View Full Version : Things looking up - Syed Bakhtiyar Kazim - 7th February 2016

7th February 2016, 09:19 AM
Perceptions matter and who better than Oscar Wilde to put perceptions into perspective: “We are all in the gutter, but some of us are looking at the stars.” However, a gentleman by the name of Arthur Rimbaud perhaps does a better job of showcasing the importance of perceptions: “I believe I am in Hell, therefore I am.” Without further digressing, the point is that perceptions matter and, in the case of a struggling economy, can make a fatal or fortuitous difference.

Perceptions are dependent on the understanding of a situation or environment, or whatever for that matter, and are employed generally in uncertain situations. But if it smells like a gutter, looks like a gutter and feels like a gutter, you are definitely in the gutter so no need for perceptions, albeit keep looking at the stars. If you are actually in hell, it does not matter what you believe; it will still be hell. Accordingly, only in the absence of absolute clarity are perceptions necessary for framing a course of action or taking decisions.

So, lately, during the course of a few social interactions — no, not virtual but the real kind thankfully — it was rather pleasant to come across positivity, sheer nude optimism about what the future holds for Pakistan, economically and overall. And this optimism was different from every Pakistanis, expect thankfully for the rare few like yours truly who have no interest in the game, and inexplicable and inane perceptions about the national cricket team’s potential. It is extremely baffling that in spite of a repeatedly poor performance by the team, in spite of analyses by experts of the game that point towards political intrigue in the corridor of powers that control the game and in spite of knowing that most of the team should be at home looking after their grandchildren, ask any cricket-loving Pakistani and he will passionately and profusely volunteer his solemn belief that Pakistan will win the ICC World Twenty20. Amazing! But as a patriotic Pakistani all the best wishes to the team; hey they might just win! Hope for the best and pray for the rest!

The thing about perceptions is that they are rather fickle and the looking good feeling can morph into the tuck-tail-and-run reaction at the drop of a coin. And since building perceptions takes times, it is imperative that national feel good initiatives are built upon tangible foundations rather than the cricket type hype that generally eventually results in national heartbreak. The latter is, at the end of the day, just a game; the former is essential and vital.

So, what exactly has happened that has brought about all this positivity, at least on the economic front? Well, the IMF is apparently happy with Pakistan but trusting their analysis is like believing that the Oscars will actually ever recognise that awards should be given to box office hits. More to the point, we have been working with the IMF on reforms, off and on for donkey’s years with not much to show for it. As an example, most US presidential candidates agree on lowering the tax rates that for some crazy reason is supposed to be good for the economy, while the IMF wants us to increase taxes. Taxation takes money from the private sector so that government can spend more and in our case perhaps inefficiently.

The State Bank of Pakistan (SBP) kept the policy rate flat at six percent and believes that “The uptick in economic activity appears to continue beyond 2015-2016 on the back of energy and infrastructure projects under the China-Pakistan Economic Corridor (CPEC)”; seriously the Chinese have not even started on energy projects. On the other hand, if you read between the lines, the Central Bank is extremely worried about declining trend in exports, referring to it as “challenges” but curiously remains silent on the ever increasing external debt. On other fronts, the security situation has improved but with the recent attack and repeated threat to schools the situation remains volatile. Politically, things are hardly clear, with the odd controversy breaking news every now and then to keep the nation entertained and journalists employed.

Mystified, there was only one option to determine the genesis of this perception: Google. However, this time around even that failed. The first search results included an eye-catcher; a newspaper article from April 1, 2012, ‘Foreign investment: positive sentiments’. Seriously, there were positive sentiments for foreigners to invest in Pakistan in 2012, so what happened? Wait, hang on; April fool! Not that a leading newspaper should fool its readers, irrespective.

Remember when, back in June 2014, the Japan External Trade Organisation (JETRO) asserted that Pakistan was seen as a top growth market by Japanese multinationals on the back of Pakistan being the top gainer on the Frontier Markets Sentiment Index? Okay I did not remember either; again Google helped but what happened? How many Japanese companies actually did invest in Pakistan over the last 20 months?

Dogged efforts on Google eventually succeed. Apparently, the Overseas Investors’ Chamber of Commerce and Industry (OICCI) very recently carried out a perception and investment survey that was encouraging and reflected positive sentiments: “This could be seen from the fact that 82 percent have stated that they foresee continuing growth in their businesses and that they are generally committed to making further investment in Pakistan.” And then there is the United Business Group of FPCCI, which currently believes that government has improved the security and investment climate of Pakistan, which in turn is attracting investors from all over the world. Quote, “Hundreds of local and foreign companies are expanding their operations while policies of the government are being lauded on every international forum.”

In the movie The Maltese Falcon, Sam Spade reminds Kasper that they were talking about a lot more money, and the latter retorts, “Yes, sir, we were but this is genuine coin of the realm. With a dollar of this, you can buy 10 dollars of talk.” Considering recent history, wonder how much of all that is talk money.

Irrespective, I have always been an optimist and believe that Pakistan is destined for greatness. Accordingly, on every forum, positive criticism aside, the mantra has always been that Pakistan is the greatest country on the globe. It is fantastic that these sentiments are now floating in the air and kudos to the government for creating this environment of positivity but let us not get complacent. There is a need to focus on converting talk money into coins of the realm in the form of investment in manufacturing. The CPEC is an opportunity, infrastructure investment is an enabler but unless manufacturing and exports grow, things might be looking up but may go nowhere.