KARACHI: As Pakistan gears up for national elections next month, Pakistani and foreign business stakeholders wish for the establishment of a transformative government after the polls, anticipating the continuity of present policies, a “charter of economy,” and the willingness to make tough decisions to tackle economic challenges.
Scheduled for February 8, the general elections are coming after more than a year of economic and political turmoil in the South Asian country that narrowly escaped a default in June last year, thanks to a last-gasp $3 billion International Monetary Fund (IMF) bailout.
Despite these challenges, there has been a palpable optimism within the business community, which hopes that the upcoming political transition would usher in a new era of much-needed stability and prosperity in the country.
“After the election we are expecting that there would be the economic stability and continuity of policies that is what actually the business community needs,” Saquib Fayyaz, senior vice president of the Federation of Pakistan Chambers of Commerce & Industry (FPCCI), told Arab News recently.
The FPCCI official said businessmen in Pakistan wanted to see the issues of high energy prices and interest rates as well as the shortage of foreign exchange resolved.
“We will emphasize that the new government should resolve the problem of energy, electricity and also the problem of foreign exchange, which is a very big problem and also we want reduced rate of interest,” he said.
Iftikhar Ahmed Sheikh, president of the Karachi Chambers of Commerce and Industry (KCCI), said they required long-term policies and a “charter of economy” for the resolution of these issues.
“We need long term policies,” he told Arab News. “We are always in favor of a charter of economy and we call for this and when a charter of economy is made, it encompasses long-term policies for exports, for development, as against the prevailing system of short-term policies running for decades.”
The concept of a charter of economy has been discussed extensively in the Pakistani discourse, with calls for a comprehensive agreement between stakeholders to create a stable economic environment.
Traders and industrialists advocate for a charter that could move Pakistan away from the decades-old tradition of short-term strategies, which have often proven to be flawed.
The KCCI chief said they wanted the new government to work on long-term policies “in consultation with businessmen,” promising an increase in Pakistan’s exports on the basis of such policies.
Asif Inam, chairman of All Pakistan Textile Mills Association (APTMA), appreciated the caretaker government of Prime Minister Anwaar-ul-Haq Kakar for its measures to boost the economy, including curbs on Afghan transit trade, crackdown on currency smugglers and efforts to bring in foreign direct investment.
“The caretaker setup is doing well and they (the next government) should adopt the same policies,” Inam said. “Current policies should be maintained and [the] stability we have achieved should not be deterred.”
Pakistan’s textile sector contributes around 60 percent to the overall exports of the country. In Dec. 2023, the Pakistani commerce ministry set an ambitious export target of $100 billion, including $50 billion for the textile sector, in the next five years.
However, the APTMA chief said expensive energy was an impediment in the way of textile industry to achieve this $50 billion target.
“One of the main reasons why the export is not flourishing is the expensive energy, which is two or three times [more] than the regional competitors,” he said.
Foreign investors expect the new government to create a conducive environment and boost investor confidence through some “hard decisions.”
“I think from the developments that have taken place, we do see that the election will take place on time. Sooner or later, they will have to work and bring some sort of a maturity and stability,” said Abdul Aleem, CEO of the Overseas Investors Chambers of Commerce and Industry (OICCI) that represent multinational companies operating in Pakistan.
“So, our expectation is that whoever sits in the government will understand that the environment has to be created with political and policy stability.”
Aleem said this stability would give confidence to foreign investors to invest more in Pakistan.
“Economic challenges right now facing the country are quite serious and therefore, they will have to take actions which may not be very popular,” he said. “The situation is such that there will be some hard decisions to be made.”
Pakistan has already taken some painful decisions, including energy tariff and interest rate hikes that have fueled decades-high inflation.
One of the major economic problems Pakistan has continued to face throughout its history is the scarcity of foreign exchange, primarily the US dollar, but recent measures by the caretaker administration have raised hopes for its continued availability.
Malik Bostan, chairman of the Exchange Companies Association of Pakistan (ECAP), said the government’s actions would continue to bring stability and the greenback would eventually settle around Rs250.
“At a time when dollar went up to Rs330 and people were talking about Rs400 and Rs500, we had announced that it may go [back] to Rs250 and it gradually depreciated and has to go to 250,” he said.
Bostan even called for drawing a charter of economy before the elections, binding all political parties to pledge continuity of policies.
“I think the government has to make a charter of economy even before the elections,” he said. “All political parties should be called and they should give pledge to implement the charter and they should not get involved in leg-pulling.”
FPCCI’s Fayyaz said they had also prepared a charter of economy and would hold consultations on it with political parties and the new government.
The stakeholders stressed the importance of reducing government expenditures, broadening the tax base, and making tough decisions for financial stability and economic self-reliance to meet the present economic challenges.
