Nine hurdles to Glory of Pakistan.
By: Tarique Khan Javed
President, Overseas Pakistani Investors Forum.
                           Dated 06 Dec 2010

OPIF recommended investment and settlement in Pakistan since its inception in 1988 based on our Research and Long term Studies which indicated that Indo Pakistan was Second biggest economy commanding 24% share in World GDP in 1750. China at that time was the Biggest economy of the world commanding 30% in World GDP. Both Ist and 2nd biggest economies became the poorest in the World by 1950s due to massive exploitation and transfer of wealth to the West by force. Chine has reemerged as the Second biggest economy. We believe Indo Pakistan will also reemerge as one of the biggest economy of the World in coming years.

 In this like Overseas Chinese; Overseas Pakistanis will play a major role. With their USD 1,000 billion savings, experience and connection they have the power to rapidly transform the Country beyond recognition. Given the Economic weakness emerging in Western Countries and adverse political and social condition developing after 9/11; increasing number of Overseas Pakistanis are inclined to return back if conducive atmosphere is created. Examples of South Koreans, Malaysians and in the past Colonial powers like British, French, Dutch are before them. These nations came out to fight poverty in their countries and returned back after making enough and creating jobs for themselves in their own Country instead of continuing painful existence in an alien land.    

The nine hurdles mentioned below are man-made and mostly result of colonial Rule or its remnants. These can be easily removed in a proper functioning democracy as people needs can not be ignored for long in such a system as political parties compete for votes. Sami colonial rule with the help of Armed forces, always trying to discredit democratic Rule, is reason why these anti people hurdles have not been removed up-to now.

With a vibrant Media, independent Judiciary and restored  but yet conditional Democracy one can hope that things will change for better in coming years. We recommend that existing Political parties adopt some of the solution we mentioned below as part of their manifesto or else a new party emerge with above 9 point manifesto and sweep the next election. OPIF will lend full support to such a party. If no one adopts our recommendations we will consider launching our own Political Party. 
OPIF recommends following Solutions to Economic Problems of Pakistan:
In our opinion following are the factors which has made Pakistan an unsafe and unattractive destination of migration and investment.
1.LACK OF LAND REFORMS:
Fact: Lack of Land Reforms; as already done in all neighboring countries is the main cause of unrest and tension in Pakistan. 60% poor in the Country are in Rural Areas. All Rural poor are landless peasants. Even those owning just 600 sq.yd plot are not poor as they can grow enough food and vegetable on such plot.

Recently MQM has proposed 36 Acres irrigated and 54 Acres un irrigated as optimal Economic Unit for Land holding

PPP in 1977 envisaged 100 Acres irrigated and 200 Acres un irrigated as the ideal maximum Land holding and a bill was passed on that basis but was not implemented following a Supreme Court ruling declaring all Land reforms as Un Islamic.

In China, after the revolution Land was redistributed on the basis of 6.5 hectares (16 Acres) per family against a 30 years lease on the condition that family stays & cultivates the land themselves. In case they move to Town they lose the land.

In Iran following the Islamic revolution during 1979 – 88 Land was redistributed on the basis of maximum 20 Acres for Land Lords & 5 Acres for common farmers. The Islamic revolution justified the redistribution on the ground that all Land belongs to Allah and in an Islamic society a neighbor cannot be allowed to go hungry while others have too much. The provision of Khums (1/5 contribution for the community) under Shia value system was also invoked to takeover Land from big Land Lords often holding up to 10,000 Acres land. It was demonstrated mathematically that if the Khums was paid over generations such accumulation of Land and wealth was not possible.

Given the very large number of Land less peasant in the Country and considering the high fertility of the Land, OPIF recommendation for Pakistan is, maximum ceiling of 20 Acres & 2 Acres for common farmer family given on 30 years leases, on the condition that 80% of the allotee family members stay on land & cultivates, if more than that leave; the land is resumed by the State.

2. KATCHI ABADIES & GOTHS MIS-TREATMENT:

Fact: Non –Regularization of Katchi Abadies and Goths in Towns and Cities of Pakistan is a major cause of crime and unrest.  40% poor live in Cities and Towns. All poor are landless. Even those owning just a 30 sq.yd plot/house are not poor. 80% resident of city like Karachi live in Katchi Abadis and Goths. They occupy just 10% area of the city yet the live in constant tension of being bull dozed.

In Iran right of every City dweller to a house was recognized after the Revolution. State brought for Land lords owning  more than one house and distributed it among those who owned no house in town and cities.

In the same spirit we recommend that for every family that has lived in a city for more than 10 years regularly a right to own  a 60 yards plot/house may be recognized. If such a family has developed a waste land into a rentable property,  Government may issue title deeds after reimbursing say  Rs 2000 per yards as development expenses by the family before getting entitled to annual lease payment say at the rate of Rs. 20 per yard. Such lease should be 99 years. To get a reasonable lease income State may link annual lease payment to Inflation index with 1st year as 100.

To curb corruption, all property data must  be computerized and all title deed to include a Google search print out highlighting the plot concerned.

3.WORST REGRASSIVE TAXATION SYSTEM IN THE WORLD:
Fact: Pakistan has the most Regressive Taxation System in the World, where by 80% taxes are collected from Poor, while the Rich are not taxed like in all civilized countries.
To bring justice in the Country  Indirect Taxes should not exceed 20 % of total taxes while 80 % taxes should be recovered from Direct taxes  on Income, Wealth tax, tax on Agriculture Income and Inheritance tax as is the common practice all over the World. If Wealth tax of 2% on Wealth over Rs 5 crore is introduced;  Rs 65 billion can be raised and need for introducing RGST will be eliminated.
If like Iran and UK Inheritance tax of 40% is introduced all indirect taxes on:
 Petrol( Rs 25 per liter),
Edible Oil( Rs 25 per liter) and
17% GST on:
 Electricity,
Telephone and
Gas and other items  used by common man, can be removed to bring a major immediate  relief to common men.
 This will also rapidly reduce income and wealth disparity in the Country.
4.EXCESSIVE CURRENCY IN CIRCULATION:
Fact: Resort to Printing of Notes to meet payment requirements of the Government’s is mainly responsible for Inflation in the Country.  Leading to decline in purchasing power, thus rapidly increasing poverty.
Econometric models on data produced by GOP indicate up to 80 % co- relation between money supply and general prices in the Country. In 1972 the total money supply of United Pakistan was Rs 14 billion. After separation of East Pakistan money supply was not reduced, in subsequent two years additional 8 billion notes were pumped into the economy leading to general price increase of all goods and services by 150 % by year 1975. Now the currency in circulation has reached Rs 1,300 billion out of which Rs 1,200 billion is doled out to Government as loan.(This was Rs 700 billion in Nov 2008 and Rs 350 billion in March 2009).  The extra 1,200 billion currencies when circulated through the economy will become Rs 6,000 billion given the velocity of money being almost 5 at present. This additional purchasing power in the market will lead to a general increase in price of all goods and services over the next one year. All prices will be adjusted upwards without any relation with actual demand and supply of the goods and services. Such upward movement of prices crushes the fixed income group like the salaried class and the poor. This mode of taxation does not discriminates between rich and poor thus is most damaging for the poorest segment of the society.

We recommend a truly independent SBP which will act as custodian of “peoples” purchasing power and not accept Government order to print extra notes. Governor of State Bank should be a Japanese or German Ex Central Banker who will allow extra printing of notes only over his dead body based on his training and experience.
5.OVER  REGULATION AND CONTROL:
Fact: Over Regulation and Control by Central and Provincial Governments are responsible for strangulating business enterprise and creating man-made shortages.
Power crises, Sugar Crises or Atta crises are all man made by Government’s unnecessary Dept and Agencies. TCP’s monopoly over import and export of many items is responsible for ongoing Sugar crisis. If free import of Sugar was allowed Sugar could have been imported at less than Rs 30 pkg while TCP was quoting Rs 70 as international price in March 2010. Atta crises was created by Governments decision to buy wheat at the rate of Rs 24 pkg at the same time insisting on Shops in cities to sell Atta at Rs 25 pkg. Power crisis is mainly due to Central Government’s insistence on permission for putting any power plant above 50MW. If such permission is not required many plants could have come in response to the shortages. The other factor is granting of very large monopoly like KESC which is finding it impossible to manage. If say 10 Co’s existed things would be much better.
Recommend elimination of 50% Ministries, Dept and Corporations like TCP. All functioning department other than Defense, Communication, Foreign Affairs and SBP should be transferred to Provinces and Provinces may be encouraged to create conducive atmosphere for investment in their province by offering incentives like lower taxation, free hand etc.

One measure which Provinces may adopt for immediate result is by following the Chinese Model create  Free Economic Zones. Overseas Pakistani and other Investors will flock is these Zones to take advantage of low labor cost in the Country. This will end unemployment and poverty within a sphere of 10-15 years.
6.INEFFICENT AND DISCRIMATARY  LEGAL SYSTEM:
Fact: Slow and expensive Legal System which is beyond the reach of common man and which favors the Rich against the Poor is a major source of injustice and also hindrance to Economic growth.
With 19 lacs cases’ pending for 2000 judges to clear the situation is impossible within the existing British system and this is a big hindrance in the economic progress of the Country. The wheels of economy are jammed due to the jamming of legal process.
Following example of Nigeria we propose setting up of rudimentary Courts manned by Islamic Scholars having equivalent of Masters Degree who would decree on the basis of existing Pakistani Laws. These Courts to start 1 hour after Fajar and continue up to Asar Prayer with a break of one and half an hour for Zohar and lunch break. Such Courts which may be called Awami Adalat to hear the same case three times on their Date for expeditious settlement of disputes ranging from Divorce, Dowry, Over due rents, Eviction, Bounced cheques, Inheritance, other financial disputes. Such Courts to be restricted to handle cases of disputes with financial implications of not more than Rs 20 lacs. Such Court to clear all cases within four months and with the appeal process to be restricted as in the Banking Courts. Such Courts also to use simultaneous service procedures as applicable in Banking Courts.
Institutions of such Courts can go along way in clearing the huge backlog of 19 lacs cases in the Legal System at present. Even after the independence of Judiciary no significant improvement in the backlog has been seen so far.
The other suggestion to improve the situation would be to make the regular Courts work three shifts till such time that the backlog is cleared. For this appointment of thousands of Judges on one or two years contract is suggested.
We also suggest that Banking Courts may be asked to take up others Financial Dispute Cases involving implication of more than 20 lacs, including Rent and Eviction cases even if no Bank is involved in the case. A premium Court fee may be charged by these Courts for such cases. If Banking Courts can not do this, Special Financial Dispute Courts may be established on the line of Banking Court with a Dead Line to decide any case with in 4 months. Appeal against such decision should be restricted and again bond by 4 month rule, as in Banking Courts.
The above three measures will help Nation get rid of the Legal grid lock in which we find our selves since last 50 years. This will also solve the unemployment problem of graduates of Islamic Schools and Lawyers.
7. LACK OF FREEDOM TO CHOOSE LIFESTYLE:
Fact: Missing freedoms as available elsewhere in the world, including Muslim countries like Malaysia, Egypt, UAE, Bahrain etc is responsible for tension in Pakistan.
We consider the Black Laws of Zia-ul-Haq era particularly Hudood Ordinance, to be major contributor of tension within the Society since 1978. A return of pre 1978 Pakistan will help in its pacification.
Staffs of Multinational Cos, Businessmen, Tourists and many Overseas Pakistanis find it difficult to stay in Pakistan due to restrictions applied in the Country towards Night life and other freedom of life style which is standard all over the World. Given a choice they do not come to Pakistan and in the process we lose billion of potential investment and technology transfer. We recommend relaxing the society by removing these restrictions which will also help us attract investment. Such relaxing will make Pakistan a happier place even with current poverty.
Since 1988 successive democratic governments have come and gone but they have not reversed the damaging legislations by Zai ul Haq including ones curtailing the Soverenity of Parliaments. Time has come to take bold and decisive actions against these laws.
8.RELATIONS WITH NEIGHBOURS:
Fact: Continued tension with India and Afghanistan. Which not only means huge Military expenditure but also loss of huge business due to security threats and uncertainty?
Our ambition to get the remaining part of Kashmir from India and rule over Afghanistan with the help of proxies like Taliban has kept us at constant war and tension with these Countries. In the process we have lost East Pakistan and invited three million Afghanis in our Cities. We have spent some US Dollar 450 billion on these efforts so far. The massive drain on resources goes on without any hope of achieving our target.

Time has come to abundant this unrealistic dream and pulls back all initiatives aimed at that achieving these targets. After making peace with the neighbors, massive mutual reduction in Arms, Number of Defense Personnel and general Defense Infrastructure may be negotiated.

We also feel that rapid stride in implementation of SAARC Charter and SAFTA Agreement may be initiated aiming at creation of a common market for SAARC stretching from Afghanistan to Burma. This will create the largest market of the World comprising 1.4 billion people and may become the most important factor in rapid reduction in poverty in the Region. This will also help the region reemerge as the most prosperous region of the World as it was prior to colonization.

9.NON CREATION OF  NEW PROVINCES:

Fact: Very large Provinces are responsible for lack of Government writ in many parts of the Country and separatist tendencies.

We recommend that like our neighbors we need to create many more provinces to better manage the Country.

More provinces will also help end the current polarization among provinces and end the current separatist movement in Baluchistan.

We recommend breaking Baluchistan in two 4 provinces, Punjab into 3 provinces, Sindh into 2 provinces and KP into 2 provinces.

We also recommend relocation of Capital from Islamabad to a Central point in the Country like Dera Ghazi Khan.