Pakistan at a crossroads

Wednesday / Apr 12 2017

Newspaper : The News

Pakistan stands at a crossroads. There is progress in some areas and lack of development in others. Due to the measures introduced in 2001 – when I was the federal minister of science and technology – the IT and mobile telecommunications sector has witnessed remarkable progress.

Our IT industry has grown from $30 million in 2001 to about $3 billion today. This became possible due to the 15-year tax holiday given to the IT industry along with other facilitating measures. The mobile telephone sector has also grown from only 0.3 million mobile phones in 2001 to about 150 million today. This was due to the removal of charges from people receiving calls (calling party pays CPP regime) and introduction of Ufone with lower rates that created market competition.

At the heart of this transformation was the investment in our universities by the Higher Education Commission to produce highly qualified and well-trained manpower. Another important initiative taken by Khyber Pakhtunkhwa and Punjab governments was to establish foreign engineering universities in Haripur and Lahore in collaboration with Austria and Italy respectively.

In each case, a consortium of several leading universities has been formed. These will be the first ‘multiple university degree’ institutions in the world in which the degrees will be given by several foreign universities. Thus each department will be ‘supervised’ by a different foreign university and the students of that department will get a degree from that university. This is a remarkable model – my brain child of 2004 – which I tried to implement during 2006-2007 but which was abandoned at the last moment by the previous government, much to the annoyance of the foreign partners. These universities will begin their operations next year and will contribute to the development of high technology manufacturing industries in Pakistan.

However, there are a lot of areas in the country that require attention. Our exports have declined by about 12 percent in the last two years: they fell from $25 billion in 2013-2014 to only $22 billion in 2015-2016. The most worrying aspect of our economy, however, is the increasing debt burden. Both the previous government and the present government have borrowed heavily from international funding agencies but the funds have still not been invested in projects that will allow us to pay back the loans. The national debt burden has almost doubled in the last eight years with a huge addition of about $33 billion in external debt and liabilities and another $4 billion that will be added this year. Our total debt burden will then rise to $81 billion. We are slipping into an abyss rapidly and our national security is now at serious risk.

The most important sector of our economy is agriculture but the growth in agricultural productivity, an average of about 1.6 percent during the last three years, is not even keeping up with our population growth. The increasing water shortages can be met by constructing small dams so that little or no water reaches the sea and can be used for irrigation purposes instead.

In this regard, we can learn from India. There are 70,000 small dams constructed at a cost of Rs46 billion in the state of Maharashtra alone. Thousands of small dams built across India reflect the long-term vision of successive Indian governments to feed their growing population through increased agricultural output. With global warming and increasing water stress, our very survival is at stake. The federal government should seriously consider cancelling the provisions of the 18th Amendment under which additional funds were transferred to the provinces, and use those funds for the construction of small and large dams across the country to tackle poverty and hunger effectively.

A ray of hope in this scenario is CPEC, provided that we execute the projects effectively. This requires an intense effort on our part to create teams of highly efficient professionals that can handle the programme. For this we must send our brightest youth to Chinese universities for six months to receive trainings in selected fields in consultation with the Chinese government.  Moreover CPEC must not just be a road to carry goods from and to China but should become a hub for the manufacture of high technology goods.

The export-oriented industrial clusters in selected fields such as engineering goods, pharmaceuticals, biotechnology products, electronics, high value agriculture and automobiles should be given a 15-year tax holiday to attract Chinese and other private industries to invest. Each industrial hub should have high tech industries to produce and export high technology products, technical training centres to produce highly qualified technicians, university research centres to benefit industries and tech parks to support new start-up companies and develop prototypes of new products and processes.

We can learn from South Korea which focused on the establishment of high technology industries such as ship building, industrial machinery, engineering goods, electronics, non-ferrous metals, petrochemicals and chemicals in the 1970s. To provide the highly skilled technical manpower needed, Korean Institute of Science and Technology, Korean Advanced Institute of Science and Technology, and Seoul National University were established. Twelve specialised research institutes were also set up in order to develop industrial technologies in partnership with the private sector. A special law for venture business promotion was approved in 1997 to help new technology-based SMEs to emerge. Korea thus moved quickly from reverse engineering and imitation of foreign imports to innovation and entrepreneurship.

These wide ranging macroeconomic, trade and industrial policy reforms with a focus on the development of high technology manufacturing and value-added exports made Korea an industrial giant in a short period of 25 years. This was due to the visionary leadership of an army general, General Park.

Singapore Malaysia and China provide similar examples. During 2016, China sent about 600,000 students to top universities for higher education abroad. In the same year, almost 500,000 students returned to China after completing their foreign training.

Our leaders need to realise that the real wealth of Pakistan lies in its youth. Our investment in education is a dismal 2 percent of our GDP. The investment in science and technology is only 0.3 percent of the GDP. Unless we give the highest national priority to quality education, science, technology, innovation and entrepreneurship, the country will not progress.