According to a recent report of the New York Times, Bangladesh has a bright prospect of becoming one of the emerging economies with a strong promise of growth despite various challenges like weak infrastructure and natural disasters.
Bangladesh is making progress as the nation's economy has managed "to grow more than six percent a year for much of the last decade. Plus foreign direct investment in Bangladesh has languished at about $1 billion a year - less than what Albania or Belarus each receive, and about one-tenth of foreign investments in Thailand or Malaysia.
In the case of Pakistan, foreign investment for first nine months of 2011/12 financial year dropped by almost 65 percent to $516 million. Direct investment fell to almost half of capital flows.
Along this, investment rate was only 13.4 percent at end of last fiscal year, which was lowest since FY74. The low saving rate, coupled with wary foreign investors, led to record low investment rate in the country.
In World Economic Forum Survey 2010, Pakistan has also dropped 12 notches to 112th place in the global trade competitiveness.
New York Times has also quoted economists at Standard Chartered Bank as saying that Bangladesh could join what have been called the '7 percent club' of economies that expand at least seven percent annually for an extended period, allowing their economies to double every decade. Current members of the "club" include China, Cambodia, India, Mozambique and Uganda. The report also said that HSBC has included Bangladesh in a group of 26 economies - along with China, India and several Latin American and African countries - where it expects particularly strong growth.
At one time, Pakistan economy is the world's 27th largest economy based on its purchasing power. However, the country remained impoverished due to internal political disturbances and negligible foreign investment since independence. With rise in development spending by Islamabad, the country's poverty levels reduced by 10 per cent from the year 2001 to 2007. The economy grew between 2004-07 due to rise in GDP from five to eight per cent. This was largely due to development in industrial and services sector irrespective of severe electricity shortfalls.
However, the country has witnessed a lot of political and economic instability leading to depreciation of Pakistani rupee from 2007 to date and now Pakistan is in the 4th number of poor countries of world, just after three countries of Africa, which is really a shame for our government and political leaders, which are included in some of the world's richest people list.
Though entire Pakistan is affected by crisis, Karachi being the hub of all economic activities has come across many crises.
Just four years ago, in 2007, the World Bank declared Karachi as the most business friendly city in Pakistan. However, now strikes, bhatta, bomb blasts, target killings, mobile snatching and robbery turn up an everyday story. The city losses around Rs3 billion a day if the normal business activities come to a halt owing to untoward incident such as violence and resultant strikes and shutdowns. According to a survey, due to closure of business activities for six days from March 23 to 31, the trade losses reached Rs18-20 billion.
According to some estimates, Karachi contributes 68 percent to the national exchequer and its share in the GDP stands at 25 percent. Karachi, world's 20th largest metropolitan city, produces about 42 per cent of value added in large scale manufacturing. It has largest and most dynamic industrial areas, like Sindh Industrial & Trading Estate (SITE), Korangi Industrial & Trade Estate, FB Area, North Karachi Industrial & Trade Estate, Dhabeji and Port Qasim etc. SITE Manghopir is the prime industrial park of the country holding about 4000 factories.
Economic activities in Karachi contribute more than $40 billion to Pakistan's total annual GDP. The port city of Karachi is rightly dubbed as the financial artery of Pakistan, which means if the city suffers the economy of the country and the whole nation suffers. The disturbed law and order situation in Balochistan also affects Karachi.
Balochistan is the second big example, where government has proved incompetent to provide security to its citizens and targeted killing, kidnapping for ransom and other criminal activities continue unabated and the new wave of sectarian violence unstoppable.
Grievances of Baloch nationalists and dissidents have revolved around political and economic deprivation, provincial autonomy, control over natural resources, detention of political workers, bigger share in NFC, special quota in federal jobs, enhancement of royalty for gas, taking back decision to build cantonments in interior Balochistan, reducing army's presence, curtailing intelligence agencies role, attrition of Baloch identity and Balochi's being reduced to minority due to heavy influx of outsiders. Later on, emphasis shifted towards missing persons, mutilated bodies and trial of Musharraf. Encouraged by foreign powers, the fugitive Baloch leaders are now demanding independence. For achieving it, on daily basis non-Baluochi' is facing death threat.
The chief minister of the province said that a large number of professors, teachers, engineers, barbers and masons are leaving the province for fear of attacks; this inhuman act of murdering innocents on ethnic ground will push the Baloch nation at least another century back.
Continuous target killing of traders are resulting in higher prices of foods items and no economic activity in Balochistan.
The condition of Khyber Pakhtunkhwa and Punjab is also not better. Due to continuous militancy, Khyber Pakhtunkhwa's infrastructure and economic conditions are damaged.
Punjab is facing the same situation; violence due to energy crisis leads the worst law and order situation.
The import of textile machinery has slumped by 59 percent during March this year due to the phenomenal decrease in textile exports and output capacity. Export of almost all value-added textile goods declined during first eight months of current fiscal year with knitwear declining by 11 per cent, bed wear by 10 per cent, and towel by 5.5 per cent.
Manufacturers have started exporting the existing functional machinery to Bangladesh because Pakistan has growing issues of energy shortfall and routine violence in Karachi. How the manufacturing units in Karachi and Punjab could expand their size when everyday violence and worst electricity and gas shortages had scaled down their production capacity to mere 50 percent. Worst law and order condition created a negative image of our country throughout the world.
Deteriorating law and order situation has forced many businesspersons to put on hold their future investment plans. As there is no business expansion and no new industries are being set up, employment opportunities are shrinking and may be forcing many unemployed youngsters into anti-social activities. Only those industrialists are investing who have made vertical expansion in their existing units after shifting the business to the next generation.
For a daily wager, who earns Rs200-400 a day, it is very difficult to survive two days of shutdown and the third day proves really disastrous when his children have to go hungry. Due to the rising cost of living and rises in the prices of daily commodities, friends and relatives who are also hit by the same situation cannot give any credit in times of financial crisis.
No doubt, day to day increase in inflation, which is pushing masses below the poverty line, is also one of the sources of shaky law and order.
An overview of the development scene in Balochistan is discomforting and the extent of relative deprivation in the province is appalling. Eighteen out of the 20 most infrastructure-deprived districts in Pakistan are in Balochistan. The percentage of districts that are classified as highly deprived stands as follows: 29 per cent in Punjab, 50 per cent in Sindh, 62 per cent in the Khyber Pakhtunkhwa, and 92 per cent in Balochistan.
If Quetta and Ziarat are excluded, all of Balochistan falls into the high deprivation category. And, Quetta's ranking would fall if the cantonment is excluded from the analysis. The percentage of population living in a high degree of deprivation stands at 25 per cent in Punjab, 23 per cent in urban Sindh, 49 per cent in rural Sindh, 51 per cent in the Khyber Pakhtunkhwa, and 88 per cent in Balochistan.
Unsatisfactory law and order situation keep the prospective foreign investors on the sidelines. Safety of capital and the security for the personnel engaged in the project are essential ingredients, which govern foreign investment.
Unfortunately, the law and order situation has remained far from satisfactory in the main economic hubs of the country.
Karachi, the largest industrial and commercial centres and the only commercial port of the country, has remained disturbed in varying degree since 1989.
In recent years, the law and order situation has also deteriorated in Punjab. Notwithstanding attractive incentives offered to foreign investors, this factor has discouraged them to set up their business in Pakistan.
Instead of taking effective measures to improve the condition, the government loves to resort to IMF and the World Bank. A normal healthy and well functioning economy does not approach the IMF for financial assistance. It is only when an economy is in a crisis situation or likely to hit a crisis in near term, the authorities invite the IMF to engage in negotiations for a possible financial package that can be quickly disbursed over a given period of time to overcome or avert the crisis.
India entered into an agreement with IMF in 1991 but exited the program a few years later as it recovered from the crisis. China hasn't approached the IMF as it has a strong and healthy economy.
All the developed countries accord special importance to economic issues and the challenges. But, in Pakistan the situation is quite different and the trade and economy is on the bottom of government to-do list. The government has failed to address the key issues like power shortages, circular debt, huge internal and external loans, poor infrastructure, law and order, etc.
There is a strong need that government should address these issues on priority basis to rev up investments to put the country back on track of economic growth and development. If the country is losing charm for foreign investors then the government would have to take extraordinary measures to avoid its effects on local investors and the country's economic growth.
The biggest advantage of Pakistan is its geographical location. It is between Central Asia, and South and East Asia. While Central Asia is energy rich, South and East Asia are energy hungry. With improved law and order condition, government can cash in on its strategic location.