In a felicitation message on the occasion of 53rd ASEAN Day, Foreign Minister Shah Mehmood Quershi said that Pakistan would continue to make efforts to deepen and further strengthen political, economic and cultural ties with Association of South East Asian member States in line with its vision of “East Asia” Policy. The warm felicitation indicates the keen interest of current ruling political leadership for pursuit of a pragmatic and beneficial economic diplomacy. There were indications of the same feelings of eastward tilt of economic diplomacy in the Foreign Policy of President Ayub Khan as included in his masterpiece book titled “Friends, Not Masters.” At that time the now South East Asian economic giant, South Korea, had borrowed economic development models implemented by Pakistan.
The political turmoil that started in Pakistan in 1968 and subsequent polls of 1970 culminated in the cessation of former East Pakistan. Hence the window was slammed for economic integration with a nascent but flourishing regional economic block South East Asian developing economies, which had ingredients of complementarities.
Regional economic integration gradually reduce and ultimately remove tariff and non-tariff barriers for the free flow of goods ,services and factors of production such as labor, capital and technology. It also attracts capital and latest generation technologies from the developed countries. The success story of Malaysia and now booming economies of Thailand and Vietnam amply explain it. Malaysia is now an important member of another vibrant economic block, Asia Pacific Group.
Integration with ASEAN will certainly pay dividend, provided the economic environment in the country is substantially improved. Trade bodies are persistently clamoring for it but to vial. The multi-power centers always block the decisions of economic reforms. The World Bank has recently urged for structural reforms to put Pakistan’s economy on the exports led growth path for which the calamity of Covid-19 pandemic can be converted into opportunity.
The World Bank Senior Economist Gonzalo Varela, in an online interaction with All Pakistan Business Forum (APBF) referred to the contraction of country’s merchandise exports to $1.39 billion in May and recommended some key steps to revive and sustain the economic growth in the post corona slow down period. In a nutshell the reforms that were suggested pertained to monetary, fiscal and energy policies. The procedure of provision of bank credit is complicated, taxes and duties regime are regressive and prices of the energy inputs are very high, because of the arbitrary decisions taken in different power centers. Fossil fuel driven high electricity tariff has swelled the circular debt by 63 percent and technical losses by 37 percent.
Business leaders are critical of frequent doses of hiking prices of petroleum products. President Islamabad Chamber of Commerce and Industry, Shahid Rashid Butt said that the hike of 27 to 66 percent in the prices of fuel will permit cartel of oil companies to earn billions at the cost of masses reeling under the back-breaking burden of economic depression and psychological impact of coronavirus onslaught. He alleged that rewarding of mafia behind the artificial POL shortages will certainly embolden other mafias to peel the skin of masses as no action has been taken against the cartels of IPPs, sugar, wheat and pharmaceuticals. The unabated rise in the prices of food commodities and medicines has vindicated his stance.
All Pakistan Textiles Mills Association (APTIMA) had sent a letter to Secretary Petroleum Division, complaining therein that gloomy picture of gas availability has made the industry unable to meet export orders and make it run on the path of recovery. It transpired in the meeting of Council of Common Interest on Friday that country will face acute gas shortages during the current and next fiscal years.
The World Bank Senior Economist had told the business leaders that boosting exports of labour intensive products will be instrumental in achieving economic growth and enhancing employment. In this regard global and regional trade integration can provide Pakistan tremendous potential in driving and sustaining growth and poverty reduction. The benefits of regional integration, global and regional trade can be reaped only when long term fiscal, monetary and energy reforms are implemented, for which strong political will is needed.