Pakistan has a great future ahead of it, indications of which are not hard to find if one looks. Yet, the journalistic axiom “if it bleeds, it leads” seems to be particularly true here; international and domestic media present a picture of insurgency, terrorism and turmoil; threats within and without; and, of cacophonous, divisive politics. Self-criticism, vital to any democracy, at times seems the exclusive preoccupation of the press and political class. And yet, this narrative elides over many success stories from which Pakistanis and their well-wishers in the international community can justly derive confidence. I have seen many such stories here in my three-year diplomatic posting; collectively, I would argue that these stories better represent the potential and future of this country than many of the crises, tragedies and dramas that dominate the daily news cycle.
With my three years here spread between Islamabad and Lahore (with a brief stint in Peshawar) my assignment afforded me views both general and particular, so I will presume to offer some observations as my tenure draws to a close.
In two fundamental areas – energy and economic growth – I see Pakistan moving in the right direction. In several other areas from entrepreneurship and education to social solidarity and security, I see important positive trends that are extensive enough to ultimately shift both the reality and the perception of this country in profound ways, if they are furthered by bold policy decisions. I am encouraged that support from Pakistan’s friends and allies, including the United States, is reinforcing these positive trends.
In two fundamental areas – energy and economic growth – I see Pakistan moving in the right direction
Four thermal power plants in Punjab are likely to be operational by December 2017. Collectively, they would increase generation capacity by 5,000MW, an amount roughly equal to Pakistan’s current shortfall. Three of these plants – totaling 3,600MW of gas-fired power – feature major U.S. investments, with General Electric supplying its latest high-efficiency 9HA gas turbines. With Chinese firms handling the engineering, procurement, and construction, GE’s investment provides a fine illustration of how Pakistan’s allies the United States and China can work together, through private investments, to meet Pakistan’s vital energy needs. U.S. government assistance, meanwhile, has added more than 2,300MW to the national grid, benefiting more than 26 million people, and customers are receiving more accurate energy bills as a result of our efforts to install or repair over 250,000 meters. Further progress will depend as much on distribution and conservation as power generation, and we are working with the government to improve the grid and help distribution companies to minimise losses; we have helped save $ 429 million and 212MW already. This matters – economists agree that fixing the energy sector could add 2-3% to Pakistan’s GDP growth, potentially bringing it on par with India’s 7.6% GDP growth rate.
On a trip to Karachi, I visited the Pakistan Stock Exchange, which rose 14 percent in 2016, leading all Asian stock markets. The Morgan Stanley Composite Index’s decision to upgrade Pakistan to its Emerging Market index, and to list nine Pakistani large-cap stocks there, will increase inflows to Pakistan’s stock market by $400 to $600 million, another market-based indicator of this country’s progress and potential.
I don’t have to go as far as Karachi to feel optimistic about Pakistan’s future. When I visit places like the Plan 9 and Plan X information technology incubator/accelerator at the Arfa Software Technology Park in Lahore I see young designers launching impressive and marketable tech concepts. The LUMS Centre for Entrepreneurship is another exciting such incubator and it showcases Pakistan’s deep reserves of marketable creativity and talent. My trips to Gujranwala, Sialkot and Faisalabad show that these are not unique features of the tech economy, as well-established businesses too show incredible resiliency in the face of energy, tax and market challenges.
Silver Star of Sialkot made Pakistan the face of World Cup soccer; the Super Asia Group of Gujranwala is branching out from home appliances and rickshaws to retail outlets that bring Pakistani consumers quality products from American brands such as Hardees. Coca Cola opening a new bottling plant in Multan as part of its $350 million investment plan in Pakistan and PepsiCo and its local franchises’ employment of over 1,000 people, show how American companies have created over 60,000 jobs here in recent years. These are votes of confidence in the country’s future. The Punjab government’s focus on expanding vocational training opportunities will ensure that these businesses will be able to hire employees skilled for the 21st century workforce. We are doing our part with a new youth workforce development program that will train 10,000 young people from across South Punjab.
I perceive a measure of social solidarity in Pakistan that is unique in the subcontinent
There is a powerful thirst for education in Pakistan. From low-fee private schools, to “Danesh” schools, to entrepreneurial universities growing up to serve students who, two decades ago, might not have been able to attain a higher education, innovative responses are arising from the public and private sectors. The University of Management and Technology (UMT) in Lahore is an inspiring example of a new institution that is serving middle and working-class students, many from South Punjab. We are helping to meet their aspirations, sending 40 UMT faculty to the United States to learn from American experts on curriculum design and pedagogy. With eight academic linkages in Punjab alone, we have paired UMT and other Punjabi universities with American institutions of higher education, building programs in English literature, film and television, gender studies, mass communications, development and entrepreneurship. Most importantly, we have built lasting ties between American and Pakistani educators. With the construction of five faculties of education across Punjab and a variety of teacher training programs that have trained or re-trained 64,000 teachers, we are helping to ensure that tomorrow’s students can get a great education too.
I perceive a measure of social solidarity in Pakistan that is unique in the sub-continent. While human development indicators point to the need for sustained effort, Pakistanis are doing an impressive job of looking out for each other in informal ways, their myriad initiatives calling to mind former President George H.W. Bush’s phrase “a thousand points of light.” I’ve always remarked on the general absence of the sort of visible poverty one often sees in the region, and I credit active efforts by community-based philanthropists to build a better Pakistan from the bottom up. We try to help their efforts through USAID’s Small Grants and Ambassador’s Fund Program, which has provided $7 million to fund small to medium-sized community-developed self-help projects doing important work in civic participation, girls’ education, and much more.
On security, I have seen an important evolution in the public discourse since I arrived in July 2013. Pakistanis of all quarters are more united than ever before in their determination to rid their society of the ills of militancy. The Pakistani military has made progress in combatting terrorism through Zarb-e-Azb and other operations, and has restored government control to parts of Pakistan that have been used by terrorists for years. Accordingly, levels of violence are much reduced. While tragic attacks remind us that this effort will continue for some time, I am encouraged by the level of national unity and strength that I have seen emerge in response to these threats. That determination and sense of purpose can serve as the basis for collective action on other challenges as well.
Improving tax collection and investment would be two such challenges. Pakistan’s tax revenue to GDP ratio is 11.3% compared to India’s 16.72% and Turkey’s 21.26%. If Pakistan were to broaden the tax net to the point where it equaled even India’s ratio, it would result in roughly $50 billion in additional revenue every year – money for schools, health, mass transit and clean drinking water; money that could take those thousand points of private philanthropic light to scale.
Pakistan’s ratio of Foreign Direct Investment to GDP ranges between 15 and 17%, compared to a South Asian average of 33%. Much of this is due to reputational issues and assessments of political risk, and may naturally change for the better as security and energy improve, building domestic and foreign investor confidence. There is much that government must also do to encourage the domestic and foreign investor. Making rapid progress on the ease of doing business indicators (already an area where Punjab is working with the World Bank to good effect) – improving protections for intellectual property; instituting more predictable and equitable taxation for major businesses that are already paying taxes and sharing the tax burden more equitably; and providing more consistent and predictable regulatory and legal enforcement, particularly with respect to cybercrimes, drug pricing, and investment dispute resolution – would boost investor confidence and start to shift the storyline toward Pakistan’s many strengths.
Other regional players afford an example. One needn’t get everything right to add points to GDP growth or witness a sea-change in investors’ perceptions; one just has to get a few high-visibility things right and create a sense of momentum. Reforms are never easy, but they are possible in the presence of sufficient unity of purpose and national will. The achievements of recent years show this is possible. Pakistan’s friends, including the United States, stand ready to support its efforts to realise the limitless potential I’ve been privileged to see in my years here.