The absence of any meaningful investment in the Pakistani economy is arguably one of the biggest challenges facing us today. Both the Foreign Direct Investment (FDI) and the domestic investment figures have dropped to a 40 years low and not only does this mean that the Pakistani production plant (meaning our economy) for making jobs and creating opportunities is coming to a grinding halt, but also the global confidence in the future of the Pakistani economy is eroding; something that does not augur well for the prospects of resurrecting the economy from its current impasse. Industry is relocating to safer and more competitive foreign soils, economies of scale are fast becoming a bane than a boon in a shaky and energy (power and gas) starved environment, which simply does not support continuous industrial processes anymore, and the inherent weakness of democracy relating to, political opportunism taking precedence over economic pragmatism, is becoming increasingly visible as the elections (expected later this year) draw near.

It would be unfair to say that this brewing economic concern is either being totally ignored or simply lost on the government, because from what one knows an urgent task has been assigned to the Planning Commission by the highest office in the country to quickly propose solutions for luring back FDI and restarting the process of domestic investment in the country, and also on the provincial front we see the Chief Minister of the largest province endeavouring to take matters in his own hands (post-devolution, courtesy 18th Amendment) by undertaking country-hopping tours to attract investment in Punjab. Good optics, but the chances of such exercises accomplishing any meaningful results are always very slim, unless they are accompanied by measures that first correct the basic fundamentals of investment generation at home. As we know, capital knows no boundaries and the investors are primarily driven by the ‘sustainable’ returns on their investment, so unless we can find a way to raise Pakistan’s competitiveness as a choice destination for investment, the desired results will not be forthcoming.

The World Economic Forum (WEF) undertakes an annual exercise to rate countries (142 economies) according to their competitiveness. The countries that seek to attract investment and grow, strive hard to implement the necessary measures in order to move up this ranking. In 2011, Singapore led the Asian countries to rank second in the world behind Switzerland in the WEF Global Competitiveness Index, which showed developing nations narrowing the gap with established economies across a range of measures from infrastructure to governance: Pakistan though sadly came across as being an exception by moving in the opposite direction amongst the developing economies! Singapore climbed one place from its rank last year (in 2010) and the other Asia economies in the top 20 on the 2011 survey were Japan (9th), Hong Kong (11th), Taiwan (13th) and Australia (20th). The landlocked Saharan State of Chad ranked last. Australia, India and Pakistan, all three lost ground in the survey.

In Australia, the forum flagged a shortfall in business innovation, as well as a weakness in the standard of infrastructure, especially around transportation networks and seaports under strain from the growing trade in mining commodities. India dropped five place to 56th, Pakistan well below the Indian mark (on account of infrastructure, governance, education, accessibility, corruption etc); whereas, China climbed 10 notches edging closer to top the 20, while already having its long arm Hong Kong at number 11th.

The annual survey by the Geneva-based organisation has 12 main criteria, such as labour market efficiency, financial market development, infrastructure, transparency, stability, corruption and education. For this report, it polled 14,000 business executives in 142 countries. The results over the past several years show competitiveness stagnating in advanced economies, as results improve among emerging markets, mirroring the trend in present-day economic activity. The survey is a further sign of the shift in the geography of the global economy, with fast-growing Asian nations better placed to invest in areas that improve competitiveness, such as infrastructure, while the USA and European States are focused on staving off recession or on austerity drives to cut ballooning debt.

As discussed above, China, the world’s second largest economy, climbed in the survey to rank 26th - still quite far behind the USA, which fell one place to fifth. China was the top ranking of the BRICS nations, well ahead of Brazil, Russia, India and South Africa, whose rank ranged from 54th to 70th. The forum stated that China’s competitive performance was helped by strong economic growth, a high savings rate - equal to 53 percent of gross domestic product - and debt. These outweighed persistent problems with corruption and financial market development, according to the survey. Actually, come to think about it, Asia’s rise to economic prominence can be largely attributed to its remarkable progress in terms of ‘competitiveness’. And, in the experts’ opinion, the meteoric rise of Singapore is also mainly driven by the efficiency of its government and its freedom from corruption.

So, what is the lesson here for us? In a nutshell, if we are serious about reviving the investment climate in Pakistan, then we first need to ensure that it is competitive for the investors to be producing in Pakistan. What the policymakers need to ask themselves before they go on to ask the outsiders to come and invest is that are our existing entrepreneurs happy? They need to conduct their own surveys on business environment vis-à-vis law and order, extortion, political blackmail, freedom to hire and fire, flexibility on human resource transfer and movement, minimised bureaucratic contact, one window facility for dealing with numerous government departments and infrastructure facilitation. They will be well advised that before embarking on investment seeking foreign tours, they should first assign their members of Parliament with the task to survey their respective constituencies to determine that who are the main growth drivers and job contributors in their respective areas and what efforts should be made to provide them with service and support to ensure that come what may the engines of the industry in their areas never stop?

The economic success stories need to be respected, recognised and rewarded, because they are the ones who are in real terms productively contributing to the national revenues and employment generation. The countries that have succeeded economically have done so by utilising the potential of their entrepreneurs, in shaping economic structures and brokering key economic alliances, by placing them in lead rolls both in the legislating upper houses and key diplomatic positions. The Greeks, ironically, the birth place of democracy, have gone as far as to democratically take time out from political squabbles by voluntarily opting to use their best qualified minds to bail them out of their current economic woes!

The writer is an entrepreneur and economic analyst.

Email: kamalmannoo@hotmail.com