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01
Mar
2011
Governance Deficit in Pakistan Economy


There are many economic indicators that serve assessing economic outlook of the country. In case of Pakistan I have been seeing many economic indicators that tell the story of high class economic chaos and the way a resource rich economy has brought to problems, poverty and unrest.

The monetary figures, fiscal deficit, balance of trade & payments, GDP growth, per capita income, inflation indices & other economic statistics apart but in my view the biggest issue of Pakistan’s economy is governance deficit.

In my view governance deficit arises once the performance of an economy stand below her potential. It simply denotes the poor or absence of management of resources and potentials of economy. In case of Pakistan the country that runs on international aid and loans have far more in term of her resources and potential.

Pakistan’s governance deficit is not merely the courtesy of ineffective governmental policy making and control but the businesses [companies & other business organizations] are also responsible. The basic principles of management are absent when we analyze majority clusters of our economy.

I would like to take a brief non statistical overview [qualitative] of this deficit [read others post on BIZOMER for quantitative analysis in Economy & Investment sections].

Government’s Side:
Pakistan is one of the most unfortunate countries of the world where governments are merely occupying offices on the basis of political agendas based on ethnic, linguistic, social & religious ideologies. Hardly can we find a single political party that has sound economic vision. Even the leaders of Pakistan’s leading political parties carry minimum management skills & economic sense.

The people who votes are the majority that can’t decide good for their own self and families so how can we consider their popular decision as rational one. Courtesy to the dictatorships based on foreign objectives & brainless democracies, Pakistan’s central & provincial governance scene is dominated by the politicians who can not even run a proper company on merit. How can we expect these people bringing sound economic planning that lead our national objectives?

The broad reasons for governance deficit on government’s side are below:

Absence of expertise and capability in term of human resources within government and political parties of Pakistan to run country’s economy since 1970s.

Government’s objective of merely managing fiscal affairs and ignoring monetary & production causes of the country.

Under utilization of massive natural & human resources of the country.

Lack of facilitation for entrepreneurships due to corruption, budgetary allocations & rigid banking system.

Political appointments of lesser capable persons on the government posts that runs economy, businesses, financial system & taxation departments.

Excessive governmental structure & employees without proper accountability & checks.

Centralization of Economic decision making units [ex. Trade authorities, Taxation Authorities etc] & lack of district & city level economic leaderships.

State owned businesses that make government a party in national economy that create bias & corruption in policy making.

Poor education system & healthcare facilities that hinder the supply of sound business and corporate brains that serves the basic objectives of an economy.

Practically no e-governance & one window operation in Pakistan regardless of relatively cheap technology solutions available in Pakistan.

Worst taxation policy & system that doesn’t cover potential taxable incomes and unable to collect taxes from the registered units with in the tax net.

Ineffective utilization of government finances & excessive reliance on internal and external debt without cash flow planning.

Lack of pro economic legislation & debates in National Assembly and Senate due to non-focus over economy as a top agenda & poor knowledge level of public representatives over national economy.

The bottom line is that when the demand of the time is to be proactive governments on economic governance Pakistan’s government over the years has been so reactive. Even their reactions are merely looking reactions of a layman dominated by management & political pressures.

I know sometimes people ask us to write solutions of the problems but in my view all above points requires no rocket science to have solutions.

We are living in 2011 whereby understandings on all above issues need a sincere will to improve & quality people to bring the pace up. At this moment of time we are lacking both of them. Regardless of it I have written a lot of pieces on solutions that you can browse in Economy & Investment sections of my portal.

Businesses or Corporate Side:
It is not merely government but many businesses and companies in Pakistan that work under their potential. Many times we observe the instances where businesses hardly try to be competitive in global competition in their narrow mindedness and lack of trained or capable businessman or entrepreneurs.

We even find noncompliance of international standards & laws in our industries and other sectors of economy. I would like to briefly chalk out the problems in this regard:

Lack of training opportunities for hired employees in middle and small size companies. Majority of large size companies equally shares the same.

Low trend of registration for sales & other taxes.

Lack of maintaining proper books of account and audit process.

Family oriented businesses that must have to be led by a family member rather than putting qualified and capable people on higher executive positions.

Low level of business initiatives in youth to carry their own businesses.

Lack of focus on bringing technology to create management information & decision support system that certainly is leading our businesses to ineffective and inefficient cost structure.

Companies & business units that earn massive money in the country don’t care environment friendly technology in their production bases that us creating severe environmental problems in big cities. This harms our export reputation across the globe whereby we looses big deals due to improper environmental and cleaning arrangements in and across our production facilities.

Lack of diversification trend in businesses that goes in surplus every year.

Lack of research and development within companies and business units to refine their processes and learning innovative ways to do business.

The number of companies registered on stock exchange by going public is lesser than the size of economy.

High personal expenditure of successful businessmen to bring the lavish life style in their life rather than presenting themselves down to earth & getting near to common man to have value grass root ideas of business.

I am sure that the country like Pakistan is not poor in resources but the governance deficit represents the totality of our problems on economic front. I think we have to better work our behavioral & psychological issues as a nation, business community and government first to get our hard core economic tallies back in order.


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Mr. Omer

Mr. Omer [1982 born] started  his professional career as a commercial / investment banker after achieving Gold Medal in Finance at master level from University of Karachi in 2006.

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