ISLAMABAD: Minister for Planning and Development Makhdum Khusro Bakhtyar has said that we need to increase saving, and to balance between direct and indirect taxes. He said that in the period of previous government, the international price of petrol went down making it easy to handle current account balance.
He expressed these views while addressing the 34th Annual General Meeting and Conference of Pakistan Society of Development Economics. He said that the service sector contributes to 56 percent of domestic GDP but its share in exports is very small. He said that our imports from China have reached USD 18 billion and the country needs to adapt import substitution policies and the government is devising policy packages for this purposes.
Makhdum Khusro Bakhtyar said that the consumption in Pakistan is 93% of GDP, highest among the emerging economies, whereas in Bangladesh, consumption is about 74%. The saving rate in Pakistan is less than half of other countries of the region. He said that the growth strategy should focus quality and inclusiveness of economic growth, human capital and sustainable agriculture. SME sector has been identified as one of the key sector of economic growth. He said that CPEC is an opportunity for Pakistan and China for growth and prosperity.
The two countries are in effective collaboration which is beneficial for both countries. The agriculture framework under CPEC focuses on joint ventures, value addition, cold chain management for fruits and vegetables, marketing and branding will help the country to overcome socioeconomic weaknesses. The second speaker of the session was ex Member Policy FBR Shahid Hussain Assad who discussed ‘Revenue Management, Issues and Challenges’. He mentioned that current issues faced by Pakistan economy in tax collections are narrow tax base and low tax to GDP ratio. Large informal economy proves to be a reason in loss of taxable income. Similarly, due to political lobbying tax exemptions and concessions are given. He suggested to broaden the tax base, simplification of tax procedures and harmonization of federal and provincial taxation.
Earlier, in his address, Dr. Asad Zaman, the President PSDE and member Economic Advisory Council said that there are many wrong theories widely accepted by economists and cost of these wrong theories is incalculable. He cited that economic theory says that the ultimate goal of human being is to maximize utility. This theory is ridiculous and has been proven false especially by game theoretic approach. Dr. Asad said that the problem of scarcity, which is considered central in economics, comes into consideration only if we consider the wants, and in terms of necessity, there is no scarcity.
He said that a society based on the care of others and cooperation is the potential solution to many problems. In his Secretary’s report, Dr. Fazal Hussain, the incumbent Secretary PSDE, welcomed all the guests and participants. He informed the gathering that the Conference of PSDE has been a regular annual event since inception of PSDE in 1982 and the conferences of PSDE have been attended by top economists from across the globe including Nobel Laureates.
He stressed importance of the event in highlighting the main issues facing Pakistan’s economy and as a platform of knowledge sharing. He expressed hope that the deliberations at this year’s Conference would yield insight into the way forward for Pakistan’s economy. The second event of the conference was Mahboob ul Haq Memorial Lecture, with the theme ‘Bringing Human Capital Back to Pakistan’. The distinguished speaker Dr Adil Najam from Boston University is the lead author of Intergovernmental Panel on Climate Change (IPCC) report, the report that won 2007 Noble Peace Prize.
In his address Dr Najam highlighted three crucial issues faced by young people i.e. quality education, meaningful employment and meaningful engagement, or the three E’s. He said that the youth now comprise of a major chunk of Pakistan’s population, and by 2045, the future of Pakistan will be decided by the demographic bracket that is now under 30. Contrary to other countries, in Pakistan the youth dividend has not translated into increased employment and human development. Policy makers have to focus on the three E’s to give an impetus to development. He argued that human development is a function of three factors namely health, wealth and knowledge.