Infecting people in about 213 countries, the spread of coronavirus has left economies around the world counting the costs.
With the first case emerging on February 26th, 2020 in Pakistan, COVID-19 has caused economic losses of up to Rs. 2.5 trillion, affecting almost every sector within almost 4 months.
It brought along shutting of borders, suspending travel and transport, lockdowns, big shifts in the stock markets as the global shares took a hit, oil price crash and unemployment as the probability of recession lingered.
The restrictions affected the supply chains of large companies and industries.
In order to mitigate the impact on the economy, the government of Pakistan unveiled a package worth Rs. 900 billion providing relief to citizens particularly low-income groups who have been badly affected by the pandemic.
The package announced in March included Rs. 200 billion for low-income groups, Rs. 280 billion for wheat procurement, a significant reduction in petroleum prices, a monthly stipend of Rs. 3, 000 for the next 4 months, the possibility of paying electricity and gas bills below a certain amount in installments, loan interest payments for exporters was deferred temporarily, Rs. 100 billion rupees to support small industries and the agriculture sector, and changing the status of the construction sector to industry.
Given the current situation of the economy, the Iqbal Institute of Policy Studies (IIPS) hosted a live-webinar that focused on pragmatically assessing the COVID-19 situation and expressed their views on strategizing and ensuring a sustainable business environment in Pakistan.
Various renowned experts and leading businessmen came forward to discuss the ‘Post COVID-19 business environment in Pakistan.’
Here is what they had to say…
Unless and until all businesses move forward step by step, we will not be able to push our economy from the bottom up. For that purpose, we need to implement constructive changes in our previous business models.
Invited to talk about the Impact of COVID 19 on Microeconomic activity and the government’s strategies to counter the impact, Ms. Shandana highlighted the existing gap in the Pakistani economy.
The paradigm of the international business community has changed as countries especially those in the European Union including Switzerland, Germany, Sweden, and other Scandinavian nations invest in ‘economically inclusive’ countries that are constantly implementing and abiding laws to overcome the existing gaps by including the under-deserved consumers in the financial mainstream. This encompasses environmental-friendly and anti-child labor laws, equal wages, women inclusion, etc.
Unfortunately, a crucial reason for Pakistan’s shirking economy is ‘lack of economic inclusivity’.
Hence, it is essential to move away from policies and plans that haven’t worked in the last 12 – 40 years.
In Pakistan today, the government has countered this gap through the ‘Ehsas Emergency Cash Plan’, which has helped both short and long-term.
Through this initiative, the government has addressed the issue of financial inclusivity especially the women. Based on a limited mandate count, the Ehsas Programme acts as a digital wallet for women that gives immediate accessibility.
Furthermore, it is also essential to improve the business environment in Pakistan to attract foreign direct investment by promoting ease of business while encouraging the youth to come up with new business ideas.
Trade and not only aid is what will help Pakistan to overcome the economic effects of the pandemic.
The need to be creative with product alignment and strategies is more than ever as the post COVID environment will be very different from now.
One of the biggest sectors creating employment, the real and construction sector has the potential to not only jumpstart the economy but also provide sustainable growth. This is because of 70+ allied industries being dependent on one sector.
Given the right support of the government, the real estate and construction sector can act as the growth stimulator for the national economy.
The current challenges highlighted in the sector are, firstly the health factor. Secondly, managing cash flows and access to finance, which is difficult amidst the COVID-19.
Moving on, the real estate investments and business environment have been ignored for the last 73 years, in terms of apt policies, suitable conditions, and lucrative incentives. This now is the reason to affect the supply chains and material sourcing. Over time, this has resulted in importing almost 90% of the mechanical, electrical, and plumbing appliances. All these accounts for about 50-60% of a development project. With the shutting borders, enforcing lockdowns and imports halted will greatly cause a delay in real estate development.
One of the major challenges currently faced is also to reduce demand due to a decrease in income.
Given the current situation, COVID-19 in Pakistan is going to stay. Hence, it is imperative to overcome the existing crisis and plan for the post-COVID-19 period.
To overcome these challenges, it is necessary to make businesses agile. Ensuring the health of the workers and employees by allowing ‘work from home’.
The businesses must plan, strategize, and opt for digital transformation – digital Pakistan. In order to improve the business environment and services offered, without any risk.
The government should study the facilities the other countries have provided and hold dialogue with them.
Talking about ‘Effects of COVID 19 on the Manufacturing Sector and Remedial Strategies’, Mr. Idress held somewhat similar views to that of Mr. Shafiq Akbar.
He highlighted the issues caused by COVID-19.
The issues include a decline in imports and exports due to suspended transportation, reduction in demand and supply, unemployment. He further revealed that COVID-19 has disrupted the textile industry and supply-chain that has led to a decrease in sales, payment, and revenue generation.
It is feared that with time, as the economy starts to reopen, import and export prices will surge, with an increase in freight prices and a decrease in the availability of items.
Due to this prolonged pandemic, the exploration of new resources will face great difficulty.
No country can survive in isolation.
To avert the effects of COVID-19 on the economy, Mr. Idress demanded that the government should study the facilities and incentives other countries have provided to kick-start the economy.
Acknowledging the incentives announced by the government, it is also crucial to hold dialogue with industries and encourage the local industries in order to normalize the business environment of Pakistan.
The first and foremost thing to change is our mindset and adopt an intensive approach.
Dr. Mirza had briefed on the matters related to the Impact of COVID 19 Environment on Trade, Commerce, and Export.
Holding similar beliefs as explained before by Mr. Shafiq Akbar and Mr. Idress, Dr. Mirza also highlighted the drastic decline in global imports and exports. The reason behind this decline is the shift in the interest of the customer, which now focuses on healthcare.
This, in turn, has disrupted the domestic trade cycle.
Businesses are not in a position to import supplies, raw material, or cargo. Similarly, goods may be produced, yet they can’t be traded.
Currently, around 6,000 containers are stranded at Port Bin Qasim.
While he lauded the efforts of the State Bank of Pakistan and the Government of Pakistan on granting relief packages, he also revealed that with time, the financial resources of businesses will soon exhaust. Due to COVID-19, the flow of investment and finance has been greatly affected.
Dr. Mirza further identified sectors that currently have the potential to jump-start economic activity. The untapped sectors include agriculture, livestock, halal meat, and seafood. IT, and commerce. In order to bring about a change and stimulate economic growth, the government should play a role in strategizing lucrative incentives for these sectors.
These are challenging times and we will fight them bravely because that’s what great nations do.
We must get used to the ‘new normal’ in order to control the impacts of COVID-19.
The businessman’s opinion is always important and when the businessman is learned and seasoned professional, it can be a very valued opinion.
The challenges and crises that Pakistan currently faces are stark, as the pandemic has exposed the longstanding inadequacies, in terms of the policy, healthcare, and poverty.
The impacts of COVID-19 have undoubtedly set the dynamics in different trajectories, which will stay as a subject to significant changes in the upcoming months. People wait to see the results of the huge interventions undertaken by the government to mitigate not only the economic loss but also loss of life.
Along with identifying the untapped sectors, the real estate and construction sector of Pakistan, including the China Pakistan Economic Corridor (CPEC) can be a game-changer.
While one cannot predict what issues the future will spur, hence, it is imperative for the government to make the right policies that strive to create a resilient economic landscape of Pakistan in the Post COVID-19 era.