Provincial tax systems and legal requirements further exacerbate the situation. The lack of harmonisation in provinces’ tax policies is one of the biggest bottlenecks to attracting foreign direct investment. Inconsistency is another issue in taxation policy, impacting the business community’s trust.
The most concerning aspect of the system is that it consumes the precious time of the business community, and there is no concept of time management among policymakers.
Dispute resolution is another area where the business community has serious concerns. It takes years to settle a dispute. According to the EODB ranking, it takes, on average, three to four years to settle a dispute in Pakistan.
Apart from these major issues, there is also a list of minor problems. In a nutshell, inefficiency rules the entire system.
To attract businesses and investors, Pakistan has to come up with better institutional arrangements and service provisions.
First, it has to decrease the number of days and institutions to register companies. Second, the service provision system should be pro-business, and services should be provided within one month. Third, tax agencies should be streamlined, and there should be one point to deal with the tax system.
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The federal and provincial governments must create a single-window tax collection system. Moreover, they should create harmony among their tax systems. Lastly, dispute resolution should be refined, and it should not take more than one year to settle disputes.
On the behavioural front, there is a need for more serious changes for all segments of society. Behavioural changes would be the most challenging part of reforms because the state will have to deal with humans.
It will be a long process and requires patience and skills to bring the desired reforms. The process will start with the education of the child. The state will have to develop a curriculum that can infuse a spirit of primary human and moral values.
On the individual level, the focus should be on infusing the values of selflessness, honesty, integrity, empathy, and patriotism. The societal focus should be on infusing values of civility, harmony, freedom, equality, justice, and the rule of law.
Moreover, individuals and society should also be trained to curb corruption and promote fairness.
Human capital is another area that has deep-rooted problems. First, education is the key instrument that helps to develop quality human capital. Unfortunately, Pakistan does not have a quality education system.
Moreover, the country is still struggling to achieve mass education, let alone universal or quality education. The literacy rate is only 62%, including people who can only read and write their names. Second, the education system does not help to develop market or personal skills. It produces graduates with limited or no life skills.
Pakistan’s system only operates in the run-of-the-mill production of graduates and postgraduates. It impacts on multiple fronts, but the most severe impacts are on financial resources and the availability of required skills for the job market. This is evident from the unemployed young graduates.
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The bad status of human capital urges us to go for a better education and skill development system. Unfortunately, Pakistan is moving in the opposite direction.
The state is shedding off the responsibility to provide quality education to create high-quality human capital. Through Article 37-B and Article 25-A, the constitution unambiguously commits that the state would provide education to every child.
Article 37-B, 1973 Constitution of Pakistan states, “The state shall be responsible for the eradication of illiteracy and the provision of free and compulsory education up to the secondary level, within the minimum possible time.”
Article 25-A – Right to Education – states, “The state shall provide free and compulsory education to all children of the age of five to sixteen years in such a manner as may be determined by law.”
Regrettably, it is not happening. It is a blatant violation of the Constitution of Pakistan.
The privatisation of education is badly impacting on three fronts. First, it is becoming challenging for ordinary citizens to educate their families. Second, it is leading to the depletion of foreign currency reserves. Third, it undermines the spirit of nation-building, as most private educational institutes prefer to adopt Western norms and values for delivering education.
On the other hand, there is also a shortage of quality professional and skill development institutes in the public sector. According to the Education Statistics report, the private sector constitutes 56% of skill development and vocational institutes.
Moreover, the government is unable to mobilise the business community to fulfil their obligations per the true spirit of the Apprenticeship Ordinance of Pakistan. These factors raise the cost of acquiring skills for the common citizens and contribute to lower human capital formation.
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According to a recent report of the World Bank, Pakistan’s score on the Human Capital Index is 0.41. It should be a matter of concern, which indicates that the productivity of Pakistani human capital will be only 41%, which is very low compared to the world.
Pakistan must understand that we cannot move up the development ladder without quality human capital. Thus, there is a need to bring reforms in the education sector, which can help create quality human capital.
We have to reform education to meet the needs of modern markets. The vision of the father of the nation can guide us on this front. He believed Pakistan must prioritise scientific and technological education to compete with the world. He cautioned the nation “do not forget that we have to compete with the world which is moving very fast in this direction.”
Pakistan should work to improve the skill development sector. Moreover, focus should be on the development of life skills. In addition, Pakistan will have to bring back education to the public sector, as was promised in the constitution.
After completing the reforms, Pakistan should look for economic development opportunities and a country that can play the role of an anchor. Fortunately, Pakistan has many opportunities that can help revive its economy and put the nation on the path of sustainable development.
Moreover, in terms of anchorage country, Pakistan has an excellent option, China. The most significant opportunities Pakistan has at this point are the China-Pakistan Economic Corridor (CPEC) and investment from Gulf countries, especially Saudi Arabia, the UAE, Kuwait, etc.
THE WRITER IS A POLITICAL ECONOMIST AND A VISITING RESEARCH FELLOW AT HEBEI UNIVERSITY, CHINA
Published in The Express Tribune, January 1st, 2024.
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