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The Decisive Edge NEWSLETTER

VOLUME 3 AUGUST-2011

ECONOMIC REFORMS


INSIDE FRONT


Here we present to you the details of the proceedings of our third session, on “Economic Reforms”. We have initiated this debate to arrive at a comprehensive solution to the current crisis, by reverting to our ideology through the application of the Divine Dictum, on personal as well as collective levels. We strongly believe that compartmentalizing the discussion will not serve any purpose, if a change is to be brought, it would need to be all encompassing and absolute, and what better than to opt for the perfect and flawless system presented by Islam. Adopting a strategic and methodical approach towards addressing the current situation and proposing a complete new system in consonance with Our Ideology Islam, we have covered social reforms, the foundation of jurisprudence, and economic reforms, the means to providing sustenance to the populace and the nation. We will be addressing Political, administrative and judicial reforms in the course of our drive, among other macro issues. The Economic Reforms session entailed a detailed debate between experts, which was not only enlightening in terms of historical data and assessment but effective enough to provoke thought, followed by an in-depth discussion of the jury, resulting in a unanimous verdict.

Ms. Nazish Shah – CEO Live Rostrum Editor: The Decisive Edge

Editors Note

Economic stability, currently the driving force behind international politics, foreign and defence policy, political stability in the domestic arena, and most importantly the well-being of the people at large, is crucial before we can progress onto tackling other concerns. While we are thankful for the support of the Honourable Jury, the Experts and all participants, we hope to continue gaining strength, in intellect, number and reach. Lets all put-in our little share in suggesting the best solutions and system. Your suggestions, recommendations and comments are welcome and awaited. Together we can and will make a difference!

Table of Contents THINK! – The Decisive Edge – Our Introduction .............................04 Honourable Panel of Jurists (Short Profiles)................................05 Proceedings of Economic Reforms Seminar (24th August, 2011) Mirza Shahnawaz Agha ...................................................06 Saad Amanullah Khan.....................................................18 Saad Amanullah ...........................................................20 Professor Abbas Hussain..................................................23 Engr. Muhammad Zubair Ahmed.........................................25 Jury Statements...........................................................27 Q&A Session................................................................28 Seminar through the Lens (Pictorial) ...................................33 Proceedings of Jury Meeting (12th July, 2011) Terms of Reference .......................................................35 Jury Meeting through the Lens ..........................................36 The Verdict ................................................................37 Our Supporters and Collaborators.........................................38

Team Mirza Shahnawaz Agha...............................................................................Declarant Nazish Shah ................................................................................................Editor Summaya Naqi ...................................................................................Transcriptions Fizzah Shakil .........................................................................................Moderator Muhammad Ali .....................................................................................Coordinator Hasan Moien ..................................................................................Design & Layouts Anas Sheikh .......................................................................................Photographer Noman .............................................................................................Photographer Esteem Concepts........................................................................................Printers Faisal Ahmed ...........................................................................................Supports

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extremis malis extrema remedia Desperate times call for desperate measures.

Our nation today faces a challenge to its sovereignty, our populace is intimidated by a test of survival and each individual is inundated by trials for making two ends meet. To address these various issues bogging down the cross section of society, we have launched 'THINK!' platform to deliberate, discuss, deduce and decide on a roadmap to resolution. It is time to bring about a change in thought and action, a change in perspective and approach, and thus a change in tomorrow. We believe these are desperate times and invite you to come join us and THINK! together. THE CONCEPT Our nation today stands at a cross road, where the turmoil and agitation in the society demand reassessment of both our thought and action. Despite being geared up to face equitable coexistence, with no dearth of talent or vision within our ranks we find ourselves quashed by varying dichotomies on a daily basis.

practice have become eons apart. The depth of the message has been lost to the tones of dust that has settled upon our mind in the last fourteen centuries. The religion of Peace, Harmony and Judicial Co-existence has now been labeled as a regime of terrorists in the hands of a select few who have failed to absorb the completeness of the Message.

Issues ranging from general governmental and management related items to resource utilization and economic concerns keep surfacing to intimidate each member of the society. While we face these trials on a individual level, it is imperative that we ignite a constructive discussion and debate on some platform to bring together the capable minds from amongst us and uncover means and measures to mitigate the impending predicament.

In our series of debates, discussions and dialogues we will endeavor to bring to light the magnanimity and more pertinently applicability of Our ideology. We will venture topic after topic in search of the true road-map. We will bring together the most capable minds in our midst to ponder over solutions to all our predicaments through the application of the rules of the Almighty.

It is with this goal in mind that 'THINK!' has been created to initiate a dialogue under the theme of “OUR future: OUR ideology”. A judicial benchmark of the “Divine Dictum-Islam” (a complete code of life, a guide to matters not only pertinent to the relation between man and the Creator, but all affairs on both individual and collective levels),has been used for a thesis such that the permissible limits therein can be addressed to neutralize radicalism with functionality. Islam entails clear guidelines on social, political, moral, material, ethical, national and international themes in spiritual, intellectual as well as management paradigms. Islam vividly defines duties and rights in all interpersonal dealings. No areas have been left unaddressed; from human rights to inheritance, from charity to punishment, from foreign relations to internal affairs, Islam outlines not only the complete system of life for an individual but also the foundation of the judicial system, the bedrock of War/Peace Laws and the core of governmental policies. Today, the gurus of human rights and international affairs are hell bent on classifying Islam as a religion of radicals. Preaching and

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THE STRUCTURE Under the banner of “OUR future: OUR ideology”, we will hold a series of debates on dilemmas confronting our populace and thrash out with experts the possible solutions. Our structure will comprise of a thesis on each topic being presented by one expert followed by a panel debate between academic and technical experts of the field. A working session will follow entailing questions from the audience thus opening the floor to a wider range of ideas and perceptions and keeping the audience engaged. Panelists will include specialists from the academics, technocrats, bureaucrats, religious scholars, personnel from the armed forces, the judiciary and others in accordance with the demand of each topic. We will strictly avoid any political discussion, since our dialogue will be based on issues and not personalities and organizations. A jury comprising of reputable retired judges and members of the civil society will grace these seminars and will impart a declaratory verdict based on rationality and the deliberation of the seminar with an end purpose to compile a white paper archive over time.


Honorable Panel of Jurists Justice (Retd.) Saiduzzaman Siddiqui Justice Saiduzzaman Siddiqui started his formal career as an Advocate High Court of West Pakistan in November 1963 and gradually elevated in cadre to the Judge of the High Court of Sind in 1980. He was appointed Chief Justice of High Court (Sind) in 1990, Judge of the Supreme Court of Pakistan in 1992 and Chief Justice of Pakistan/Chairman Pakistan Law Commission on 1-7-1999. He was prematurely retired in 2000 as he declined to take fresh oath of office under PCO I OF 2000. During his professional career he has attended copious conferences and seminars. He also presented four reports to the Islamic Conference of Foreign Ministers on the plight of Muslim minority in Bulgaria.

Justice (Retd.) Syed Ali Aslam Jafri Justice Syed Ali Aslam Jafri started his formal career in 1965. He became an Advocate of Sindh High Court in 1972 and practiced as an advocate of the Supreme Court of Pakistan from 1986 onwards. He was elevated as a Judge of Sind High Court in October 2000. He retired in October 2005. He was appointed the Federal Insurance Ombudsman in April 2006. He has been an active member of the civil society and holds prominent positions in various forums, associations and organizations. Justice Jafri has participated in various seminars and conferences and has also been affiliated with the field of legal education and has had held many eminent positions during the pursuit.

He has also held innumerous prestigious offices, in the government as well as various educational institutions in the country. In addition he has been an active member of the civil society and has been President/ Patron of multiple social welfare projects/ societies and forums. Justice (Retd.) Syed Mehmood Alam Rizvi Justice (Retd.) Syed Mehmood Alam Rizvi, enrolled as an advocate in 1987, and became standing counsel Pakistan in November 2002. He was appointed Special Prosecutor for Anti-Narcotics Force in 2003 and was subsequently elevated as a Judge of Sindh High Court in October 2007. He ceased to hold office after July 2009. In one of his landmark judgments, he barred the bank recovery officers from harassing defaulters, as a result of which State Bank of Pakistan made a proper policy to deal with such matters. During his professional career he has participated in innumerous conference, workshops and seminars. It is as a result of his recommendation that the Special Terrorist Act, 1975 and Special Courts were abolished and separate Courts were constituted under the Act, 1997.

Justice (Retd.) Khalid Ali Qazi Justice Khalid Ali Qazi, started his career as an Advocate Sindh High Court in May 1982. He then enrolled himself as an Advocate of the Supreme Court of Pakistan in January 1996. He was on the panel of approved Advocates of various Financial Institutions, Universities and Statutory bodies. Justice Qazi was also twice a member of Sindh Provincial Assembly and had also served as a Provincial Minister for Education, Government of Sindh. Mr. Justice Qazi has the honour of receiving an honourary Doctorate from the University of Preston USA in 1999. He is the author of four books titled 'Rendezvous with law: A judge's Reflection', 'A treatise on Law of Evidence', 'Fundamentals of Social Legislation' and 'Sindh Excise Manual'.

Barrister Farrukh Zia Shaikh Barrister Farrukh Zia Shaikh, enrolled as an Advocate, Sindh Bar Council, 1989. Called to the Bar by the Honourable Society of the Lincoln's Inn (London) on 1991. Lecturer in Laws, Sindh Muslim Law College, University of Karachi (Pakistan). He has held the position of Lecturer in Laws, Sindh Judicial Academy. Member, General Council of the Bar, England and Wales. Member, International Bar Association, London, United Kingdom. Ex-Special Prosecutor, Anti Narcotics Force, Government of Pakistan. Author of Chapter on Pakistan in Enforcement of Foriegn Judgements and Hague Convention No: 28 (Child Abduction). Ex-Judge of the Honourable High Court of Sindh, Karachi

Justice (R) Mushtaq A. Memon Justice (R) Mushtaq A. Memon started his Legal professional career in 1973, when he joined the Chambers of his father Mr. Ahmad Ali Memon, Advocate, but soon became an associate of Mr. Khalid M. Ishaque, Advocate, with whom he worked for almost 24 years until elevation as Additional Judge of the High Court of Sindh in 1997. He was confirmed as Judge of the said Court in 1998, and ceased to hold the said office in, 2000. He has been practicing law on Constitutional and Civil Side since 27th January, 2000. He attended seminar on gender bias at Lahore in June 1998. In June 1999 he attended short course organized by the Commonwealth Institute for Judicial Educators at Halifax, Nova Scotia, Canada.

Muhammad Jawaid Alam Muhammad Jawaid Alam enrolled Advocate subordinate courts Sindh and Balochistan in 1975 and High Court in 1988. Appointed Addl. District & Sessions Judge Sindh 1991 and promoted as District & Sessions Judge in 1998 and posted in many pertinent judiciary posts. He was selected one of eight Special Judge Anti-Terrorism for Sindh in 1999 discharged duties till 2000. He was appointed Judge of Accountability Court at Karachi in 2000 for 3 years and also held position of Administrative Judge Accountability Courts of Sindh. As he acquired Islamic and moderate judicial education side by side, he is one of the versatile intellectual in his own turf.

Muneeb Ahmed Khan Mr. Justice (Retd) Munib Ahmed Khan started his Legal Profession and enrolled as an Advocate in October 1978, enrolled as an Advocate of the High Court in 1980 and of Supreme Court in 1992, appointed as Additional Advocate General Sindh in March 1997 and resigned from such position in November 1998. Started teaching as Professor in S. M. Government Law College in 1995 and till elevation remained engaged in such position. Towards professional experience, conducted cases of all nature, remained as Railway Standing Counsel, engaged with House Building Finance Corporation in High Court and Supreme Court, engaged as a WAPDA Counsel in superior Courts as well as Counsel of Pakistan Steel.

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Economic Reforms Seminar – Opening Thesis Paper Mirza Shahnawaz Agha was born in August of 1950, into a family of immigrant traders, and was brought up in the former East Pakistan; He went to the first cadet college in the country then and post graduation in commerce studied Islamic Jurisprudence as an apprentice to Dr. Muhammad Said Al-Awadi from Jaddah, Saudi Arabia. He has had a career in trade and industry from the age of 18 and heads a few enterprises today; He proposed the re- structuring of the ministry of tourism, culture & sports to Government of Pakistan, as a consultant, enabling the declaration of tourism as an industry by the government of Pakistan. During his professional career he has been an active member of the civil societies and has contributed his share and formalizing several public welfare projects. Mirza Shahnawaz Agha is presenting his paper on “Economic Reforms” of THINK! as the Thesis Presenter.

To his credit are four books; “A rendezvous with Destiny”, “First Feelers”, “Decisive Edge” and “What is this thing called Religion for God sake” and many articles as a research scholar. He has been a active contributor to a reputed newspaper on political economy and social issues. A research scholar, he is very well traveled and exposed.

Duration: Approx: 40 mins

Thesis: (Verbal Presentation) Asalamualaikum to the jurists, panellists and friends, I am afraid there are a couple of panellist missing, but nonetheless, for the time allocated to me of twenty minutes and considering the delay that has already taken place so far, instead of reading through the written part of the thesis, which has already been circulated, I will go on explaining the explanation, if I may, in the short period of time, which has been allocate to me. To begin with, it will be very good for us to understand what is economics? and when I have reflected on this, I have come to the conclusion that it relates to our planet, it relates to the people who inhibit the planet, 6.93 Billion. They constitute what we call the consumer and planet itself is the resource available for these consumers to use and to utilize. This particular faculty of economics has been brought midstream, as we see in our day and age. And since the principal cornerstone of my reform papers has been the reversion to our ideology, it was incumbent upon me to have to reflect upon what our ideology i.e. Islam has to say about the consumers and their status, and the commonwealth of nature, i.e. the planet that we live on and we use for consumption, for our clothing, for our abodes and for other things. This legal definition, like every other terminology which is used in

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economics, in our day and age has to be defined conceptually, has to be legislated and has to be part of how we view economics from our perspective. It is a good fortune for us to have a jury here comprising of very senior judges, who will best be able to comment on this subsequently, because the objective resolution, which is part of our constitution, alone does not make up for Islamizing the economic systems which are prevalent on the planet. We are following an economic order, called the new world order; we are following economics for whatever is being dished out to us, without really reflecting on our status There are basically two things to define here: the commonwealth of nature, which is being used, and the consumer, what is our status. From what I understand, from what I have researched and what I put on this printed paper before you, it is simply that whatever the population, are equal owners of the commonwealth of nature given to us by Allah (SWT) i.e. the planet. To give you an example where the disparity lies, where the injustice lies, I would like to quote to you a figure: Total surface area of the planet is 510,065,600 sq km and if we simply divide this by 6.93 billion people which inhibit this earth, then individually, we should all be owners of 73,602 square meters of surface, which we are not; and should we be given the right to own

this, then our right automatically gets established as equity holders of the planet to be able to determine our course forward. If we work on the same analogy, and move forward and look at our own territory in the Islamic Republic of Pakistan, we will see another astounding figure that our population stands at a 174.59 million people while surface area of the globe which is being occupied by us is only 976,096 square kilometres, so apparently we have been robbed by about 11,709,304 odd square kilometres of global space. This is the disparity which does exist insofar as land is concerned. Then we come to the printed paper, because when we have to define the people who are inhibiting this particular planet, we also need a definition for labour. So as equity holders we are deprived of our equity holding as it ought to be. This is why Islam does not recognize political territories. When it comes to labour, there is no equity in the medium of exchange, we call money. A person digging a hole in a dessert in the United States get a different amount of money while a man doing the same labour with the same skills in Thar in Pakistan will get probably 86 times less. So the fundamental presentation right now in today's paper is the liberation of land and the liberation of labour. It is the equity in the medium of exchange, we call money, which has to be viewed.


While this is the premise, when I sat down to write out this particular paper, I divided the paper into two parts, because this is not a class of economics, I am not going to be teaching you calculus here or telling you statistical data. Part one entails that all factors of economic; all factors of production; all factors of consumption and the status of the consumer have to be legally defined and made part of our constitution, they have to be legislated and this is fundamental, because on this will depend the politics of the country; on this will depend the future planning hat this particular population can aspire to have, on this will depend the decision which are made for governance, on this will depend the economic roadmap and the destination for a country like ourselves. The second part of my paper relates to as a consequence of the legal measures, which need to be legislate, deals with, the various reforms we need to address to be able to achieve true independence, to be able to protect our sovereignty, to be to have a place of respect in the community of nations on this planet. So insofar as the first part of the paper is concerned, I have already expressed to you my observations and my research insofar as legislation is concerned, because unless this is done, we will keep politicising amongst ourselves, we will keep playing the blame game, but we must realize in effect that the real fault lies with the legal structure for economics in the document we call our constitution, by which we are running and governing this country. And economics is right now the cornerstone of global politics. So as we view our plight today, I would like to quote a couplet which comes to my mind recurrently, and I think the poet is Meer.

We are in a bad shape, and we keep going back recurrently , pleading for money. This is not the way an economic setup ought to be run, this is not how to get a railroad going. And if I have been able to communicate to you my basic reservations and my basic observation

on the first part of the paper, I would like, because of the limitation of time, to move swiftly onto the measures that I have proposed in this paper. You see friends, I would like to also introduce to you a certain terminology, which in this paper has been called “equity abuse�; this equity-abuse primarily is that we do not have the land which our population deserves, we do not have the liberty of labour because of international protocols, which we are signatories to and therefore we have a medium of exchange which is declassed! That is why the legal definition of particularly, where a consumer with equity on the planet stands, what ought to be his holding, and what ought to be his right in being able to choose who and how he is governed, is fundamental for judicial activism insofar as economics is concerned. Now if we move on swiftly to the package of what ought to be done to mitigate this particular problem, we'll have to view the four factors of production: land, labour, capital and enterprise. These again need definition. In my opinion and in my research, the status of land essentially cannot be freehold. The only freehold land is what comes to you by virtue of your birth right on the planet but that is got to be shared with everybody else who lives on the planet, therefore whatever land is utilized by you has to be paid for in continuity to the state, for the lack of a better term, or to society, on a continual basis. Similarly labour; no labour can be captive and without compensation and the categories of labour are limited to the individual levels of civilization, which are ones mental and physical skills. This needs clear definition as well Capital is a consequence of labour input, based on a medium of exchange, which is free off any disparity whatsoever. Therefore money is a measure of labour and not a commodity. Today money is being used as a commodity. Any if we take the US Dollar as an example, and then we will see that that printed paper does not have a very fancy picture on it, and is not backed by real assets. It is backed by the barrel of the gun. So equity in capital and the medium of exchange is

fundamental to being able to achieve our own, or being able to implement our own doctrine. The fourth factor of production i.e. enterprise, represents the freewill of man which addresses the ethos of his being. He identifies a need, invents, produces, and proliferates after research. This is the cornerstone of human survival and the marvel of self respecting right of existence. It cannot be compromised. Today this particular aspect of enterprise is regulated again by international protocols and it reminds me again of something, which I saw probably in an Indian movie, that if they do something, if they commit themselves to any form of enterprise, it is considered as marvellous, and if we do it, it is considered as an act which is in breach of the will of the international community. This has to be also legislated. Having gone beyond the factors of legislation, legal definition we can then address the measures. I propose therefore the following measures:

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We must look inwards, instead for looking outwards for sustenance

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There should be an absolute ban on borrowing. There is no such thing as borrowing. No nation has ever risen to any position of respect as a consequence of borrowing. It is a plague, it is like cancer, it is disrespectful, it is not even logical.

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And if we do not stop picking up Finance Ministers which are ex-citi bankers, with all due respect to any citi banker sitting here, we will sink further. This has to come to an end.

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We have to find a place of respectability from the resources we have. And mind you, the resources we have, have been put on this piece of paper printed before you. These are the statistics, which I have managed to pick up, on which we can rely upon, and there are sufficient a population of 1 Billion people, we are only 174 Million. So let's not be naive. Let's roll up our sleeves, get down, work and rise.

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We must seek to establish an economic quid pro quo with the 07


rest of the world, and that can only happen if you have your own roadmap and destination, your destination is your independently being able to manage your resource for your population.

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We must seek to 'assetize' the commonwealth of nature in our political jurisdiction. And needless my saying what we hold right now, which probably the research of Mr. Saad Amanullah, has made a great contribution in being able to tell us what this country holds, but just to give you an idea, we have about 185 Billion Tonnes of coal, 41.97889 Trillion CFT of natural gas, reserves of 1352 Million Tonnes of copper and there are other resources which are not even tapped. Then we have a lot of land which is good for agriculture, we have water resources, we have the biggest human resource with us, we have people who have with them the ability to build a country, to build our industry, to build our own area of independent place in the community of nations. My most important reform, which is being suggested today, is urbanization. According to the surveyor general of Pakistan there are 3403 pockets of population in this country. And I would like you to use your vision, please walk with me and see if you can understand what I am saying. If these pockets of population are urbanized on a vertical basis throughout the country, and I mean vertical basis for the provision of power, for the provision of food, for the provision of water, for the provision of education, medical care and we decentralize, we do fiscal decentralization, then you will be able to graduate the volume of production and you will be able to graduate the volume of consumption and you will be able to give a vertical growth to the industry in the country. I suggest this for Pakistan, where we make an unusual political territory. We have multi-racial population, we have a variety of

languages spoken here and we are supposed to be bonded by an ideology called Islam. Well let's just go for it, let's put it to test, let's legislate, let's get bonded by that.

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Should we go for urbanization, it is my submission, then the provincial demarcation will become cultural boundaries and the three tier, or three parallel economies that we have in the country, one of the armed forces, one of the bureaucracy, one of the wretched people, will come on an equal plane, because they will be laws that will determine how you commit yourselves to enterprise and industrialization in this country. These urban units can also become political constituencies in the future and they will help unite a very very politically polarized population that exists today.

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From the economic point of view, should we do this then we can also move towards the optimum utilization of our political territory as it exists by making what we might refer to as Corporate Pakistan. These urban units can become companies which can be quoted on the stock exchange. The rest of the land can be utilized for industrialization or agricultural purposes and we can introduce corporate forming. If the land utilization is committed on the basis, or on a motto that not a single inch of our land will be nonproductive, then viewing the K2 Mountain in the north or viewing the green turtles in the south will all generate an income which will keep the wheel of the economy moving, in fact sprinting.

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Another very important feature of the reform, that I seek, is land revenue. You see, we are following a taxation pattern here which was left by the colonists. Ibn-eKhuldoon, 600 years ago, made an observation that over-taxation kills the incentive to labour. This is there documented in his Mukkadma. And an advisor of the State bank of Pakistan, Mr. Merchant observed that if honestly

somebody has to pay taxes in Pakistan, of all the taxes that are there legal, he will end up paying PKR105 for every PKR 100 of his income. We are neither following Ibn-e-Khuldoon, nor any Merchant. We have a taxation system which contains rules and regulations which exist from the 1800s. I suggest for your consideration, and I submit, that land revenue, in my limited research, is about the only levy that can be levied on a Muslim population to fund the operations of government. Should you take the productivity index and should you analyze the cost, the amount of revenue we collect today to run the government from the present budget, then the 56% population, that exists in the country, which are labourers, you have got the youngest labour force that exists on the planet, will need to pay only PKR2.61 per square meter per annum. And I see no reason why we should start taxing income, our freedom to move, our freedom to transport and above all our freedom to produce. Since we have the youngest labour force, I have also sought that an effective social security plan be put into place, because we are a country where the land is not accurately demarcated. We do not have the count to the last inch, as you have in Switzerland, the head count, which is our labour force, there is no count because there are political deterrents, and therefore, if you have the youngest labour force, you have to have a social security plan for the unemployed and you have to have your doors open for industrialization so that the unemployed do get employed; either in the field of agriculture, or in the field of mining or in the field of mechanical or electrical productions.

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There is another thing. In the developed world, an aspect of standardization has played a very very significant role. Whether there are roads, there is a sewerage system, there is an educational system, there are


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building standards, for everything you engineer, for everything you convert the commonwealth of nature to a product which is consumable you need to fix and determine standards. You have Pakistan Standards institute. I recommend that standardization should be taken up as a formal activity and a Ministry should be there to regulate everything that is being produced or everything that is being dispensed including services in the country. That will cause uniformity all over, and that will kill the current environment of

substandard production.

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I thank you all for your time.

The last point which I have made in my paper is fiscal and administrative decentralization with a strong centralized audit to maintain standards. So that we can use our natural and human resources and to link them to complete transparent. This is all I have to present for the moment.

I must close my speech by this last statement which I had written down earlier, that we must seek a world dependent on us instead of our remaining dependant on the world.

Thesis: (Printed Distribution) 1) Towards initiating these series of seminars to THINK! This is the third in succession and on “ECONOMIC REFORMS”, as could be justified within the parameters of our ideology, in the Islamic Republic of Pakistan……….

'global-peace and harmony'.

3) All economics on this planet today is based on 'consumption' and noncorresponding 'production'. With a globe with restricted resources; restricted regeneration ability, and growing consumption levels by the population that inhibits it, the crises at hand is 'equity-abuse' The legalization of this abuse needs to be challenged with a better order socio-economic order.

5) This paper addresses the primary status of 'economic equity', by comparison of 'which-is' and 'whatought-to-be'. It addresses the legal status of the 'medium-ofexchange'; the legal status of, the 'commonwealth-of-nature'; the legal status of 'labour' and the legal status of 'land'. It leans on the Dictum of Allah to define these legal parameters. When we set out to address the economic agenda of a country in this day and age where political boundaries determine the raison d'être of a state we are really in denial of all human values for co-existence. We are in a State of Eye ball to Eye ball confrontation for economic gain. We are reckoning with an order worse than the order of the jungle! We must seek 'to remain in the lead', what ever it takes, what ever the cost in human life, misery the like. This is the so called 'New World Order' effectively placed, for us to follow, by a bunch of primitive hoods! This is in denial of Human Civilization.

4) Notwithstanding, the scenario above, the solution rests with graduating and fixing the degree of this 'equity-abuse'. The more we reduce 'the abuse' the closer we get to a state of universal brotherhood and the magic words called

6) As though the misery and insult of economic subservience was not enough, we people here, select a bunch of so called leaders in envy of riches and progeny who go further to seal our fate in stagnation and or regression. I am

2) All that is said here should not be construed as an interpretation of any particular set of Ayats from the Holy Quran, instead extreme care has only been taken to present a 'Reform plan', that will not breach the Dictum of Allah …. I have therefore relied upon the fundamentals of economics in Islam, as I could search with my limited insight.

of-course referring to the leadership of hereditary usurpers of the commonwealth-of-nature the Lords, Kings and Gods, of our times and their partners the Holiness and Eminence and the epitome of purity Personified and self-asserted! These leaders accept the economic Status Quo on the Globe, and in-effect murder our existence before our birth! 7) This is no secret, and I am not the first to take cognizance of this. We must identify, recognize, condemn and forsake the rule of this Primitive Economic Order and move to the civilized level of global co-existence, by making an example of this in the Islamic Republic of Pakistan. I seek that we consider an economic order in consonance with our ideology and based upon sociology in Islam. 8) When ever 'Change' is sought a reason must justify the same. There has to be a basis. A law, a doctrine of law has to be followed. With us, that law that doctrine is absent, and that has to be put into place. In our country where research, awakening renaissance are absent probabilities, we have just about the Dictum of Allah to lean upon, away from Clerical thrust towards Mysticism. The Human Race has not, and cannot, go wrong in the adoption of this

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route for redemption. That is documented history. 9) Reflecting on the economic doctrine prescribed for us by Allah I have arrived at some conclusions which I submit here for us to consider. Three basic reforms are required: a) Liberation of Land; b) Liberation of Labour; and c) Equity in the Medium-of-Exchange (we call money). 10) Prior to defining the 'resource-forconsumption', it is basic to legally define the 'Consumer'. The Human Population is divided in tribes with their own cultures based upon ecological conditions of the regions they respectively inhibit. This population collectively are 'Consumers' in primary manifestation and they, and they alone 'own the resource, the Commonwealth-of-nature on the planet and beyond 'equally'; While we will address the means of liberating land and labour, the legality of our action is most pertinent to establish, by us the stake holders seeking change; We the stake-holding Consumers that inhabit this planet in-fact the Universe! Let me start with an equation of simple arithmetic. In a population of 6.93 billion people and the surface area 510,065,600 Sq K.M of the globe if divided will alone present each person as an equity owner of 73,602 Sq Meters (0.0736 Sq. Km.) of area in which 21,491 Sq Meters will be land and 52,110 Sq Meters would be water; Outer space and the universe have not been factored in this arithmetic! That is where the injunction that no Muslim can be poor comes into reference! 11) If the premise of equal ownership of this natural resource is acceptable, the legal writ to equitable sustenance becomes consequently also acceptable; and 12) When the ownership of the 'commonwealth-of-nature' and its right to usage is legally equal, then so will the definition of labour compensation gets established

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without disparity; and 13) Through a medium-of-exchange (we call money) which will manifest without disparity. With an asset base so defined a person can and will only need to build upon his income-stream which is directly linked to his labour, research and inventions. This will determine his/her level of rightful consumption and compensation of labour-his/her wealth! 14) I can see a lot of people who, when they take notice of this thought for the first time, will be delighted with their new found wealth! In the Pakistan context if our population of 174,579,000 are each entitled to 0.0736 Sq. Km of land, then Pakistan should have been 12,849,458 Sq K.M. instead of 796.096 Sq KM. Some body has robbed us of our Right to 11,709,304 Sq K.M of the Earth's surface! That somebody is none else than ourselves. Restricted to our political territory however each Pakistani today's of the 174 million, is an equity holder of 0.00456 Sq. Km of land in place of 0.0736 Sq. Km. 15) Nobody is taller it's just us, we are kneeling down. We refuse to labour and therefore accept what is not engineered by us, or even by our hidden deity of worship called Allah. We have chosen to accept what ever was handed down to us by our oppressors! It is like making our own idols and worshiping them! 16) I submit that in defending the socio-economic status-quo on the planet of today, the ailments and the evils of the socio-economic plight will continue to remain for the human race. This is simply and evidently manifest. This is ironically the political arena of our day and age in history. Let's view the down stream effects of legally acknowledging an equity holder. First each is equal to the other, and therefore has but one leverage over another human-being the ability to serve his kind: through labour and a knowledge-base. There will be competition in these

levels within society but free from deception; there will be an end to equity-abuse; Shoora (consultation and consensus development) will blossom, Labour will seek to liberate itself and land will not be utilized without compensation. The biggest gain of all will be the treatment of money. It will turn into a measure of labour and not a commodity as is there, by design. Last but not the least there will be equality in opportunity! The Super Power so assumed will be constrained to make a paradigm shift from Gun Running to sustainable evolution of Human Civilization. 17) Now friends, the above foregoing being the legal basis of change we can very well differentiate from what 'ought-to-be' and 'what is'. 18) To m i t i g a t e t h e r e f o r e o u r wretchedness the option is just one: We need to revert to our ideology for the legal implications that are there for us to follow in economics. 19) With this as the premise I choose to present to you a plan entitled SMALL IS BEAUTIFUL towards the reforms we need to adopt to turn Pakistan around from wretchedness to glory and exemplary self-reliance. 20) Before we seek measures for change let us first legally define the factors of 'Production' in the context of our ideology; 21) First Land = All land belongs to Allah and therefore the right to ownership cannot be without rental compensation to society in continuity; 22) Labour: No labour can be captive and without compensation and, the categories of Labour are limited to the individual levels of civilization, which are one's mental and physical skills. 23) Capital: Capital is a consequence of labour input based on a mediumof-exchange that is free of disparity whatsoever and therefore money is a measure of


labour and not a commodity. 24) Enterprise: Enterprise represents the 'free will of man' which addresses the ethos of his being. He identifies a need, invents, produces and proliferates after research. This is the corner-stone of human survival and the marvel of the self-respecting right of existence. 25) In view of all the foregoing above it is incumbent upon us to consider a 'road-map' and an economic destination' for our pocket of global population (being the sixth largest) in an exemplary way; 26) I have used the statistical data in Table 1to lean upon for this paper. What constitute a state are population, territory and government. In our case the land is not fully measured, the population not fully counted and the government is constituted by a doctrine alien to our ideology. 27) Notwithstanding, the definitions enumerated above are basic legislative changes that are required towards achieving a roadmap for a socio-economic destination: Post these basic legislature anchors the set of Reforms that are proposed herein this paper are appended below: 28) We must seek to look 'inwards' instead of 'outwards' for our sustenance; No Nation has ever made it to a place of respectability and independence on borrowed money, and this is so because borrowed money is nonrepresentative of domestic labour. 29) We must seek to establish our socio-economic quid-pro-quo with the rest of world as that is the only shield in defense of sovereignty in this politically divided world. Our special template and liberty to invent becomes our 'unique selling point' our exportable success pattern. Our road-map to real independence.

30) We must seek to assetize the commonwealth-of-nature in our political jurisdiction (territory); The Coal Reserves of approx. 185 Billion Tonnes, Natural Gas, reserves of approx. 41.97889 Trillion CFT, Copper Reserves of 1352 Million Tonnes; Our mineral Reserves are all in captivity and need to be liberated to be assetized and used. 31) We must seek to instantly 'urbanize' the entire country for all 3403 pockets of population that presently exist in the country (Courtesy Surveyor General of Pakistan) on a vertical basis for power, water, education, health, civil defense, employment and at the best standards available to mankind; We need to do this with indigenous natural Resources and Human Resources. We do not need to borrow to build for a country like Pakistan. This Reform is the bedrock for igniting the economic generator in the country. It is envisaged that these urban units will become the political constituencies of the future and will enable decentralized fiscal management. It will also establish markets formally for production and consumption. Land revenue to run government will become simple and effective and the Labour management will get optimized. Provinces will become cultural boundaries as Islam does not recognize ethnic, racial or political demarcations of territory in use of the one Ummah. 32) We must seek outside the said urban areas, to put land into o p t i m u m p r o d u c t i v i t y. T h e founding moto ought to be that: not an inch of land can be nonproductive! This does not require 'rocket science' to figure. As a sample the Tourism Policy prepared in 1989 by me for the Government of Pakistan is enclosed herewith to display productivity. From viewing the peak of the K2 Mountain to the Blind Dolphins and the Green Turtles in the South all are economic profit centers available for use.

33) We must seek to run Government from Land Revenue alone and free production and individual labour from all forms of taxes; Present Governmental Budget (which is bound to be re-defined under this Urbanization Plan) as a hypothesis represents a figure of Pakistan Rupees 2,078,165 Million, while the total land is 796,096 Sq km. This offer's (again as hypothetical indicates) Rs. 2,610,445 per sq. km per annum or Rs. 2.61 per sq. meters per annum as land revenue for governance, and to this should be linked the future of taxation. (Reference: Economic Survey of Pakistan 2011) 34) We must seek to compensate labour not deployed or unemployed through a social security plan which is effective, with an inescapable headcount; the fiscal empowerment of the youngest labour force on the Planet will ignite a generator of enterprise not earlier witnessed in the country. When a citizen is born, naturalized or hounoured with citizenship she/he must be commissioned as an equity holder of the state. Her/His primary 'right' comes as his entitlement to protected living, and his/her obligation comes as a contributor to 'production' as legally defined. 35) We must seek to standardize and regulate all aspects of production so that only the best comes into existence; it is incumbent to establish a Ministry for Standardizing everything in the country and this is sought in league with universities and research hubs that exist. 36) We must seek to lend support to our medium-of-exchange (money) such that it gets equated with trading partners on one-to-one basis. We must seek to attempt this by segregating trade into a partisan divide for the Islamic and non Islamic trading partners; this divide will trigger the resistance to 'equity-abuse' globally and will bring about a fair legal order. This will make money tangible and the objective to end this global heist of

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exchanging tangible with an intangible printed paper will become a milestone in clear sight. We have to legally import in Rupees and export in the currency of the importer. 37) We must seek common laws for enterprise putting an end to parallel economies within the country each, belonging to the army, the bureaucracy and the wretched people. The Armed Forces and the Bureaucracy have instilled fears in their employers, the people to occupy economic profit centers. This must go. The armed forces are defenders of our ideological frontiers universally and the bureaucracy are but servants of the people. These roles need to be excelled and not diversified. 38) We must seek to back-integrate the bureaucracy (all forms of Government employment) into civil society, to uphold a common compensation bench-mark for labour across-the-board through out the country. Today on the Colonial pattern, we have servants, we the employers need to salute. This is ridiculous. This is bureaucratic apartheid and a deterrent in the evolving of a free country towards progress. Additionally, these servants of the people unless placed as equals will never gauge the suffering of society. They cannot be retained alienated and protected as 'holycows'. 39) We m u s t s e e k F i s c a l a n d Administrative De-centralization with a strong Centralized audit to maintain standards; To use our natural and human resources we need to link to a system of transparency that is devoid of the current politics of nothing. More, we have to address Land Management based on a template where we see the emergence of Corporate Pakistan. We should seek to agree on residential usage of land by individuals and the rest of the land should manifest for use as corporate entities. These are cities, ports, agricultural holdings,

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tourism and minerals l e a s e s a n d concessions the like. 40) We must seek a world dependent on us instead of our r e m a i n i n g dependant on the world. I know some economist sitting in our midst will defend the Global Economic World order on grounds of the Super Power syndrome; on notions of inflation, deflation stagflation and fears of bridges being absent between larger circulated bank tenders prior to corresponding g e n e r a t i o n o f production. These are protectors & defenders of the status quo. I can only offer to write their fears on the tomb-stone of Adam Smith. These fears are redundant; Nations that do not dare into new frontiers of existence sink into the oblivion of regression and slavery. Wake-up Pakistan!

TABLE 1 GLOBAL STATISTICS: TOTAL SQUARE AREA LAND WATER POPULATION

: : : :

510,065,600 Sq. km 148,939,100 (29.2%) 361,126,400 (70.8%) 6.93 Billion

PAKISTAN STATISTICS: TOTAL SURFACE AREA TOTAL SURFACE AREA AGRICULTURAL LAND Forests Arable Land Culturable Waste Cultivated Area Reported Area Area Not Reported Overall Water Availability Area Irrigated by different sources

: : : : : : : : : : :

796,096 Sq. Km. 79.61 Million Hectares 33.66 Million Hectares 4.24 Million Hectares 39.42 Million Hectares 8.14 Million Hectares 21.28 Million Hectares 51.13 Million Hectares 22.48 Million Hectares 133.70 Million Acre Feet 19.67 Million Hectares

: : : : :

Over 74 Million Tonnes 925 Million Tonnes 1352 Million Tonnes 2.547 Million Tonnes 23.72 Million Tonnes

: : : : : : :

4850 Million Tonnes 7 Million Tonnes 600 Million Tonnes 2.24 Million Ounces 600 Million Tonnes 184 Million US Barrels 41.97889 Trillion CFT

NATURAL RESOURCES: Aluminum Iron Ore Copper Chromite Ore Zinc / Lead Coal : 185 Billion Tonnes Gypsum / Anhydrite Phosphates Rock Salt Gold Magnesite Oil Natural Gas Natural Stones as Building Materials i). Granite ii). Marble and Onyx

: 4140 Million Tonnes : 160.2 Million Tonnes

HUMAN RESOURCES: Total population

: 174,579,000

(6th most populated territory on the planet)

Thank you all for your time.

Urban Rural Male Female Labour Force Available Urban

: : : : : :

61,626,387 112,952,613 90,589,043 (51.89%) 83,989,957 (48.11%) 54.92 Million (ages 15-65) 35.3%

BUDGET Rs.

: 2,078,165,000,000

RELIGION: Muslim : 96.1% Minorities : 3.9% Land revenue yield based on the above budgeting out-lay is Rs. 1,718.56 p.a per sq meter but when paid for by a labour force of 54.92 million will mean Rs. 37,840 per person per year. Source: 1. 2. 3. 4. 5.

Geological Survey of Pakistan, 2010 TIMES ALMANAC 2011 Provincial Agricultural Dept. Govt. of Pakistan Pakistan Statistical Yearbook 2011 Pakistan Economic Survey 2010-11


Economic Reforms Seminar – Thesis Paper Saad Amanullah Khan is currently the Chief Executive Officer Gillette Pakistan. Before joining Gillette, Saad worked in P&G for 20 years with assignments in Switzerland, Saudi Arabia and Pakistan. In P&G his last assignment was Deputy General Manager and Finance Manager P&G Pakistan. He holds an MBA from the University of Michigan other than two engineering degrees, both from University of Petroleum and Minerals, Dehran, in Systems Engineering (Automation) and Computer Science Engineering. Prior to his MBA, Saad has worked two years in Saudi Arabia with key assignments in Jubial and Yanbu industrial estates. Mr. Saad Amanullah Khan is presenting his paper on “Economic Reforms” at THINK! Duration: Approx: 13 mins 21secs

Saad is active on the social responsibility front and is the founding member of the Agha Khan's Patient Welfare Committee, President and founder of “Helper of HOPE”. In this NGO they currently run 2 hospitals, 2 formal and 96 information schools plus multiple Maternity & Health centers in Karachi and lower Sind impoverished areas. He conceptualized, led and delivered Rs 1 billion from USAID to the Bolton Market victims in an efficient and transparent form. Among other activities Saad is an active member of the American Business Council (ABC), Chairman of the Taxation Sub-Committee for the last 4 years. He has also held the Vice Chairmanship of the Taxation Committee of Overseas Investor's Chamber of Commerce and Industry (OICCI) for 2 years.

This was an excellent article, in fact a thought provoking thesis presented by Mr. Shahnawaz Agha here. I agree that the current economic model is clearly not working. Especially if you look at the last few years, billions of Dollars worth of value has disappeared from the banks, you have seen the huge financial crisis that just happened and the difference between the haves and the have-nots is increasing by the hour. Let me give you a flavour of the disparity by quoting some facts that I have collected in some of my other research. The top 200 corporations globally are bigger than the world economies all put together excluding the top 12 economies. I repeat 200 corporations are bigger than 172 countries; Global economy is about USD 60 Trillion out of which top 12 economies are USD 41 Trillion i.e. 71% of the global economy rests in the top 12 countries; Top 500 corporations of the world form about 50% of the global economy. In light of these facts the recommendation of Mr. Agha about eliminating equity abuse and somehow bringing in more equality makes a lot of sense. We have a problem here and hence this debate. Personally, the timing of this debate could not have been more perfect because if we do not

fuel the economic development in Pakistan and start growing soon, in double digits, poverty which is already on the rise will become uncontrollable, this will increase lawlessness as people will be left hand to mouth and this in turn will lead to anarchy, which we are seeing even today in Karachi and some other parts of the country. The reform plan that Mr. Shahnawaz has presented has some concepts that to me are “gold nuggets” and great food for thought, I will list them down as I read through them: The first is that it is based on creating an economic equity and reducing equity abuse, where he has talked about liberation of land and labour and equity in the medium of exchange i.e. paper money, and how we have completely lost touch with the real asst behind them; The second concept that I found really interesting is that we need to look inwards; no one has become a success story on borrowed money, in fact you become a slave and are dictated to be the lender; The third concept is using land as a real asset and utilizing it to the maximum potential. I will share with you some mind boggling facts here. Pakistan has over USD 30 Trillion worth of resources, which is 150 times the size of our GDP

today. These are God given resources in our land that we are not utilizing; these include nearly 50 % of the global copper reserve, which is in Pakistan, and we are not even exporting a single ounce of copper today. We have world's second largest coal reserve that we have all heard or read details about. The other point I wanted to make was that the maximum potential of our land can only be realized, however by implementing land reforms. Shahnawaz Sb. has alluded to the fact of per person per square foot, but frankly we are far away from this. We have to make sure that people own their own land and we do not have disproportional sizes of land in the ownership of a few people. The fourth concept that I liked is, “Citizens when born are made equity holders in the country they belong to.” That is a very interesting concept since you are a part of Pakistan, there has to be something… For example in our company, when you join Proctor and Gamble you automatically become a share holder, i.e. the company gives you a few shares, this inculcates a feeling of ownership in the employee, thus impacting performance and dedication. It is called the stock ownership plan.

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The fifth idea is eliminating the concept of paper money, which today is no longer linked to any real tangible asset and is just intangible printed paper. Unfortunately many countries including Pakistan continue printing paper money in order to meet their requirements and inflation keeps increasing on the side, in addition to other adverse effects. The sixth idea that I liked was the concept of Centralized Audits to have check and balance. I will use this concept in the idea that I want to propose to help Pakistan move ahead. The seventh idea was proper role of army and bureaucracy, which is very important. Neither army nor the bureaucracy is there to rule the people; to protect the gentry from Thor and threat is what the army should be doing and to serve the people is what the bureaucracy should be doing. The eighth idea was to establish a ministry of standardization to get the best possible production results and apply them to everything produced in the country. That is very important because if you want to compete globally, you need to have best in class production with the best ideas implemented and obviously checked. The last concept is “run government from land revenue and free labour and production from any type of taxes”. That is great to hear and I think there is some truth and material to this but frankly from the implementation point of view I would love to sit with Mr. Shahnawaz and see how we can bring it to life. Now some of these ideas are great but too far from reality. Maybe 100 years ago these could have been implemented before the current economic reality was cast in stone, but today moving towards a world of “global coexistence” it is nearly impossible. Some of the ideas that I have concerns about are: The disproportional focus on land as a measure and source of economic development undermines the potential of industry, services and manufacturing sectors, because these are not directly

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linked to land; and most of our industry is based in urban areas. I mean, Pakistan is a huge country and when you look at the unproductive parts, the deserts, the mountains; it becomes a concept difficult to comprehend. The second is taxation on land on a per square foot basis. Today 80% of Pakistan's GDP comes from industry and service sectors and not from land per day, which barely uses any land and are located in urban industrial areas Over 50% of labour is used by agriculture, which contributes only 20% to the GDP, so obviously there is a mismatch here and that is where I think one should use our capabilities and ideas for improvement because human resource is a key resource and we need to make sure that we improve our agriculture so that either it becomes 50% of the economy and GDP or the labour implemented there is brought down. Now building on Mr. Shahnawaz's concept with my own mixture of experience, to me a workable model would look something like follows: Economic development is the cornerstone of survival; everything else follows. Poverty level will go down, education will increase, health will improve, and infrastructure will improve. So economic development is the first thing we need to concentrate on in Pakistan; because if you do not have economic development you are practically going back in time. Each sector of the country delivers different returns on investment. Industry mining, agriculture, forestry, fishery are all part our economy, because we have been gifted with sea, land, minerals etc. One must focus on the size of the prize. We have to sit back as a country and look at what is the return on investment from different sector and based on the size of the prize, allocate resources to those sectors where we can get maximum benefit e.g. if fishery is not giving you much benefit, then take the fisherman and apply him to something else more productive, where you can get better returns.

If you cannot track it, forget it. Unfortunately in our country we do not track progress, do not have goals, and do not have targets. And to me that is one of the biggest flaws of how the government is running, because there is no accountability. If you come to my company, or in fact any multinational that are successful, they have clear goals, there are clear targets which are tracked on a quarterly basis, shared with the entire company and if there are gaps, people come together and deliver the gaps. So to me clear targets or key performance indices should be set for the country; monthly, quarterly, yearly updates should be shared with the overall population and Mr. Shahnawaz said, this should be overseen by a Central Audit Committee, which should make sure that people are doing what they are supposed to do and if they are not, change the minister, change the secretary, change the person and bring in another who has the ability to deliver those goals. And finally, I love the concept, which I said earlier as well, to use Ministry of Standards to keep quality of industry, services and agriculture in check. I will share with you a ground reality in Pakistan. Overseas Chamber of Commerce, a name you would have heard, has 180 multinationals as members. These 180 companies are responsible for 29 30% of Pakistan's taxes. This is stated on their website. Can you imagine that? Do you know how many companies function in Pakistan... above 50,000 companies, out of which only 180 companies pay 30% of the tax. Now obviously these are global multinationals, but why are they doing that? Because they have a certain culture, they have good governance, they have clear strategies, and they are focused. So I think there is a huge opportunity here. Also these same 200 or so companies are responsible for 20% of the GDP. This has to do with standards, quality product, they go to the export market and they obviously benefit from this. On agriculture in Pakistan I did a study and I compared our yield on rice, wheat and other crops versus the best in class in the world. Like Egypt is best in class


in rice. Our yield is less than 50% on all items. This is ridiculous, we are an agricultural country. Our people are probably not being taught proper agricultural techniques and methodologies, like crop rotation etc., let alone mechanization. So to me this is how we should approach the whole issue and just as a source of information, I have written an article, “Pakistan as an Economic Powerhouse”, just to show that if we can fix everything in Pakistan today, like governance, mining, agriculture etc. we can take our per capita income from USD 1000 to USD 5000, our GDP size from USD 170 Billion to USD 800 Billion, we could be the size of Brazil today. I was in a meeting about 5 weeks ago in which the Ambassador of Japan was present. There I learned of something very interesting. In 1960 Pakistan was the top emerging market in Asia; people looked forward to coming to Pakistan. At the time of revival of Japan, Tokyo Bank has opened their second branch in Pakistan; three Japanese companies came to Pakistan before they went anywhere else on the globe; Ayub Khan, the then President, went to Japan and the Emperor came to receive him at the airport, something he has never done. All this was because they thought of Pakistan as a country they would want to associate with. I do not know where we went wrong and lost our track. We do not want to go into the history of this whole thing but we as a country still have the resources, still have the same people and we can continue to grow. All we need is strong, sincere leadership, which is more concerned and committed to the welfare of the country and its citizens rather than their own benefit and gain. And once we can find that I am sure we can move on.

health will improve, jobs will be created, people will be more satisfied. I don't care what form of government it is, democratic or not, my concern is economic development and growing the country in double digits, otherwise this country has practically no future. If you do not grow, if you are lower than inflation, poverty will keep increasing and so things will go to the very end. At the end Mr. Shahnawaz quoted and I would like to re-quote “We must seek a world dependant onus instead of our remaining dependant on the world.” Yes it is possible by going beyond what is in this thesis but using some of the “golden nuggets” that have been highlighted. I wish him all the best and hopefully if we can get some of these ideas implemented in the economic plan for Pakistan, we probably can move forward. Thank you.

So at the end let me say the following: Priority to me today is not to invest in education, health sector and other items but just two things are needed: strong inspirational leadership and economic development because if we have economic development, education will follow automatically,

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Economic Reforms Seminar – Thesis Paper Mr. Muhammad Zahoor Motiwala was born in Chittagong, East Pakistan and his family came to Karachi in 1974. He holds an MBA from IBA, Karachi and a Law degree from S. M. Law College. In the last 25 years he worked in diverse areas like automobile; technology & telecom; financial services, and trading and has been associated with some of the big names in Pakistan's corporate sector.

Mr. Zahoor Motiwala is presenting his paper on “Economic Reforms” at THINK! Duration: Approx: 18 mins 13 secs

Based in Lahore he is the CEO of WINCOM Private Limited, a telecomm infrastructure and O & M company of the Abu Dhabi Group. Before WINCOM, he was Group Head of Operations at the AKD Group of companies where, among other assignments, he was the CEO of TMT Ventures a venture capital company that invested in ideas in the area of technology, media and telecomm. He serves on the Board of Directors of many private companies; teaches business courses at various private universities and is associated with a few not-for-profit organizations and also serves the Executive Committee of Alliance Française de Karachi, the French cultural center. An entrepreneur by temperament; micro enterprise, venture capital and youth empowerment are some of his areas of interest and he takes active part in mentoring and grooming of youth. He often speaks at seminars and symposia on issues of youth and on economics and business.

I have known Mirza Shahnawaz Agha for almost 25 years and no marks for guessing that he is a non-conformist and I think people like him who, in the words of Martin Luther King, are “creatively maladjusted”, are the ones who actually think because reasonable people sort of make do with whatever is available and it is the unreasonable people who try to change the status quo. Like I said earlier, I have been a great fan of his intellectual abilities. As I was reading through his paper yesterday, at the generic level, like Saad, Sb. said, there are no disagreements with the concept that “what is” is not what “what ought to be”. So at the generic level I don't think we can disagree, the present economic system is extremely lopsided, very ununiverse friendly, in the sense that we are depleting all types of resources that we have been bestowed with; there are a lot of economic disparities, the person working in the desert of Thar obviously does not get the same amount of money as somebody in the United States. Having said all this to me, as a student of economics and a person who has been a corporate creature almost all his life, and taking a cue from Saad about plans, I think that the ideas are definitely very interesting but at the same time very radical. Radical has a positive as well as a negative connotation depending

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upon how we view it. But given the present global regime, give the manner in which the concept of “Islamanything” is viewed through tainted lenses, I think these proposals, especially the one pertaining to the commonwealth of nature as far as land distribution is concerned, in agreement with Saad, has been over emphasized. I also think that this proposal is not practical or possible, what I mean is that it is not practical for the immediate short term and that it is best that we try and achieve the same objectives as we hope to achieve through the land distribution plan through other means like intellectuals capital, industry etc. So, to my mind, this idea of commonwealth of land and equal distribution of land among the populace is an idea which is very sensitive; it is something that will stir up a proverbial hornets' nest, because if you go deeper into it, you will realize that, forget the global land mass, stating close to home, in Pakistan only, the populated area ratio for the five provinces varies so drastically, that if you advent onto the path of equal distribution of land, you will open a Pandora's box of problems, including but not limited to practical, administrative and others, thus making the execution almost impossible. This might be equity which we can spot on the conceptual level in this proposal

but it is not practical, not to my mind at least. Other than this issue, I think all the ideas put forward by Mirza Shahnawaz Agha are important, are logical, are something that we as a nation, as a people, as a country, take note of and should try, inculcate and implement. But where do you start? Changing the Minister, changing some laws, or changing the procedures and practices in one or two departments will not make a difference. On top of this, if we try and indulge in this debate, we will be made to confront the fact that our system has rules and laws for many of the things, deviation from which is the root cause for the current crisis. The problem is that unless we as a nation are willingly and readily able to accept and adopt certain things, no amount of legislation or discussion is going to help. Therefore, the problem in my mind, in a wholistic perspective, keeping in mind all relevant facts, is that we need to change our mindset, our thought process and our approach. This concept presented by Shahnawaz Sb. to a 100 intellectually bestowed individuals, in a cool, comfortable environment can be discussed and debated, but at end of the day, how do we implement it? To me, if we agree that this is the roadmap, that there should be equality in terms of at least opportunity if not


land distribution because: If they did exist a concept of equality of land distribution, than in human history someone or the other would at least have put it to test; If equal distribution of land was a desired aspect or part of the economic regime in Islam than we would have known of its implementation or an attempt there-towards somewhere in our very rich history of over 1400 years. I would like to state on the record that I am not a Islamic Scholar nor a historian so my information could be limited or incomplete. But so far as the point regarding the loans is concerned, Mirza Sahib is absolutely right. No nation, no country, no individual can ever grow with debt burden. Resources, we have plenty, we know that; the potential of Thar coal has become a topic of general discussion. Dr. Samar Mubarak has also recently received some allocation, lets see what comes off that gasification project. Yes there are lot of resources, yes there is potential and yes I agree that we should look inwards and not outwards and all these things even to implement at the present level, forget the more difficult ones, will still require a shift in the way we think. Today's Tribune has a headline pertaining to “FBR has lied�, if we are going to lie regarding statistics, lie to ourselves, and not behave responsibly how can we grow or become stable? To quote an example of our attitude as a nation, I am trying to extract some information for Sindh government, on behalf of a friend in USA, who wants to invest in the Thar Coal project, but to no avail. How can we expect foreign investment to come into this country with this lethargic and late back attitude of the bureaucracy? What I am trying to say is that we need to change this attitude, this mind set, as a nation towards the way we discipline ourselves, the way we work. This is something which needs immediate attention, something we need to start working on now! And these are areas where we have enough

legislations, it is just a question of tweaking some of the regulations and implementing some of the rules. Other than that no one can disagree that armed forces should not be in the business of making money. A model where you have every individual, like you have compulsory conscription in Iran and Israel, conscripted into the army in addition to the professional armed forces, can be implemented and will require lesser effort and receive lesser resistance in the context of acceptability. Looking at these numbers and arithmetic I suddenly realized that sitting in 2011 it is probably another 35 years before we would be a 100 years old as a nation. If we start training our 1 year old child today he will be one of the decision makers and movers of the nation, sitting at a responsible position in next 35 years I think that is where we need to start. Why do we not decide on a more target oriented, short term agenda and start thinking about where we want to see Pakistan, as a nation, when it is 100 years old? And try to through focus activity bring about a change in the educational and academic system? Like I said earlier any child born today will in 35 years be at a stable professional position in one of the many sectors in this country, industry, bureaucracy, academia, judiciary, armed forces, any field. If that child is trained properly and brought up to be a responsible, positive thinking, just, honest individual who has a progressive streak, in the future of this country would be in safer hands. We can also address what type of constitutional frame work do we want Pakistan to have at 100? Lets bring together all schools of thought; the molvis, the intellectuals, the right wing, the left wing, the less educated the more educated and come up with a draft, may be a new constitution which will bring us to the kind of country we want to be when Pakistan turns 100 and than put in some practical aspects of land reforms saying that only income from land revenue should be used to run the government. We need to

consider if enough land revenue can be generated to support the government machinery? What will be the per square meter load? Is this load viable when compared against production / utilization per square meter? What I am suggestion is that there is a lot perhaps already on the ground, all that is required is to review and tweak them according to the need of today. And as regarding the honest leadership, that too will require a change in our attitude. We need to re address our personal value system, and what is our definition of success, how important we consider material aspects of life as compared to other things. All these things pose a very big challenge to us even today. This plan proposed by Mr. Shahnawaz is a desired goal but in order to get there we need to plan and strategies on a roadmap, taking very small steps towards progress and success. I would repeat here that the most important reform needed is a change in our mindset both at individual and collective level. The only route for this is education and the way to achieve is to bring together people from all walks of life to prepare a policy where our educational system will not only be imparting information but knowledge; and more importantly creating better human beings. Post discussion and consensus development lets present it to the policy makers, no matter who they are; lets exert some civil pressure on them and get these enacted. And lets try and do things in a more achievable manner and perhaps one day we will reach that desired state. Thank you

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Economic Reforms Seminar – Thesis Paper Sohail Wajahat Siddiqui is currently the MD & CEO of Siemens Pakistan. A prominent name in Pakistan's corporate sector he holds an MS degree in Electronics from King's College, London. He is also the first Pakistani to head Siemens Pakistan.

Mr. Sohail Wajahat is presenting his paper on “Economic Reforms” at THINK! Duration: Approx: 27 mins 15 secs

His many accolades in the corporate sector include having served as President of the Overseas Investors Chamber of Commerce and Industry and as President of Management Association of Pakistan. He has also served as a Board Member of Pakistan Steel, KPT and KASB Bank. The government of Pakistan having recognized his business acumen also nominated him as Board member of EPZA, TDAP, STEVTA, EDB and PEC. He is currently the Chairman of Pakistan State Oil's Board of Management. He is serving on the Board as Member of the Pakistan Business Council (PBC). He has served and continues to serve as Board and Council Member of bodies like NUST, LUMS, IBA, KASBIT, AIESEC and the YPO/WPO. He also plays an active role in charitable organizations like Pakistan Red Crescent Society (PRCS), Sindh Branch, Behbud Society of AKUH, Tabba Heart Institute and Rotary Club Metropolitan. Mr. Siddiqui was also a Member of the committee that chalked out the Engineering vision 2010 for Pakistan. In recognitions of his outstanding services to the country and to the cause of education and engineering industry in particular the President of Pakistan on 14th Aug 2006 conferred upon him the honor of Sitara-e-Imtiaz which was presented to him on 23rd March 2007.

WE, the representatives of the people o f Pa k i s t a n , a f t e r m u t u a l consultations, have agreed to come together to develop a National Economic Agenda (NEA) designed to promote economic welfare of all the citizens of Pakistan. WE believe that the adoption and implementation of this national economic agenda would lay the foundation for: · Sustained annual GDP growth rate in excess of 6% accelerating to 8% as reforms take hold and a virtuous cycle of increased savings and investments is put into place. · Reduction of inflation to a single digit level. · Reduction in unemployment / underemployment rates. · Substantive reduction in poverty through a combination of reduced inflation , higher job creation, significantly increased targeted social protection programs and skill development of the people · Elimination of load shedding and gas shortages · Elimination of crowding out of private sector from the credit markets and enhancing the ability of the private sector to increase investment · A 50% increase in the next five years in the percentage of children in this Country who enrol in, and stay in schools, this is the stress in

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education that we have heard from other speakers. · Significant new economic opportunities because of greater integration of Pakistan's economy in the larger regional economy · An improvement in the underlying conditions which create both an internal and external security threat to the nation To achieve the above WE, the Signatories, have identified the following Five Reform Areas that need to be urgently addressed: 1. Better Macroeconomic Management of the Economy; · Reduction in the fiscal deficit to 3 4% of the GDP in the next three years through: · Increase in the Tax-to-GDP ratio to 15 % in the next 5 years through better collection of existing taxes and a reform of the tax system by adopting the principle of taxation regardless of source of income · Bringing all sectors into a uniform documented tax net · Setting a target of 10% Reduction in public sector waste both at the federal as well as the provincial level through implementation of the recommendations of the National Commission on Government Reforms. · Eliminating Public Sector Enterprise (PSE) losses by empowering

professional boards and management to reform and restructure these institutions without political interference. · Eliminating non targeted subsidies and phasing out the role of government in commodity operations, subsidies should not be across the board but targeted, a Mercedes owner should not be getting subsidised gas, or a home owner in defence for cooking range, because he can afford to pay the complete prices, while the supply going into industries at a subsidised rate will benefit the economy. · Once the fiscal situation stabilizes, gradually bringing down corporate tax rates to make them competitive with other emerging economies to attract investment 2. Energy for Growth: · Take urgent decisions to fast track the import of LNG · Carry out an urgently needed revamp program for the existing assets in the power generation and distribution system. · Rationalize price distortions between different fuel sources and different consumption segments · Revisit the gas prices being offered to E&P companies to encourage accelerated exploration and development of indigenous gas resources.


· Carry out focused development work on other indigenous fuel sources particularly hydel and Thar coal. · Put in place a structured program to deregulate the energy sector in the next 3-5 years. · Have an integrated energy ministry which, with the help of the best professionals available in the field, should oversee the implementation of an integrated energy plan, thisi ntergrated policy is now being populated. Without energy we can forget about development, economic or otherwise. This is the top agenda with other world economies as well. So this whole policy is 2010-25. Every topic which i have addressed is in the form of solutions; practical solutions identifying where the manpower is, where the money will come from, who is going to implement it and how it is going to be implemented with a timeline. 3. Protecting the Poor: · Ensure government spending on social protection is increased from under 1% of GDP to close to 3% of GDP which is close to the regional average, from where this will come, i will discuss with you a little later in my presentation. · Subsidies intended for the poor should be targeted and monitored to ensure that the poor are the actual beneficiaries. All non targeted subsidies must be eliminated · Fully leverage the capacity created in the public-private partnerships as delivery vehicles for targeted programs for the poor. · New social protection programs in the areas of nutrition , employment and health insurance need to be designed and implemented · Rationalize and consolidate the existing social protection instruments to eliminate duplication and overlap. 4. Educating for the Future: The current system of education will not be able to take the Country to the next level of development; a major shakeup is required before we are able to become a knowledge

economy or are able to put our young population to productive use. The major areas requiring immediate consensus are: · The starting point is political will. Demonstrate at federal and provincial level that education is priority one · Implementing legislation already in place to ensure that the government increases the education budget by at least 0.5% of GDP per annum so that it reaches 5% of the GDP. · Liaise with the provinces so that after the 18th Amendment provinces have a common curriculum. · Retain HEC and modify its role in consonance with the provisions of the 18th amendment. · Substantially increase scope of technical and vocational education · Incentivize private / not-for-profit sector participation · Mainstream madrassah education, we do not want to eliminate the madrassahs, we want to build on them. These are our assets, the setp-up, complete with the manpower and resources, is no ground, we just need to train the trainers. 5. Regional Trade as a Growth Driver: · Revisit the national security paradigm especially with respect to regional trade. · Develop a strategy for trade policy to use it to strengthen linkages with our neighbors and beyond, the strategy to also include a policy to promote transit trade. · Invest in supporting infrastructure. · Grant India MFN status · Use the SAFTA framework to address non tariff barriers on both sides · Creating an environment which fosters cross border investments This consensus document has been signed with the People of Pakistan as witness that WE, the Signatories, and the political parties that WE represent are committed to the objectives of this National Economic Agenda and that WE will work to ensure that it is implemented for the greater good of Pakistan and its Citizens.

The foregoing was a document signed on 29th of April 2011, we are hopeful that all tose who signed this document will remain committed to the cause of bringing about economic stability and development in our country. Now lets go to how it will be done and why it is essential. • The key stakeholders are we, the Pakistani, Investors, Multilateral Agencies (IMF/World Bank Etc.) • The citizens' perspective: • Consumer price inflation has been on a rising trend. Dr. Ashfaque will be in a better position to discuss these in detail • Lack of employment opportunities has also been on the rise. • Lack of Economic Justice: • Rich don't pay fair share of taxes • Government not able to control cartel's (mafias) • Poor and unequal access to services and opportunities (gas, electricity, education, health etc.) • The Multilateral Perspective • The fiscal debt has been on the rise, with the domestic and external both forms of debt increasing. The trend makes a lot of difference in these matters since reversal of trend is a painstaking and time taking activity. • Caught in a debt trap and unable to survive without constant external support, this is like living on life support systems in an ICU, where the removal of support would mean sudden death • Under taxed and poorly documented economy • Intraregional Trade is absent in our region, while it easier, simpler and more economical to trade within the neighborhood. Unfortunately we are not on cordial terms with many of our neighbors, which not only unnatural but also disadvantageous to the economy.

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• Over and poorly regulated economy • Large, highly inefficient, cash draining public sector; it is not a hidden secret that we are making a loss of PKR 800 Billion per annum in the public sector which is equivalent to USD 10 Billion. These are numbers I can prove to the last penny. That business is not worth indulging in that cannot generate revenues and reports a loss all the time. • This is what causes circular debt, for which we have proposed integrated energy ministry, in effect putting and end to the blame game between WAPDA, PSO, Sui Gas, OGDC etc. • The Investors Perspective • Out of control Public Spending we do not have money to replace a gas turbine when needed, but can fund purchase of an e x p e n s i v e a r m o u r e d c a r, although both cost approximately the same. That is what the mindset of our government is. We should put the money where the return is not into unproductive items. • Pr i v a t e & P u b l i c S e c t o r Borrowings - Heavy borrowing by the government has resulted in classic crowding out effect on borrowing , reducing private investments & driving down private demand for credit. • Take a look at ths graph for credit rating and absorb where we have come from. The purpose of showing you this graph is to bring to light the fact that there is no need to be pessimistic. We do not have a limitation of talent and ability, despite the odds and hurdles, we can achieve excellence. We need to only decide to indulge in collective actions instead of only talking. • The Solutions • On a war footing address the severe energy crisis by taking critical reform decisions which tackle pricing distortions, production and distribution inefficiencies, remove bottlenecks for urgently needed

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• •

• • • •

imports and develop the indigenous energy resources. Take urgent & concrete steps to sharply reduce public finance deficits. Overhaul the tax & tariff structure and bring all sectors into a uniform documented tax net. Reform and restructure public sector enterprises, starting with the transparent appointment of capable / professional top management and boards which are empowered to take the necessary actions. Eliminate waste in Govt. expenditure. Phase out broad based non targeted subsidies which unnecessarily benefit the well off also. Significantly increase education, health and income support expenditures (targeted subsidies) for the most vulnerable segments of the Society. Strengthen intra-regional trade linkages Address the Severe energy crisis Expedite LNG imports Eliminate pricing distortions between different fuels / sectors created by GoP taxation / pricing decisions. Accelerate development of Thar Coal; Thar coal is an available, ready resource, which requires only infrastructure to be established, not costing more than PKR 10 Billion, while it can produce billions of US Dollars every year. A private company can develop a mine, a gas plant, but not roads and bridges, this is the job of the government Re v a m p o b s o l e t e p o w e r generation / distribution / transmission facilities Deregulate the sector to bring in innovation and allow market to allocate molecules Accelerate gas exploration through political initiatives by settling high prospective zones in Baluchistan & KP - offer high incentives, which are consistent

• •

• • • •

• •

with global prices, for offshore drilling For example KSE is generating between PKR13-22, hydel is lesser. In mix energy we reach 12 cents, because we are using the wrong mix, we are not using coal, we are using gas inefficiently i.e. the same volume of fuel can produce 64 M Watts, that we are currently using to produce 18 M Watts. Improvement of Public Finance: Overhaul the tax structure Same rate of tax regardless of source of income. Bring all exempted/severely under taxed sectors in the tax net Lower the tax rate and remove all exemptions. Document the Economy Revamp FBR. Deploy technology Carry out strategic review of tariff structure to create level playing field for local manufacturing Check abuse/misuse Afghan Transit Trade/ under invoicing / smuggling Improvement of Public Finance: Re f o r m , r e s t r u c t u r e a n d deregulate Reform and restructure public sector enterprises Create a "supra board" which overseas the restructuring program of all these PSE's Take these PSE's out of control of line ministries and have the "supra board" report to a parliamentary committee for restructuring. Appoint capable/professional top management and boards which are empowered and accountable. Mandate to reform and restructure these PSE's within two years. Focused and integrated deregulation of key sectors like energy and agricultural commodities Strengthen regulatory agencies (CCP, OGRA, NEPRA, SECP) by building capacity and ensuring independence. Improvement of Public Finance:


Elimination of waste • Reduce size of Govt. structure by eliminating ministries and subordinated institutions which add little or no value • Introduce stronger parliamentary oversight over Govt. expenditure, including defense expenditure, by strengthening parliamentary committees • Make Freedom of Information Act operational and provide citizens access to Govt. expenditure, particularly by using information technology • In a nutshell, saving a dollar is as good as earning a dollar, we need to be more stringent about what we are wasting, be those in the form of energy losses, administrative expenses or wasted resources. • Increase education, health and income support expenditure • Significantly enhance resources for education, health and social protection • Instead of broad based subsidies use targeted income support programs • Use innovative strategies to provide education and health coverage • Enhance citizens engagement and oversight over public education and health programs

• Health insurance is of prime importance, in liberating the people of Pakistan from the clutches of the local leaders and land-lords that are using them as slaves. • Reprioritizing expenditure (phased over three years) • This graph is a summary of the complete presentation. (Fig. 1) • These are perfectly do-able. It is not a tall ask when a corporate is advised to reduced cost by 10%,or increase revenue generation by 5% or even sublet/ dispose off revenue guzzling activities, then why would it be a complicated issue for a government. With the right policy and the political will to implement, these targets can be achieved in three years. These small targets is achieved will have a big result of making 9% of current GDP available for public benefit. • Intra-Regional Trade Linkages: • Revisit Afghan transit treaty to take care of Pakistani business concerns and address trade opportunities with Afghanistan and Central Asia. To quote a few examples, the volume of “Razors” that we have been included in the Afghan Transit Treaty would be in excess even if

• • •

In my closing remarks, I would like to emphasize that just like fever is caused by a sore throat, the current economic deterioration has its roots in the energy crisis. If this root cause is addresses, there is no reason why we cannot set the balance right. Thank you.

Kyrgyzstan

Uzbekistan

REPRIORITIZING EXPENDITURE

Potential Energy Trade Flows

Tajikistan

PHASED OVER THREE YEARS

all men and women in Afghanistan start shaving twice a day; the import of normal black tea in Afghanistan is four times that of Pakistan, despite the facts that their population is only 30 Million while ours is approx. 200 Million, and that they primarily drink green tea. The effect this has is that the same items are brought back into Pakistan and sold at lower rates. Increase trade linkages with Iran with specific emphasis on energy Work for creation of a fully integrated South/Central/ West Asia energy grid Expand trade linkages with India Potential Energy Trade Flows A keen look at this image will allow you to understand that we are strategically located in the energy trade flow routes. (Fig. 2) Energy is not as big a crisis as we are presenting it to be, the same crisis could be used to our advantage, if we focus on this.

5% Improvement by increasing Tax to GDP Ratio by 5%

3.3% Reduction in Fiscal Deficit

Iran

3

an 3 ist an h g Af

3

17

1

18

tan kis Pa

Nepal

21 45

29

India 2% Improvement by 10% Reduction in Expenditure

Bhutan 7

34 1

Bangladesh

Total Improvement 9%

All units in Mtoe

1 5.7% Increase in Education, Health and Income Support expenditure

2% Improvement by elimination of PSEs Losses

FIGURE 1

Sri Lanka

FIGURE 2

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Economic Reforms Seminar – Thesis Paper Dr. Ashfaque Hasan Khan is currently the Principal and Dean, NUST Business School, Islamabad. Dr. Khan holds a Ph. D in economics from the Johns Hopkins University in USA. He joined the Pakistan Institute of Development Economics (PIDE) in 1979 as Research Economist, where he grew to Joint Director before being appointed Economic Advisor of the Ministry of Finance in March 1998. He was appointed Director General Special Secretary Finance/ Director General (- a position which he held until February 2009) of the Debt Office and of the Ministry of Finance in January 2003 and July 2007 simultaneously. Dr. Khan has been the spokesperson of the Government of Pakistan on economic issues for 11 years (March 1998 February 2009). Dr. Ashfaq Hasan Khan is presenting his paper on “Economic Reforms” at THINK! Duration: Approx: 45 mins 00 secs

As a key member of the Government's economic team he was actively involved in preparing the reform program which was launched in early 2000 and provided vital policy inputs in framing the country's macroeconomic policies. He was the member of the core economic team which negotiated with the IMF for various financial packages, implemented the programs and finally brought the country out of the IMF Program in December 2004 and thus restored the country's financial sovereignty. Dr. Khan has been actively involved in the floatation of Pakistan's sovereign bonds including the Islamic bond (Sukuk) in the international debt capital market. He has also been involved in the issuance of Global Depository Receipts (GDRs) and Exchangeable Bonds in international equity markets. As Consultant to the Secretary General SAARC, he prepared the Regional Study on Trade, Manufacturers and Services which served as the foundation for regional cooperation in South Asia including the establishment of the SAARC Chamber of Commerce and Industry. Dr. Khan is currently a member of the United Nations Expert Group, Economic and Social Commission for Asia and Pacific (ESCAP), Bangkok and was one of the experts assigned the task to prepare the views of the Asia-Pacific region on the world economy for presentation at the G-20 Summit, held in Seoul Korea in November 2010. Dr. Khan has the distinction of being the most widely published economist of the country. He has published 9 books and more than 170 articles in national and international journals of economic science. His papers have appeared in the most prestigious journals of economic science published from Harvard University and University of Chicago. Dr. Khan has also the distinction of being a student of a Nobel Laureate in economics, Professor Lawrence R. Klein. In recognition of his outstanding contribution to the field of economics and public policy he received the award of Sitara-i-Imtiaz in 2005. The Economic Cooperation Organization (ECO) also conferred him the ECO Excellence Award 2010 for his outstanding contribution in the field of economics.

Let me begin by thanking this organization THINK! for inviting me and giving me this opportunity to speak on the subject which is at the heart of everybody in this country. I will be speaking on Pakistan's current economic challenges and particularly emphasizing the way forward. How it can be addressed? You have heard couple of presentations in which solutions are given, I will simply carry forward in slightly technical terms but will be speaking in very public language so that everyone can understand. I have divided my presentation in 4 parts. In the first part I will list the key challenges and than there are issues, key issues, we are facing. Challenges

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and issues must be seen separately as you will see in a moment, and what consequences are for this type of problem that we are going through, as far as the economy is concerned and the way forward. I have listed challenges facing Pakistan's economy. Pakistan's economy is currently passing through the worst phase of his history. Both economic and non-economic factors have contributed to this slide which has taken place at an unprecedented pace. In just four years time, Pakistan has become a forgotten economy. Nobody bothers about Pakistan anymore. In my introduction you have heard that I was one of the members of panel chosen by

Economic and Social Commission of Asia and Pacific to prepare the non G20 countries response to the global economic challenges which was presented in G20 meeting in Seoul, Korea. When I was discussing with others in the panel, people were talking about Sri Lanka, Bangladesh but Pakistan did not figure anywhere. Just four years ago, this is the same economy which was regarded as one of the four fastest growing economies in the Asian region, along with India, China and Vietnam. Goldman Sach, a global investment bank, in the year 2000 identified four emerging countries in the world and according to their view in the next 40 to 45 years


these four countries will rule the world economy. These countries were Brazil, Russia, India, China and recently they have added South Africa; this is also known as BRICS. In 2005 Goldman Sach tried to find out who will be the next 11 countries to join BRICS to rule the world economy, and you will be surprised that Pakistan was one of them. Together these are called the Next11. So as Sohail said it is not that we have always been down, we have gone down today while we were at the very height in global economic agenda, only a few years ago. So what made us slide so fast and that is why I used the word that the pace of this decline is unprecedented. Within a short span of four years an economy at the helm of affairs has become a forgotten economy. What when wrong? As I have stated many economic and non-economic factors have contributed to this slide. I am not going to go into that detail but I will come to the point that these are the challenges that we are facing. You have heard from the private sector people that investment has declined to a 40 years low 13.4% of GDP which was 22.5% four years ago. A decline of around 10% of GDP in investment is a matter of concern, because investment is an input to growth. Without investment the wheel of economy will stop turning and will churn out lesser jobs and employment opportunities. This will result in an increase in unemployment, increase in poverty. Investment effects economy with a lag. ·

If investment has fallen to 40 years low today what is in store for growth in the next 3 to 5 years for Pakistan?

·

As a result of this declining investment our economic growth has slowed from an average of almost 7% GDP to less than 3% per annum in the last 4 years.

·

As a result of that both unemployment and poverty are on the rise

·

For the first time in the history of this country high double digit inflation is persistent for 46

months in a row. This has never happened before. This is impacting the people of Pakistan, particularly the fixed and poor income people. Pakistan has lived in a low inflation environment and we have never seen a high double digit inflation persisting for so long. That is why you see so many complaints from the people; the poor cannot protect themselves from inflation, while the rich can because they have the capacity. ·

The root cause for all the above points is a high budget deficit. Budget deficit is the mother of all economic problems, so any government that maintains fiscal discipline and keeps budget deficit low can win the elections for many years. Unfortunately this is not in the minds of our current political leadership. Their uncertainty of whether they will survive in power tomorrow has led to fiscal profligacy. Turkey is an excellent example of financially disciplined government; their inflation used to be 100% per annum which has drastically been reduced as a result of which the same government has recently been elected for a third term.

·

When deficit increases, i.e. the gap between revenue and expenditure, the larger this gap the more we borrow and the more rapidly we accumulate debt. We have accumulated more debt within the last four years than we had accumulated in the preceding 60. it took us 60 years to accumulate a debt of USD 4.8 trillion (1947 to 2007) and we have accumulated another USD 5.8 trillion in only 4 years (2007 to 2011).

·

With debt increases the debt servicing. Four years ago our debt servicing was at approximately PKR 360 billion which now stands above PKR 1000 billion. This extra amount which is going into debt servicing could have been spent towards betterment of people.

·

Our external debt is also on the

rise. It has increased by about USD 20 billion within the last four years, while it stood at approximately USD 40 billion in sixty years. Thanks to Mr. Shaukat Tareen who signed a contract for an unneeded USD 11 billion with IMF. Borrowing money from IMF does not help, infact only if IMF is standing support to a country, it is enough to restore confidence of the global investor. We are stuck with a USD 11 billion loan which we will come out of only if we can repeat December 2004. ·

Foreign investment is declining rapidly. It has gone down from USD 8.5 billion in 2006 07 to less than USD 2.0 billion this year. Foreign investors are losing confidence in the economic management of this country.

·

Security environment, power sector crises are the other challenges confronting our economy today. I will not repeat what Mr. Sohail Wajahat has already discussed at great length.

Now lets discuss some key issues. There is a minor difference between issues and challenges. ·

I consider the new NFC awards an economic issue. This award is a political award; there is no economic foundation behind this award. We have given whatever anyone asked, received applause and came back happy, without realizing the effect and impact it will have in the future. So we have sowed the seed for perpetual economic crisis in this country. This in its self is a crime that we have committed. We will discuss how to save ourselves of it a little later in this presentation.

·

Remittances in Pakistan are rising at a very fast pace; what is the reason behind it? Where is this money coming from? Has the number of expatriate Pakistanis doubled or tripled suddenly? Or has the salary of all Pakistanis working abroad been tripled? Given the global economic crisis, it is hard to believe that the salaries of our people have gone up several times.

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It is also hard to believe that given the current international political environment in different countries are encouraging Pakistani workers to come and work. Than how are remittances increasing by 26 27%? Philippines is also one of the major remittance recipient countries in the world. Those of us who have traveled, particularly to the Middle East, would have seen Philippine workers everywhere from the airport to marhaba to services to all kind of shopping malls. Their remittances are growing by 3% per annum while ours are growing by 26%. Why this mysterious increase in remittances is taking place and while I have been raising this question for quite sometime but to no avail. So I consider this an issue. This is a kind of Dutch disease in economic terms. ·

There has been instability in the economic team in the last four years. We have seen 4-5 finance ministers, 4-5 finance secretaries, 4-5 chairman CBR, change in the chief economist portfolio and 4 governors of State Bank. When there is no stability in the economic team how can we expect stability in the economy? This is a point to ponder for us and more importantly for the people in power; we have made ourselves into a joke for the international community.

slowed down to 2.4% growth. At an average this is about 2.9% in the last four years versus approximately 7% in the previous 5 years. I repeat that the people are the same only the environment has changed. ·

·

Unemployment is on the rise, this is all linked with economic activity. When the wheel of the economy is turning you need more hands to support that activity which means creation of more jobs.

·

Look at poverty; these are all linked to each other. In 2000-01 34.5% people were living below the poverty line which came down to 17.2% in 2007-08, thus reduced to one half. The same people are sitting in the bureaucracies who were running the system then, but something has changed.

·

Now let us look at the consequences of the forgoing; ·

·

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Investment has slid down from 22.5% to 13.4% in merely 4 years. The people are the same, so far as civil servants and bureaucracy is concerned, but the environment has changed. Civil servants are also human beings who respond to their environment, good environment results in conductive, positive work efforts and bad environment has its own negative impact. This is the same economy which was growing at a rate of 9% in 200405 when it entered into the league of four fastest growing economies in the Asian region which has now

The same industry which grew by about 20% in 2004-05 went into negative in 2008-09 and is now resting at a mere 1%. Many factors are contributing to this slow down in industrial activity. Law and order being one of them. Karachi is a major growth pool in the country; if Karachi bleeds, rest of the country will bleed.

·

We have been living in a low inflation environment for a very long time. In August 2007 the world faced a food and fuel crisis, this was a global phenomenon, after which we saw a rise in inflation in our country. Pakistan is an economy integrated with the rest of the world, we are not an island economy and hence we feel the impact of global changes. Prices came down and are on the rise again. This is a governance issue. If a butcher demands PKR 300 per kg you should be thankful that he did not demand PKR 500 per kg because there is nothing you can do, there is no system to prevent him from over pricing. Fiscal deficit has increased again and this is the mother of economic problems. Any government which can reduce this to within 2.5 3% will be successful government.

·

With an increased in fiscal deficit, public debt increases. The graph of public debt as a percentage of GDP has taken an increasing trend and it takes a lot of effort and time to reverse this trend. In 1999 our total public debt was equal to the size of GDP which was reduced to 55% in 2007 and is on the rise again currently approximately 60%.

·

The effect of debt is interest payment. This is a committed expenditure that no government can reduce or cut. There is very little flexibility so far as current expenditure is concerned because the interest payment in 2000-01 was 48% of total revenue, we reduced the fiscal deficit and in turn this interest payment reduced to 24% and 2005-06, and now it is on the rise again. When I say total revenue, it includes what CBR collects, what the provincial governments collect, non-tax revenues, surcharges etc. all put together.

·

External debt as a percentage of foreign exchange earnings is just like blood cholesterol level, if higher than 200 you are in the danger zone. If a person's cholesterol is in the vicinity of 350, he is prone to heart attack, stroke and is as good as dead. The same analogy applies to a country in terms of external debt as a percentage of foreign exchange earnings. If this number is above 200 we are in the danger zone. From 347% we had reduced it to 122% which has now again increased to 148% and is rising.

·

From USD 8.4 billion foreign investment in 2006-07 it has now declined to USD 1.2 billion. The question we should be asking is why? What has caused this unprecedented pace of decline?

What is the way forward; ·

First things first is economy our priority? When I say OUR I mean that of the political leadership. I believe that has not been the case in the last 4 years, so again first thing is that the economy must be


brought at the center stage. ·

·

·

·

it for 11 years, PIA, Railways, Steel Mill are a few examples, but they come back to the same state. These cannot improve until they are privatized. Even if a party bids for PKR 1/- for PIA or PSM we should willingly part with it because we will be saving PKR 300-400 billion of tax payers money that we are injecting into these bleeding PSE's, just to keep them a float. How long will we continue? Changing the management will not help. People like Tariq Kirmani and Zafar Ali Khan, very successful professionals of the corporate world, could not do much for PIA. They brought about marginal changes which were lost once they left. This is so because we have treated these institutions as employment agencies, regardless of productivity.

Once this is achieved, we need a credible economic team. Why can't Sohail Wajahat and Asad Omer be a part of the economic team? They know far better about our economic problems than those who have landed in Pakistan from abroad after 2 to 4 decades, as a guests whose family is still stationed elsewhere. What would be the level of commitment of such person to this country? This is a country of 170 million, with no dearth of talent among people who have seen the thick and thin in this country. They know the problems because they have lived and experienced them. Fiscal discipline is a must and how to achieve that is through reducing the budget deficit and bringing it down to between 2.5 to 3 percent in the next 3 years. This will be achieved through raising revenues and not through cutting down expenditures. The expenditure needs to be rationalized. As we have seen bulk of expenditure is being made towards interest payment. Revenues are to be raised through broadening the tax base, so that everyone puts in his share, however small it be, instead of 12% of the population bearing the load for the whole nation. This should be regardless of the source of income, it is not fair if 2 individuals with similar income pay taxes at different rates due to difference in source. MFN (Most Favored Nation) mentioned by S o h a i l Wa j a h a t i s e q u a l l y applicable here. When we do this we will be able to reduce the tax rates. We need to also strengthen the tax administration which is currently very poor. As I mentioned earlier, we need to rationalize expenditures. The foremost step to be taken in this direction is outright privatization of bleeding public sector enterprises (PSE). Restructuring is not the solution; I have attempted

·

to theft when employees dish out free connections in their neighborhood. I know a family which is receiving free electricity even today, despite the fact that the man who was a WAPDA employee is now dead. The lady of the household when leaving for vacations had left the air-conditioning running so that her plants will not wither. This reckless attitude is only because we have provided the opportunity. o We need to strengthen the finance department of WAPDA. When we used to hold meetings of National Accounts Committee to prepare the numbers for GDP and GNP, since WAPDA has a major contribution, we use to inquire from them 2 to 3 days ahead. Every individual in the finance department of WAPDA would revert with a different set of numbers and these are the numbers that drive the power tariff and the increase theirof. I have no faith in these numbers anymore.

The issue of circular debt and power sector subsidies cannot be resolved through raising power tariff alone. I have been harping this for the last 11 years, because with the tariff the power theft will increase in direct proportion and then a citizen who was paying a small sum towards revenue will not be a revenue source any more. This single track mind set has to change. These are to be addressed through: o Energy Audits of Power Plants, be those of WAPDA or IPPs. These have become fuel guzzlers. The volume of fuel that these power plants are consuming for producing one unit of electricity is enough to produce 3 units, this is inefficient power. A number of IPPs receive capacity payment although they have become inefficient over time. We need to audit in order to gauge which power plants are efficient and which are not so that there can be a targeted investment on those power plants which are efficient and cost effective. o What is the rational to provide free electricity to employees of WAPDA and PEPCO which leads

o We have never given line loss and theft targets to the owners of the distribution companies, which has resulted in their lack of concern towards improving their performance. So we need to give targets for them to improve. ·

In the case of NFC awards, as I said earlier, we have sown the seed for perpetual economic crisis in this c o u n t r y. E i t h e r w e s h o u l d postponed the implementation for 3 years or if that is not possible than we need to put some binding constrains on the part of provincial governments that they should come up with a targeted surplus in their budget. I will give example of 2 budgets. The first for 2010-11, immediately after the announcement of NFC award. The Finance Minister announced target budget deficit 4% for Federal and 5% for Provincial, so the provinces have to

25


produce 1% surplus. When the provincial assemblies passed their budgets, instead of 1% surplus there was 1% additional deficit. In the budget of 2011-12,. The Finance Minister announced target budget deficit 4% for Federal and 4.6% for Provincial, so the provinces have to produce 0.6% surplus. When the provincial assemblies passed their budgets, instead of 0.6% surplus there is deficit. In July 2011 only, we are facing 4.7% deficit and the 4% target has been forgotten. This will continue because there was no thinking behind the NFC awards. This crisis will continue until curtailed through CCI (Council of Common Interest) or NEC (National Economic Council) in the form of binding agreements for provinces. ·

There is a need to re-look at the monitory policy and stop this adhoc “Aspirin Approach”. Instead of tightening the monitory policy we need to assess the cause for inflation. Whether it is because of excess demand in the market or because of pressure from supplies side and rising food and fuel prices. This is similar to taking an aspirin for a headache without assessing whether it is being caused by hypertension, lack of sleep, fatigue or something else. If the medicine of the doctor does not cure you for 40-45 months either the doctor will change the medicine or you will change the doctor. We are not being sensible enough to try some other remedy in the case of our monitory policy.

·

Support price of wheat is highly inflationary. 10% increase in the support price of wheat increases inflation by 3%. We have doubled the support price and can feel the brunt of this even today. So we need to freeze the support price for another 2 years.

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We should not repeat Shaukat Tareen in the case of IMF. We should remain within our bounds and the size of next IMF program should not be more than 100% of the quota i.e. USD 1.3 1.5 billion.

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The private sector is the engine of growth. The job of the government is not providing employment but providing policy so that the private sector will some forward and enhance their business hence creating employment. There should be constant and active engagement and dialogue with the private sector. The Finance Minister must come, as a routine, to visit chambers, meet the private sector people and instill confidence in them. There is a total disconnect in the current system between the political leadership and the private sector. This engine of economic growth is running out of fuel.

·

Peace in Karachi (the major growth pole of the country) is sine quo non for economic growth and prosperity. If Karachi bleeds, the economy of Pakistan will bleed. Peace in Karachi will help mobilize more resources, more production, more exports and more jobs for the people of Pakistan.

The day we realize this, our economic problems will be on the path to solutions. Thank you.


Jury Comments Comments by

00: 00:35:05

CJP (Retd.) Saiduzzaman Siddiqui

I will give my own observations on this session. It was a very good discussion. What i have been able to gather from the discussion which has taken place here today is that there are a few problems which have been identified by the panellists. The top most problem which has been identified is the deficit in the budget; the second and the most important is the privatization of the industries and exit policy for the government to go out of the business sector; because it has rightly been pointed out that it is the job of the government to provide the lay down the policy, to govern the country and to provide safety and security to the citizens. It has also been pointed out that there are sick industries or sick organizations which are eating away a lot of our money which a taxpayer pays to the government and two of them are PSM and PIA and the amount of subsidy which the government is providing to these two organizations is tremendous. Then there is the question of corruption which had been identified and you would have seen in many talkshows and other documents that approximately PKR 500 Million is being taken by way of corruption every year. These being the major problems which have been discussed here the question is who is going to bell the cat? Do you think that the current government is capable of enforcing all these suggestions which have been provided today on this forum? In my opinion the present government is incapable of enforcing any of the suggestions which have been made at this forum for the purpose of increasing or improving the economic health of this country. Unless the present system is done away with and a new system is installed I think it will be very difficult for us to come out of the present economic crisis which we is confronting our country. Pakistan was founded in the name of Islam and a keen look at the early days to assess what was the concept of Quaid-e-Azam Mohammad Ali Jinnah when he addressed the nation is very

enlightening. In my opinion he had in his mind a concept of a completely Islamic Welfare State in this country not based on the economic system of the west. I will only read a paragraph of his speech, which he delivered on 01st July 1948 while he inaugurated the State Bank of Pakistan. He said, “I shall watch with keenness the work of your Research Organization in evolving banking practices compatible with Islamic ideas of social and economic life. The economic system of the West has created almost insoluble problems for humanity and to many of us it appears that only a miracle can save it from disaster that is not facing the world. It has failed to do justice between man and man and to If this goes on only God can help us or the people can rise and they can demonstrate and they can bring about a pressure on the present government to resolve these problems perhaps it is only then that we will be able to survive economically, otherwise God will help us. CJP era dic ate friction from the international field. On the contrary, it was largely responsible for the two world wars in the last half century. The Western world, in spite of its advantages, of mechanization and industrial efficiency is today in a worse mess than ever before in history. The adoption of Western economic theory and practice will not help us in achieving our goal of creating a happy and contended people. We must work our destiny in our own way and present to the world an economic system based on true Islamic concept of equality of manhood and social justice. We will thereby be fulfilling our mission as Muslims and giving to humanity the message of peace which alone can save it and

secure the welfare, happiness and prosperity of mankind.� These are the words which Qauid-e-Azam spoke in 1948 and in my opinion these are true even today for the crisis this country is facing. You see our country is under massive loan. Yesterday I was watching a program and it was stated that PKR 12 Billion have been taken by the government as a domestic loan, which has exceeded all limits. In addition to this there is a loan of about USD 60 Billion on this country; how can a country which has a begging bowl in its hands all the time survive; only an economic miracle can save it.

With a weak government, with a weak infrastructure, with complete absence of accountability in this country, there is no hope in my view for the present to have an economic revival. I hope the government can take notice of some of suggestions by the panellists on this floor. The main question is whether the present government has the political will to enforce these recommendations or not. You can see that the finance minister, in his first speech when he was presenting the budget, has said there should be austerity in the economy, there should be financial discipline, the size of the cabinet should be reduced, but what has happened? Immediately after the budget was passed, the budget provisions in the presidency and in the prime minister secretariat have been increased. This is what we are doing; we are now used to of spending much more than we earn. If this goes on only God can help us or the people can rise and they can demonstrate and they can bring about a pressure on the present government to resolve these problems perhaps it is only then that we will be able to survive economically, otherwise God will help us. Thank you.

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Comments by

Justice (Retd.) Khalid Ali Z. Qazi

. . . Jury Comments

00: 00:05:17 Actually the need of the hour is to change the system. So long as the 2% extortionist class keeps exploiting the 98% commoners, the capitalists, feudal and land lord, in connivance with the civil and military bureaucracy, keep strengthening and supporting the exploiters instead of reforms, no system will be successful. Budgets are nothing but jugglery of numbers, otherwise the fact of the matter is that the expenses of the bureaucracy, be it civil or military, have become so exorbitant, that this poor nation is unable to afford it. Foreign debt and foreign aid is taken for and spent on these extortionist elite and not the masses. So what we basically need to do is to reduce the size of the bureaucracy, to reduce the defence budget, to reduce non-developmental expenses and exhibit some discipline in spending a part of the tax revenue on the people who pay the taxes. It is not acceptable that the populace paying 65% of total tax revenue, receives only 5% of budget allocation. Nor can any system be implemented in such environment, neither can our country develop. Pakistan will develop through Rule of Law, through equality, through elimination of exploitation, through giving equal rights to all. We cannot bring stability to this country by establishing dictatorship in the guise of democracy or by passing malicious laws by bulldozing the opposition in the assemblies. Political stability is crucial for economic development and political stability will come through ensuring the deliverance of rights of each and every citizen of the country, without which the economic policies will keep failing and there is no chance of economic development, regardless of any change in government. It is evident from history that wherever there was tyranny and injustice, wherever the rulers had dual standards for justice, those nations were destroyed. Hazrat

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Ali (RA) has said that the rule of heretical doctrine can survive but the rule of injustice cannot.

OUR SUPPORTERS AND COLLABORATORS

I appreciate the work of Mr. Shahnawaz Agha. In my sincere opinion, he has given valuable suggestions and proposed amendment in laws. The format should be such that the other panellists should debate the points raised by Mr. Agha and not go off on a tangent, deviating from the discussion. He has proposed land reforms. Let me share some interesting numbers with you. In 1843, the British rulers of this area used to recover 49% of land revenue, while now, the current system, with all its extravagant

In 1843, the British rulers of this area used to recover 49% of land revenue, w h i l e n o w, t h e current system, with all its extravagant expenses is spending PKR 25,000/- to recover PKR 1/- in the same head.

Asset Management Company Limited

expenses is spending PKR 25,000/- to recover PKR 1/- in the same head. We will need to assess the legal structure regarding the management of land, recovery of revenue, maintenance of law and order among other essential considerations. In the end I would like to thank Mr. Agha, the THINK! Team and the audience for their support and evident concern. I will reiterate that for economic development, unless we provide justice, equality and rights to every single citizen of this country, no plan will be effective. Thank you.

ALL LOGOS ARE THE SOLE PROPERTY OF THEIR OWNERS


Q&A Session 1 & 2 Comment: Salman Alvi: Iqbal has said: Zara num hoto yeh mitti baree zarkhez hai saaqi, it is not about the presence of talent it is about utilizing it. The issues we are currently discussing are effectively chapter III, what we are missing is chapter I. the thing is that for all these suggestions to be implemented, we need an infra structure, we need law and order. A current example in this regard is the KESC saga; a mere 500 individuals brought the whole city of Karachi to its knees; the performance and services of the company was reduced to 50%, by individuals who are not terrorists, not hooligans. What kind of precedence are we setting here? That the only method of communication is blackmail and sabotage? If it t was KESC today, tomorrow it can be P&G or Siemens. If we consider our sick industries we will realize that these are not sick because we did not have potential but because we did not run them properly, because we politicized it, because we did not provide it the requisite support and system, because we are underutilizing them, because we are not providing them the raw material. I agree with Zahoor when he says that before we venture onto reforms we need to save what we can from what we have, save the current suffering industries from shutdown, utilize them to the full capacity. From where will we setup new industries when we do not have any foreign investment coming into our country and all this is linked to that same support that I am talking about, law and order is a part of this requisite support. We need to first ponder how to provide these elements to the existing industries and economic activity before we start dreaming big about setting up new ones. I will repeat here that we have potential, we have talent but we are not working on supporting it and utilizing it. Comment: Advocate Arshad: I have a few comments to make here, Firstly in the previous session also I had pointed out that the route to salvation is saving the next generation from character and moral deterioration; and mobiles

are playing a very important role in destroying our youth. We should all work together to try and stop this abuse by our children. Secondly, like the moderator pointed out, since we have now increased that age limit for civil service from 28 years to 45 years, we are effectively looking at only 15 years of service from an individual post which he will demand pension and benefits; what kind of impact will this have on the government exchequer and on public money? Will his 15 years of service be worth the benefits that will be dished out to him? Thirdly in connection to legislation, I would like to request the Honorable Jury to play their part in curtailing the creation and implementation of unjust legislations. These are respected and exposed people who have seen the problems at very close range during their careers and are more capable than those sitting in the legislative assemblies. It the judiciary can come together for the support of the people of this country, we can be saved from whimsical and baseless legislations that are being passed and loaded onto our shoulders and that too to no avail. Question: Shoaib Shamsi: My question is to Agha Sb. In particular and the complete panel in general, when we talk about economic reforms, the economy of today and the future is knowledge based economy. I am not going to indulge in rhetoric about education first, but even we are an agriculture based economy, we need to define our purpose and gain enough knowledge in the field to increase the yield from the current 50%, as pointed out by one of the speakers, to its full capacity. I did not find in Shahnawaz Agha's paper due emphasis on knowledge based economy. If we take a closer look at the 120 corporations mentioned by multiple speakers, we will see that the multiplication in their revenues is because of the continuous knowledge enhancement and training that they indulge in and impart to their employees. My question in a nutshell is why have we not laid stress on acquisition of knowledge to improve

our economic situation? Question: Syed Muhammad Zaeem: I am a company executive while all my life I have been a banker. Shahnawaz, thank you for a lovely presentation and thesis, but all this is really a utopian idea, but nevertheless this could be treated as a blue print. To conclude what Zahoor Motiwala has said, and I liked it, we must have a focused, processing approach to the whole problem, where are we today and where we want to go and how do we get there? You have to have your focus rearranged with this and of course with a vision statement on where you want to see Pakistan in 50 or 100 years, and then build up from this point onwards in order to achieve it. Answer: Mirza Shahnawaz Agha: I will answer Salman's concern. There is only one recipe to resolution of your concern and it is called fiscal empowerment. If you fiscally empower your population the attitude will change; I have heard complaints all through of the Pakistani attitude, there is nothing wrong with the attitude. There is an age old English saying that “all people are like all people, all times are like all times, the world is his who dares to conquer it”, In a state of poverty which is defined by one of the companions of our Prophet (SAW), it is called “Red Death (Mout-al-ahmer)” and poverty is our problem. The minute you empower your population that attitude will change and so will the situation and crisis. Insofar as Mr. Shamsi is concerned, I would like to quote to you the times of the Chinese emperor when he asked his court philosopher how he can rule forever, and the court philosopher told him that the only way you can rule forever is open school; and he opened 200 schools; and this was 2000 years ago, so yes you are right. But as Saad also observed, there can be no possibility of education when there is no fiscal empowerment. If you need to send your child to school, you need to have the money to be able to send him or the government must have the

29


. . . . . continued money to be able to bring him to the school. Answer: Sohail Wajahat Siddiqui: Responding to your concern about focused approach, we at the Pakistan Business Council, started with 03 and now we are 31 business houses, have tried to get all the political parties to sign a common economic agenda, because if it is not focused by all the political parties the moment one party changes, the agenda normally changes, which is not the way the economy can be run in any developed or civilized nation.

Question and Answer Session 2 Question: Sohail Hameed: On one side there are exploiters and those who are committing white collar crime and on the other are people of unstable mind and between them are intellectuals. What do you think how much time do these intellectuals have while they can sustain between these two conditions? Answer: Dr. Ashfaque Hasan Khan: It is the job of the intellectuals to educate the masses through such platforms. You can see that the media is present here and through them these discussions will reach the masses resulting in building a social pressure on the present government, which can be categorized any manner. But building this social pressure through platforms of this type, through the media, through our writing is our job. We should not become pessimistic the situation will change. Answer: Sohail Wajahat: We have handed over three things in this country to illetrates and dolts; Education, Religion and Politics. No civil person is willing to indulge in politics. If you declare today that you want to enter into politics, your friends and family will respond by trying to tell you that this is a business of hooligans and thugs, it is not safe, not an activity for civilized persons. For politics I say this because a major proportion of our parliamentarians are running around trying to prove that their degrees are

30

Q&A Session 1 & 2

Answer: Sohail Wajahat Siddiqui: Yes nearly all these points have been included in the document. It was not possible for me to present the complete docuemt here due to paucity of time, but it has been worked upon extensively and is a comprehensive policy document that can be implemented.

Zaidi: I will be covering three speakers in my questions and comments. Firstly for Agha Sb., This was pure idealism and I am with you; I used to be of a similar opinion a long time back but so far as equity proposition is concerned, this is not going to work, like Mr. Motiwala said that when we are talking of equity the desire is there, taking into account the non-conformism and all, but pure idealism. I have a major disagreement with you when you say that education has to come after economic emancipation. I personally think that we have a huge human resource pool and education has to go along with economic development; you cannot have economic development without education. Though you are heading multinationals and have your own experience, but this is a very fundamental concept. We have got India across the border, just look at them, what happened and where did we get left behind? Only in education. Their engine of growth is their human resource and education a small example is that they were controlling the world's call centers , with youth employed. So education is automatically a part of the engine that drives the economy. I will very strongly differ to say that economic development without educational advancement is not possible, it is simply not possible in as vacuum. And for Ashfaque Sb. I have an observation to share about 2007 and that period's growth. I am only an ardent economic reader, but I think that that growth in 2007 was a very strong consumer oriented growth, where we had these leasing companies dishing out cars and credit cards, all kinds of loans; we were driven in that growth between 2005 and 2007. I am an ex-army officer myself, but it was consumer driven and the resultant inflation. The second thing is that you have left us in a dilemma regarding remittances. Please enlighten us where these are coming from and what is the negative impact. As a member of the general public, I thought it was very positive.

Question: Major (Retd.) Hasan Akhtar

Answer: Saad Amanullah Khan:

not fake. Similar is the case of religion where we have no proper institutions or degrees to identify Muftis and Maulanas. For education, we go and join this profession only if we cannot land ourselves a better job, it is no more a profession driven by passion and expertise. There are types of senses; sense, no sense, nonsense, nuisance and common sense; no sense and nonsense can also be termed as mentally incapable and hence are forgiven, even by God, it is the nuisance that needs to be addressed. The only mean to address this nuisance is for people with sense to come out make it common, thus making it common sense; in other words intellectuals have to come out and educate people and impart knowledge so that more of us will be thinking on the same lines. In addition it is high time that intellectuals should venture into these fields of politics, religion and education to improve the condition of our people. Question: Admiral (Retd.) Farooq: I want to ask Mr. Sohail Wajahat if in the common economic agenda signed by all political parties, these recommendations made by Dr. Ashfaque Hasan Khan have been incorporated? And I wish to recommend to Dr. Ashfaque that in addition to discontinuation of the provision of fee electricity to the employees of WAPDA, the free fuel to government employees should also be discontinued. They can be given cash instead, which will reduce the excess utilization of these resources on one hand and will support the economy on the other.


. . . . . continued Q&A Throughout my life I have been a very strong supporter of education and health, but here I ma trying to set priority. if you open a school today, the impact will definitely come but in ten years, but if you do not have economic growth even for one year the same schools will shut down. I agree 100% that economic development cannot be achieved without educational growth but my point is that educational development will an auto effect of economic growth, when jobs will be created and people will have enough to survive, they will automatically be driven towards improvement in the standard of living, thus affecting both health and education sectors. Question: AVM (Retd.) Dr. Abid M. Rao: I will start my question by quoting two statements that I heard during one seminar during training in France. The finance Minister started his presentation by saying that “the figures I am going to present, you don't have to believe them, because statistics are like a bikini, what they show is sensational, what they hide is vital,” second statement he made, and this is 1989 time frame, he said, “after second world war, two economies have grown to excellence i.e. Japan and Germany; and these two countries have never produced an economist worth a name at the international level and contrarily, the third world countries have world class economists yet they are the poorest countries, I don't know where is the disconnect.” Sir your figures were genrally covering your period, 1999 when your government came and 2007 when it ended. I would like to say that these figures alone mean nothing. 1999 was a period when we had this nuclear bomb explosion and we were under economic sanctions. So the figures projecting those days are not realistic in projecting lack of governance or misgovernance. In 2007, I will quote some incidences. Your government, your Prime Minister, was involved in a very big scandal of Stock Exchange, not designing the tax structure, privatization was also stained with

some mal-intention checked by the Supreme court. Regarding the state of the Railway today, I believe the Railway Minister that it is because of your government's bad selection of Chinese Engines, 293 Millio worth one stock of engines, which are a total liability on them. So these things must also be quoted and considered. 2006 the fuel prices were rising. Your government checked that, kept it at an artificial level, and when this government came, the dam broke and we were in trouble. Therefore your presentation, only to prove that the previous government was better than the current government is immaterial. As a common man, with no economic knowledge, even I know that this is no rocket science. The problem is lack of good governance in this country. Answer: Dr. Ashfaque Hasan Khan: Let me begin with consumer oriented growth. In GDP estimation consumption has an 80% weight-age, so no matter how small the growth, based on the weight-age, it is always consumer oriented growth; and what is wrong with that? The whole world is operating on the same format; if USA today is insisting that China should increase their local consumption and change their export oriented policy that is only because they want to strike a balance in trade. We had woken up to the idea very late.

Session 1 & 2

rating that we were able to bring foreign investment into the country. Insofar as the team is concerned, you can read the document submitted by the current government to the IMF, which is available on their website, about the previous economic team. It is completely full of praises. Question: Zahoor Motiwala: We discussed privatization and how these bleeding organizations should be privatized, but we also on the flip side see our bad experience regarding whatever has been privatized thus far, an example being KESC. So when the government wants to get out of business sector is it not of immense importance that you think through the privatization policy and that you soupup your regulator, be it NEPRA, SECP, PTA, State Bank, any regulator that you look at, there is a lot that has been left to be desired from their performance perspective and from their capacity building perspective? Answer: Dr. Ashfaque Hasan Khan: Privatization is not in dispute, because it not the job of the government to run factories, utilities or trains because civil servants are not trained to do businesses. The problems arise when you don't privatize to the right person, that is a place where your judgment can be wrong, but privatization in itself is not in dispute.

So far as remittances are concerned, I did not say it was good or bad, my only concern is that it is mysterious! What will happen if these Dollars that we have become so habitual to fade away? Or even come down to a normal 10 12%? The growth figures presented here were quoted from 1991. The idea is not to compare two governments and prove one more worthy, but to identify the problem and advise and solution. Mr. Sohail Wajahat mentioned rating agency ratings which had gone up from “B” to “B+” and has now slid down to “C”. These ratings were also achieved on the basis of these numbers only and it was because of these numbers and

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Event through the Lens

32


1) 2) 3) 4)

CJP (R) Saiduzzaman Siddiqui Justice (R) S. Ali Aslam Jaffri Justice (R) Khalid Ali Z. Qazi Justice (R) S. Mehmood Alam

5) Justice (R) Munib Ahmed Khan 9) Mr. Saad Amanullah – CEO Gillette 6) Barrister Farrukh Zia Sheikh 10) Mr. Sohail Wajahat – CEO Siemens Pak 11) Mr. Zahoor Motiwala – CEO Wincom 7) Advocate M. Jawaid Alam 12) Dr. Ashfaque Hasan Khan – Professor 8) Mirza Shahnawaz Agha 25) Justice (R) S. Ali Aslam Jafri

26) Justice(R) Munib Ahmed 13) Mirza S. Agha 14) Qirat 15) Audience 16) Mrs. Agha (Cntr) 17) CJP Saiduzzan 18-19) Q&A 20) Justice Khalid 21) Barrister Farrukh 22) Huma Agha 23) L-R F.Zia Sheikh, Mahmood Alam and Qazi Khalid Group

24 24) Justice Javed Alam

27) Senator Haseeb (Right)

Event Glimpses

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Jury Meeting through the Lens A meeting was arranged by the THINK! platform on On 19th September, 2011 at Karachi Sheraton Hotel, at 08:00 p.m. just for the jury members.

“With a weak government and a weak infrastructure, there is no hope for economic revival, until the people rise and bring about a change,”

Pakistan is a rich nation, in terms of land, minerals, human resources amongst others. We need to initiate the process of urbanization, industrialization, standardization and assetization of all resources of the country,”

Chief Justice (Retd) Saiduzzaman Siddiqui.

Mirza Shahnawaz Agha. The agenda was to get a Verdict on the drive. The meeting was a success by the time Dinner was over a unanimous decision to continue the drive was achieved.

“Economic emancipation of the people is an essential requirement before we can address any other developmental strategies for our country,” Justice (Retd.) S. Ali Aslam Jafri.

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“Unless we eliminate economic exploitation and provide equal rights to all people, regardless of caste, colour and creed, our country will not develop,” Justice (R)Khalid Ali Z. Qazi

“The need of the hour to derive a plan for socioeconomic development, with the involvement of people from all walks of life, which is not only in accordance with the Islamic Economic System but also is based on consensus,” Justice (Retd.) Mehmood Alam Rizvi

“The economic system of the west will continue to damage our very foundation, until we are able to establish a system of socio-economic equality,” Justice (Retd.) Munib Ahmed Khan


The Verdict O

THE VERDICT

n this 19th day of September 2011 in the presence of the following honourable members of the Jury and Members of the THINK! platform;

Members of the Jury: Chief Justice of Pakistan (Retd.) Saiduzzaman Siddiqui Justice (Retd. )Syed Ali Aslam Jafri Justice (Retd.)Khalid Ali Z. Qazi Justice (Retd.)Mehmood Alam Rizvi Justice (Retd.) Munib Ahmed Khan

Members of the THINK Platform; Mirza Shahnawaz Agha (Declarant) Ms. Nazish Shah (Chief Executive Officer)

Post careful deliberation and discussion on the proceedings of the preceding seminar, conducted on the 23rd day of July, 2011, the members of the Jury unanimously agreed that: 1. That the current economic order of the world (also in use by us) is oppressive and anti Islamic and therefore against the ideology of the state of the Islamic Republic of Pakistan. 2. That the economic philosophy in Islam warrants the establishment of 'equity' across the board and this essentially implies legally defining of the tools of 'production' and 'consumption'. 3. The 'Economic Reforms' paper submitted, and deliberated upon, provides clear direction towards legislative and uniform practice that ought to be upheld to reduce if not eliminate 'equity- abuse' the world over, supportive of basic human rights. 4. That the paper deliberated upon provides a remedy to the current plight and in tandem establishes the road-map for economic independence freeing the state from alien dependence to a large extent. 5. It is recommended that this process of seminars initiated by THINK! need to continue. For and on behalf of the Jury

Saiduzzaman Siddiqui Chief Justice of Pakistan (Retd.)

Syed Ali Aslam Jafri Justice (Retd.)

Khalid Ali Z. Qazi Justice (Retd.)

Farrukh Zia Shaikh Barrister (Former Judge of Sind High Court)

Syed Mehmood Alam Rizvi Justice (Retd.)

Munib Ahmed Khan Justice (Retd.)

Jawaid Alam Advocate (Former District Judge)


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THINK! - the decisive edge  

A public welfare debate pertaining to the legislation in Pakistan in light of her ideology.

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