“The budget is alright, given the limited room for the government to manoeuvre and the constraints it had to deal with. If we don’t want to touch the ‘sacred cows’, sell the loss-making state-owned businesses (dragging down the government’s fragile fiscal house) or fix the power sector, then the (new) budget is fine,” observed Mian Mohammad Mansha, chairman of the Nishat Group, one of the country’s largest and most diversified business conglomerates, which also owns the MCB Bank, during an interview with Dawn over the weekend.

“If we want to make this economy competitive, we will have to make difficult decisions; we will have to go after structural issues and fix the basic problems dragging down the economy. Let me also tell you one thing: there always is room for tough decisions no matter how heavy the constraints are,” the billionaire textile, automobile and banking tycoon argued.

“Correct the fundamentals of the economy, strengthen the foundations upon which the economic superstructure is built to create a business-friendly and investment-friendly environment. We must fix our justice system, law enforcement, education and bureaucracy and downsize the government by pulling it out of the businesses it has no business running.

“Once you pull off these fundamental changes, you’ll easily manage to increase the size of the pie and take care of your longstanding problems (a narrow tax base and abysmally low tax collection).

If China can have business ties with India despite its territorial disputes, why can’t we?

We need a reformer coalition government that agrees on making fundamental structural changes in the economy,“ he went on.

Mian Mansha’s concerns complement the disappointment expressed by businesspeople over the government’s failure to take bold steps to fix the economy in what many call a ‘neither-here-nor-there’ kind of budget. Most feel that the budget detailing the country’s fiscal plan for the next year falls far short of tackling critical issues like expanding the tax base by netting incomes from the real estate, retail and agriculture sectors.

Rather, it enhances the tax burden on the compliant formal corporate sector, sending a message that if you are an undocumented person and a tax evader, you can continue to live like that, and no one would bother you. But the “tough decisions” Mian Mansha was referring to do not directly have anything to do with such concerns.

“Our real problems are much deeper than our taxation issues. We must look at the larger picture. These are symptoms of the disease and not the disease itself. One should treat the disease first, and the symptoms will go away. I want an environment where people can grow their businesses, where people have jobs, and where people have money.

“We need to improve our regulatory environment, make our systems functional and let the people invest and work. Once we create this kind of environment, our tax net and collection will also increase manifold,” he argued.

One of the country’s top exporters, he says the country cannot rebuild its depleting foreign currency reserves or overcome its perpetual balance of payments troubles by increasing exports.

“No country can build reserves by selling towels. If you want to strengthen your external sector and build currency reserves, you got to do this by attracting local and foreign private investment.

“India has done it that way. (Unlike Pakistan) they have been in just one International Monetary Fund programme since 1991 and never looked back. Foreign companies are flocking to that country. This is because Indians have implemented tough reforms to facilitate investors and investment.

“In Pakistan, on the other hand, we see foreign investors running away. This is because there is no rule of law here, and no one respects the sanctity of the contracts. Sri Lanka has come out of a similar crisis because of the respect for the law and the sanctity of contracts in that country. Why should anyone invest here if they have better, more attractive places to invest?” asks Mian Mansha, who has built a diverse business empire starting with a single textile mill.

“Once you can inspire confidence in the investors, they will start putting their capital in the economy; it will tackle most of your problems like the balance of payments issues, low industrial and agricultural productivity, exports, tax revenues, etc. There will be no stopping you; you just have to increase the size of the economy and make this country a favoured destination for the investors,” he insisted.

Besides, he contended, Pakistan must pursue greater regional trade with its neighbours: India, Iran and Afghanistan. “When we talk about trade with Afghanistan, we are actually also talking about trade beyond it to the Central Asian states. We can earn billions of dollars just by giving these landlocked states access to the world.

“Likewise, the (resumption of) trade with India will open up many business opportunities. If China can have vibrant trade and business ties with India despite its territorial disputes, why can’t we? I think there’s nothing better than having good relations with your neighbours. And you can’t change neighbours.

“We need to get our things sorted out with our neighbours. Now whatever the issues that are impeding, let them be there. But once people come to one another’s country through trade and tourism, I think the doors will start opening,” concluded Mian Mansha.

Published in Dawn, The Business and Finance Weekly, June 12th, 2023