Selective raising of import duties a half-hearted measure

The Pakistani government's recent move to selectively raise import duties on a set of items, mainly to discourage imports of luxury goods, has the making of being nothing more than a half-hearted step.

It is true that Pakistan needs to quickly find ways of curbing its imports while boosting its exports. It is equally true that a rapid growth in imports, especially that of luxury goods, poses a fast growing burden for the Pakistani economy.

But sorting out the challenge of an ever growing burden from a sharply rising trade deficit must relate to meeting the challenge of raising productivity at a rapid pace. Ultimately, there has to be a revival of investments-both equity and direct, and there must be a strong push to rapidly increase exports.

But the writing on the wall is crystal clear. The investment climate will not reverse itself and improve in the near term unless the prevailing political climate shows signs of a significant improvement. For the past many months, since a new government was elected in February's parliamentary elections this year, political infighting continues to be the fact of life in Pakistan . The ruling political coalition recently broke up when Nawaz Sharif, the former prime minister and leader of the Pakistan Muslim League-Nawaz (PML-N), walked out of the coalition citing differences over the controversial matter of restoring the judges who were dismissed by former president Pervez Musharraf.

As a follow up to that development, Asif Ali Zardari, co-chairman of the ruling Pakistan People's Party (PPP), has indeed managed to secure enough votes that he would be the likely winner in presidential elections this coming Saturday.

And yet, there is no clear evidence that Zardari's victory will in any way help to overcome the political discord across the country which stands at the centre of the worsening economic and investment climate, and which burst in to the open in the wake of Sharif's move.

Going forward, the government must appreciate the intrinsic link between economic outlook and the future of Pakistan 's investment climate versus the country's political direction. As long as infighting does not end, the investment climate will not perk up.

There is an added problem. The lacklustre economic and political environment comes just over a year after Pakistan succeeded in attracting a record $8.4 billion in foreign direction and equity investment as well as receipts from the privatisation programme. It is clear that having set the bar that high, Pakistan's present and future performance will always be judged against that past.

The new government and politicians of today must therefore strive as hard as possible to match the previous record for their performance going forward and will always be judged with the best days of Pakistan's economy from recent memory. Those were times when former president Musharraf ruled over Pakistan.

Irrespective of their political differences, a pertinent question for both Zardari and Sharif must be: do they seriously want their track record to be compared with that of Musharraf who was very recently forced by the two ruling politicians to step down?

Pakistan's increasingly moribund economy is unlikely yo improve. The outlook has never been so ominous.

- The writer is a journalist based in Pakistan.