Imran Trumps Trump

Links of Published Versions of Article:

By:

Omer Zaheer Meer,

CFA (USA), CPFA (UK), FCCA (UK), ACA (ICAEW – UK), AMLE (UK)

Even before Prime Minister of Islamic Republic of Pakistan, Mr. Imran Khan sat foot on the US soil, his charm offensive began. Undoubtedly it was a difficult trip. USA and Pakistan had grown apart over the years with the mistrust increasing by the day. From Salala to Aafia to Shakeel Afridi to nurturing the “eternal enemy” of Pakistan to siding with the Afghan Taliban, it was a downhill journey filled with complaints by both sides. Trump took office, believing he can do what none other could and make Pakistan dance to his tunes, even at the cost of our national interests. As the time passed and the global geo-political landscape started shifting, perhaps so did the advice he received and his perceptions.

Still, it was the Pakistan that India was up against and mind you, India has the economic “might” and swayed USA to its ways. Narendra Modi spent over 2000 crores building a campaign of “global isolation” targeting Pakistan with all his political experience, “wisdom”, economic might and strategic alignment with USA.

Then, along came Khan and it all changed. He delivered for Pakistan what no Pakistani Prime Minister before him could, even in more conducive circumstances and he did it with dignity and poise.

Then, along came Khan and it all changed. He delivered for Pakistan what no Pakistani Prime Minister before him could, even in more conducive circumstances and he did it with dignity and poise.

The first master stroke was delaying the IMF program and strengthening ties with Turkey, Kuwait, China, Iran, KSA, UAE, e.t.c. showing the USA that Pakistan can survive sans its aid and influence and will only talk on equal terms without having to compromise on its national interests for peanuts.

The next outstanding and brave move was to hold a public gathering in an arena in the USA, something that no Pakistani Prime Minister had ever done. Indian Prime Minister Narendra Modi did it with extensive resources and PR machinery. Khan did it better without any of that. He took commercial flight with a small team, stayed at Pakistan’s embassy and his party PTI organized the public gathering on its own.

This was not all. Khan used the opportunity brilliantly to pre-emptively counter the narratives of the opposition by highlighting his anti-corruption drive back home as well as his vision for a rising Pakistan. The results were astounding. Trump in his meeting, wished him success for his anti-corruption drive and couldn’t help but keep using the term “very popular leader” for him. Trump seemed to have been trumped by Khan. The opposing narrative built carefully and with the help of expensive PR firms died before it could even begin during this trip.

Put simply, Imran Khan won over the United States of America even before he and Donald Trump spoke about the key issues facing both countries and laid the groundwork for a proper and long-term bilateral relationship. In the words of Adam Gerry:

In a country (USA) that since 9/11 was programmed by the controlled news media to hate Islamic Republic of Pakistan, in the same country where Islamic societies are often misunderstood and in a country where arenas are usually filled with sporting or music events rather than anything remotely political, Imran Khan stole the show. Even if his rally was played for few seconds on America’s notorious television news programs, this has been a great victory for Pakistan. Because all it takes are a few seconds of footage from that Imran Khan rally to change perceptions of Pakistan from one that is wholly negative to one that is self-evidently optimistic and indeed one that is truly inspirational.

Prime Minister Khan has done something for Pakistan that let alone his countrymen or contemporaries, even the European allies of the USA find hard to do. He conquered the heart and soul of America with his charm offensive coupled with his dignity and topped up with his poise and sincerity.

Even forgetting Khan’s confidence and poise or even wearing of the national dress of Pakistan and the game-changing public gathering in USA, the way he put forth Pakistan’s case and advocated for us all was heartening.

He was put a tough question on Iran and handled it intelligently, keeping a balance and pushing forward the case for peace in the region. Faced with the question about 3000 American deaths in Afghanistan, he reminded the world of over 70,000 Pakistani lives lost. Asked about Shakeel Afridi, he raised the issue of Aafia Siddiqui just as he had promised to do.

That was not all, faced with questions, planted to attack the institutions, he brilliantly defended Pakistan. On the issue of PTM activists, he highlighted the initiatives taken for FATA including the mainstreaming and the breach of law by PTM activists. It was not just that he did it all without any paper slips but that he did it in a manner which reflected his sincerity, confidence and conviction. And these were what won over the Americans just like they won over the Pakistanis.

Some critics pointed out that he did not get any “money”. They’re right. Infact he openly shared that he didn’t even ask for any aid but he won something much greater for Pakistan. He won the respect of the global super power and the western world with a seat for Pakistan on global stage ensuring Pakistan is both heard and respected. And let me share, if handled properly, this foundation laid by PM Khan during his maiden USA visit can lead to a dynamic and successful foreign policy leading to long-term economic and trade benefits for Pakistan.

The writer is a leading economist and experienced tax expert who holds five top professional finance, investment and accountancy qualifications CFA (USA), CPFA (UK), FCCA (UK), CA (ICAEW) & Anti-Money Laundering specialization along-with substantial international exposure and represents Pakistan on Global Tax Forum while sitting on the boards of several think-tanks. His profile can be accessed at: https://omerzaheermeer.wordpress.com/about

Iqbal the Economist & his solutions for Pakistan– Part II

Links of Published Versions of Article:

By:

Omer Zaheer Meer,

CFA (USA), CPFA (UK), FCCA (UK), ACA (ICAEW – UK), AMLE (UK)

Continuing from the last week, Allama Muhammad Iqbal, the sage of the nation, further pointed out the key problems as well as their workable solutions as outlined below:

5. Opportunity Cost

In economics the opportunity cost is the cost of the opportunity lost in order to avail another one. For example if we build a plaza on an agricultural area where we could alternatively cultivate wheat, the opportunity cost of building the plaza would be the lost production of the wheat for the foreseeable future which we could have alternatively done and made use of. This needs to properly considered in all economic decisions. It’s good to see that PM Imran Khan has taken a leaf from Iqbal’s philosophy and incorporating that within the construction bye-laws prohibiting construction on agri-lands, hence accounting for the opportunity costs regarding food safety.

6. Austerity

Pakistan is caught up in the crisis of underdevelopment in the face of vast unlimited resources. One important strategy to adopt as per Allama Iqbal is austerity, as a guiding inflexible rule to allow resources to go into economic construction. Iqbal was a great champion of this cause and recommended it time and again. This, besides other factors help in building public trust. PM Imran Khan also champions this idea to build public trust.

7. Land Reforms

Iqbal didn’t shy away from the controversial topic of land reforms either. Infact, he backed these reforms to facilitate the oppressed class of peasants. It will be a befitting tribute to the memory of Iqbal if we develop an equitable system of agriculture in which the cause of peasants is well looked after for ensuring social justice for the peasants and for making a major break-through in boosting agricultural production.

Iqbal argued for radical reforms arguing that land as a means of production should be owned by the society for the benefit of all. “al-Ardu Liliān” (“The Earth is God’s”), is a poem in Bal-i-Jibril, which sums up this idea about land ownership.

در خدایا! یہ زمیں تیری نہیں، میری نہیں!
تیرے آبا کی نہیں، تیری نہیں، میری نہیں!

(To God, this land is not yours, nor mine,

Not thy ancestors’, not yours, nor mine)

If these core elements of Iqbal’s economic philosophy are properly implemented, there is no reason why Pakistan cannot progress on the path of economic prosperity

8. Rural Development

Iqbal also argued that the development of rural areas is at the heart of the economic and social development of a country. He analyzed that it does not only mean agricultural growth but it’s also about improv­ing of the economic and social conditions of the rural population by way of rising incomes and providing them with necessary ameni­ties like good houses, paved streets, water supply and sewerage, health services, education, roads, power, communication,’ etc.

9. Industrial Development

The cause of industrial development was very close to Iqbal’s heart. He considered the develop­ment of industries essential for mitigating the curse of unemploy­ment. On many international platforms there were talk of indigenous technology during his era, which are now wrongly associated with Mahatma Gandhi. The historical fact is that Iqbal was the author of this concept at the time. Examine the excerpt below from one of his speeches:

“We spend practically nothing on industry. And as I have said before and as many other speakers have pointed out, indus­trial development alone can save us from the curse of unemploy­ment. There is a good future for weaving industry and for shoe-making industry in this province and if we encourage these industries, I think we shall be able to save the province from unemployment, provided we protect these industries against Cawnpore and Ahmedabad.”

10. Skilled Workers

Iqbal was unequivocal on this issue. He said that Muslims must take to industry and craftsmanship. “In my eyes,” declared Iqbal, “the hands of a carpenter, rough and coarse due to the constant use of the saw, are far more attractive and useful compared to the soft and delicate hands of a scholar, which never carry more than the weight of a pen.”

11. Global Exploitation

Furthermore, Iqbal had also analyzed protective trade tariffs and global economic exploitation of weaker nations by the stronger ones. His couplet below depicts his state of mind regarding the exploitative attitude of the Western economies and his dreams for the economy of Pakistan:

دیار مغرب کے رہنے والو خدا کی بستی دکاں نہیں ہے
کھرا جسے تم سمجھ رہے ہو وہ اب زر کم عیار ہوگا

(O, Residents of the West! God’s earth is not a shop;

The gold you think to be genuine, will now prove to be debased)

To sum it up, the key principles of Iqbal’s economic model are as below:

  1. Having strong bond of trust between the state & citizens (core issue of Pakistan particularly in the context of the revenue collection agencies).
  1. Human Capital & Human Development (which is a key with the present youth bulge in Pakistan).
  1. Interest Free Business Eco-System (this warrants a detailed writeup but Akhuwat’s model is something we can begin with as a recent success story to replicate, beginning with pilot projects).
  1. Poor Centered Policies (inclusive economic policies resulting in justice and peace which in turn produce a conducive business environment leading to economic upturn).
  • Self-reliance which is the core of Iqbal’s philosophy and economic model.

If these core elements of Iqbal’s economic philosophy are properly implemented, there is no reason why Pakistan cannot progress on the path of economic prosperity. How can that be done and where to begin with are the concluding areas we’ll discuss in the last part of this series.

The writer is a leading economist and experienced tax expert who holds five top professional finance, investment and accountancy qualifications CFA (USA), CPFA (UK), FCCA (UK), CA (ICAEW, UK) & Anti-Money Laundering Specialization along-with substantial international exposure and represents Pakistan on Global Tax Forum while sitting on the boards of several think-tanks. His profile can be accessed at: https://omerzaheermeer.wordpress.com/about

Iqbal the Economist & his solutions for Pakistan– Part I

Links of Published Versions of Article:

By:

Omer Zaheer Meer,

CFA (USA), CPFA (UK), FCCA (UK), ACA (ICAEW – UK), AMLE (UK)

Allama Muhammad Iqbal is known to us as a marvel of excellence in all the fields he worked in. He is the visionary who dreamed of Pakistan, the famous Poet of the East, a top philosopher, a revered scholar, a politician, a parliamentarian par excellence and even a spiritual guide for many. Thanks to the recent pioneering work published in the book of my honorable father Mr. Zaheer Ahmad Meer Advocate, titled “The Great Lawyer – 106 Reported Cases of Allama Muhammad Iqbal”, we’re now aware that he was a Great Lawyer too. 

However, what most of us may be unaware of, is the fact that he was also a fine proponent of economics. He wrote his first book on Economics titled “Ilm ul Iqtisadiyat” or “Science of the Economics” in 1903 in Urdu, at the age of just about 26 years old, when no one was doing such work even in English in the sub-continent.

Unfortunately, this first ever book on economics in Urdu language, largely remained unnoticed, not to be realized, never to be properly acknowledged.

Let us remember that during Iqbal’s era, the classics of Adam Smith, John Stuart Mill, Ricardo and Alfred Marshall were taught all over Europe. But in the Indo-Pak subcontinent even teachers and scholars had only a hazy idea of this subject. Actually, it was not even introduced at the University level anywhere in the Indo-Pak subcontinent baring three universities. 

Unfortunately, this first ever book on economics in Urdu language, largely remained unnoticed, not to be realised, never to be properly acknowledged

It is therefore spellbinding that Iqbal had such deep insights into the subject of economics and the economic plight of the Muslims of the sub-continent. He was deeply concerned with the unequal income distribution that turned the rich richer and the poor poorer, a challenge we still face across the globe and in our homeland, Pakistan. The mere writing of ‘Ilm ul Iqtisadiyat’ renders him economist in the same-way as the Wealth of Nations (1776) made Adam Smith an economist, or the Das Captia portrayed Karl Marx as one; albeit the context eventually differed.

Iqbal also pointed out on 28 May I937 that: “The problem of bread is becoming more and more acute. The Indian (Muslim) has begun to feel that he has been going down and down during the last 200 years. Ordinarily he believes that his poverty is due to (Hindu) money-lending or capitalism. The perception that it is equally due to foreign rule has not yet fully come to him. But it is bound to come.”

Allama Iqbal, the learned enigma and a great thinker of Islam, was actually the first economist of the Indo-Pak subcontinent to raise his voice against the exploitation of Muslims by domestic and foreign classes controlling the means of production.

While, Dr. Muhammad Iqbal was anti-Imperialism in his thought process, yet he was able to point out the key problems as well as draw up workable solutions to address them.

1. Welfare based wealth

Iqbal presented the concept of welfare based wealth, distinguishing it from the traditional wealth.  An example to elaborate the concept would be that if skilled labor were enslaved for forced labor, it’ll increase the national wealth but will be detrimental to the welfare based wealth of the citizens and wider humanity. Similarly a pledged property may be accounted for as the wealth of the creditor in the event of a default but won’t meaningfully impact the overall wealth of the state.

2. Population Control

Surprisingly, Allama Iqbal also pointed out the excessive increase in population as a core issue at times of saturating economic resources, in an era when no one in the Islamic world did that. He very logically explained that while increase in population can be productive in a scenario of untapped or plentiful economic resources, it becomes counter-productive economically when the situation reverses, unless, other economic avenues can be explored to further create economic opportunities for growing population.

We can all appreciate, how this issue identified in 1903, has become a core economic concern for us in 2019, albeit 116 years later. I ask you all, what else do you call vision & foresight, if not this?

3. Economic Equilibrium in local context

Iqbal also advocated that a research-based analysis can determine the equilibrium in various sectors of the economy and modes of factor pricing as per the local context. Yet, at the same time he also urges to focus upon human development through exploration and preservation of natural resources and improving human and societal relations. By doing so, Iqbal practically envisioned today’s HDI (human development index).

4. Specialized Production/Services

Iqbal has also put forth various strategies used by recent economic success stories. For example, he discussed regional specialization in producing goods and services and brought in the notion of comparative cost, concepts that China practiced in its economic resurgence. This basically advocates for a country or its federating units, e.t.c. to focus its expertise in their specialzied area of production/services while accounting for the opportunity cost of producing that good or service in order to achieve economic optimization.

The writer is a leading economist and experienced tax expert who holds five top professional finance, investment and accountancy qualifications CFA (USA), CPFA (UK), FCCA (UK), CA (ICAEW, UK) & Anti-Money Laundering Specialization along-with substantial international exposure and represents Pakistan on Global Tax Forum while sitting on the boards of several think-tanks. His profile can be accessed at: https://omerzaheermeer.wordpress.com/about

Taxation can help declining economy

The following article has been published in Daily Nation, dated 23rd February 2015

(E-Paper (Print Edition)http://nation.com.pk/E-Paper/lahore/2015-02-23/page-9 )

(Onlinehttp://nation.com.pk/business/23-Feb-2015/taxation-can-help-declining-economy )

Taxation – Solving Pak’s Dilemma

Prof Dp

By: Omer Zaheer Meer

We’re all aware of the fact that it cost money to run countries and these funds are raised by taxes. Taxation is therefore an essential subject warranting attention from all concerned. In this write-up we’ll identify key issues in this regard and propose solutions to solve them amicably which have been presented by me at various think-tanks as well as published and publicized but unfortunately still awaits implementation from the decision makers.

Taxation is an extremely important source of funding for any state to finance the running of the Governmental functions. Even the oil rich Arab states are now beginning to recognize the importance of this and starting to shift towards a lasting economy with citizens contributing to the national treasury with their share of the taxes. To put it simply in all global economies, there is taxation both direct and indirect (in different combinations). Direct taxation is a tax directly levied on an individual or business’s income while indirect taxation entails taxes on products and services whereby consumers are made to pay taxes when they consume these.

In developed countries, realizing that taxation is necessary for providing them with necessary facilities, most citizens contribute their share to the state finances. Direct taxation is the dominant part of the tax system in such countries as it accrues some substantial benefits for the economy, people and the state. Importantly, direct taxation allows richer segments of the society to be taxed more and poorer classes are provided with relief and benefits. This proportionate taxation not only help smooth the flow of money across various classes of the society but it also helps in ensuring that every citizen has a minimum living standard by providing state assistance where required.

However, a different story is at work in Pakistan. A culture of tax avoidance has long engulfed the business horizons. An ongoing cat and mouse fight between the tax authorities and the taxpayers, with the later believing that it would be a waste to pay off their tax bills due to the deep pockets of the corrupt government officials, has led to a greater focus on indirect taxation. While the tax and state officials rightly point out that no state can perform the necessary duties with the empty coffers, the tax payers also have their point in that they don’t see any real delivery of essential services but instead are greeted with stories of herculean corruption rife all around. The plague of corruption is widely believed to be consuming most of the available resources. Hence, there seems to be a massive break-down of trust between the taxpayers and the “tax-man”.

This serious trust deficit leads to a difficult situation where finance ministry overemphasizes on indirect taxation to try to bolster its coffers.  Unfortunately this approach has serious negative ramifications for Pakistan’s economy and people which has manifested in worsening the already declining economic situation of the country.

In Pakistan, ordinary people are taxed indirectly on just about everything. Nowhere in the developed world is indirect taxation utilized as heavily as in Pakistan due to the negative effects that it creates for the economy. In Pakistan’s case (and that of many other developing countries following this strategy) the negative impacts far outweigh the contributions raised in this manner due to the missed opportunity costs.

For example, 25-30% had been routinely charged as an indirect tax on every liter of fuel (mainly Petrol, Diesel, e.t.c.) in Pakistan which is a basic necessity for everyday life compared to only 13% in the USA. This way of collecting taxes indirectly leads to inflationary pressures in the economy as the increased transportation costs translates into increased prices for just about everything including the commonly used commodities. The effects are hyper-inflationary in nature because there is a multiplicative rather than an additive element in the inflation passed-on at every level.

Furthermore the pay-rises are not proportionate to inflation thereby forcing people to rely on expensive credit to make their ends meet. Similarly businesses also require more finance to run their operations. This hyper-inflationary environment then leads to higher interest rate which negatively affects the businesses. With higher finance costs many business projects which would otherwise be viable becomes non-feasible. The resulting lack of employment opportunities combined with the limited money-supply puts recessionary pressures on the market. The above issues lead to the devaluation of the currency which in turn results in increased foreign debt burden. As a result, financing costs of the foreign debts rise leading to a higher proportion of GDP spent on debt financing. All this combined with hyper-inflation drags the already estranged economy further back in Pakistan’s case.

The above is a summary of the mess created by the taxation policies pursued by the previous government which are unfortunately continued by the incumbent finance ministry. The result is that while the standard of living of especially urban Pakistanis is generally considered well-off compared to most developing countries, Pakistan is considered to be lagging behind economically in the league of the nations.

What is actually required is to restore the faith of the taxpayers by implementing a multi-dimensional tax reforms agenda where:

  • Taxpayers are encouraged and incentivized for paying taxes.
  • Taxpayers are facilitated by making the process easier and fairer, focusing on maximum automation in order to stem out corruption.
  • Instead of increasing the tax rates the tax net is constantly widened.
  • More focus is given to direct taxation.
  • Meaningful tax rebates and reliefs are introduced for the less able sections of the society.
  • A system of proportionate taxation is adopted with more affluent contributing more to the treasury.
  • Certain exempt sectors are brought into the tax-net (subsidies can be given for assisting any under-pressure areas/products).
  • Tax rebates and incentives are introduced to encourage foreign/local investments in key sectors with tax-breaks for transfer of technology, e.t.c. as may be required in a particular sector.
  • Tax money is actually spent on public welfare and infrastructure projects, which will improve the spending capacity and the business environment in Pakistan.
  • The massive corruption in public contracts/projects, now routinely in the range of 40-50% of tender values, is eradicated for better and efficient use of public money through revamping the pay and accountability structures.

With all the natural resources at our disposal, a high proportion of population been young and hardworking and cheap labor availability, a fairer system of taxation culminating into a fairer economic policy can provide the necessary environment to harness the economic potential of Pakistan.

The key reforms outlined above, if properly implemented, can resolve the current enigma facing the treasury. Should such reforms be made with reliance on local resources and a will for change, there is no reason, why Pakistan cannot stand on its own feet and become an economic hub not only for the region but the whole world.

The writer is a leading economist who is also a qualified chartered accountant, financial analyst and anti-money laundering expert. He can be reached on Twitter and www.myMFB.com @OmerZaheerMeer or omerzaheermeer@hotmail.co.uk