Building Stronger and Sovereign Pakistan

As Pakistan celebrates another Independence Day, it is worth reflecting on what sovereignty means in the twenty-first century. It is no longer measured solely by territorial integrity or military capability. A truly sovereign nation is one that is food secure, economically resilient, financially stable and institutionally strong. It protects its borders while creating opportunities for its people, particularly its youth, whose aspirations will shape the country's future.

Pakistan has demonstrated remarkable resilience throughout its history. Despite geopolitical uncertainties, economic pressures and security challenges, the nation has preserved its independence, strengthened its strategic capabilities and developed institutions capable of safeguarding its national interests. These achievements provide a solid foundation for the next stage of national progress.

National security remains indispensable. Pakistan has maintained credible deterrence in a challenging regional environment, ensuring peace through strength. Recent conflicts elsewhere have also underscored an important lesson: military preparedness alone cannot guarantee lasting security. Sustainable national power rests equally on economic vitality, technological advancement, food security and social cohesion.

Pakistan's strategic location offers immense opportunities. Situated at the crossroads of South Asia, Central Asia, the Middle East and China, the country can serve as a vital hub for trade, energy and regional connectivity. Stronger economic cooperation with neighbouring countries, including Afghanistan, Iran and, whenever circumstances permit, India, can unlock new avenues for commerce, investment and shared prosperity.

Energy connectivity remains another strategic opportunity. Projects such as the Iran-Pakistan pipeline and the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline have the potential to strengthen Pakistan's energy security while generating transit revenues and promoting regional integration. Advancing such initiatives through constructive diplomacy would contribute to long-term economic stability.

Economic sovereignty is built upon sound fundamentals. Pakistan must continue reducing fiscal and trade imbalances while strengthening public confidence in institutions. Consistent policies, transparent governance and effective implementation are essential to creating an environment where businesses invest with confidence and innovation flourishes.

Food security deserves equal priority. Pakistan possesses fertile land, a hardworking farming community and extensive irrigation infrastructure. Yet recurring shortages of essential commodities highlight the need for modern storage facilities, efficient supply chains and timely policy decisions. Preventing post-harvest losses and improving agricultural productivity will strengthen both national food security and economic stability.

Agriculture as a whole requires renewed attention. Reviving cotton production through high-quality, disease-resistant seed varieties, modern farming practices and greater research support would benefit farmers, strengthen the textile industry and increase export earnings. Likewise, investment in value-added agriculture can transform Pakistan from an exporter of raw commodities into a supplier of high-value products.

Industrial modernization must also become a national priority. Upgrading oil refineries, encouraging technological innovation and expanding manufacturing capacity will reduce import dependence while creating skilled employment. Predictable policies and a stable regulatory environment will encourage both domestic and foreign investment, enabling industries to compete more effectively in global markets.

Pakistan's greatest asset is its people. A young and energetic population, growing digital capabilities, entrepreneurial talent and an expanding technology sector offer tremendous potential. By investing in education, vocational training, research and innovation, Pakistan can build a knowledge-based economy capable of competing in an increasingly technology-driven world.

The country's future prosperity will depend on partnerships between government, private enterprise and academia. Together they can promote productivity, encourage exports, strengthen infrastructure and create employment opportunities for millions of young Pakistanis. Sustainable economic growth will reinforce national resilience and enhance Pakistan's standing in the international community.

As the nation celebrates its independence, the objective should not merely be to preserve sovereignty but to strengthen it. Economic self-reliance, food security, technological advancement, regional connectivity and good governance are not separate goals; together they form the pillars of enduring national strength.

Pakistan has overcome formidable challenges before, and it possesses every ingredient needed to build a more prosperous future. With prudent policies, strong institutions and a shared national purpose, the country can transform its strategic advantages into lasting economic success. That is the path to a stronger, more confident and truly sovereign Pakistan.

*This article was originally published in Pakistan & Gulf Economist

 

 

Pakistan: Excessive taxing is disastrous for economy

Today I have found Asad Ali Shah* one of the supporters of my propagations. I have picked up the following text from one of his posts at LinkedIn. He has talked why excessive tax in the name of super tax and poverty alleviation tax on corporate entities is disastrous for Pakistan’s economy:

1) Pakistan already has highest tax rates in the world, imposition of additional taxes will increase the rates in range of 39 – 49 percent (specified sectors and banks). Add workers welfare fund (2%), and workers profit participation fund (5% on industrial entities) and dividend 15% ‑ tax rate on shareholders goes up in range of 55 to 65 percent;

2) In most countries, corporate tax rates are significantly lower than individual rates- as large scale value addition, productivity and innovation happens in corporate sector. Further, most countries have been competing to reduce tax rates to attract investment and multinationals to locate their head quarters/operations in their country. For instance tax rates for Corporates in a developed economy like UK is 19%, while tax rates for high income individuals are 40% and 45%. Similar trend prevails in most economies. Therefore, all economies promote corporate entities- in land of pure, Pakistan does exactly the opposite.

3) Considering very large portion of Pakistan’s economy is informal, imposing excessive tax on few corporate entities that are in formal sector and transparently report higher profits tantamount to punishing them for honesty. It will naturally prove counterproductive and will promote tax evasion. As saying goes, "No good deed goes unpunished".

4) Biggest cause of Pakistan's bankruptcy is huge cost and inefficiency of public sector- the Government of Pakistan spends 22% of GDP vs. 15% in Bangladesh. Much of such spending is wasted- payments of salaries to much larger number of people than required and other costs against which service delivery remains substandard. Even the so called development expenditure (aggregating Rs2.3 trillion for federal PSDP and provincial ADPs in current budget) is poorly spent on projects that do not generate adequate economic benefits. Most projects are initiated based on political considerations without adequate economic justification; poorly executed resulting in huge cost over runs and inordinate delays. It would have been far better, if such development spending was cut by 50% for reducing fiscal deficit rather than imposing such exorbitant taxes on private sector corporates.

5) All over the world, it is through private sector that countries produce goods and services at lower cost for their citizens and become competitive to generate exports. Bulk of employment is also created in private sector. All of this happens when the governments have small role ‑ promoting efficiently and regulating private sector through competitive and adequate fiscal and monetary policies.

Unfortunately, in Pakistan the keep governments have kept growing the public sector through excessive taxation on a very small formal sector that is shrinking with time.

It is unfortunate that in Pakistan economic and social indicators continue to get worse; but the governments keep on going back to IMF every 3 years, but unwilling to learn.

*Asad Ali Shah is a Fellow Chartered Accountant, engaged in management consultancy, tax, corporate and financial advisory services for over 35 years. He has been advising large national and international organizations across a range of industries and markets in the areas of strategy development, organization design, governance and Consulting. Have advises clients to help them improve their governance, strategy, operations, internal control and risk management systems. He frequently writes on macro economy, governance and matters of public interest.