Mian Mansha exposes hurdles in revival of national economy, $5b foreign aid

One of Pakistan’s most influential businessmen, Mian Muhammad Mansha has exposed hurdles in the revival of the national economy and an expected $5 billion financial assistance from an ally Arab country.

While talking to Geo News, Mian Mansha said that the government needs to bring foreign direct investment (FDI) to the country and he believes that it is not impossible.

He said that the Pakistani delegation faced embarrassment in Saudi Arabia as the Saudi Crown Prince Mohammed bin Salman scolded him for why they choose to beg for money every time instead of devising a concrete strategy for reviving the economy.

Mansha claimed that Saudi Crown Prince Mohammed bin Salman expressed wishes to invest $30 to $40 billion investment in the industrial sector and said that there should not be less than 10 per cent economic growth in a country like Pakistan.

“All the major airports are privatised across the globe. Our people used to face humiliation at our airports. It can be privatised within three months.”

He claimed that a Middle East country is likely to make a huge transaction with Pakistan which he cannot name at this time. The ally country will provide $3 billion subsidised gas facility to Pakistan and $2 billion cash to be deposited into the national exchequer.

“ملک کا نام نہیں لے سکتا لیکن ایک ملک کے ساتھ ہماری بڑی ٹرانزیکشن ہونے جارہی ہے. یہ ملک ہمیں 3ارب ڈالر کی ادھار پر گیس اور دو ارب ڈالر کیش دینے کو تیار ہے.”

چیئرمین نشاط گروپ، میاں منشا@NayaPakistanGeo pic.twitter.com/3mR3ZANWFm

— Shahzad Iqbal (@ShahzadIqbalGEO) June 5, 2022

Mian Mansha praised the incumbent government for making amendments in the NAB law which will end harassment of the nationals. He was of the view that Pakistan’s major problem is not corruption but incompetence. There should be a competitive environment in Pakistan to achieve development goals.

The businessman said that Pakistan should initiate a trade with India as the country got nothing by cutting trade ties with the neighbouring state.

‘Government must play on the front foot’

Mian Mansha told Dawn newspaper that all the economic troubles can be overcome provided “we’re able to tell the untold story of the country’s rich, untapped business opportunities, change the world’s perception about us, and convince foreign investors that it’s no longer business as usual to attract foreign direct investment (FDI) to shore up our foreign currency reserves and boost growth.

“Our problems will be solved only when foreign investors start to invest here. You can’t build foreign reserves with exports alone. India has accumulated reserves of $650 billion mainly by attracting FDI.”

In the recent months, Pakistan has witnessed its finances deteriorate as the two-month-old coalition led by the PML-N delayed tough decisions, including reversal of the fiscally unsustainable fuel and power subsidies, for fear of political backlash with Imran Khan’s PTI on roads to secure an early election, as well as heightened uncertainty in the international markets on commodity super cycle spawned by Covid-related supply disruptions and exacerbated by Russia’s invasion of Ukraine.

Though a 40 per cent increase in fuel price and a 47pc boost in electricity prices have brought the government a step closer to securing the much-needed agreement with the IMF that will help it access the remaining $3bn of the existing loan and unlock funds from other multilateral and bilateral sources to avert default, the deal is not expected to finalise before implementation of other prior actions in the next budget.

Mian Mansha advised the government to close the deal with the IMF, privatise the state-owned enterprises (SOE) that are costing taxpayers up to $3.5bn a year, bring in foreign direct investment, reopen borders with India, boost trade with Afghanistan and beyond, improve the business climate in the country by ensuring policy consistency and build trade infrastructure to put the nation back on the growth track. He is of the view that all these actions need to be taken without delay.

“The government must play on the front foot; business as usual cannot work any longer. These measures are imperative to change Pakistan’s perception as a country where rule of law is respected and investors are protected.

“Reopening trade with India might help Pakistan come off the Financial Action Task Force’s so-called grey list and ease its economic difficulties. If the government has to implement legal, judicial, governance, and other reforms to change Pakistan’s image as an investor-friendly destination, it mustn’t think twice about that,” the chairman of the Nishat Group and MCB Bank told Dawn in an interview.

“Growth comes with perception about the future outlook of an economy. If we change the perception of the country, it’ll change the mindset of (foreign) investors and give us growth next year.

“For once, the coalition (comprising parties with divergent political views) is in power; this affords us a great opportunity to take difficult and longstanding decisions that no single political party has ever been in a position to make on its own.”

Mian Mansha, who has built his vast business empire comprising textiles, banking, carmaking, cement, energy, dairy, agriculture, real estate and other sectors of the economy, strongly believes that the coalition should produce rapid growth through its budget for the next year “without worrying about the fiscal deficit”.

He doesn’t agree with the widely-held view that it will be difficult for the Shehbaz Sharif government to produce a growth budget with its hands tied by the IMF or without creating macroeconomic imbalances.

“My advice to the government is to beg, borrow or steal (dollars) to stabilise the economy and external sector (as quickly as it can), and then move towards rapid growth.

“It has a lot of margin for that. We should know that the IMF suggests what is good for an economy. The IMF doesn’t stop you from growing the economy or reducing tax rates; it looks at the bigger picture and wants you to stop wasting money on unproductive subsidies, or on the loss-making state-owned enterprises, or such things that would create deep macroeconomic imbalances.

“Once the economy starts growing, it will yield a lot bigger tax revenue than you can hope to collect by boosting the tax rates. The deficit will not matter any longer. We mustn’t just look at the budgets; these are just a small part of the economy.

“The bigger economy exists outside the budget and the public sector; we should grow that and tap the hitherto untapped potential of the country and opportunities it offers.”

“Just like fuel and power prices subsidies, the SOEs are also a source of distortions in the market and the economy. We should fix these distortions by privatising them. This will not only bring economic dividends for the government but also improve the quality of services being provided to the people, creating goodwill for it. Look at the benefits the privatisation of banking and telecom has brought to people.

“Privatisation will enhance growth, boost taxes, encourage market competition and attract foreign direct investment. Why not privatise now and unleash growth? Why wait? By establishing trade and investment ties with India and privatising public-sector companies we can boost growth and change our perception in the eyes of the world. Unless we show to the world that we mean business, no one is going to come to invest,” he concludes.