LAHORE, Dec 28 (APP):Adviser to Chief Minister Punjab on Economic Affairs, Planning and Development Dr Salman Shah said on Tuesday that Pakistan needs to develop urban economy, as the fastest urbanisation in the world is taking place in the country.
He stated this in a meeting with business community including Lahore Chamber of Commerce & Industry on (LCCI) President Mian Nauman Kabir, former LCCI presidents Mian Shafqat Ali, Sohail Lashari, Zafar Iqbal Chaudhry and Executive Committee members here at Lahore Chamber.
The Adviser said that the urban economy in Pakistan is growing three times faster than the rural economy. He mentioned that the Punjab government formed a policy for solarisation in Punjab and 10,000 to 15,000 megawatts of solar energy will be added to the system during the next two years.
Dr Salman Shah said that the country needs cheap energy to move economy forward as the energy being produced by the IPPs is costly. “If we install solar system on canals, it will also help water conservation,” he observed.
He said that Pakistan can become “Mini China”, as it is abundant with young human resources. Young population is swelling and 3 to 4 million youngsters are being added to the work force annually. He said that employment generation for these human resources is one of the biggest challenges.
He said that after an end to Vietnam war, the ASEAN countries have made great development. He said that an end to Afghan war has brought good opportunities for Pakistan’s economy.
He said that the debts have become one third of the GDP which is the biggest problem than the current account deficit. He said that the country is paying 3 to 4 billion dollars in debt servicing. He said that the debts will continue to rise until our economy is not grown. “To increase the economy we have to increase our exports,” he added.
Dr. Salman Shah said that the delay in IMF programy will result in further devaluation in rupee and hike in inflation. He said that the Punjab government has taken economic strategy to division level. He said that development expenditures of schools in Punjab are Rs 30 billion while annual subsidy of Orange Train is more than this amount.
LCCI President Mian Nauman Kabir said that the trade deficit in the first five months of the current financial year (July-November 2021) has crossed $20 billion, which is 112 per cent higher as compared to the same period last year.
The government should take steps for import substitution and bringing diversification in exports through value addition. Furthermore, the export potential of Punjab, especially in the non-traditional sectors of provincial economy needs to be highlighted.
He said that the lack of stability in the exchange rate market is a huge concern for business community as industrial sector is heavily dependent on the imports of raw materials and machinery.
The massive devaluation in the recent years has increased the cost of doing business. He underlined the need for measures which need to be taken to minimize the volatility in exchange rate market.
Mian Nauman Kabir said that the inflation rate has increased to 11.5 per cent in the month of November while the food inflation is touching 12 percent and policy rate has increased to 9.75 per cent, suggesting that the monetary policy should support industrialisation. Unfortunately, in the past, the successive governments used the policy of increasing the interest rates to control inflation.
Instead of curbing inflation, this resulted in rapid de-Industrialization and hindered the private sector growth.
The LCCI president said that the access to finance is a persistent challenge for private sector. The SMEs in Pakistan only get six per cent of the private sector credit while the number of SME borrowers is only around 163,000.
He added that the cost of land for the business community in the Industrial Estates in Punjab has increased and called for a simple lease policy through which the land in the existing/new Industrial estates can be provided at reasonable rates on long term lease.
Mian Nauman Kabir also stressed the need for resolving the issue of water tariff across the major cities of Punjab.