Transcription
It was a large representative gathering. You know, the entire corporate leadership was there. The Business Council convened it. A dialogue took place, and what's your key takeaway? In my opinion, our biggest victory is bringing everyone onto the same page and making them realize what our problems are. We should take the formal private sector, the documented economy, along with us. We should pay attention to its issues and challenges. Why wouldn't the business community work with you if they get the right environment? I think the biggest thing for Pakistan is that everyone now knows that our economic model was wrong. Typically, boom and bust, boom and bust, as they call it. So, from that, we now have a feeling that we need to move forward from this. What also emerged from the conference is that we now need to think long-term. The one page you are talking about, what the government is talking about, what the military is talking about, it is now necessary for this to transform. The roadmap for that, etc., should be ready. I think. For that, all government institutions are there. There is a great need for everyone to work with cohesion. An industrial policy separate, then FBR separate, then an energy policy separate, then you want synergy, it's a must. So, synergy and cohesion are a must for a growth-oriented strategy. We have been talking about it for a long time, that brother, FBR, it should be documented, digitized. Somewhere you are seeing improvement. That requires political will. This problem of the undocumented economy exists in every sector, and it is causing harm to the government and the nation. There are leakages, right? Then, if the profitability of the organized sector is affected by this, how will they invest? How will they grow? The investment we need should come from a long-term perspective, not just for the consumption-led domestic market. We should do export-oriented manufacturing joint ventures so that there is a transfer of technology and human development also happens simultaneously. It's not just about foreign exchange going out. Pakistan's economy, despite the phase of consolidation and recovery, is presenting a contradictory or conflicting picture. Some macroeconomic indicators like inflation, interest rates, remittances, exchange rates, foreign reserves have improved compared to before. However, the tax system and structural issues have become a hindrance to local and foreign investment, industries, manufacturing, and exports in Pakistan. As a result, for the last 3 years, economic development, i.e., GDP growth, has been around an average of 1.5 to 2%. Our GDP growth is stuck around 1.5% to 2%. This is a very serious matter. Pakistan's public debt has reached its highest level in history, at 77 trillion. And after deducting the provinces' share in NFC, at least 82% of the federal revenue is consumed by this debt and its servicing. Meaning, out of every 100 rupees that come to the federation's share, 82 rupees go towards debt and interest payments. A very concerning and very important aspect of the economy is also that in the first five months of this financial year, i.e., from July to November, Pakistan's exports have decreased by 6%. Especially in the last month, November, exports decreased by 15.4% compared to last year. Unfortunately, Pakistan has not been able to fully use its exports to power growth. Exports are falling from 16% of GDP in the 1990s to just 10% today and are highly concentrated in a few products and markets. So, what's holding exports back in Pakistan? Behind Pakistan's weak performance are deep structural barriers and policy distortions. High tariffs make inputs more expensive. Red tape, costly logistics, and a complex business environment make it difficult to export. Exporters also face hurdles accessing finance, while energy costs and digital infrastructure cut into competitiveness. Together, these challenges have created a staggering $60 billion export gap. As a result, unemployment is increasing, and according to the World Bank, about 45% of Pakistan's population has fallen below the poverty line, while youth unemployment has reached a level of 16.3%. In fact, the burden of taxes in Pakistan has increased so much that it has become unbearable for our economy, business community, and salaried class. SIFC, i.e., the Special Investment Facilitation Council, has also confirmed this bitter reality, and the sky-high tax rates in Pakistan are the biggest obstacle in the path of local and international investment in the country. In his address at the Pakistan Business Council's Dialogue on Economy seminar, SIFC's National Coordinator, Lieutenant General Sarfaraz Ahmed, also explained the detailed reasons for the lack of local and foreign direct investment. He said that until the income tax rate is reduced and the super tax on the corporate sector is abolished, thinking about new investment in the manufacturing sector is no less than a dream. Surprisingly, in the last three years, while GDP has grown at an average rate of 1.8%, tax collection, i.e., FBR's tax revenue, has doubled with a 100% increase. It's as if the government is extracting from those who are already paying taxes, instead of increasing the tax base. For example, in 2022, 6800 billion taxes were collected, which has increased to 1900 billion in just 3 years, and this year the government has set a tax revenue target of 1900 billion. The basic reason for this is that the income tax on the salaried class in Pakistan is up to 35%. Corporate tax on companies is 29%. There is a 10% super tax, advance tax, withholding tax, workers' welfare, provincial levies. And all of these combined make the tax on companies 58% all put together. The tax on dividends is separate from this. Currently, the corporate tax rate is not this high even in the US, UK, Norway, Canada, and Saudi Arabia. It is between 20 to 25%. In the UAE, it is only 9% corporate tax. Whereas in Pakistan, if you earn 1 rupee, you have to give 58 rupees to the government. In this entire situation, international investors, foreign companies, foreign investors, instead of coming to Pakistan to pay 58% tax, go to countries where there is ease of doing business, where there is a one-window operation, where there are no regulatory restrictions from 36 departments, where fair and transparent justice is available for any dispute. And most importantly, the tax in these countries is two to three times less than in Pakistan. This is why FDI in Pakistan has been hovering at a miserable level of 1.5 to 2 billion dollars for the last 4 years. SIFC aims to create a one-window solution for investors, ensuring ease of doing business while fast-tracking high-end projects. What we are trying to align for the future is that we would like to attract all types of foreign direct investment, which is basically export-oriented. Because the existing systems are not good enough, especially for the foreign investor to get them incentivized in this space of investment and removing tax anomalies. And I know you have loads of complaints against the tax. Then I think till the time we resolve them, we are not going to go further. The place would like to be. In Pakistan, in this situation of economic stagnation, the IMF's Governance and Corruption Diagnostic Assessment Report of last month was released, in which the IMF, based on institutionalized corruption, presented a charge sheet against the Shehbaz Sharif government and demanded that the tax system be made completely transparent and easy, free from corruption. The IMF has stated that economic stability is impossible without reducing tax rates and increasing the tax base. The important question is, where is the real problem? In reality, Pakistan's shadow economy or undocumented economy, which is approximately equal to Pakistan's GDP at 400 billion dollars, is the biggest reason for this entire situation in Pakistan. Whereas the performance of the tax regulatory, i.e., FBR, is such that neither the IMF, nor SIFC, nor Pakistan's 250 million people have confidence in FBR. This is the most challenging situation for Pakistan's businesses, and undoubtedly, Pakistan's corporate sector is very worried in this regard, and as a result of this entire situation, we have seen an exodus of multinational companies from Pakistan, which is also a very big challenge for Pakistan's image. To discuss this entire situation, we have invited the Pakistan Business Council, and its Chairperson, Dr. Zeaf Munir, is with us. Mr. Javed Qureshi, Chief Executive Officer of the Pakistan Business Council, is also joining us. Thank you so much, Madam. For joining us. Thank you very much, Sir. It's a situation that is obviously the most challenging situation. Is there a light at the end of the tunnel? Thank you, Kamran, for inviting us. We are doing this program on a very important topic, which is Pakistan and Pakistan's economy. As you mentioned, we are now moving from macroeconomic stabilization, from firefighting mode, towards stability. Now, where to take it from here, how to bring growth, that is the most important thing on everyone's mind right now. As you mentioned, the Dialogue on Economy that the Pakistan Business Council recently convened in Islamabad, the objective there was also to talk about solution-oriented things and see how the business community, policymakers, academia, civil society can come together towards solutions. So, it was a large representative gathering. You know, the entire business corporate leadership was there. The Business Council convened it. On the other hand, the government was also very forthcoming. So, SIFC was there, FBR was there, and all the departments were there. Government ministers were there. All of them were there. It was a very good conversation. What are your key takeaways, as you said, a dialogue took place, and normally these are talk shops. We have a lifetime of experience; talk happens, talk happens, and it ends. Are there some takeaways you can actually feel like, okay, it was a good experience? In my opinion, the most important thing was that our objective is always to get on the same page, all the stakeholders, so that they understand that we are not talking about just one sector, or one individual, or one industry. We are talking about Pakistan's economy, and what are the bottlenecks, challenges, and solutions that we can find together. So, the most important thing that emerged from this was that we saw that everyone is now focusing on similar discussions, like you mentioned, how will we fix the investment climate? How will we provide good jobs to people? How will we focus our growth on an export-led economy? So, the fact that every stakeholder was coming and talking about these very things, in my opinion, is our biggest victory: bringing everyone onto the same page and making them realize what our problems are, that believe in business, believe in the private sector, that the private sector, by working with you, can drive the wheels of this economy. We represent the formal private sector. And this is what we want: to take the formal private sector, the documented economy, along with us. Pay attention to its issues and challenges, and why wouldn't the business community work with you if they get the right environment? Yes, correct. So, Mr. Qureshi, this is definitely a very important takeaway that there was no difference of opinion. Meaning, they were not complaining to you, the Pakistan Business Council, the business leadership, and the government was not doing so, and you were presenting things to the government, and they were agreeing with it. And it's extraordinary, especially the Chief Coordinator of SIFC, very bold of him that he said, yes, exactly, this is the problem. I think the Chairman of FBR also said more or less the same thing. This convergence, and its occurrence, and along with it, the Prime Minister is also working on it. Several committees have been formed that are looking into different sectors. Some are looking at industries, some at tariffs, some at taxes, some are doing things. I think there are recommendations as well. Are you having any further engagement with the government in this regard, so that now that all these discussions have taken place, how to operationalize them? How to actualize them? Absolutely. Thank you, Sir, for inviting me, Kamran Sahib. I think, yes, discussions are ongoing at different levels. For example, in the Saudi business investment talks, we are very involved, and our dialogue and communication with the government have increased significantly. Now, they are asking us more questions: help us with how to do this. Earlier, there was more discussion about what to do. Now the discussion has shifted to how to do it, and we need your help. So, we have not only come onto the same page, but we are also working together quite a bit on the execution side. So, I think this is a very positive thing. I think everyone knows what the problems are. I think the biggest thing for Pakistan is that everyone now knows that our economic model was wrong, and there is now a realization that we need to move beyond that model. What was that economic model? We would grow, imports would increase, and in three or seven to four years, the entire structure would collapse. Typically, boom and bust, boom and bust, as they call it. So, from that, we now have a feeling that we need to move forward from this, and I think because of that, there is a slight decrease in growth. There is a decrease in growth because it is a new path for us, and from our conference, what also emerged is that we now need to think long-term. These six-month policies or one-year policies will not work. Now you have to make a 5, 8, 10-year plan, and you have to stick to it. You cannot change it. Every year or eighteen months, it requires a little, you know, a little stamina. So, overall, Dr. Zeaf, from our point of view, what we are seeing from the front is that this talk of continuity and sustenance is very important. In Pakistan, there is genuine political turmoil every two years, three years, two and a half years, the government changes. And this has been a standard practice, you know, in between there is military rule, then this has been happening. Since 2008, this cycle of in and out, in and out, has continued. This time, we are seeing continuity for various reasons. One is, obviously, there is no political turmoil of that kind. There is unrest from PTI, obviously. But there is no political turmoil of that kind. There is a kind of continuity. On the other hand, the military and civilian leadership are on the same page. That is a very important thing. In the recent developments, there has been a significant indication of military continuity, which we have also seen internationally. So, this is one of the lights at the end of the tunnel: that now what you are talking about on one page, what the government is talking about, what the military is talking about, what the military leadership is talking about, it is now necessary for this to transform, and the action plan for that, the roadmap for that, etc., should be ready. I think, yes, you have spoken very correctly, and you have raised a very important point about what the strategy should be, and the lack of strategy is why the growth strategy, the long-term strategy, and for that, all the government institutions need to work with cohesion. Because the industrial policy is separate, then FBR is separate, then the energy policy is separate, then you want synergy, it's a must. So, synergy and cohesion are a must for a growth-oriented strategy. Another thing is that governments come and go, models come and go. What doesn't change is that you have a population of 250 million. Until you create employment, until you make the wheels of your economy turn, until you improve the Human Development Index, then whatever government it is, whatever your relationships are, its biggest fruit should be this: consistent vibrancy, jobs created, wheels of the economy running, the potential of your youth, the potential you see where Pakistanis go and make a name for themselves, if you provide them opportunities, then the most fundamental thing is consistency in policy, and we have heard this phrase from the PBC platform, the Charter of Economy. Now this phrase, you hear it commonly. If you look at its basic objective, it is that if there is a Charter of Economy, then everyone's buy-in and ownership, whoever the stakeholder is, will be there, and then it will not be due to boom-bust cycles or political reasons. There are structural reasons. Structural reforms are needed. Your economy is import-led. Your growth strategy was based on debt, not on export-oriented growth. We need to correct all these things. But for this, it's consistency in policy, structural reforms, your excessive taxation, the uneven playing field, solve all these problems, and then there are all kinds of models in the world. Okay. Yes, this conversation, Mr. Qureshi, this discussion that the Madam was having, and the dialogues that your Pakistan Business Council had with the government at the Dialogue on Economy, all of that, these are all repeated discussions. We all know exactly what has to be done, what has to be done. Whatever it is, as you said, at this time we have a cautious approach. There is an IMF program, after which we do not want to go into the boom-bust cycle. If we increase growth, imports will increase, then there will be pressure on the exchange rate, inflation will come. All these things are in place. So, when will the turnaround come? How will it come? What is the game plan for that? Sir, for that, you need to have courage. It will take 5 years, and you need to focus on execution, and your entire thinking now needs to be on execution: how to do these things, with how much discipline, and who will do it. There is a great need for accountability in this. What is the first thing? Everyone knows, right? As General Sarfaraz also said, at this level of taxation, who will do business, who will work? At this level of taxation, where there is so much gruesom extraction, and such extortion, we now call it extortion here, that when your growth is 1.5%, and your revenue growth is 2x or 1.5x that, it means there is massive extraction, and the consumer has nothing left in their pocket, right? If it's the salaried class, then where will consumption be? Where will the market run, and in that way, where it already is, there will be stagnation. So, this is contrary to our strategy. So, what is the magic wand that will turn this around? Sir, in this, what Madam Zeaf talked about, the Charter of the Economy, I would say that the country now also needs a Tax Charter.
You will pay taxes. If you do not pay taxes, you should be dealt with strictly. If you want to create this level playing field that everyone is talking about now, you will have to be a little strict about it. Which we do not want to tolerate. Whatever the reason, be it the political government, whatever it is, until you do this, how will you reduce taxes? You can only reduce taxes in this way, by collecting from others as well, where it is due. For this, you have to work closely with the FBR, and you have to enforce the laws so that people realize that now you do not have the choice to play in the unorganized sector and get away with it. There is more to it. So, I think if there is a little political stability for three to four to five years, then these things can happen. Without this, it is very difficult. And the second thing is that we repeatedly talk about taxes, but the government also needs to reduce its expenses. Because both things happen, right? You either increase revenue or reduce expenses. So, here too, I think the government now understands this. The IMF report has also come. They have questioned a bit about governance, etc., not just a little, but quite substantially, that your expenses, your mismanagement, your non-transparent conduct, government governance, all these things are very serious. And documentation and an organized economy. You also mentioned, Dr. Zaf, that you are the Chairperson of the Pakistan Business Council, but you also lead one of Pakistan's biggest brands, which is related to this economy. Documented economy, undocumented. Day in and day out, you face this. Because obviously, this is an area where the undocumented economy is very high, perhaps even very, very high. So, are you seeing any improvement anywhere? Because we have been talking about it for a long time, that the FBR should document this, digitize it. Look at India, even for a monkey show, people are paying by giving QR codes. What great difficulty have we faced? And when we are talking so much, with so much commitment, and with such enthusiasm, that we want to move forward, then now you report to me to what extent you see improvement in this. Talk and commitment that it will happen, it should happen. We are listening to that. You asked me if I, as an industry leader, being in the market, see any visible improvement on the ground in my industry, my sector, or the economy. That requires political will also. Okay. So, it's not just about QR codes. It's not just about implementing track and trace. Okay. All these people, processes, transformations happen with that. But along with this, there is also a great need for political will. Because this entire system and this sector did not develop overnight. Okay. It is very important when you say that the areas that hold a make-or-break proposition for us, for the economy to grow, for revenue to increase, for all these things to happen, we need to document the economy. We consistently talk to business leaders and all technocrats here. Everybody talks about the will, which means that doing this is a decision of will. The will of politicians, of parliament, of the Prime Minister, whether they want to enforce it or not. And down the line, what can their representatives sitting in those cities, in those markets, do for its enforcement? So, now, if we ourselves acknowledge that if we know that in your industry, there are also those who buy sugar without paying tax, meaning both are available. And there are also those like you who buy by paying tax. Then our question to them is, then why do you impose tax only on those who are paying tax? It's a very serious issue. As a consumer leader, English Biscuits, or Candy Land, or whatever, you know, if you are paying, as you said, you are buying sugar according to tax, you are buying your other raw materials accordingly. You are then documenting your entire value chain, supply chain, in terms of documentation. But someone competing with you is not even named, has no work, is not connected to the supply chain or that entire chain in any way. They are not touching the documented economy at all. So, what will you create? They will defeat you, and you will not be able to compete with them in any way. It's a massive, you know, such a big problem. The loss in this is the nation's loss. Okay. The loss is the nation's, the loss is the consumer's. You will provide quality. The consumer understands. Brands are not built just like that. Brands are built when you fulfill the promise of a brand. Okay. But for that, you need consistency in quality. Okay. To do that, you need an entire institution of that kind. So, yes, to compete, the effort you have to put in, for these IP infringements happening, and these duplicates being made, and all this happening, if those efforts were directed more towards growth, then the government would benefit, because we get tax from them, right? So, and then that tax should be used for the welfare of the people. So, this is in every industry, because we see it from the platform of PBC. This problem of the undocumented economy is in every sector, and it is causing loss to the government and the nation. The biggest challenge for PBC, which represents the organized tax-paying sector. So, can we say that the number one challenge is the undocumented economy? That's right, sir. 100% sir, 100%. Because, sir, if there are leakages, then if the profitability of companies in the organized sector is affected by this, how will they invest? How will they grow? How will they diversify? How will they undertake large projects? So, our, you know, we have to have a cultural change that size also matters. And if you are always worried that I cannot compete because others are stealing, then it becomes difficult for you, doesn't it? Now, look, the Saudis are telling us the same thing. In our discussions about investment, they are telling us to show big projects. Show us big bankable projects, big projects. Now, our corporate sector, for the last two to four years, because they haven't made that much profit, they don't have the surpluses to collectively undertake big projects. So, this is very important, sir. Not only from an equity point of view but also from an efficiency point of view. If the unorganized sector also has to grow in the long run, sir, they will also have to be documented. Because they can only go up to a certain level. But even there, the numbers they have, the numbers of this undocumented sector that we see, are unbelievable numbers. They are not small numbers at all. Because of the foregone, all these things, the problems in pharmaceuticals, the problems in consumer items, and then this is all a matter of law enforcement. Because if somebody is not going by the book, then they are a total outlaw, aren't they? Exactly. So, this is a serious issue of law enforcement. This is about taxation being too high. But this undocumented economy and this law-breaking economy, this outrageously law-breaking economy. Pakistan Business Council is drawing the government's attention to this. Absolutely, sir. We are not just drawing attention. You now hear this talk that the tax net should be widened, whether it's coming from the FBR, or the government, or any other institution. The undocumented economy, the cash economy being very high. So, the talk is that we might actually have a trillion-dollar economy. We say 400 billion dollars, but 400 billion dollars might also be in the parallel economy. So, various kinds of numbers come. But verifying this is very difficult. But this is a problem. I wouldn't say that no one knows about it. Everyone realizes it. As Javed also said. Now, the point is that we want to see the execution and implementation of the plans being shown for this, and we want to see it consistently. It should not change. If there is any change in the leadership of your bureaucracy, or if there is any change from above, there should be consistency, that you follow through. So, now is the time to see execution, implementation. The realization of how big a problem the undocumented economy is, is absolutely there. But political will and this undocumented economy, sir, was one of the main, perhaps the main, reasons for the exodus of MNCs from here, or PNG, or when FMCG companies leave, they say that we cannot compete in this economy. Absolutely, sir. They say, ask anyone, they say we sell something for 40 rupees. The same thing comes from Dubai for 25 rupees, smuggled. So, how can we compete? So, these things, again, it's the same point you are making, that there should be a rules-based economic system where there is respect for the law. No matter how much we work on this, it is not enough. And these are multinationals, sir, they have global policies, global rules, which they have to follow. Then they say, we cannot stay in your country because it becomes very difficult for us. And their exodus is not just the exodus of investment. Actually, when such big companies, such multinational companies with that kind of foreign exposure and experience come, they bring that experience, they bring that, you know, expertise, all those things, all that governance, that management, all those things, technology, then the transfer of the entire system. If we have a pure system here, then it is not needed for big growth. We need that system. When these companies leave, that expertise also leaves with them. That experience also leaves. Now, look, sir, it needs to be developed. See, Javed also said the same thing. Some MNCs that are leaving have their global strategies. Okay. And they have their own market assessments. Some of the examples that have happened, they have also gone from other countries. Some are, if you look at the foreign ones, one or two big ones have also come. But I would say that we should focus on MNCs or foreign investment that aligns with our requirements and strategy, that is running according to the needs of the economy. This point was perhaps discussed very seriously in SIFC as well. So, the investments that have come, they should come from a long-term perspective, not just for our consumption-led domestic market. Export-oriented manufacturing, transfer of technology, human resource development. Absolutely, anyone who invests does so with the aim of getting a return. For that, you have to create an environment. But the investment we need, and the multi, and look, our own local companies also need to form consortiums and go to scale, and then bring in multinationals, foreign investment, for joint ventures, so that there is transfer of technology, human development also happens simultaneously, and foreign exchange is not just going out. Okay, sure. So, you know, it has to be a strategy based on an overall alignment with what our economy's and country's growth strategy is. The quality of investment is also important. Burger joints, beverages, or long-term investment. If it's long-term, then how can we do that, you know, so that this kind of investment happens, sir? See, for this, you have to provide incentives. If you set up factories for export, then you have to give tax concessions. You have to give HR concessions, human, labor, etc. And most importantly, sir, stability of policy. Because these kinds of investments involve a lot of money, and you have to assure investors that our policies will remain consistent. Other things are also involved. Yes, energy costs should be low. Now, your situation is that your energy cost is three times as much as in other countries. So, how will you compete with Vietnam? Now, look, Vietnam is the best model. Samsung set up a factory in Vietnam to make mobile phones. I think 40-50 billion dollars of exports now happen from Vietnam. So, Vietnam probably built an entire city for them, named it. We also set up a unit of Samsung, didn't we? Samsung also invested here, we also had investment in K-Lucky. What's the difference? What is the difference between the Vietnam model and our model? Specifically, not for any brand or model, or as you said, who should come, who shouldn't. Hot money, hot investment is not good. Long-term growth-oriented is good. For us, if even assembly is happening, which is very import-dependent, then if it becomes an indispensable part of a chain, it still has value. But you did it in automobiles, in mobile, and our entire, and there could be more, and there could be more, if in your strategy and your performance targets, you have kept that, how can we reduce our dependence on indigenization and imports and move more towards exports. So, import replacement, import substitution is also important, that we are making it here. But as we keep talking about, without a manufacturing industrial base, no nation with a population of 250 million can grow. So, there must be manufacturing, there must be an industrial base, and on top of that, you need high value and technology-driven and future economy-driven, which we also covered in our Dialogue on Economy, for that, momentum is also built. Moving into sectors like, for example, we talk about AgriTech. Agriculture is a huge employer. Its productivity has low-hanging fruits. You can increase it. If there are manufacturing industries related to it, agro-processing industries related to it, then you can develop a value chain. Similarly, as PBC has also published research and reports on electronics, on semiconductors. So, there is potential in all these sectors. What are the challenges? What are the bottlenecks? They need to be addressed. And there should be a vision that is aligned with what we want from this, that we want to reduce reliance on imports, have more reliance on exports. And what we are doing for import substitution, because we have a very large domestic economy, a domestic consumer base, that should remain competitive, focus on innovation, and enhance productivity. For that too, there are roadmaps. But at the time when this Dialogue on Economy happened, the numbers we got were quite serious. Meaning, the growth of LSM is declining. Credit is low. All these things, meaning people are not investing. They are not investing in these sectors that Dr. Zaf was talking about. So, this was a concern which was, you know, very pronounced in your dialogue. Yes, it was, sir. And there is some frustration and some impatience, and as I said earlier, now the challenge is execution. Because we have stabilized the economy. The government has done good work. But now, you know, you have to come to the front foot a bit. And now, you know, everyone is on the same wavelength about these things. But now you have to take these things forward a bit so that there are results. In the sectors you mentioned, there has been improvement in Pakistan, like in the pharma sector, there has been deregulation. You know, that thing is better. The growth of IT has also been seen to be better. Regarding these sectors, your understanding, your own take from the PBC's point of view, which was reflected there, where are the deficiencies? Because these are areas with more growth prospects. Pharma and IT. What would you say about this? Yes, we have identified sectors that have some alignment with what we hear from other stakeholders and what we are discussing. The IT sector, pharma, due to its deregulation, because it definitely has potential. It also has export-oriented potential. There are capacities in both pharma and both, and both can be export-oriented. IT has done 3.2 billion last year, which was a significant jump. Then we also talked about mining. Yes. And an area. Good. And also, there were discussions that for this kind of field, which can have substantial rewards for the country, it has its own ecosystem. For that, you need patient capital. Their timelines are 25-25 years. You need to have risk appetite because these are high-risk fields. So, local investors who are interested in Pakistan's growth and are interested in Pakistan moving forward, they will be interested. Foreign companies are now talking. This will be an important thing, that this Reko Diq is about to reach financial close. If this happens, it will be an eminent breakthrough in that regard. Secondly, our mining in the rare earth area, when this reaches financial close and activity starts there, that's going to be an eminent turning point. It is a very, it is a very significant milestone. Because it's a milestone that is giving a signal. Reko Diq is a very big company in this field. You are hearing that our partners, they talked about Saudi Arabia, we have had quite a bit of interaction with them. Interest is also being shown from the US. So, to give practical shape to all these ongoing conversations, it is also necessary to show something. So, therefore, I think this is good signaling. This industry can be taken in a positive direction. But the room for growth and expanding it is huge. So, for now, it is up to the blocks they have taken, but around Pakistan, there is potential. So, if all the challenges that everyone knows are addressed, then in the next 25 years.
Years later, this can be something with Pakistan, and by then, as you spoke about your own, like IT, ICT, I would say, definitely address its challenges. Invest in it, and in your IT sector, agri-tech sector, startups in IT, and the venture capital space comes in. Logistics. So in all these sectors, there is room, that you have low-hanging fruits too. So if we look at our own bottlenecks, we talk about energy. Energy is not competitive. If it's 14 cents per kilowatt here, it's 10 cents, I believe, in Bangladesh, and 7 cents in Vietnam. So, regionally compared, but what are we doing? We are passing on our inefficiencies and misgovernance. So these are things that you should bring under control. You should privatize. Privatize SOEs. Our ports, we are bleeding inefficiency from there too. Okay? Give some attention to infrastructure. You see where we are located strategically. We connect Central Asia to here. We are in a very, very strategically located for logistic pathways also. So, you know, these are areas where if there is focus, then sir, what is our pull? For investment, for a foreign investor, like you mentioned Saudi Arabia, or other Middle Eastern countries, there is no tax there, right? Should we invite them to a country where we will charge them 60% tax, where energy prices are so low, other things are so low? Then there is global competition, right? Vietnam is also running in this, Bangladesh is also running, India is also running, and other countries are running that are more efficient, or have a better ease of doing business, or are better. So what do you sell to your partners, or your acquaintances, or those who want to invest in Pakistan? What do you tell them to do in Pakistan so that they come and do business? That's a good question. Important. What will the government sell? First, tell us. The government is unfortunate, it doesn't know. What does it know? Dr. Zafar spoke about privatization. Yes, the story we sold was that, you know, a population of 250 million, a big market, our labor is cheap, we have capable people, productivity is high. But the things you said, the cost of doing business. The cost of doing business, we have to work a lot on all these things. And you spoke about foreign direct investment, yes, the biggest thing in that is that now the world also looks at risk, and when they calculate their returns in a country, they see how much risk was in this country, and they adjust their returns. And this is our problem that Pakistan's risk seems high. In fact, sometimes we overestimate it, and we have to work a lot on this too. So many multinationals also leave because they say, you know, not much money is made in this country, the risk is too high. And this is, if you look at the financial sector, all the foreign banks, the European banks, they all left. Because they used to say that the operating risk here is too high. So if Pakistan wants to attract foreign direct investment, a lot of work is needed on this. It's no longer just a game of returns or revenue. Now you can't say that, you know, we have a population of 250 million, or the market is very big. And if you want to work on this, you have to change the entire ecosystem. Foreign direct investment, you know, why do other countries attract it? Because their entire system, their hotels are good, their airports are good, their taxi service is good. Foreigners come and go. They get visas easily. No one bothers them. They have their lifestyle, they can do their shopping. Because these are professional people. They come. If you create problems for them, then why will they invest? Now, here, for example, if you have a foreign company, and you want foreign directors on the board, you have to get their special approvals. Now, in this country, those approvals take a lot of time. So these are small things, but they bother multinationals. Then they say, the risk here is very high, the cost of doing business is very high, there are many problems here, we have to sort things out a lot. Then when it comes to dividends, we can't send money abroad. Repatriation takes time. Then the currency devalues. So you have to address all these things. Now yesterday I met the Ambassador of Uzbekistan. He said, we got $45 billion in investment, FDI. We are stuck at two, two and a half, three and a quarter, five percent. Look, it's a small country, and it has attracted $45 billion. So they must be doing something. Now, okay, maybe they also have some natural resources, and I would say one more point, mining, this is a very good thing. But this should not stop us from undertaking the reforms that we have to do. This is a bonanza. This will also take time. This will take 5, 7, 8, 10 years. We cannot wait until then. The reforms we are proposing, the things we need to fix, we have to carry on those things. So let this continue, it's a great thing. But the other things we are talking about, tax reforms, cost of doing business reforms, state-owned enterprises reforms, privatization, these are very important for us. Critical thing is regulatory reform. We need foreign capital the most. We are stuck with exports, or besides remittances, we have nothing. So for foreign capital, we need a package, right? An overall system, an ecosystem to attract foreign capital, that's what we need. And what do you suggest, as you interact with investors and people all over the world, that we bring them to Pakistan, what should we give them for that? If your local investor has confidence, they will be more attracted to invest. That's more attractive to a foreign investor who is a serious investor, a long-term investor. Your own local investors have billions of rupees in capacity to invest. Okay? Their problems, their issues, which are the same issues as any formal sector, I'm not talking about anything specific, any specific thing, that should absolutely not be there. But to bring investment confidence, the investment climate, or the business climate that you need, that is the same for both foreign and local. And your best investor, meaning brand ambassador, should be your local investor, right? So you should definitely facilitate them so that they can communicate business to business, you know. Like our forums, we also consider this our responsibility, and that's why we are working in this direction. And look, specifically, going and having a general talk, you know, going and giving a presentation that come and invest in Pakistan. That's good for informational purposes. But the real work is specific and targeted, that you are specifically selling what you want investors to come for, which comes down to bankable projects that will be able to pass the due diligence of the investors. The investor wants returns, right? Okay? And the second thing is, look, now we are seeing that with the world, we are feeling a favorable environment, understand. How to convert this into economic diplomacy? This should be the top of mind agenda. Is our goodwill good internationally? Is our standing better? This is an opportunity for us to gain economic dividends from it. Gain economic dividends, because for the man on the street, until there is some tangible benefit in his life, he will not understand. It is something that we need, and for that, you have to believe in business, believe in business. Now, all these things, the goodwill we have received internationally, our brand has improved, all the things that have happened for us, or if we have done anything for continuity in the constitution, you made a very important point that the man on the street should know that he is benefiting, then he will understand that there is some benefit. Otherwise, it will go to waste. None of this will be of any use. And thank you so much, Dr. Z. Munir, Mr. Javed Kureshi, Dr. Z. Munir, Chairperson, Pakistan Business Council, Javed Kureshi, Chief Executive Officer, Pakistan Business Council. If business runs in Pakistan, Pakistan will run. If business prospers, Pakistan's economy will prosper. If business runs, jobs will be created. And for that, what needs to be done? What is happening? What are the problems? We are talking to the Pakistan Business Council, the best, most important business representatives of Pakistan, the representatives of Pakistan's business. Thank you so much.