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The pattern is being repeated for the umpteenth time now! A new government
takes over the country and goes to the economic drawing board for
chalking out growth strategies. As it develops a theme with sectoral
priorities over three or four years, its stability begins to falter
under political strife and it begins to divert its attention to fire
fighting for survival. Larger questions of national sovereignty emerge
to becloud the economic road map. In desperation the government resorts
to grandiose projects with high visibility for political mileage while
the nitty gritty attention to detail of all those 'unglamorous' steps
that provide the foundation for sustainable growth is lost. Often,
the road map itself is discarded.
The urgency of showing 'tangible results' triggers a regression to
beaten tracks of the past. In such an environment innovative thinking
has no room. Five year plans give way to 100 day deadlines. Fundamental
steps for human resource development, infrastructure, streamlining
regulatory frameworks and growth stimulating public sector interventions
are brushed aside in the glorification of building bombs, dams, motorways,
ports, power plants and such esoteric mega projects; hopes for a brighter
future are pinned to such initiatives. While the value of such mega
structures can not be ignored, the 'fundamentals' should remain in
centre focus at all times, crisis or no crisis, independent of a government's
survivability. Our governments have spent too much effort in surviving
the day to build a future. Mind you, creating crisis is a forte of
our culture. A very senior World Bank executive is quoted as saying
about one of our Prime Ministers, "He has a gift of finding thunder
in a clear blue sky." I think the attribute can be extended to
many more.
The present government (assuming the continuity since 1999 in spite
of democratic diversions) prioritized four areas of fast growth -
Agriculture, SMEs, mineral resources and IT. In the sixth year running,
these sectors remain mired in stagnancy. Intermediary textiles (yarn
and cloth), domestic production of consumer goods (cars and electronic
goods), telecom and consumer banking have turned out to be the trailblazers
of growth, to be followed soon by power plants and cement industry.
Apart from textile that has been the traditional leader in exports,
all other sectors are import oriented, cashing in on a captive domestic
market. Is it any wonder that trade deficit is bloated to unprecedented
levels. A large part of foreign investment is coming due to privatization
of existing enterprises; very little in labour intensive industries
for employment generation.
Industry seems to be the darling of the planners as a growth engine
for the future. It has become synonymous with economic prosperity.
I find it hard to repose faith in our ability to catch up with other
Asian tigers and China in this area. India laid down the foundations
for industrial growth many decades ago on which they are building
a strong engineering edifice today. We missed the boat during seventies
to nineties. We lack raw materials, human resource base and economies
of scale to compete globally in engineering goods. Our comparative
advantage lies in agriculture, livestock, fisheries and mineral resources.
In the short to medium term, these sectors can provide fast track
growth rates.
While textile exports have to squeeze through narrow conduit of politically
driven trade concessions, we have neighbours who import wheat. Egypt,
Iraq, Iran and Afghanistan import 15 million tons of wheat annually
through sea routes from Australia, Canada, US and Argentina. We can
cut transport costs by land routes if we have the surplus and the
quality standards in storage. We are clinging to jute bag storage
systems that disqualify us for international trade in wheat. We need
to invest and convert to bulk storage that would be cheaper in the
long run due to reduced wastages. With current resources and adequate
technology Pakistan can produce at least 5 to 7 million tons of surplus
wheat if price incentive is given to the farmer. In protecting the
small numbers or urban poor, we are surrendering our potential neighbouring
markets to India.
The world market of fresh fruits and vegetables is around 90 billion
dollars. Ecologically, Pakistan is an ideal habitat for horticulture
products, much more so than grains and sugarcane. A humble target
of capturing 2 percent of the world market would bring in 1.8 billion
dollars in foreign exchange, besides injecting the poverty stricken
rural areas with disposal incomes. Next, Pakistan is the 5th largest
producer of milk in the world. According to recent estimates by European
experts, Pakistan has the lowest cost of production for milk, even
lower than New Zealand. There are six to seven milk and dairy product
importing countries around Pakistan. The market is there to exploit
if the production chain was to be streamlined on modern lines. Incomes
from livestock products will directly go to the rural poor.
Pakistan has a long coastline rich with marine resources. Most of
these resources are wasted by medieval fishing techniques in shallow
waters. Deep sea fishing is outsourced to Korean and Chinese trawlers
who harvest the seas ruthlessly with no consideration for preservation.
A bulk of Tuna fish is sold as low quality dried fish or smuggled
to Iranian packaging industry.
The key problem with undeveloped horticulture, dairy and fisheries
is the lack of cool-chain infrastructure and controlled environment
transport systems. The government believes that development of this
infrastructure is a commercial venture and should be undertaken by
the private sector. As up to 40 percent of perishable agricultural
production rots away in the country, government will not see the cost-benefit
ratio of putting up cool-chains as part of the social infrastructure
like roads, sewerage, hospitals and schools. PIDC lead the way for
large scale industrialisation during the sixties as private sector
was shy initially but bought over industries when shown economic viability.
The same can be repeated for perishable food industry in the country,
for domestic and or export purposes.
Development of fresh food chains is no rocket science. It needs quality
standard regulations, storage and transport infrastructure and vertical
linkage with international players. California and Spain did it 50
years ago; Chile, Egypt and Morocco are doing it now. Why can't Pakistan?
We are too busy fire fighting political problems and seeking glamorous,
high profile symbols of development.
Iqbal Mustafa
email: mustafa@hujra.com
1050 words
11 February 2005
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