- Efficiency, productivity, high-tech modernisation, exports, green skilling and progressive governance drive economic stability
Interview with Mr. Majyd Aziz — President Employers’ Federation of Pakistan
PAGE: Tell me something about yourself, please:
Majyd Aziz: I am President Employers’ Federation of Pakistan, Former President of Karachi Chamber of Commerce and Industry, South Asian Forum of Employers, (UN) Global Compact Network Pakistan, and Former Chairman of SITE Association of Industry. I am Former Member of Board of Directors of the government-owned Zarai Taraqiati Bank Ltd and Former Chairman of the government-owned SME Bank Ltd. I am also Founding Chairman of All Pakistan Federation of Industries which is the only registered trade union in Pakistan. I am President of our family-owned business group.
PAGE: Remittances play a vital role in easing financial pressures on the economy and in supporting household income. What has the incumbent government done to further remittances?
Majyd Aziz: Undoubtedly, overseas workers remittances bring about a boost to any nation’s economy and financial sustainability. They also provide much needed financial strength to the families of workers toiling overseas who left the shores to ensure a better quality of life for their families. Pakistan has become overly dependent on the remittances because these have kept Pakistan above water. In the past couple of years, there has been an exodus of talented people who for myriad reasons left the country and are now making their mark in foreign lands.
Paradoxically, Pakistan is losing out on the pool of available talent but at the same time, the hard truth is that these migrants have been a blessing at a time when the economy is under deep pressure. The burning question is whether the increase in inflow of remittances has to do with government incentives or policies or whether this increase is more to do with this outflow of Pakistanis to search for better prospects. One factor that cannot be discounted is that the government has been encouraging remittances through banking channels instead of the Hundi/Hawala system prevalent for decades.
However, have these undocumented channels completely gone out of style? It is difficult to quantify it but there are opinions in the market that the system continues more or less as before. Moreover, many Pakistani workers, say in UAE and Saudi Arabia, convert their currency into PKR before returning home. Hence there is the possibility that the real time remittances figure is much, much more than the official figures. It can be debated whether this should be estimated to get the actual total. The country’s financial managers and the various banks do play their role in convincing expatriates to use the banking channels. Credit should be accorded to them that increased, formal, and regulated channels have resulted in a surge in remittance. The government can further incentivize in order to create a comfort zone for those remitting funds.
PAGE: There is a debate that overseas Pakistanis cannot be a dependable pillar of long-term economic stability. Some alternative must be explored. What is your perspective?
Majyd Aziz: In order to maintain financial stability and sustainability and to spur up growth, countries put lot of emphasis on remittances. To quote a few figures, India receives nearly $140 billion, Bangladesh $35 billion, Sri Lanka a little less than $10 billion, while Philippines will cross $40 billion in 2026. Pakistan is right on track, and the official inflow will cross $40 billion at the end of this fiscal year. It is important to note that that for the developing countries, there is always the fear that brain drain is one of the sources of increase in remittances. This scenario has more to do with the push-pull dynamics of the ecosystem. When salaries and wages are comparatively low, where there is downturn in the economy primarily due to political and security instability, where there is a lower growth environment, and where there is systemic failure of good governance, there is more likelihood to exit from the country. When there is lure of higher income possibilities, fairly stable economy, rule of law, and respect for professionals and talent, then the pull factor is overwhelming. There are economists and analysts who suggest that too much dependence on remittances should not be the panacea for economic ills and to a large extent they are correct. However, when there are limited economic opportunities, when deindustrialization has become a looming threat, when the politicians are not keen to end their infighting and instead focus on the economy without developing good governance, when talent and professionalism are not suitably recognized or respected, and when social, traditional, and cultural factors are under siege, then exodus of a large number becomes the final option. Addressing most of the above factors as well as fast track structural reforms in taxation, bureaucracy, price spirals, and political stability, may bring about a slowdown in the brain drain (erroneously termed as “brain train” by government spin doctors).
PAGE: There is little disagreement that remittances provide timely relief whereas exports bring sustainable growth. Do you concur?
Majyd Aziz: Pakistan is one of those very few countries where exports are either stagnant or moving at a slow speed despite all utterances by government that positive efforts are being are in the pipeline to enhance exports. Pakistan’s import bill increases monthly and the ways and means to settle the import bill should firstly be through increased exports. In the case of Pakistan, remittances are considered the source of paying for imports alongwith heavy reliance on internal and external loans. This is where rethinking is seriously desired. Focus should be on strong and effective economic diplomacy to attract Foreign Direct Investment as well as encouraging domestic investors to return to the industrial arena. Export of indigenous resources should become the most important priority. Minerals, fisheries, agriculture, and information technology exports can become the game changer for Pakistan.
PAGE: Lasting economic stability can emerge only from internal economic measures such as productive investment, export-led growth, agricultural modernization, skills aligned with domestic industry and sound governance. What is your standpoint in this regard?
Majyd Aziz: At the outset, it should be noted that as years go by, the exporters have to work hard to comply with all conditionalities, whether of EU GSP Plus, whether of Brands, and whether of importing countries. Complacency will immensely hurt exporters and this is where these exporters must be on their toes. Efficiency and productivity have always been a big factor in high cost of production. There is an imperative need to introduce high tech modernization, not only in agriculture but also in other sectors such as fisheries and minerals. The government must make exports the cornerstone of its economic growth policies and programs. Green skilling is the order of the day, and Pakistan is still lacking in promoting green skills. The various training institutions as well as TEVTA related organizations have to change the architecture of their curricula and speed up their systems. All in all, politicians should now sit straight and work for the motherland rather their own self or their own political party. Government should instill trust and confidence through progressive measures instead of adhocism and abrupt changes in the policies. Poverty is increasing and if it is not reined in, Pakistan is bound to retrogress, face a hammer blow, and become a country where leaders would be holding the proverbial begging bowl, going from one foreign capital to another, as well as knocking at the portal of IMF. Writing on the wall vividly cautions that economic downturns disproportionately burden the most vulnerable and fenceline population, often those least responsible for economic crisis.