Pakistan has become full member of Shangai Cooperating Organization (SCO) which will open for it new vistas of economic cooperation and development with a number of countries provided it puts its own house in order in terms of progressive economic reforms. In a statement in the meeting of SCO Council of Heads of Governments, the Prime Minister Shahid Khaqn Abbasi said that becoming full member of this organization Pakistan is all set to bring more vitality in the organization as it possesses tremendous potential for global and regional trade besides promoting economic activities.
Prime Minister said that SCO holds tremendous potential for connectivity, trade, energy and economic development. It could lead to progress and prosperity in the region, he added. However, he cautioned against the politicization of development projects. He said Pakistan is big consumer market of 200 million people and CPEC compliments the SCO, s vision of connectivity and economic interaction.
Pakistan can reap the fruits of economic integrating in SCO only when it improves its domestic economic environment by meaningful economic reforms otherwise it will remain a consumer market and will not acquire its share in the production activities of this economic block. Reliance on a large number of indirect taxes for revenue generation and not extending the tax base through direct taxes, by taxing the affluent sections of the society, has wiped out the comparative advantage of our primary commodities and finished goods. The sky high tariffs of energy inputs have created stagnation in the economy. That is why the country could not avail the benefits of GSP plus for exports to the European Union and tax exemption given for access to the American market.
The complimentarity facto r is also vital for economic gains in Regional integration and bilateral economic cooperation. It was the complementarity of South Korean, Taiwanese and Malaysian economies with that of Japan which paved the way for the spectacular economic growth in these developing countries. These Asian Tigers invested heavily in human resource development to absorb and indigenize the imported modem technologies. Ironically, the civilian governments in Pakistan substantially slash down the budget allocations for higher education. The devolution of higher education to the provinces under 18th Amendment to the Constituting has given a death blow to human resource development.
Regional integration and agreements of Free Trade enhances the volume to trade which is mutually beneficial. But in case of bilateral trade between China and Pakistan the trade deficit of the latter is widening at a very fast space. The main reason is that low quality and high prices of our products make impossible to sell our goods in the Chinese market. The ambassador of China Yao Jing, in an interview with national daily news paper, made it clear the industrial parks and special economic zones along CPEC will empower investors and businessmen from Pakistan to raise their production capabilities and increase their exports to China. Do we have the required technical and managerial expertise and conducive business environment to achieve this goal? The answer is no because the ruling feudal and mercantile elite will be reluctant to create an appropriate environment for it by withdrawing regressive indirect taxes and bringing the rich people in the tax net who are so far out of the net of direct taxes Their thinking is still caught in the medieval age in the current 21st century which is a century of knowledge explosions, inventions and innovations.
The regional and global connectivity via CPEC will not be complete unless peace and stability return to Afghanistan which seems unlikely in the near future. The Prime Minister, in his statement in SCO meeting, has made a reference to CASA and TAPI gas pipelines in the context of energy supply for which peace and stability in Afghanistan is inevitable. Iran has launched its first phase of strategic Chahbahar Port, opening up a viable trade route between, Iran Afghanistan and India. After the completion of second phase of this project, six Central Asian states, Armenia, Georgia and Belarus will also find it feasible to use the Chahbahar trade route. Pakistan cannot perform a vital role in SCO unless the ruling class is prepared to change the prevailing socio-cultural and economic milieu. Let us hope the global environment will compel them to do that.