18 May 2010

Current problems of Pakistan

Majority of the Leaders are not sincere with their homeland. Most of the policies, decisions are
made outside Pakistan in Bahrain, Abu Dhabi US and in UK. There are many corruption charges
against Altaf hussain, zardari, babar awan, jahangir badar, farooq sattar and on many other
leaders. NRO cases are opened against many leaders However, President Zardari’s cases could
not be reopened until he was in Presidency and according to NAB Zardare has assets of 150
billion dollars inside and outside Pakistan. There is a system in Pakistan whoever come in power
try to loot Pakistan wealth and resources as much as possible.There is lack of accountability in
our system.

Overview: Pakistan is an Islamic state. It is a huge, populous and diverse nation and got
separated from India in 1947 and it was never liberated till now. From British it has fallen in to
American imperialism since its inception. Pakistan an improvised and developing country has
suffered from decades of international political disputes, trade deficit, balance of payment,
foreign exchange reserves, circular debt, poor performance of the banking sector and Karachi
Stock Exchange, low level of foreign investment, high inflation rate, poverty, low tax collection,
corruption in system and declining exports of manufactures. People of Pakistan don’t have power,
gas, sugar, water, jobs, money, food, security and hope for better future.So lets have a brief look
on the problems that Pakistan is facing and find solutions.

Still after 64years of independence Pakistan a fragile economy a low income country would
require at least 14 years of 7% average annual GDP growth to double its capita to around $ 2000.
Pakistan was one of the few countries that grew by 6% annually between 1960-1990 and reduced
the poverty level to as low as 18% and it was the leader of pack in the south Asia until 1990 but
India has overtaken us during the last 15years.

Democracy in Pakistan is mafia based democracy. Most of those who cast votes are among the
85 % illiterate people or out of 15% educated class who could write their names only are forced
to cast their votes under the influence of a Mafia head of their group whether in the form of
Zamindars, jagirdars, Peers, Industrialist, Business heads or any other head. Wrong attitude ,
Socio–economic injustice , Dishonesty and Lack of Education & Knowledge have created an
environment of hopelessness and have given rise to secretarial hate and fights or even killing each
other , as well as Extremism & Terrorism and this has led Pakistan and Pakistani loose national
and self respect internationally

Tax collection in Pakistan is very low 8-9% while in neighbor country India it is 18%. Out of a
total population of 170 million people, less than 1.7 million pay taxes. This means only 1% of the
total population pay taxes. Because of less tax collection Pk is the 3rd world country which
heavily depends on foreign aid. Corruption, low literacy rate, high poverty level and ignorance
among people have not made anything better. Policy makers and think tanks of Pakistan should
make sound, credible and long term policies to overcome these problems.

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Pakistan is a country with lot of resources but there is mismanagement of resources. Ravi water
can produce up to 45000 watt of electricity but 70% of it get wasted and go in Arabian Sea. From
only Ravi water, Pakistan can produce 19000 watt of energy while need of electricity is 17000
and Pakistan is producing only 13000.

Sugar crisis is one of the main problems that Pakistan is facing today. Sugar industry is the
second largest industry after textiles and constitutes 4.2 % of manufacturing. Pakistan in the 5th
largest country in the world in terms of area under sugar cane cultivation, 11th by production and
60th in yield. Sugar consumption is high in Pakistan and increased from 2.98 million tons in 1995-
96 to 3.95 million tons in 2005-2006. Now sugar consumption is about 4milion tons and reason
behind this increase is rise in the total population which has reached 170 million.

The recent sugar crisis in Pakistan is because of shortage in supply and is artificially created in
order to maximize profit. Before Ramadan there was no signs of crisis rather reports tells that we
have enough sugar to meet the demand. In early august the price of sugar started rising and
reached to RS 52.5/kg from 47.2/kg in July. Several steps were taken by government specially by
Shabaz sharif to reduce sugar crisis which include ban on the export of sugar, removal of sugar
import duty, raid in mills to bring sugar in market and crushing of sugar but government has
failed in adopting a proper agricultural policy as there is no planning at any level for important
crops including sugar cane and there is no monitoring system.

Electricity shortage is because of wastage of energy and lack of proper planning. Our industrial
sector uses around 30% of total power generated and about 45% of energy generated is used for
domestic consumption. Transporter sector uses around 28.0 % of energy and Heavy losses due to
theft are estimated around 30%. Use of energy in old machines, old transport, improper tuned
engines and lack of awareness of efficiently using it in industry and at home causes great loss.
Another important reason behind shortage is the aging of generating equipment which could not
develop the electricity as per the requirement. Due to load shedding and insufficient supply of Sui
gas to the industrial sector the export of the country has been decreased to about 50%. Closure of
about 3000 industrial units because of acute power and gas shortage has rendered jobless tens of
thousands of workers. This has increased unemployment and poverty and now a days people are
facing problems as a result of twice a week holidays for CNG (compressed natural gas) stations at
the bidding of federal government. There is a urgent need to take radical bold steps

NRO and its effect: NRO that stands for NATIONAL RECONCILIATION ORDINANCE was
formed during Musharaf time and many corrupt leaders take advantage of it. Recently
government has issued list of NRO beneficiaries which include 8041 persons including 34
politicians.The list includes President Asif Zardari, Interior Minister Rehman Malik, MQM Chief
Altaf Hussain, Farooq Sattar, Federal Minister Babar Ghauri, Jahangir Badar and many more.
The top beneficiary of NRO is Altaf Hussain whose 72 cases including 31 murder cases were
dismissed. President Zardari’s cases could not be reopened until he was in Presidency. According
to nab zardare has assets of about 150 billion dollars. These politician have looted Pakistani
people wealth and resources of Pakistan. They have their property abroad; their bank accounts are
almost all over the world. If these politicians bring their money in Pakistan then PK will not need
foreign aid and funds from IMF.
According to NAB Zardare has an asset of 150 billion dollars inside and outside Pakistan. There
is a system in Pakistan whoever comes in power try to loot Pakistan wealth and its resources as
much as possiblehere is lack of accountability in our system.Now as NRO cases have opened,
NRO beneficiaries should resign and face the corruption charges against them.

Majority of the Leaders are not sincere with their homeland. Most of the policies, decisions are
made outside Pakistan in Bahrain, Abu Dhabi US and in UK.

Terrorism: Terrorism is the use of threats and violence to frighten or alarm people and it in
badly affecting Pakistan economy. Terrorist groups in Pakistan include lashakar-o-omer, harakat-
ul-jihad-i-islami, lashkar-e-jhanvi and jaish-e-mohammed. These terrorist have attached GHQ
pindi, moon market, PC hotel in Peshawar and islamad, girl’s school in swat, markets of
Peshawar and mosques of various cities. The rate of suicide bombings is increasing alarmingly.
Terrorism activities are creating serious problems for Pakistan and PK has to increase budget on
its defense.

After 9/11 attacks on world trade center in US, Pakistan stand with US in war against
terrorism.Goverment of Pakistan is taking many steps to deal with terrorism. Pakistan is operating
in FATA, its military, intelligence and law enforcement agencies are cooperating with US and
has also banned several militant groups. For America, to win the war against terror, stability of
Pakistan is important so US being the strongest economy in world must support maximum
financial aid to Pakistan without imposing any conditions.

According to a recent report of the State Bank of Pakistan political instability and poor law and
order situation has brought the foreign investment down by 13 %. Foreign investors are not
coming in Pakistan even local investors are not ready to invest in PK as it is very risky. Pakistan
suffered RS 2080 billion losses from 2004 through 2008 in the war on terror. During 2007-08,
Pakistan suffered RS 484 billion losses and these losses had increased to RS 6708 billion during
2008-09.

During Musharf time the economy grow at an average rate of 6-3 per year. After Pakistan joined
the war against terror it received billion of dollars as foreign aid, heavy developmental projects
were launched and ignited the growth rate. Tax collection increased by 18% during July-April
and exports increased by 18.3 % and imports up to 8.9 %. However only the services sector grew
significantly and not the manufacturing sector, no major industries were set up and in 2008
Pakistan economy suffered heavily because of world wide recession.

Inflation is a big problem for Pakistan and it is a one of the major obstacles in the way of
development. It need to be controlled through proper planning. Domestic production should be
encouraged instead of imports, investment should be given in consumer goods instead of luxuries,
foreign investments should come, and developed countries should provide assistance. And strong
monitory systems need to be established in order to ensure sound evaluation of process at every
stage.

According to a recent report of state bank of Pakistan, the current political instability, terrorism
and poor law and order situation has brought the foreign investment down to 13%. The inflation
rate was 7.7% in 2007 and in 2008 it increased to about 20.8%.
Unemployment is one the major problems of Pakistan. We can say that it is the root cause of
several other problems that Pakistan is facing and it is also the result of number of problems. It
badly effect social life of people. AS a result of unemployment corruption poverty will increase.
Different steps have been taken by government to reduce it which includes BALUCHISTAN
PACKAGE. Purpose of this package is to provide job to Baluchistan people and through this
package if Baluchistan Government start giving 10-10 thousand to each family then it will be a
great step. Now again there is need of balance and check and strong monitory system to ensure
that people will get job and corruption will not take place

Now almost 50% of imports are coming from USA, Japan, KSA, Germany, the UK and
Malaysia. Such a high degree of imports is in favor of exporting countries but it is not beneficial
for Pakistan, its undesirable as Pakistan is a country with lots of natural resources. It exports of
Pakistan increase in future then depreciation in Pakistan rupees will also decrease.

Foreign direct investment (FDI) play an important role in the economic growth of the host
country. It promotes growth, increases competitiveness and exports. The amount of foreign
investment rose from $ -8.4 million in 2001-2002 to $ 8416 million in 2006-2007. However it
declined to $ 985 million in 2007-2008. Pakistan is making efforts to attract FDI but because of
present economic and political instability Foreign investors are not ready to invest.

Weaknesses of Pakistan are law and order, political stability, economic strength, local business
environment, protection of property rights, infrastructure, high business cost, quality of life,
judicial system welcoming attitude and tax structure while strength of Pk includes Abundant
land and natural resources, location on world map, trained policies, infrastructure and legal
system so PK need to take advantage of its strength and should take effective steps to reduce
weaknesses

NFC award, National Finance Commission award, is the distribution of financial resources
among the provinces of Pakistan by the federal government on annual basis. 7th NFC award is a
great step towards progress of Pakistan. There were 12-13 formulas initially which have been
narrowed down to four now. In this award multi factors are considered. Now overall share of
Baluchistan will be up to 9.2 % from present insignificant 7.1 %. Share of Punjab will be reduced
to 51.9 % from present 53 %. Sindh will get 28.8 % resources against previous 24 % share while
NWPF will get 14.4 % against previous 14.98%. Distribution of resources has always been a
matter of contention between provinces, now a consensus has developed and it has achieved its
main objective that is to remove the provincial disharmony by granting them more financial
autonomy. Now there is a need for proper balance and check of resources given to provinces and
to take consistent, credible solid steps to reduce corruption
 Let us have a brief look on some figures.

Indicator 1999 2007 2008 2009

GDP $ 75 billion $ 160 billion $ 170 billion $ 185 billion
GDP PPP $ 270 billion $ 475.5 billion $ 504.3 billion $ 580.6 billion
GDP per capita income $ 450 $ 925 $ 1085 $ 1250
Revenue collection RS. 305 billion RS. 708 RS. 990 billion RS. 1.05 trillion
Foreign reserves $ 700 million $ 16.4 billion $ 10 billion $
Exports $ 7.5 billion $ 18.5 billion $ 19.22 billion $
Textile exports $ 5.5 billion $ 11.2 billion $ - -
Foreign direct investment $ 1 billion $ 8.4 billion $ 5.19 billion $
Poverty level 34% 24 % - -
Literacy rates 45 % 53 % - -
Developmental programs RS. 80 billion RS. 520 billion RS.549.7 billion RS. 880 billion
Debt servicing 65 % GDP 26% of GDP - -

Recommendations: Government should take bold practical steps to maintain law and order
situation. Political and economic stability to attract foreign investors and strong monitory system
to reduce corruotion.Fair tax collection and improvement in infra structure, more investment in
education and physical infra structure. Close relationship between public and private sector.
Identification of potential investors and sectors that is to more attract china, Malaysia, korea and
to focus on mining, tourism, agriculture, construction etc.

Pakistan must take advantage of its geostrategic position as its surrounded by oil and gas rich
countries and can earn millions of dollars annually by charging transit fee for gas and oil
pipelines and international trade that passes through its territory. PK has extremely negative
image on world because of their media so extraordinary measures are required to reduce this
wrong perception about Pakistan.

Milk is the largest agricultural product if we start exporting it then we can get 4arab dollars.
Massive clean of rotten eggs and strict punishment should be given to NRO beneficiaries, All
NRO beneficiaries should return money of Pakistani people as only if Mr.Zardare bring back its
money then Pakistan will get relief from IMF loans and aids from US.

Fresh blood with a totally changed attitude and culture with clear sense of direction is the only
hope for Pakistan prosperity and respect.