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Pakistan a Rich Country?

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The below article “Pakistan a Rich Country?” by Syed Shabbar Zaidi was originally published by Pakistan Observer on November 16, 2021.

 

By Syed Shabbar Zaidi

Pakistan owes over 100 billion USD in foreign debts. It has had over 375 billion in the current account deficit since 1947.

Pakistan imports around 10 USD billion worth of food items annually. This is the state of affairs of the state of Pakistan. However, it is also a fact that Pakistanis are the second largest investor in properties in Dubai.

Around six daily flights to Dubai are all jam-packed with first-class and business seats occupied by Pakistanis. Lacs of very expensive animals are slaughtered during festivals.

Almost all the mosques in the country are well equipped with airy space and large halls which remain unutilized except for prayers which in total consume one to two hours in a twenty-four hours day. Prostitution and pornography is constantly increasing as society is choked.

Pakistanis purchased a very large number of four-wheel drive vehicles during 2020-2021 and such vehicles are all booked in advance for two to four years. In all the big cities of Pakistan middle and high-end restaurants require at least an hour waiting time for dinner.

The average attendance in a middle-class wedding, which consists of at least two functions, is around 400 people with lavish food and excellent arrangements.

All these facts and many others not mentioned reveal that there is a serious contradiction between the Pakistan we see in state numbers and the Pakistan we see if we move around in the upper-middle class. Apparently, there is a contradiction or disharmony.

However, my analysis of Pakistan’s social, economic, and political structure reveals that this is all part of a well-thought-out scheme. This society has been established by design and it suits the people who matter whether they are bureaucrats, politicians, forces, and professionals.

This is the product of a very long journey which Pakistan has traveled from 1947 to 2021. This is an elitist state made by elitists, ruled by elitists for the elitist.

Those who challenge are spectators outside the pavilion. This is the reason that no right-wing person has ever been punished whereas leftists starting from Hasan Nasir to Dr. Aizaz Nazir have records of butchery. Those who belong to the left are now living in Defence Societies like me writing articles like this and have become part of the system.

The system which has been so designed in Pakistan requires legal and financial security to the people who are enjoying this state of affairs.

Pakistan may be the only country in the world that has effectively legalized this disharmony and has installed sensitive trip wires which alarm the arrival of the intruder in the system. This article covers only some aspects of this extortionist system and is limited to the subject of finances and businesses.

Pakistan is the only country in the world that has placed foreign exchange regulations against the documented and organized companies and has opened the free movement of currencies by individuals.

Legally, prior to 2018, an individual was authorized to buy foreign currency without any limit in the open market without any practical documentation about the source of money from so-called exchange companies.

This is a unique animal created in Pakistan. This money can be deposited in the foreign currency account of the individual and sent anywhere in the world without any probe. ‘No question asked’ is an attribute propagated by court economists of the political elite.

Availability of rupee without any source is guaranteed by the cash economy in the country which consists of around 40 percent of the GDP of the country. This roughly amounts to USD 150 billion per year.

This means that around 20,000 billion rupees are injected in the economy every year which all remain unaccounted for. This sum is earned from trade, agricultural income, real estate, and all other sectors, including some industrial sectors, which are undocumented. For example, around 30% of the tobacco industry consists of an undocumented economy.

The whole sugar industry is undocumented after the production stage. This 20,000 billion rupee is used for the purposes identified in the first paragraph. The story would have been satisfactory if this money would have remained in Pakistan.

It is not so, businessmen and bureaucrats want to enjoy their money in London and Dubai. Therefore, Zia Ul Haque and Nawaz Sharif designed systems whereby such rupees are available in USD. Protection of Economic Reform Act, 1992 was promulgated to facilitate the same.

It was a poison to an ailing patient. However, Nawaz Sharif is not the only person to be blamed. Afterward, Zardaris and PPP, Musharraf and his Chaudhries, and Imran Khan’s friends all enjoyed the system.

Why should anybody change it? This suits all political parties and people who matter as they need money for their elections etc and their children do not want to spend life in Pakistan.

All politicians when not in power live in Dubai, London or New York as people in Pakistan are dirty and life is insecure. This happens with the middle class party MQM also. It is a disease that is inflicted when political recognition is achieved. I hope the same may be cured. There are very few people who have actually seen all aspects of this wild game. I am one of them.

Since 1988 in all my annual speeches at the Institute of Chartered Accountants of Pakistan’s budget seminars, I have been saying that we are following the Dubai model of economy whereas the survival of the common man lies in adopting the Korean model.

I was the person who coined the term ‘Misaq-e-Maeeshat’. I was the person who instituted the Foreign Asset Declaration Law after the revelation of the Panama Leaks.

Nevertheless, the lesson I have learnt is that stakes are so big in this country that there will be a strong resistance crossing this trip wire. A whole generation has been nurtured where no tax, no documentation, luxurious life in Dubai and London is the norm.

This generation which is reasonably educated is confident that their future is guaranteed as their fathers have substantial assets and properties outside Pakistan. Pakistan is a second rural home for them for leisure and to promote corruption or play politics.

In my view, the Panama Leaks, Paradise Leaks and Pandora Leaks are all deliberate actions of the western governments. There is no effort by ICIJ.

After the economic shocks which the western societies had due to the Chinese economic tsunami and the event of 9/11, it has become difficult for the western governments’ protected tax and regulatory heavens to distinguish between funds that can be used for terrorism and those accumulated there by corrupt rulers and bureaucrats of undeveloped or developing countries like us. So there is a deliberate attempt to unveil that system. This led to these leaks.

The rich citizens of poor countries are being incentivized to park their declared and undeclared wealth in these tax haven jurisdictions from where these funds end up in New York and London capital markets. New York and London are happy as long as the funds are not related to terrorism.

Markets in London and New York run on the capital transferred from old Soviet countries, oil-rich Gulf family emirates, and corrupt countries like us. Now the only attempt to distinguish funds related to terrorism out of that. This is what is called FATF.

Nevertheless, those Pakistanis who are parking their wealth in these jurisdictions including the Gulf Emirates are warned that I foresee a time in the near future when such assets would be frozen in these jurisdictions.

This will be the ultimate cost of a second passport. Such freezing may take any name or mode including restrictions to move those out of a restricted place which will be west.

I hope this time is late, however, the speed of events reflects that such time is not very far. My support for asset declaration law was for this reason as I did not want my peoples’ wealth to remain unnamed. However, those who want to keep funds outside Pakistan without proper records and documents will regret in near future.

This is the result of greediness and unfaithfulness with the society that has given every benefit to these people.

Malta, Cyprus, Hungary, etc are not places to keep assets that can be used for generations. One can earn real income only at the place where there is a natural network. Let people learn the lesson because it is very difficult to persuade those who have money without effort.

As against that, there are a very large number of middle-class youngsters who are very bright. They work day and night and obtain straight A’s or over 80 marks in Cambridge and Matriculation examinations respectively.

These youngsters do not see their future in the country for the reason that the initial gap is too large to be bridged. Some of them find suitable jobs in Pakistan and remaining try to live somewhere in Canada or USA if they find such an opportunity.

The question which is to be answered is whether these Dubai-style luxury mafias demonstrating their untaxed wealth in Pakistan can be taken to task. The apparent answer is negative.

However, the history of civilizations reveals that there is always a time when ordinary civilized manners fail and anarchy prevails. The uncivilized manner is demonstrated by TTP, TLP, and extremist elements of MQM and others. We consider that these organizations are products of establishment however we do forget that establishment can only initiate the idea.

The public popularity can only be if there are organic and inherent reasons. There are many people who justify the trends adopted by these organizations. As an informed citizen, I am seeing organic recognition for these elements. This will be suicidal for society.

The immediate solutions from the economic side lies in fundamentally correcting the foreign exchange system incentivizing companies against individuals, taxation of all Pakistanis on the basis of citizenship, prohibition of dual nationality like India and Singapore, and compulsory declaration in CNIC record of all UAE Iqama holders to at least identify few Ex Ministers who are honored to as Assistants and Accountants in the UAE companies.

This hypocrisy cannot continue. Let us get together to enlighten society against intellectual corruption in addition to financial corruption.

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