economic links. Maintain macroeconomic stability with sound monetary and fiscal policy. Improve banking, financial regulation, and investment and money transfer processes. Public-private partnerships (PPPs) can harness resources, knowledge, and finance for economic and infrastructure development.

Economic development requires time, strategy, and priorities. An inclusive approach, strong leadership, consistent policies, and a focus on long-term sustainable development I hope SIFC has all those ingredients and will help the country become an economic power which it deserves.