From Social Chaos to Social Unity: Can Imran Khan be the Glue?

After Sunday's tremendous show, what do u see common between Jinnah and Imran Khan? In short they both lacked in skills required to give a decent public speech. Perhaps a trait which only Bhutto could master in our nation's history. But despite this apparent deficiency, both have been very charismatic in their personalities - a paradox may be! Equally important is the fact that no one put much heed to them during their early phases probably due to their seemingly contradictory and in some sense complex thought process. 

Having not gone to the rally, it will be unwise on my part if I try suggesting how many people might have participated. But the figure could be anywhere between 70,000 and over 100,000, depending on the number of people standing outside the boundary. However, its very difficult to entertain the possibility of above 300,000 like some PTI supporters suggest. Anyways, in my opinion, its no more a matter of number game and PTI has definitely exceeded the maximum expectations of many analysts and crossed the minimum threshold required to set the tone of its political movement. 


One major and the most important factor which has gone unnoticed or may be noticed but unsaid so far has been the participation from not only all income groups (leaving the top and bottom percentile) but also from people loyal to inherently contradictory ideologies. For once, after a long time, men with religious or non religious outlook and women with or without headscarf all appeared in complete harmony with each other while sharing the same platform for a common cause - a cause of better Pakistan. Going back in history and studying few cases in which polarized societies successfully transformed themselves into huge empires, the causality has always run from social unity to economic prosperity and not vice versa. Early Islamic and Mongolian empires, though distinct in themselves, are two interesting and somewhat familiar case studies. 


In today's state of chaos which is only leading to increasing frustration and thus reinforcing the cycle, Imran Khan does appear to present himself as a Glue who may succeed in bridging our increasingly polarized society. With a World Cup victory up his sleeves, he has already risen beyond ethnic identification and has established himself as a Pakistani. Not many Pakistanis will be willing to forego their claim on Khan due to any political affiliations. Furthermore, having done most of his social work in Punjab, with a 'Khan' in his name and focusing all his energies campaigning against the Pakistani version of the 'war on terror' in FATA (can always be debated but not here), it becomes very difficult to pin him down to a certain region. Knowingly or unknowingly, playing national anthem in front of a huge Pakistani flag on 30th's rally organized at Minar-e-Pakistan lent further support to his Pakistani character. Each of these factors might not be very important on its own, but together they do have significant role in shaping public perception. 


It wasn't just the stage which presented an interesting show of symbols but participants themselves also looked more future oriented - another aspect which analysts have missed in pointing out. Yes, much of the crowd was frustrated at the current lot of politicians and were looking for an alternate - as was acknowledged by Imran Khan - but less energies were wasted is hooting 'Go XYZ Go'. Though this was very refreshing, it would have been even better if someone from the crowd might have talked about his/her suggestion on how to get things right? PTI supporters might turn around and say that no such question was asked by the media people or otherwise at least they bothered to leave their comfort zone for a cause unlike many other (including me) who like to be the master of their keyboards. Fair point!


Before concluding, I must say that some analysts have gone slightly overboard when critically analyzing Imran Khan's speech. Despite being all over the place, it did present a significant breakthrough when compared with traditional speeches. PTI Chairman did target political leadership of the country but he did not let it become the focal point. A very different stunt (i call it stunt because of the political risk involved) which he successfully pulled was cursing the audience for their apathy towards the state of affairs in the country. On issues dealing with governance, much of the speech was mundane except few points which need to be highlighted: 


1. Electricity Crisis. This one took be by surprise and unfortunately it went unnoticed as well. It is the first time someone presented the true picture of Pakistan's electricity generation and distribution network and proposed a practical solution in terms of improving the efficiency of the underlying infrastructure (wapda) from the current level of 25% to around 60% rather than just focusing on building new projects. The question 'How?' can never be fully answered but at least someone has got his focus right. 
2. Corruption in the Police Department. The idea of SHO being an elected represented on patterns of USA system is also a very creative one. Its effectiveness in context of Pakistan can always be debated but it is definitely a food for thought.  
3. Foreign Policy. His foreign policy statement was quite similar to that of PML-N - friendship with all. But it definitely is the only right option for this country at this point in time. 


All in all his manifesto may not yet be clear and his team not very apparent, but Imran Khan is emerging as the only leader who could unite the varying factions of our society - an achievement which will set the tone for any future progress. 

Where is the DESTINY we are DESTINED to find?

A common question to which we are all busy finding the right answer is what exactly is the future of this country? Our economy is in a chaotic state; leaders obsessed with themselves; society getting fragmented with each bomb blast; defences no more impregnable; and the list goes on....

When I think about all this, none of the above said rings enough bells which may send shrivels down my spine.

Usmanioon pay kohe ghum tota, to kia ghum hay

Khone sub hazar anjum say hoti hay sahar payda

What concerns me most is the possibility of us crossing the minimum threshold which may push us into the state of collective pessimism.

In economics we study a concept called inflationary expectations. Basically if a society thinks prices will rise to a certain level, prices WILL rise to that level. Go back in history and think about the reason of why Pakistan came to BE? Well I will call it the power of collective desire. Go back in US history and ask yourselves what turned this non-productive piece of land into a land of opportunities? After all the people who initially migrated are the same people who live in today's Britain.

Now some of us might say that the actual reason was the role of leadership. My answer to this is Yes and No. Think about it! What is happening in Pakistan for last many years? Brain Drain. Why should any sensible person stay in the midst of people who are not even sure about their future? Honestly! Even Jinnah left India after he found Muslims of India to be nothing more than a ‘HOPELESS’ case. What brought him back was only the increasing desire of Muslims to achieve a certain destiny which they had already decided for themselves.

It is this reason why to me collective pessimism is a much greater threat than any other disaster. Once we enter this state, there is nothing stopping us from going down the drain. Lets call this the 'theory of collective pessimism'. However, to save ourselves from entering this closed destructive loop, we must choose a reason – a destiny – which may be a source of hope for us all and this country. Hence the title of this write-up!

But what exactly do I mean when I say ‘Where is the Destiny we are Destined to find?’ I can assure one thing that we are destined to find it but what we need from each other is defining this destiny of ours. I must mention my Boss here who wants to see future Pakistani cities as Dubai. But when he mentions this to his audience, the hall goes silent with everyone having a sarcastic smile of their faces. Sometimes it takes me back to 1938 when Allama Iqbal was lying on his death bed while people taunting him for his crazy vision of carving an independent state for Muslims of India. But in the following years this crazy vision – which had then become a collective desire – transformed itself into a reality.  

Unfortunately Pakistan lost the few saner heads too early in its life. Since then we have developed several constitutions telling us how to carry ourselves but have failed to outline a common goal – a destiny. What use is knowing how to kick while not knowing where the goal post is? Or What use is knowing all the bus routes while not knowing where the final destination is? Even a blind person has more chances of reaching home compared to someone who doesn’t know the way to his home!

In the absence of a desired destiny, it is no wonder that we have failed to find ourselves a decent walk in last more than 60 years. It is still not too late for us to get our heads together and desire a common destiny for ourselves. Once done, all we need to do is to stick to the right side in our future history and keep our roars safe for the right time.

Ishq to farryad lazim the, so woh ho chuki

Ub zara dil tham ke farryad ke tabeer daykh

Saving the railways

RAILWAYS all over the world have an edge in long-haul and mass-scale transportation of both goods and passengers.

In Pakistan they were the primary mode of transport until the 1970s, but since then their share has declined due to a shift in government focus from rail to road transport. From 2005 to 2010, budgetary expenditure on railways was only Rs45.5bn compared to Rs155bn on the national highways.

But lack of resources is not the only problem. Only 42 per cent of total track length is currently being utilised, and this number is expected to fall even further after the closure of many routes in 2010. So what exactly is happening with the remaining 58 per cent? Most likely it is being sold on the black market or being left to degrade on its own.

We cannot expect Pakistan Railways (PR) to run the few locomotives it has left on all routes, as this is neither economically nor physically feasible. But there is at least one thing it can do without spending a single penny — give up its monopoly and open up tracks to the private sector.

PR is facing significant losses due to mismanagement, overstaffing, underinvestment, poor maintenance and weak ticketing checks that allow people to get away with not paying for their tickets. Over time there have also been political interventions in decision-making about which new routes to open. Furthermore, PR is not allowed to charge a market-clearing price; fares have always been dictated by the federal government.

But we have all heard about these problems time and again. What is more important is to focus on how to make things work, which is what the New Development Approach (NDA) team at the Planning Commission is currently working on.

To improve management, partial privatisation should be encouraged. In India this has given the railways sector a much-needed boost. PR can adopt similar measures, such as outsourcing stations management and rail hospitals, allowing companies to run their own container trains, and letting suburban trains run as separate companies. This will increase the private-sector participation necessary for promoting competition.

When outsourcing station management, some percentage share of the revenue from all tickets sold at a particular station should go to management. This would incentivise management to make sure the maximum number of tickets is sold through better provision of services, an efficient ticketing system and minimum free-riding.

Gradually PR should be unbundled and privatised completely. This may include privatising rail tracks, station management (as mentioned earlier) and separating passenger from freight services. Privatising tracks (including signalling), especially, will improve track utilisation and minimise the government’s ability to control competition. Furthermore, the earnings of the track operator would be solely dedicated to the maintenance and expansion of track infrastructure. Such unbundling would create a more mature market in the railways sector, which is necessary for efficient allocation of resources and hence for growth.

For successful results, however, two important conditions must be fulfilled. First, an independent regulatory body must be established with sole responsibility for promoting competition and implementing quality control. Currently all regulations are made by the railways’ ministry, which is also the PR’s parent body.

Existing financial and administrative linkages between PR and the ministry will never allow the latter to draft policies that do not favour PR. It is also widely accepted in international academic circles that improved private-sector participation and increasing competition results in greater benefits if an independent regulatory body exists.

Second, prices should be deregulated and market players should be given full power to charge a market-clearing price. Had the Pakistan Telecommunication Authority (PTA) not been established and prices not deregulated, we might not have witnessed the boom in the telecom sector.

Furthermore, to reduce corruption within PR, employees should be given performance-based remuneration and promotion. PR employs round 90,000 people and carries on average 65 million people annually. Indian Railways, on the other hand, employs 1.6 million people and carries 7.3 billion people annually. This gives us an annualised passengers-per-employee ratio of 722 for PR and 4,562 for IR. Given its massive losses, PR needs to better handle its employees and operations. The colonial tradition of seniority-based promotions has long failed and has even been abandoned by the country that propagated it.

The solution, then, is to unbundle railways infrastructure into rail tracks and signalling, station management, and services (passenger and freight). Privatise unbundled assets, especially rail tracks and signalling for increasing track utilisation and station management for making ticketing procedures and checks more effective. This gives us a clear-cut restructuring plan for one of Pakistan’s major state-owned enterprises.

The writer is an economics graduate from the University of Bath and is currently working as an economic consultant in Pakistan.

Written by Ahmed Pirzada

& published in DAWN (1st Feb, 2011)

Let's get it right this time

The favourite statements or slogans to divert attention from real issues and woo people during the election period to vote for this party or that: “We will bring the growth in double digits. We will bring in FDIs. We will create employment opportunities. We will provide housing for poor. We will develop a tolerant and talented society. We will alleviate poverty.” By now it is obvious; it very much sounds like a manifesto of a political party. Those who will cry these words out in a more enthusiastic way will surely win the elections. Fair enough! This is how elections are fought. But what is not fair is that our policy makers have also relied on similar statements without feeling the need to explain one critical question: how will they make all this happen?

Well some might already be thinking of ways the government can bring this change. Many would know for sure that all this can not happen in the parliament’s lifetime. Or some may be thinking that some of these may be possible probably by initiating various mega projects, focusing on trade and not aid, giving subsidies to lets say textile sector, and so on. Unfortunately we do not have enough money for the mega projects, developed countries prefer to give aid than removing trade barriers to foreign goods and we have been giving subsidies to various sectors for the last six decades, but they have still not developed enough to sustain themselves without needing financial help.

In recent conferences organised by the Planning Commission to debate on the New Development Approach (NDA) being developed internally, some many interesting questions were raised by civil society, donor agencies and the Planning Commission itself. Just to give you a taste of it let me state a few over here:

Everyone talks about promoting public-private partnership but has anyone pondered on what does it mean? Or do we have set rules defining public-private partnership necessary to send some sort of a signal to the private sector?

We often say that the government should do this and that. But who is the government and what exactly should its role be?

One way is to keep looking for all these answers which we might never find given inefficient bureaucracy, frequent changes in political setup and deficit of constructive thinking. Second is to get the government out of all the sectors through deregulation and privatisation and let the markets work on competitive basis. At least going with the latter option, we would not have to waste time in finding incomplete answers.

To ponder a bit more, let’s focus on our current growth cycle. We get foreign aid which gets spent on fiscal incentives leading to rapid growth. Now when we should introduce market reforms we prefer to relax and wait for the fiscal pressure to build up, which when gets coupled with some external shock bringing us back to where we started from. Making foreign trips to look for financial aid! Honestly, it sounds more like our CRISIS CYCLE? I will leave it to the readers to decide.

YES, some of you are right. If we replace aid with more consistent investment, we might manage to move out of this low level equilibrium trap. But why should anyone invest in our market which is marked by government presence in all the sectors? This is not all, inefficient infrastructure and law and order, unskilled workers and acute energy shortage are enough to keep the investors away. Furthermore, would you like to compete against Pakistan Railways which is also responsible for devising rules governing railway business in Pakistan? Or what about the aviation industry where the national carrier gets preference in route allocation? In energy sector, we have been trying to resolve circular debt for last three years. How is it even possible to achieve that when the sector is not being allowed to charge enough to cover its cost? Similarly, why shouldn’t our refineries decide the price themselves? Can our government determine the prices more efficiently than the markets? Looking at our history, governments have always been quite determined to outsmart the market. So far the results have been a bit disappointing for the public but perhaps stock brokers can learn a trick or few.

These are some of the important issues which NDA tries to resolve. It offers private sector led growth through well functioning deregulated markets, software development, rezoning cities, community participation and useful connectivity. But before we move towards implementation, we really need to make our mind if this is what we want or are we better off sticking with the old model?

Written by Ahmed Pirzada

& published in Business and Finance Review (31st Jan, 2011)

Survey reveals key citizens' issues: Connectivity of Pakistan

WEEKEND MAGAZINE  (January 22, 2011) : A survey was conducted on the transport sector of Pakistan to get first hand experience of citizens' problems. Out of all the surveys distributed randomly in various universities, engineering firms and government agencies located in either Islamabad or Rawalpindi, 83% response rate was achieved.

Targeting universities provided us with easy access to youth belonging to different areas of Pakistan and therefore helped us in significantly eliminating the sample bias problem. In the sample, 52% of the respondents were from the age group of 21-25 years followed by 30% from the age group of 26 and above. Remaining 18% were between 17-20 years of age. Similarly, 38% were fully employed including 1% not in paid employment, 58% were students while 4% were both student and employed.

It was found that only 26% of the respondents use public transport on daily basis. However, there is considerable demand which is visible from 41% respondents using it at least once or twice a week and 60% using it at least once in two weeks. On the other hand, only 21% respondents said they never use public transport. Main problems faced while commuting are quality and lack of transport. 51% reported that they think quality is the major issue while 36% view it to be lack of transport.

Of the female respondents, many reasoned security related to quality and overcrowding to be the main reason for their reluctance to travel on buses. On the contrary, only 13% reported higher prices to be their major concern. This highlights that currently insufficient routes are being served with inadequate number of buses. It, therefore, makes it necessary for the regulators to realign existing routes and ensure minimum number of buses per route.

Problems facing rail travel are also very similar but of greater magnitude. Almost all the participants complained for poor services. However, 55% thought of it as their major problem while 16% opted for long delays. It was found that 57% of the sample had never travelled via rail. Out of the university students, who represent the newer generation, only 36% had ever used railways.

This is again due to poor services and long delays which 78% of all the students considered to be their immediate issues. Air travel is considered to be the most attractive mode of travel for long distances but is the least used due to higher prices. Only 36% had ever experienced air travel and 86% find it expensive. Of the employed class, 41% do use it at least once a year but this significantly does down to 31% for students.

When asked 'how should we improve Pakistan Railways and Pakistan International Airline?', 36% preferred privatisation over any other solution. 26% were in favour public-private partnership and 27% want the government to run the affairs of these enterprises on commercial basis.

Most importantly, only 5% wants government to continue giving them subsidy. This is a major finding and is against the general perception of possible public anger against privatisation. Another critical issue which deserves to be highlighted is limited role of universities in career counselling. Only 20% of the students said that they received some job related information from their respective universities. Out of those working, only 3% received help from their educational institutions when looking for a job.

Internet has come to the forefront in helping students looking for jobs. 29% of the respondents find role of internet to be the most important in their job hunt. Newspapers, however, still play a lead role with their share of 31%. Remaining 26% prefer relying on their friends and family. Significant use of internet for this purpose, despite limited employment information available online, provides the labour market with a much transparent platform which is all set to be fully exploited. Dedicated job portals along with online career counselling can play a significant role in ensuring efficient signalling.

Use of Internet has also started to become visible in the professional spheres of people's life, 62% of the respondents said that they mostly use internet for work or study purposes. This percentage is almost the same for both employed and students. These findings have been taken into account when proposing key reforms on connectivity of Pakistan in the work of New Development Approach (NDA) undertaken by the Planning Commission.

Written by Ahmed Pirzada
& Published in Business Recorder - Weekend Magazine (22nd Jan, 2011)

Understanding key issues in financing infrastructure projects

With increasing cost of construction, frequent occurrence of large-scale natural disasters, and ongoing fight against insurgents, it has become impossible for the government to continue financing infrastructure projects. This can be seen from the recent reductions in the budget of public sector development projects (PSDP). Historically, PSDP has been the main source of finance in addition to foreign loans. Much of the international aid, however, was directed towards social sector projects which were arguably of temporary relief.

To deal with these challenging circumstances, IMF has highlighted some key issues which need to be looked at when undertaking any infrastructure development project. These include: what investments offer the biggest boost to growth? How much investment is needed and by whom? How to finance this investment without taking on too much debt? Without looking at these issues, there remains a much higher probability that the project will get delayed to an extent that it no longer remains needed. If the project does get completed, long delays will push the cost to an extent that the cost-benefit analysis done when the project was conceived is no longer valid. Countries like Pakistan which are very much financially constrained must realise these issues and bring out policies aimed at utilising their full strength.

In answer to the first question, National Trade Corridor Management Unit (NTCMU) was established to come up with projects which help improve trade-related infrastructure facilities with the end goal of making Pakistan a regional trade hub. However, projects are still being approved in isolation with no broader vision of achieving sustainable growth. Ideally, a strategy should have been prepared by now and we should have moved on towards implementation stage.

Similarly, there is a need for improving PC-I with respect to involving private sector in development projects. The entire PC-I documents, expect the project to be fully financed from the PSDP. Instead, it should be made sure that first the project is floated to the private sector for take up with full ownership and if not successful, only then the government is approached for funding. Another section on ‘Public-Private Partnership (PPP) Option Analysis’ in the PC-I document, as suggested by the Infrastructure Management Unit (IMU), can be a good addition.

IMU (2007) has also done an extensive and useful study on constraints to private sector investment in infrastructure. But much needs to be done in removing these constraints. Some of the key constraints highlighted by the study are related to ‘procurement laws’ and ‘procurement processes’. Existing procurement laws do not include a requirement for the public body to consider infrastructure service delivery through the private sector. Procurement processes, on the other hand, are too centralised. All procurement decisions for a value as low as US $4-5 million are made at the highest level of the government. This is the case even for projects which are 100 per cent PPP and will not require any public expenditure.

Despite considerable realisation and wide consensus, Pakistan is still to come up with a detailed yet clear framework on PPP. This is mainly because the direction, content and the responsibility for the PPP framework still remains unsettled. Restriction on local governments against financing development projects through user charges or fees is also a major constraint to PPP at municipal level. Knowing that various amendments are being considered in local government law at provincial levels, these issues can be revisited with the approach of promoting private sector in infrastructure projects. Furthermore, land acquisition laws are currently in conflict with international norms. It is one of the major issues and has often resulted into delays and sometimes abandonment of the project.

National Highway Authority Act, which does not contain any requirement for PPP Option Analysis, also appears to discourage private sector participation.

It does not empower assignment of toll receivables in favour of the private project company executing the project. Another issue is that of competition with public sector construction firms. It is argued by the private construction companies that lucrative projects are always given to public sector corporations in a non-transparent and discriminatory manner. Such attitude discourages growth of private sector firms and hence their ability to undertake projects which are spread thin over the time horizon.

Written by Ahmed Pirzada
& Published in Business and Finance Review (24th Jan, 2011)