RECENT meetings between the army chief and representatives of the country’s business community, in Karachi and Lahore, have revealed the outlines of a plan to revive the country’s economy by mobilising all resources through the prime minister-led Special Invest­ment Facilitation Council (SIFC).

The chief of army staff, who is a member of the SIFC’s apex committee, reportedly assured the business community of making all-out efforts to ensure transparency in dollar rates in open and interbank markets, besides bringing money exchanges under the purview of taxation, eliminating smuggling at the borders with Iran and Afghanistan and improving tax collection.

The COAS also explained the SIFC’s role in attracting investments of up to $100 billion from Saudi Arabia, the UAE, Kuwait and other countries.

But Gen Asim Munir’s meetings with traders are not a new thing on part of the military leadership, not is he the first one to do so. Former COAS Gen Qamar Javed Bajwa also held similar meetings with the business community, reportedly in October 2019 and June 2021, to allay their concerns over the deteriorating economic situation in the country.

Experts argue that for sustainable economic recovery, SIFC should also focus on structural reforms, not just foreign investment

During recent meetings with businesspersons, the COAS said he believed that $100bn investments in various sectors would massively help strengthen the country’s economy.

“I think these investments would leave a positive impact on our economy. It will bring dollars, strengthen the rupee and resolve our forex-related issues,” said Zubair Moti­wala, the chief executive of the Trade Development Authority of Pakistan, in a recent TV appearance.

He said the COAS was of the view that the Rs1.3 trillion being spent on the state-owned enterprises should be stopped and they should be privatised.

The business community leaders, during meetings with the army chief, highlighted various issues, including smuggling at the western and northwestern borders.

“When we raised this issue in meeting, the COAS said a task force has been constituted which will control smuggling very forcefully,” said Irfan Iqbal Sheikh of the Federation of Pakistan Chambers of Commerce and Industry.

According to Mian Anjum Nisar, the FPCCI’s Businessmen Panel chairman, the meeting focused on several issues the country’s economy has been passing through. “We found him [army chief] committed to doing something in a bid to end crises by all means to benefit the public,” Mr Nisar, who attended the meeting in Lahore, told Dawn.

Structural reforms

While Gen Munir’s huddles with the business community are generally being termed as a positive development, economic experts view them from a different angle, saying that efforts to revamp the economy must be carried out by ending political uncertainty and holding the general elections on time.

They term the army chief’s role very effective in giving a push for quick decision-making on the part of bureaucracy to ensure ease of doing business in the country.

They are of the opinion that the role of SIFC shouldn’t be limited to bringing only foreign direct investment (FDI) to the country, but also focus on introducing structural reforms to strengthen the economy.

“During the period between 2015 and 2020, the country received FDI worth $62 billion, either in the form of loans or other kinds of inflows. But despite having such a huge investment, we are still standing at the door of IMF for loan,” says Dr Sajid Amin, senior economist at the Sustainable Development Policy Institute (SDPI).

“Such investment can only resolve our liquidity-related issues (flow of dollar, exchange rate, foreign reserves, etc),” he says, adding that the government should take a firm decision to introduce some structural reforms to widen the tax base, improve tax collection, debt repayments, privatise state-owned enterprises and introduce a tax-facilitation system.

Mr Amin feels that holding of elections on time strengthens the democratic system. “After elections, the SIFC and the new government should work together to steer the country out of the economic crisis.” He believes that Pakistan would have to go for another IMF programme if it opts for such structural reforms.

The federal government had on June 17 this year issued a notification constituting two committees of the SIFC, aimed at attracting investment from the Gulf states in the fields of defence, agriculture, minerals, information technology and energy.

Through the notification, the Shehbaz Sharif-led government had constituted an apex committee of the SIFC under the command of the prime minister. Its members include nine federal ministers, the army chief (by special invitation), all chief ministers, a national coordinator (from the Pakistan Army) and the PM’s special assistant, who works as the committee’s secretary.

Later, the composition and scope of the SIFC were also made part of the law through an amendment to the Board of Investment (BoI) Ordinance, 2001.

“SIFC is a powerful body that was constituted to end red tape, giving a push to resolve various issues related to NOCs, refunds, approval, etc, quickly,” explains eminent economist Haroon Sharif.

But the main issue, the former state minister and BoI chairman says, is how to restore the private sector’s confidence by introducing reforms in the industry, dispute resolutions and economic zones. These, he argues, cannot be done by the SIFC alone. “Even if we find some money, we cannot do it with this.”

There should be no role of bureaucracy in the board’s affairs; it should be given to professionals from the private sector if “we want to bring investments”, he maintains.

Mr Sharif also calls for ending the role of bureaucrats in the process of privatising state-owned enterprises, as only the private sector’s professionals can better assess and make the pricing of assets.

While the economists seek structural reforms side by side bringing FDI by the SIFC, journalist Kamran Khan — who claimed to be privy to developments in power corridors — said that the premier intelligence agency, in collaboration with the relevant civilian agencies, will play a central role in eliminating smuggling along the Iranian and Afghan borders, confronting de-dollarisation of economy.

“The developments in last 24 hours confirmed that the COAS Gen Asim Munir will now lead Pakistan’s battle for economic survival from the front. In [recent] meetings… [he] resolved to implement an ambitious plan to reform the economy,” Mr Khan said in his post on X, formerly Twitter.

But there are still some who view the latest development with some degree of trepidation. Sharing a report from March 2000, analyst and think tanker Mosharraf Zaidi recently pointed out how similar the stated purpose of the SIFC and the Musharraf-era Corporate & Industrial Restructuring Corporation (CIRC) seems to be.

“CIRC’s purpose? To revitalise the economy by reviving non-functioning public sector entities. Sound familiar?” he asked, rhetorically, in a post on X.

Published in Dawn, September 6th, 2023