A roadmap is a “plan or a strategy intended to achieve a particular goal”. Our goal obviously is to stabilize the economy. Our goal obviously is to stabilize the rupee. Do we have a roadmap? We have hope – and hope is a “feeling of expectation and desire for a particular thing to happen”. Remember, ‘hope is not a plan’. Do we have an exchange rate strategy? A strategy is a plan of action designed to achieve a particular goal.
This absence of an exchange rate roadmap is making investors and markets extremely nervous. This absence of an exchange rate roadmap has actually begun shutting down parts of Pakistan’s economy. This amounts to courting disaster. Consider this:
Foreign companies unable to repatriate dividends: The Overseas Investors Chamber of Commerce & Industry (OICCI) has 208 members including Abbott Laboratories, 3M, CitiBank, Bank of Tokyo, Coca Cola, Colgate, Bayer, Chevron, Deutsche Bank, Glaxo, IBM, Kuwait Petroleum, Microsoft, Nestle, Pfizer, Shell and Telenor. These companies are unable to repatriate profits and dividends. The held-up amount hovers around $1 billion. As per the Pakistan Investment Policy 2013, “foreign investors can repatriate profits, dividends or any other funds in the currency of the country from which the investment originated.”
Shell has been in this region since 1899. The Bank of Tokyo has been here since 1925. Glaxo came to Pakistan in 1951. Pfizer entered Pakistan in 1959. CitiBank has been operating in Pakistan since 1961. Collectively, these companies pay 33 per cent of total corporate tax. Do we want these companies to shut their businesses down in Pakistan?
Foreign airlines unable to repatriate ticket sales: There are some two dozen foreign airlines operating in Pakistan. These include Emirates, Turkish, Qatar, Etihad, Air China, Gulf, Thai, Kuwait and Saudi. According to the International Air Transport Association (IATA), Pakistan has blocked $225 million of airline funds for repatriation. For how long will these airlines continue flying to Pakistan?
In November, Turkish companies “raised concerns over the delay in repatriation of profits”. A week ago, the Turkiye embassy in Islamabad shared concerns of Turkish companies with the government of Pakistan. Do we want these airlines to halt their operations in Pakistan?
Clearance of onions, garlic and ginger delayed: a total of 417 containers valued at around $5 million could not be cleared through various terminals in Karachi because of “non-availability of foreign exchange”.
Google Play Store services: Three weeks ago, we were told that “mobile users would be unable to download the Google Play Store services in Pakistan after the State Bank of Pakistan revoked the payment of $34 million to international service providers.” Then we were told that “Google is not suspending Play Store in Pakistan but users won’t be able to pay for apps using mobile balance.”
To be certain, no individual knows what the rupee-dollar parity should be. No central bank knows what the rupee-dollar parity should be. Only the market knows the rupee-dollar parity. We must let the market determine the rupee-dollar parity – or we will shut Pakistan down. We must let the market determine the rupee-dollar parity – or we will court disaster. Roadmap the government must have, and must share it with extremely nervous investors and exceptionally jittery markets.
Email: email@example.comDr Farrukh Saleem, "Roadmap," The News. 2022-12-18.
Keywords: Economics , Economy-Pakistan , State Bank , Foreign exchange , Investment , Airlines , Investors , Pakistan , Kuwait , IATA , OICCI