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Global Go To Think Tank Index (GGTTI) 2020 launched                    111,75 Think Tanks across the world ranked in different categories.                SDPI is ranked 90th among “Top Think Tanks Worldwide (non-US)”.           SDPI stands 11th among Top Think Tanks in South & South East Asia & the Pacific (excluding India).            SDPI notches 33rd position in “Best New Idea or Paradigm Developed by A Think Tank” category.                SDPI remains 42nd in “Best Quality Assurance and Integrity Policies and Procedure” category.              SDPI stands 49th in “Think Tank to Watch in 2020”.            SDPI gets 52nd position among “Best Independent Think Tanks”.                           SDPI becomes 63rd in “Best Advocacy Campaign” category.                   SDPI secures 60th position in “Best Institutional Collaboration Involving Two or More Think Tanks” category.                       SDPI obtains 64th position in “Best Use of Media (Print & Electronic)” category.               SDPI gains 66th position in “Top Environment Policy Tink Tanks” category.                SDPI achieves 76th position in “Think Tanks With Best External Relations/Public Engagement Program” category.                    SDPI notches 99th position in “Top Social Policy Think Tanks”.            SDPI wins 140th position among “Top Domestic Economic Policy Think Tanks”.               SDPI is placed among special non-ranked category of Think Tanks – “Best Policy and Institutional Response to COVID-19”.                                            Owing to COVID-19 outbreak, SDPI staff is working from home from 9am to 5pm five days a week. All our staff members are available on phone, email and/or any other digital/electronic modes of communication during our usual official hours. You can also find all our work related to COVID-19 in orange entries in our publications section below.    The Sustainable Development Policy Institute (SDPI) is pleased to announce its Twenty-third Sustainable Development Conference (SDC) from 14 – 17 December 2020 in Islamabad, Pakistan. The overarching theme of this year’s Conference is Sustainable Development in the Times of COVID-19. Read more…       FOOD SECIRITY DASHBOARD: On 4th Nov, SDPI has shared the first prototype of Food Security Dashboard with Dr Moeed Yousaf, the Special Assistant to Prime Minister on  National Security and Economic Outreach in the presence of stakeholders, including Ministry of National Food Security and Research. Provincial and district authorities attended the event in person or through zoom. The dashboard will help the government monitor and regulate the supply chain of essential food commodities.

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At the cost of economic growth

Abandoning economic growth for stabilisation is a poor choice. Unfortunately, it has been the choice in Pakistan. Historically, economic policy of the country has been vigorously pursuing stabilisation at the cost of economic growth. The focus has been limited to deficit management.

In the most recent episode, the current account surplus has been made a sign of success by ignoring that it has come at a very serious cost: economic growth dropped below the population growth rate of 2.0 percent even before Covid-19.

This fixation with stabilisation has a background. High economic growth brings macro-economic crisis in Pakistan by its very structure. Total or final consumption constituted 94.8 percent and 91.6 percent of GDP FY2018-19 and FY2019-20 respectively, increasing from 82 percent in FY2003-04. The share for India and Bangladesh in 2018-19 was around 71percent and 75 percent, respectively. Importantly, around 82 percent of this comes from household consumption.

Further, industry added 28.85 percent and 28.77 percent share to the total GDP of India and Bangladesh, respectively, in 2018-19, compared to 19.36 percent for Pakistan. A similar situation exists for exports’ share in GDP. Finally, the services sector contributes more than 50 percent to the GDP of Pakistan. But the sector has low productivity as the country passed from the agriculture sector to services sector without consolidating the manufacturing sector.

Policies to fuel household consumption and facilitate importers to support a higher growth, such as exchange rate overvaluation became the need of the hour. This not only led to higher trade deficits but also adversely affected capital account. Roughly, Pakistan has had a macroeconomic crisis every time the GDP growth rate has surpassed 5 percent. This has made economic growth look evil.

Further, the opportunity cost of not having growth was relatively low. Given its nature and composition, higher growth rate has done little to lower poverty. They were weakly associated with creating employment opportunities in the right quantity and quality. Particularly, higher growth failed to produce jobs for middle and high skills. Therefore, political constituency for economic growth did not develop and stabilisation league thrived.

Because of crisis associated with higher economic growth and low political demand for it, stabilisation occupied the centre stage in economic policy and deficit management emerged as the criterion of success. Tools able to discourage imports to manage deficits and attract protfilio investments to build reserves in order to sustain pressure on rupee emerged as macro-prudent policy.

While stabilisation is not bad per se, stabilisation at persistently low growth is definitely bad. Economic growth above a minimum threshold is a fundamental prerequisite to create employment, reduce poverty and transit towards a higher level of economic development. Persistent low economic growth in countries like Pakistan, which have a high population growth, costs economic development through multiple channels.

Pakistan’s population grew at 2.40 percent per year between 1998 and 2017. For a population of over 220 million, this is an addition of about 5.28 million people each year. Low economic growth, which already has low job elasticity in this context means being unable to meet the number of jobs required to provide employment to the ever-increasing labour force.

This, in turn, may compromise the efforts for poverty alleviation. There is much liking in Pakistan for the Chinese model of poverty reduction. One needs to remember that the Chinese miracle became possible only because of 30 years of explosive growth (averaging around 10 percent). In 2019, growth in Chinese economy totaled $22.5 trillion despite being the largest in the world, that’s roughly 8 percent more than in 2018.

Assuming that there is no change on labour force participation and population growth rate, Pakistan needs a GDP growth rate of 7 percent in order to retain the employment level of 2018. In order to absorb the two million new entrants into the labour market every year, the country needs a growth rate of 10 percent. Improved job elasticity may get the required rate down to 7 percent which to me is what Pakistan needs to grow at on a sustained basis in order to reach a higher level of development.

Finally, a sustained increase in household consumption and savings is not possible without a growing economy, particularly in the absence of household financing market. The two, in turn, fuel the economic activity through increased aggregate demand and investment at the macro level and investment in human capital – health and education – at the household level.

The preceding discussion begs two questions: how to achieve a sustained 7 percent GDP growth rate and how to ensure that it is good growth? In other words, how to have sustainable and inclusive economic growth at a high rate? While there is no straight forward answer, evidence suggests some basic building blocks for it.

Because of the crisis associated with higher economic growth and lower political demand for it, stabilisation occupied the centre stage in economic policy and deficit management emerged as the criterion of success.
First and foremost, economic policy needs to shift its focus to creating employment opportunities, attracting efficiency, seeking FDI and promoting exports. This is not possible without shifting from stabilization-centred (macro prudent) economic policy to a growth centric one. Both have competing objectives and policy tools.

The recent rise of Bangladesh shows that growth coming from the industrial sector, financed by investment and exports, producing jobs and encouraging female labour force participation can be sustained over long periods. It is associated with improved income and consequently household consumption, saving and private investment. It brings stabilisation with it.

Attracting efficiency seeking FDI and promoting exports require investment in people and growth centric prudent macro-economic policy. A growth centric policy acts to provide an environment which attracts efficiency, seeking FDI, bringing technological spillovers, adding to productivity and creating demand for middle and higher skills.

In contrast, policy for stabilisation is okay with attracting portfolio investment by offering lucrative returns in the form of high policy rate which actually discourages investment. Similarly, a growth-centric prudent policy promotes a fair exchange rate to attract FDI and access international trade market instead of overvaluation.

Second, priority must be given to economic inclusion of the people and businesses, particularly micro, small and medium enterprises (MSMEs). Steps must be taken to create demand for economic inclusion. In this regard, we need go beyond awareness and advocacy programmes and work to increase household income.

According to a study, 66.3 percent respondents from Pakistan reported low income as primary reason to not having a bank account. Further, digitalisation can help promote economic inclusion. The SBP and commercial banks need to partner with the private sector to promote economic inclusion of the masses and businesses, particularly MSMEs.

Third, focus on industries having a higher capacity to produce jobs. These industries must be supported to achieve economies of scale through work regulation and targeted economic policy interventions. The scale and duration of supportive policies must be linked with the performance of the beneficiaries. This is the key to developing resilient and competitive industries. This model not only provides a sustainable basis for economic progress but also lays out foundations for social inclusion through improved job opportunities and household incomes. Conversely, it reduces the socio-economic inequalities and poverty.

Fourth, population growth needs to be brought under control. Improving the female labour force participation can be the key as it increase the opportunity cost of having an additional child.

Take the example of Bangladesh. Economic growth boom started after 2006. It was the time when the country achieved and sustained an annual population growth rate of 1.1percent, compared to Pakistan’s 2.2 percent. Leaving the gains aside, the per capita income in Bangladesh grew faster than Pakistan’s by approximately 3.3 percentage points per year. It affects consumption, saving and domestic investment patterns.

Policy tinkerers in Pakistan must understand that a sustained improvement in the living standard is not possible with the current levels of economic growth. While economic policy must not be fixated with the GDP, it must not abandon economic growth to achieve the so-called stabilisation.

Stabilisation at low growth has been achieved and lost many times already. A stabilisation that costs the masses unemployment and poverty is unsustainable. It dies down before giving any gains. Good growth therefore must be ensured and promoted. In the words of Britain’s business lobby group, the CBI, it must aim “growth for everyone”.

The pandemic calls for and provides an opportunity for Pakistan to take a new approach to growth where economic growth and well-being go hand in hand. This will require: i) continuity and expansion of fiscal stimulus, ii) shifting the policy focus from stabilisation to growth, iii) building strong economic foundations for growth through monetary, fiscal and other regulatory policies, iv) creating a conducive environment for economic growth which is inclusive and produces employment opportunities and, v) investing in people.

COP-26 UK: Questions need answers

COP-26 is going to be organized sense of hope and maturity. The hope is derived from the positive developments during the last few months. The worst opponents of climate change are vacating the power houses. World is coming out of COVID-19 with the realization that we can manage our lifestyle to check the rampant GHG emission and environmental degradation. It will only require adjustment to lifestyle, which is possible. The maturity is obvious from the adaptation of green recovery as leading option to combat theimpacts of COVID-19. Green recovery has become global slogan and every government seemsto be interested to join the green drive.

The other element of maturity is that governments are working to devise the financial packages for green recovery. EU has announced that it will spend 30 percent of total allocations ofrelief and recovery fund (€ 750 billion) and EU budget 2021-27 (€ 1.1 trillion). The allocations suggest that it would be huge investment if met with actual spending. It will be a game changer. China, South Korea and many other countries are also presenting a positive outlook on green investment. China is also focusing to infuse a new spirit under BRI green investment, and it was working even before the COVID-19. There was 58.12 percent green investment under BRI in 2019. France has announced a package of € 30 billion for green recovery. The package is quite comprehensive in terms of covering areas of investment. The package includes areas of investment from cycling to industrially transformation. Germany has announced a stimulus package of € 130 billion with € 40 billion for green investment, especially focusing on the climate change.

Pakistan also showed commitment to climate change and environment in recent times like plantation drive, renewable energies, etc. Pakistan used COVID-19 outbreak as opportunity to enhance efforts on climate change. Pakistan took some innovative steps to lessen impact of COVID-19 and contribute to wellbeing of environment. Government of Pakistan used plantation as a tool to create jobs, which were direly needed during the COVID-19. The results of drive suggest that Pakistan achieved tremendous success to protect environment and create jobs at wider scale. Pakistan also invested on hydropower, solar and wind. Pakistan also took concrete steps to promote electric transport system, which will play determinantal role in controlling pollution, but success will be dependent on the availability of electricity. Pakistan took all these steps despite the fact that country is going through economic crises, low growth and scarce financial resources in addition to COVID-19. Thus, Pakistan can be presented as case study for poor and resource deficient countries.

The event would be determinant for future course of actions on climate change, green investment (green recovery packages has direct relevance to Paris Agreement), and sustainable future of world

However, it was disappointing to note that biggest economy of world, USA failed to give due importance to green recovery and climate change related investments. The statistics shows that USA only committed less than 1 percent for green investment from the US$ 3 trillion package. Rather, it preferred to oblige the fossil fuel industry. Another important country to mention here is Japan, which also did not show much enthusiasm.

In this backdrop, the COP-26 has become the most notable event of 2021. The event would be determinantal for future course of actions on climate change, green investment (green recovery packages has direct relevance to Paris Agreement), and sustainable future of world. However, there are few questions which require answers to test maturity of world leaders and countries; What is status of Paris Agreement and progress? How to link the green recovery investment to Nationally Determined Contributions (NDCs)?What would be methodological framework to measure the performance on NDCs? Unfortunately, right now world do not have methodological framework to measure the performance of NDCs, which would be key the answers of first two questions. We only relay on the submission of countries and statements by the leaders. The bitter reality is that the statements are not often backed by actions, here we quote many examples.

Although, work is going on methodology at UNFCCC and other platforms, but the consensus is still missing. UNFCCC has erected a specialized group to work out a methodology framework to measure the progress on NDC. World is expecting that the group will be able to deliver a methodology framework soon. Apart from other expectations, it would be key area to watch. Pakistan can assist the world here. It is not just a patriotic or nationalistic statement; it is based on the hard facts.

Pakistani scholar Farrukh Khan has presented a viable solution. He proposed methodology with the name of DEAL (Decision making, Economy, Alignment, Livelihood). Each indicator has sub-indicators to measure the progress. Decision making will be measured by programmatic approach, Devolution and Capacity. Economy part will be measured by energy, technology and resilience. The elements of alignments would be stakeholders, finance and investment. Livelihoods will have sub-indicators of poverty, jobs, and equity.

The specific objectives of the proposed methodology are; 1)measurment of the performance of countries against commitments made under NDC, 2) legal and political scrutiny of commitments made under NDC, 3) new “Index (for ranking of countries) “building on the findings of objective-2, and 4)develop Score Card with the name of DEAL Score Card.The score card would be used to rank countries on the basis of contribution of countries on NDCs under Paris Agreement. It will give us a clear picture of state of affairs. The methodology has been already applied on Ghana and finding has been published at Harvard University. This paper can provide a base for future.

However, for that purpose there is need to replicate the methodology at wider level or at least on selected countries. There is need that international organizations, UN bodies and more specifically UK government should test this methodology through a multicounty study. The results of this study can be presented at COP-26 to refine the methodology further. It would be a concrete output after the Paris Agreement and instrument to gauge the performance of countries.

It is required intervention because world needs concrete steps not just talking. The COVID-19 has provided us great opportunity to reset the ambitions and actions. The advocates for environment and climate change are asking leaders, how we will turn this opportunity into reality. It also become important because during COVID-19 we also observed the phenomena of reverse migration, which will have its own implications on nature, if not tackled properly. People needs answer to their questions not statements. Hence, COP-26-UK can be turn into an opportunity to present some concrete answers through tangible actions and a sound methodological framework to measure the NDCs would be an excellent option.

Using taxation to curtail tobacco use

The World Health Organisation (WHO) calls tobacco consumption an epidemic due to its severe short- and long-term repercussions. Daily, over 1.3 billion people worldwide consume tobacco products. There are an estimated 8 million tobacco-related deaths annually.

Around 80 per cent of smokers live in low- and middle-income economies, with 60 per cent of the population living in Asia. South Asia remains one of the most affected areas and bears most of the health costs incurred due to the tobacco use. The WHO has categorically stated that there is no safe level of exposure to tobacco.

Taxation is considered the most useful tool when it comes to deterring tobacco consumption. As per WHO guidelines, if all the countries impose at least 50 percent excise duty on a cigarette pack, the number of tobacco consumers would decrease by 49 million.

The data suggest that cigarette smoking declines in the presence of a robust taxation regime. This should encourage states to improve their tobacco taxation strategies.

As far as South Asia is concerned, the cigarette tax scorecard 2020 paints an overall dismal picture. Although some countries are playing a substantial role in increasing tobacco taxation, the fact remains that these efforts have not proved enough for widespread change in tobacco use in the area.

With a score of 1.88 out of 5 points, the Indian tobacco taxation regime is much below the global average of 2.07. The amendments in the local taxation regime started in 2011 with augmented excise duty in 2014-15 and banning e-cigarettes in 2019. Due to such efforts, in 2020, the local tobacco taxes reached 348 billion Indian rupees. However, despite its continuous efforts to increase the taxation on tobacco products annually, the fact remains that its health costs could not be reduced as envisioned. The main reason is the differential tiered tax system, which leads to increased consumption of low-cost cigarettes.

On the other hand, Bangladesh and Sri Lanka have shown considerable improvements in tobacco-related products’ curtailment. Sri Lanka is the only country in the region that has secured 3 out of 5 points on the cigarette scorecard. The reverse shift of Value Added Tax (VAT) and excise duty is the reason for the change.

Bangladesh, once the leading tobacco consumer with a recorded 46 million consumers, has made incredible improvements. From 2010 to 2018, the National Board of Revenues’ tiered tax mechanism computes the excise duty as a percentage of its retail price. From 2015 onwards, the tiered system was simplified by eliminating the middle-tier option. Additionally, 1 per cent of health development surcharge has been imposed along with a 15 per cent VAT. Through dedicated efforts, Bangladesh has secured a 2.38 on the cigarette scorecard 2020, a tremendous improvement from the previous score of 0.88 in 2014.

With a score of 0.88 on the cigarette scorecard, Pakistan’s situation does not look promising. There are about 22 million tobacco users in Pakistan, with 1.5 million oral cancer cases reported by the Pakistan Medical Association yearly. A much simpler tiered tax version was introduced in 2013 where the lower and upper limits for a pack of 20 cigarettes were kept at Rs 17.6, and Rs 46.5 respectively. During 2014-16, the government continued to increase taxes. However, the institutional and governance issues led to the lowest excise duty levied on these tobacco products. Successive government paid no heed to the rising tobacco consumption, particularly among the country’s youth. The Federal Board of Revenue faces severe resource constraints to implement a suitable tax regime effectively.

Additionally, proponents play an essential role in keeping the prices of cigarettes low. With their massive influence over legislative bodies, a favorable taxation system is levied. A particularly controversial move was introducing a third-tier system in taxation, which favored the tobacco industry. In 2017, through SRO 407(I)/2017, FBR introduced a third tier instead of the two-tier system previously implemented. The Auditor General of Pakistan (AGP) reported that this move alone resulted in a loss of Rs 33 billion for the government in one year. The AGP claimed that about 23 per cent of smokers did not smoke more than five cigarettes a day before the amendment. Conversely, after 2017, smokers’ rate of consuming less than five cigarettes per day dropped to a mere 1 per cent. The third tier was abolished in 2019.

Tax relaxations are demanded in the name of illicit trade. While the consumption figures stand at a whopping 86.6 billion cigarettes per year, the industry’s official figures acknowledge 55 billion only. The rest is usually blamed on illicit trade; however, the volume of illegal trade is not more than 9 per cent, which is way less than the tall figure of 41 per cent reported by the tobacco companies. These figures raise suspicions of tax evasion by leading tobacco companies and speak volumes about the tobacco lobby’s power in statutory institutes and its disastrous impact on the economic and healthcare sectors. Consequently, the average price of a cigarette pack remains the lowest in Pakistan.

It is evident that the region lags behind other countries in controlling cigarette and tobacco consumption. A uniform tax system is needed at all levels to prevent tax evasion. In South Asia, the tier system provides tax evasion opportunities to tobacco companies, causing severe economic and health implications. A high uniform taxation system would push tobacco prices above the average income growth, thereby keeping youths and children away from these products. Besides, the lower-income segment of the society would not burden the national exchequer by consuming additional cigarettes, and the healthcare costs might come down. A single-tier system will also lessen the problem of illicit trade.

Besides a uniform taxation system, sweeping tax reforms are needed in Pakistan. FBR needs to be empowered to coordinate with other departments regarding tax monitoring, collection and compliance. The immense influence enjoyed by the tobacco industry needs to be curtailed by implementing laws against tobacco products in letter and spirit. Pakistan needs to levy other taxes like sin tax and value-added tax to comply with the WHO recommendations which suggest about 70 per cent tax to control the availability of tobacco products. Pakistan also needs to pass detailed legislation to ban both direct and indirect forms of tobacco advertisements.

Women at a loss

World Bank’s Human Capital Index (HCI) notes that a female child born in 2020 will be 44 per cent less productive than those born in the pre-pandemic years. HCI measures the contribution of health and education to the world’s citizens’ productivity and economic potential.

As per recent World Bank reports, a female child born in Pakistan today has 59 per cent fewer chances of reaching her full potential. The number is the lowest amongst all countries in the region, and most others in lower-income groups. If the HCI measures are believed, Pakistan is wasting nearly 60 per cent of its human potential.

Moreover, Pakistan ranks 154 out of 184 countries on the Human Development Index (HDI), another UNDP measurement based on life expectancy, education and per capita income. The rankings are a definite cause of worry for a country grappling with several socio-economic concerns. The most troubling part is that when the HCI and HDI rankings for Pakistan are discounted for gender inequality, we find ourselves among the worst performers in the nations’ league.

The startling number of out-of-school children is a prime issue for Pakistan, especially when it comes to girls’ education. Only 27.6 per cent of women have earned secondary level education. This compares poorly with 45.7 per cent achievement for their male counterparts.

With millions of young women unable to continue their education online, young mothers deprived of routine antenatal checkups, coupled with reduced family income in the year 2020, the future appears even bleaker.

The year of the pandemic’s spread has significantly impacted the lives of women everywhere, with the United Nations calling gender-based violence in 2020 a shadow pandemic.

There have been news reports of a surge in domestic violence, honour killings and gender-based violence during the lockdown that has led to an increase in depression, aggression and violent behaviour within households.

With a notable increase in rape cases during the first quarter of 2020, the reported number stands at 1,868. The lockdown, otherwise an effective strategy for containing Covid-19, could not prevent female kidnappings — the number of kidnapped women in the last half of 2020 was a staggering 6,720.

The shift to remote learning and working systems during the pandemic further proved that women are not safe in cyber-spaces, as cases of online harassment increased manifold in the last year.

In the pandemic year, 4,737 women suffered sexual violence, and 1,843 faced severe domestic violence. Unfortunately, most social welfare helplines at the provincial level were shut down during the Covid- -19 lockdown in Pakistan. The police helpline and the Ministry of Human Rights Helpline, which remained available, received approximately 40,000 calls a month seeking a referral, legal advice and actual physical recovery.

National Disaster Management Authority of Pakistan also has a dedicated Gender and Child Cell to support the most vulnerable population during emergencies. After the Sheikhupura gang-rape incident in December, one can only hope that a better emergency helpline system for women and children is established.

As the world moves into 2021, a woman still has many hurdles to cross to succeed in Pakistan.

Female participation in the labour market continues to remain low (21.9 percent compared to 81.7 per cent for men).

One of the primary reasons for women lagging in entrepreneurial ventures is a lack of access to finances. The State Bank of Pakistan (SBP) has noted that only 3 per cent of small and medium business loans go to women. Only 19 per cent of the microfinance loans go to women.

The Ehsaas programme aimed at supporting women from the low-income background is a step in the right direction.

Notifications such as the Policy for Counteracting Harassment Issues in Educational Institutions, bills like the Protection against Harassment of Women at Workplace Amendment Bill 2019 show the government’s intent to sensitise institutions to the predicament of Pakistani women.

In a significant move at the start of the 2021, Lahore High Court has directed the Government of the Punjab to abolish the virginity tests.

In 2021, actionable research will play a pivotal role in informing policymakers to make better decisions regarding increasing gender equality. Decisive policy changes are pivotal for Pakistan’s improved performance in the HDI and the HCI.

Policymakers and researchers must work together this year to find effective ways to protect and promote the country’s female population. Programmes focused on promoting equality overall should be a focus of research now. Social protection schemes will also help foster a culture of safety and openness and reduce the ever-widening gender gap.

A focus on women empowerment in 2021 is critical to the country’s socio-economic growth. The hope remains that Pakistan, through dedicated effort, will see a change for the better in women’s safety and gender equality measures.

China between criticism and flattering

China’s transformation is a marvelous story. A country with 81 percent poverty is now the second largest economy of the world. The transformation led to enhanced global relevance and currently China is formidable economic power. China contributes40 percent in global manufacturing and is trade partner with 120 countries. The status has been further strengthened after the COVID-19 outbreak. It is only country which was able to absorb the shock with positive GDP growth among major economies. The march on the path of development is going on and it is expected that within one decade it would be the largest economy of the world.

The journey of rise is not without shocks and troubles. China faced many challenges and story is still going. The challenges are numerous but,criticism and flattering, stand out among all. China is either facing fierce bashing from opponents or flattering from friends. Both challenges present a unique set of problems, which have potential to complicate the future situation if not tackled at this point time.

First, the rivals started a malicious campaign and adopted the strategy of panning China at any cost. They are applying it to demoralize or antagonize Chinese people and government of China. A comprehensive strategy has been deployed to achieve the desired outcome. The first step was to propagate anti-China message by targeting Chinese government and companies. The crusade started with the undermining the Chinese government. The favorite tools were to target the openness of economy, human rights, environment and democracy etc. The system of governance was also targeted.

Communist Party of China (CPC) is the most recent recruit on the subject. The rivals are not leaving any stone unturn to criticize the CPC. We can analyze the news, articles or listen speeches, where adversariesare trying to undermine the CPC. They present CPC as oppressor. In reality, it is CPC which have turned around the fate of China, brought China out of poverty and turned it into a global power. The people of China are happy with the performance of CPC and admires the achievements. But the malevolent campaign is still going on. The opponents feel that by criticizing CPC, they can create a wedge between people and CPC and later on, they can exploit the wedge for their own objectives.This is not possible as CPC is prioritizing people and their welfare. It is evident from the plans and policies of state.The concrete example is work on poverty and eradication of extreme poverty from China in 2020.

Chinese leadership is cognizant of the fact and are applying the rational mind to tackle these challenges. They are showing resilience to provocation, which is irritating the opponents

The next step was to malign the Chinese companies and putting all sort of barriers to hinder the growth of these companies. Huawei is facing the brunt of this strategy for a long time. It has been advocated that the Huawei is spying on the behalf of China state, which has no evidence till to date. The opponents have built alliances to check the growth of Huawei. They are pursuing countries to not join Huawei, but countries do not have any options in 5-G technology except Huawei. TikTok is another prominent example of this strategy.

Second challenge is flattering, which is more serious and dangerous as compared to first one. Flattering is a silent enemy, which kill state from the inside. It does not show the impact until the damage is done. It leads to arrogance and make country immune to wise advice or reform. It is self-defeating instrument, as we can witness it from the decline of existing global power, which are not ready to listen anything. The arrogance gives them assurance that their ideas are superior, and world needs to act on their ideas.

Theflattering usuallycomes fromfriends; hence it becomes extremely difficult to know it or analyze it. The friendstell that you are doing extremely good job and there is no match of your wisdom or there is no precedent of wisdom.They try to convince that you cannot make a mistake or bad decision. The same is happening in case of China. Friends, in their own perspective are helping China, to avert the consequences of the propaganda. It is good that they are trying to stand with China, but they need to avoid excessive praise and also tell China when it makes mistake or take wrong step.

Both challenges have their own implications. First, if China fall prey to criticism, it will be antagonized, which is desired purpose of the opponents. As,they have perceived that it will compel China toengage in conflicts. The episode of Hong Kong, Taiwan and South China Sea is continuity of this strategy. The ultimate objective is to hinder or stop the China’s progress on the economic front by engaging in conflicts or senseless race for power. Second, flattering will present the challenge of arrogance, which would be ultimate disaster. The arrogance will compel China to lose the rational mind and make decision by considering themselves immune to mistake. We have seen the implications of arrogance in past which led to decline of superpowers.

It is good to note that the present Chinese leadership is cognizant of the fact and are applying the rational mind to tackle these challenges. They are showing resilience to provocation, which is irritating the opponents. The present Chinese leadership is also ready to admit its mistakes and correct the course of action. For example, for last few years, Chinese leadership is openly admitting the environmental problems and trying to fix them by applying the relevant policies. For that purpose, Chinese leadership has adopted the concept of Eco-civilization and better living instead of blind growth.

However, the real challenge for leadership and elder of society would be to infuse the same wisdom and spirit at the societal level and among future leaders. They will have to convince young population that humbleness is China’s strength. It is feared that in the absence of concrete efforts, the continuous blamegame and flattering can createserious challenges especially among youth. They can become victim of negativity or praise. Although, both challenges require serious attention, but tackling of flattering and arrogance would be more difficult, as everyone like to be praised. Owning to influence of flattering, Chinese people may startto talk about Chinese way of life or Chinese values like the Western countries. It will lead to arrogance which will be mother of all ills. It is good to note that President Xi has launched comprehensive campaign through education to infuse the spirit of humbleness, traditional wisdom and value-based society.

However, China would also be in need of help from friends to stand with her and tell her truth. Pakistan being iron brother, should take lead and work with China, to avoid such situation. First, Pakistan should stand with China to face the propaganda and refute the propaganda. Second, Pakistan, being iron brother, also enjoys the confidence and trust of China, which can be utilized to avert the praise trap and arrogance. It can be achieved by telling China that China is not immune to mistakes. It is normal to make mistake, but correction is wise step to avert negative implications. It should be done through proper channels not in public.

Privatization of what? SOEs or governance

Privatization paranoia is not going anywhere. Government seems to be obsessed to go for privatization at any cost like previous governments. The argument for privatization has same ingredients, which are we hearing for long time. State Owned Enterprises (SEOs) are loss making entities. It is burden on national exchequer. SOEs have become bottomless buckets, which cannot be filled. Government has to offer billion of rupees to sustain the functioning of SOEs.Business is not job of government. Business is job of private sector, as they are best to run it. Then stories are being told how private sector is pulling business up across the world and here comes the global statistics, which usually show one side of picture. Growth is being projected but development and in-equalities are less talked about. Hence, government is going to privatize the SOEs and private sector will turn these SOEs into profit making machines.

These arguments are being used to justify the privatization. But the fundamental questions are not being discussed or highlighted, leave alone the answers. Like, why SOEs are loss making entities? Why private sector wants to invest in loss making entities? What is motive? How it will help country?Who will pay for it? Let’s decode these questions and try to find some answers.

First, yes, SOEs are loss makingentities but why and who is responsible for it. The answer is bad governance and political economy of power are responsible for it. Political economy of power dictates to ruling elite to use SOEs as instrument of power grabbing. Thus, the successive governments used SOEs to buy loyalty, votes and benefit the cronies. They hired people in huge number, beyond the need and carrying capacity of these entities. The executive management, which was usually hand-picked, was offered hefty packages. It served dual purpose, first the loyalty was bought.Second, the executives facilitated ruling elite to run the SOEs according to political preferences of ruling elite. It resulted in crossing the threshold of carrying capacity of SOEs which brought SOEs to their knees and turned them into loss making entities.

Although, the privatization and tax relief may will turn these organizations into profit generating entities, but the wealth will be concentrated in few hands

Rather than learning from the mistakes, government or state want to punish people for theirown mistakes of bad governance and political gambling. It is not justifiable act. Further, the argument of bad performance is not so convincing. If we have to buy this argument, then what about the performance of ruling elite for more than 70 years. Pakistan is facing multifaceted problems due to the bad performance.People are paying price in the form of higher poverty, food insecurity and lack of the basic facilities.

In this context, can we ask that the governance of country should be privatize? No. certainly not. Then why we are advocating the privatization of SOEs, which can be good source of earning, if managed properly. It is bad proposition because every state needs non-tax income to provide basic necessities of life to people at wider scale. Non-tax revenue is also required to run the state and state apparatus.

Second, private sector is interested in these entities because they know that these organizations have potential to turn into profit making machines. They only needto focus on governance and get rid of extra employees and liabilities. Government is helping them by shedding off the burden by laying off employees and paying other liabilities. It is a win and win proposition for them, as they will buy entity with zero liabilities and huge potential to earn profit. However, it would be loss and loss proposition for state. As on one hand it will lose earning opportunity and on other hand state will have to offer incentives to private sector.

Third, the private sector works on single motive, the profit. Profit for whom? Off course for themselves. Besides, they are free from all obligations of common good or sharing profit with others. They are always in search ofopportunitiesto enhance profit and privatization will create another opportunity for them. The story will not stop here. The real game will start after privatization, as they will ask for incentives to fasten the recovery. Tax cut would be a perfect choice. It is a favorite word of private sector and they do not waste any chance to avail it. Whenever, government talks to them they complain about higher taxes and need to lower the taxes.

Although, the privatization and tax relief may will turn these organizations into profit generating entities, but the wealth will be concentrated in few hands. It will lead to K-type recovery.To counter the argument here comes the theory of trickle down into play. However, the empirical evidence points in opposite direction. The most recent study on the subject was conducted by researchers from London School of Economics and the King’s College London.

The researcher analyzed 50 years data to find correlation between tax cuts and trickle down, growth and employment. They came up with the conclusion that there is no trickle down associated with tax cut for rich. Further, tax cuts led to in-equalities in advanced economies.Study also suggested that the contribution of tax cuts does not correspond in national growth or reduction in unemployment. It did not contribute according to hype created around it.

Fourth, people will pay the real price in short term and state will bear the brunt in long term. As, private sector does not have responsibility to serve the interest of state or people. They are only concerned about the profit. In future, if they feel that business incentives are not good, they will move to a destination with better business incentives.

Hence, government needs to ponder on real questions and reasons of downfall of SOEs. Privatization is not a solution. It can be “get rid strategy” but it cannot be a good strategy to achieve sustainable growth and development. The analysis suggests the fundamental problem is political economy of power, which is very dear to ruling elite. The ruling elite is using these entities as source of bribe or influence. By applying these tools, they are making sure to secure the votes for next election. We can find the practical examples in the case of Pakistan International Airline and Pakistan Steel Mills. The two organizations have been stuffed with political appointees. It led to cross the carrying capacity of these organization, which is haunting these organization. The overstaffing is one of the seriousproblems, but political parties are determined to save their associates and supporters.

Lastly, state needs to ponder on this dimension and re-think privatization strategy and work on the real problems. Pakistan can learn from the different models, which different countries adopted to grow and combat the challenge of loss making SOEs. We can look at China, how it runs SOEs and acquired the place of second biggest economy of world. The simple conclusion is that China run the SOEs on the principles of market and rules of business. China introduce competition among SOEs and made sure that there should be no comfort zone for SOEs except the competition. We can also look at the example of Malaysia, how they fixed the problem of loss making SOEs.

In the conclusion, government and private sector, should try to make a difference between private business and privatization. Off course, Pakistan needs to facilitate private business, it is required for economic growth but it should not be mixed with privatization.a

Willingness – The only Impediment in the G2G Contract in Tobacco

PM Imran Khan has made digital governance or e-governance a hallmark of his governance policy. The main objective of e-governance is to provide a single-entry point or one window operation for all government services to the citizens. The theoretical progression in e-government generally hinges on a four-phase mechanism including the information phase, the interaction phase, the transaction phase, and the integration phase. The integration phase demands more than a web presence by the government. It rather includes the seamless permeation of one solution from one to (multiple) other departments. In economizing the effort, energy, time, and money, the government agencies need to collaborate to provide the services to share information and to make the process more wholesome/integrated. Under ideal circumstances, several government agencies can synergize their efforts to provide each service at a single-entry point. This is equally true and desirable in the case of non-e-governance as well.

The relationship between different government agencies needs coordination and the ensuing relationships are referred to as Government-to-Government (G2G). Theoretically, G2G refers to the relationship between the organizations of the same government (subjects) of public administration. The concept of G2G also encompasses relationship referring to the information and data exchange, business relationship, ICT solutions, document exchanges, cadastral sharing, and provision of services and solutions at no or minimal cost. Such exchanges and the success of such interactions depend upon the degree of communication, and cooperation mechanisms.

In the case of Pakistan, FBR has ordered multiple Requests for Proposal (RFP) and Invitation for License (IfL) for the Track-n-Trace system since 2007.Multiple national and international companies have been bidding in the process but due to technical reasons, the process got stalled multiple times. Track-n-Trace system envisages placing of the tax stamps on the products where the chances of tax evasion are maximum and the conglomerates have not been paying their due share in the past. Industries such as Tobacco, Cement, Fertilizer, Beverages, and pharmaceuticals, etc. are all the appropriate candidates for Track-n-Trace stamps, with the tobacco industry-leading by a sizable margin. The tobacco industry (also referred to as big tobacco) has been incurring an annual loss of more than Rs. 44 Billionthrough tax evasion. The tobacco industry very conveniently places the blame on the illicit or counterfeits through concerted and focused publication campaigns. The increase in the frequency of the newspaper articles can be observed sky-rocketing during the months preceding budgetary tax increments. There is no doubt that Pakistan faces problems of illicit trade in tobacco products, including smuggled products and undeclared local production, and limited counterfeit production. However, the estimated cost of all these illegalities is not more than Rs 20 billion every year (more than twice that amount is underpaid in taxes by the tobacco industry).

The tobacco industry very conveniently places the blame on the illicit or counterfeits through concerted and focused publication campaigns. The increase in the frequency of the newspaper articles can be observed sky-rocketing during the months preceding budgetary tax increments

Aspired Track-n-Trace system necessitates secure, and non-removable high-security tax stamp/markers/codes which include unique, secure, and non-removable identification markings, combined with state-of-the-art electronic monitoring and tracking system. These features have been obligated in the Track-n-Tracesystem to safeguard the existing revenue and to streamline robust revenue increase, simultaneously causing a reduction in illicit trade and counterfeits.

NADRA has been a strong contender in the bidding process in the past and has offered FBR the provision of all the desired security features. FBR has four main security features including an overt security feature visible with the naked eye, a covert security feature, an optically variable security feature, and a smartphone App readable security feature. NADRA has offered a total of eight security features (surpassing many currencies of the world), at no cost to the government. The (minimal cost) needs to be paid by the tobacco industry. The end-to-end support also includes training of the FBR staff and sustainability. For some unknown reasons, FBR does not want to perform this G2G operation, which could save billions to the national exchequer in the long term and generate billions more in annual tax revenue. The only reason not to opt for such a path seems to the absence of coordination/collaboration summed up in willingness.

Authors:

Waseem Iftikhar is a scholar PhD at Center for International Peace and Stability (CIPS) at NUST, Islamabad.

Pakistan in 2021

If 2020 was a nightmare, it was an unusually long one. There is still no end to it in sight. The pandemic that has made the outgoing year one of the worst times for humankind in the 21st century will, to our utter consternation, remain a major factor in what 2021 brings forth.

All the six factors that I am listing below to define ‘Pakistan in 2021’ are, therefore, linked, directly and not-so-directly, to Covid-19.

The first of these factors is the availability of a vaccine and cheap rapid tests. The Cabinet Committee on Covid Vaccine procurement has approved procurement of one million doses of vaccines from Chinese manufacturer Sinopharm. Pakistan will continue to explore other options too. How soon it gets hold of an approved Covid-19 vaccine will determine Pakistan’s course vis-a-vis the coronavirus in 2021. The availability of the vaccine, however, will not contain the virus automatically. After getting access to ample doses of it, the next challenge will be to put in place special storage and transport arrangements for it so that it does not lose its effectiveness while being shifted from one place to another.

The forthcoming Pfizer, Moderna, AstraZeneca and Sinopharm vaccines all require different storage temperatures because of the ways they are structured. The Pfizer vaccine must be kept at a frigid minus 70 degree Centigrade. Other vaccines do not require such extreme cold storage conditions but these, too, must be stored at subzero temperatures. This makes their transportation to remote parts of Pakistan an unprecedented logistical challenge.

The next big challenge concerning Covid-19 vaccination is the need to clarify and contradict all sorts of rumors and conspiracy theories being peddled on social media. A huge number of people across the globe are likely to resist being vaccinated because of these rumors and theories. In Pakistan, in particular, where dozens of polio vaccinators have been assassinated (by militants, claiming that vaccination campaigns are a facade for intelligence gathering) in the line of duty, such anti-vaccine propaganda will be a grave threat to the corona containment efforts. How effectively and quickly the government overcomes this challenge will decide what 2021 has in store for Pakistan – a better-than-2020 scenario, business as usual, or a worse-than-present situation.

Tests can be another limiting factor in Covid-19 containment. A reliable Covid-19 test in Pakistan costs more than 6000 rupees and its results become available within 15-20 hours. In many other parts of the world, cheaper and more rapid tests have already become available. It will be a major game changer for Pakistan in its fight against Covid-19 if it can get hold of these testing technologies in 2021.

The second factor is the shape and speed of a recovery – both from the pandemic and the economic stagnation. If the pandemic persists across the world, the chances of a strong and quick economic recovery are slim in 2021, mainly because of Pakistan’s limited export destinations and even more limited export basket.

It is not exports alone, though, for which we are dependent on the rest of the world. From remittances that have been the drivers of local consumption in recent months, to foreign direct investment that we aim to attract, and from imports that we need to the global supply chains that we aspire to become part of – these are all dependent on how quickly we and the rest of the world recover from the medical, social and economic pains being inflicted by the coronavirus pandemic.

No one, indeed, will be safe in 2021 until everyone is safe. Our future is inexorably entangled with that of the rest of humanity – whether we like it or not.

The third factor on my list is the effectiveness of Pakistan’s present economic policy responses to Covid-19. The government has focused on improving public healthcare infrastructure, beefing up social protection programs and keeping livelihoods intact through various incentives and financial stimuli. The success or failure of these initiatives will determine which way the country is headed in 2021 – to a more-of-the-same approach, to a radical tightening of the belt or to even more generous financial incentives to keep the economy on track.

‘Online’ is the buzzword for a ‘Covidized’ world, and that is where the fourth factor lies. If nothing else, it has jumpstarted the preparedness in developing countries for the fourth industrial revolution being fueled by digital and information and communication technologies. The better prepared we are for this revolution, the better placed we will be to tap the opportunities that it opens up.

For one, it suggests that buildings and other physical infrastructure is not always necessary to provide education and healthcare and to do business. It, therefore, goes without saying that we can make healthcare and education accessible to many million people across Pakistan by using the latest information and communication technologies.

There is one caveat here though: that this will be well-nigh impossible in a digitally divided country. How successfully and quickly we are able to bridge the digital divide between different parts of the county will determine whether Pakistan will be ready for this revolution in 2021.

Simultaneously, Covid-19 has also highlighted the importance of such conventional sectors of economy as agriculture and food security – which is the fifth factor to determine the course of 2021. Admittedly, Pakistan has averted a triple crisis of healthcare system collapse, economic meltdown and food scarcity in the wake of the pandemic in 2020. Going forward, it will need major investments to transform its food supply and marketing systems – the proverbial field to fork mechanisms – and introduce a climate smart agriculture that can adapt to changing weather patterns and increasing water scarcity.

Lastly, but perhaps most importantly, a socioeconomic turnaround in 2021 will depend upon political stability in the country. The first five factors may not be under direct control of our decision-makers but bringing political stability in the country is certainly in their hands. In the best-case scenario, the government and the opposition resolve to be a part of the solution that the economy needs, while still maintaining their political differences and disagreements. Their consensus on the need to improve the national economy will expedite reforms both at the policy and structural levels, thus plugging loopholes like the energy circular debt, loss-making public-sector enterprises and the shrinking and loosening of the tax net, thus providing a fiscal cushion against Covid-19 in 2021.

In the worst-case scenario, the two sides may collide head-on, leading to a political stalemate in which neither of them wins but the whole country loses. However, let us wish that the factors and gamechangers defining 2021 work in our favor. A happy new year to all.

A case for lost interactions

Social connections are important to happiness, health (physical and mental) and overall feelings of connectivity to society. It has dynamic characteristics of evolving social actions between individuals or groups. Knowing we are valued by others is an important psychological factor in shaping our self-esteem and individuality. It also helps in thinking positively about our environment. Studies have proven that those with strong bonds with family, friends and community, are happier and have lesser health issues. Social interaction thus helps in remaining mentally agile and everyone requires it no matter how asocial one may be.

After an extensive lockdown during Covid-19 worldwide, one does not need research-based evidence to appreciate social connections and interactions. Isolation caused people to suffer enormously from mental health issues as humans are social by nature and crave contact. We need others for support, well-being and entertainment and Covid-19 changed the way we do things especially our social connections.

For nearly a year now we have kept ourselves socially and physically distant, avoided touching surfaces and wore protective gear. However, it has been difficult to adapt to the new changes which requires setting aside a lifetime’s worth of learned societal norms of human interaction and communication. Physical contact is part of our relationships and we are now entering a world where such ingrained habits may come to an end. This is a cause for real stress for many as nothing compares to living in real communities and spending actual physical time with your loved ones.

Long before Covid-19, a 2010 report by the Journal of Health and Social Behavior indicated that low quality and quantity of social ties includes the development and worsening of cardiovascular disease, autoimmune disorders, blood pressure and cancer. Post-Covid-19 will lead to even lesser social and professional human interaction. It has become common to work from home, alone and secluded from colleagues. Despite companies ensuring web-based communication, it is doubtful whether socialisation levels when working from home can ever match those when working from office. We have virtually no time and space left for in-person interaction. Moreover, children have been pulled out from schools and daycares and forced to isolate from their peers, which is an important aspect of child development.

The sense of community membership which helped provide support to individuals who are impacted by day-to-day stress, and chaos of life will quickly disappear. Before we would not even think twice about the number of times we made physical contact with other humans. But now there is likely to be confusion as we try to adapt to the new normal and learn to remain social yet physically distant, something that will demand a great deal of acceptability and appropriation. Society has struggled to navigate social scenarios, be it taking turns, conversation skills, emotion regulation and expression, or frustration tolerance — all of which are foundational to a healthy living.

The problem, however, does not end here as another aspect which may create problems in the future is transitioning back to normalcy which may be too much to handle after several months of being told that leaving the house, in some countries, is illegal and puts one in danger. Recovery will not be easy and will require carefully planned and crafted mechanisms in place to support getting back to how life used to be. And the reverberations of how lost socialisation opportunities during Covid-19 have affected generations across the world will only be felt in years to come.

Tax reforms in tobacco sector imperative for revenue growth: SDPI – blog

ISLAMABAD: Pakistan has relatively low taxes on cigarettes, which not only sabotages authorities’ efforts of curbing the habit of smoking, but also leads to loss of revenue for the national exchequer.

This was revealed in a research study titled “Regional Tobacco Regime and its Implications for Health” conducted and released by the Sustainable Development Policy Institute (SDPI), a think-tank in the federal capital.

Around 22 million people, including 60 per cent adolescents, consume tobacco products in Pakistan, owing to which 1.5 million cases of oral cancer are reported every year by the Pakistan Medical Association.

The government granted tax concessions on cigarettes to provide relaxation to the tobacco industry. The study found that the tobacco industry flourished by leaps and bounds at the behest of revenue that could have gone to the national exchequer, signaling a lack of clear policy.

Not only does this tax relaxation harm revenue collection, it also has wide-ranging consequences on public health. Therefore, the study concluded that that there is a dire need to increase taxes on cigarettes to control their consumption and to increase revenue.

According to the World Health Organisation (WHO), more than 1.3 billion people consume tobacco products daily, with around eight million deaths recorded across the globe annually. The global health body has termed tobacco usage as an epidemic with severe consequences for public health, stressing that high taxation and increased prices are helpful in curbing this habit.