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PAKISTAN 2010

PAKISTAN 2010
A VISION FOR KNOWLEDGE-LED, JUST, TOLERANT, ENTERPRISING & PROSPEROUS SOCIETY

PAKISTAN 2010

PAKISTAN 2010 Programme MINISTRY OF PLANNING AND DEVELOPMENT GOVERNMENT OF PAKISTAN CONTENTS
1. Introduction 2. The Context a. Pakistans Socio-economic record b. The international context 3. The Vision and frameworks Pakistan 2010 a. Six Steps to Enterprise Pakistan 4. From vision to reality: The 2010 Programme 5. Making the program work: Good Governance a. Civil Service Reform b. Legal and judicial reform c. Legislative reform d. Decentralization e. Eradication of corruption f. Citizens Charters 6. An agenda for collaborative action.

PAKISTAN 2010

MESSAGE
MESSAGE FROM HIS EXCELLENCY MUHAMMAD RAFIQ TARAR, THE PRESIDENT OF THE ISLAMIC REPUBLIC OF PAKISTAN ON THE OCCASION OF LAUCHING OF PAKISTAN 2010 PROGRAMME. It is great moment that the present Government has finally embarked upon a well conceived agenda for change and development in the society. On the eve of entering upon the 21st century, the country has celebrated its 50th anniversary just a few months ago with nationwide reiteration to create a prosperous Pakistan. Pakistan 2010 Programme provides a charter for making this country a great nation which it deserves to become. An agenda of change at this stage when the entire world is undergoing rapid transformation in the fields of development is imperative. We will have to aim for development which is consist with our religion, rich heritage and must adopt a multi dimensional approach, ensuring economic prosperity, social justice and strong technological base. Our efforts should concentrate on endeavors to bring prosperity, based on sustained industrial growth and make Pakistan a technologically strong society. It demands sincere application of policies by the planners and requires large scale participation of people in the meritorious task ahead of us. I have full trust in our peoples abilities. The nation should jointly move towards this mission. Today we should not only launch this programme in words but also pledge out energies and spirit to implement this package Insha Allah the future will be ours and I pray for the success of this nation.

PAKISTAN 2010

MESSAGE
MESSAGE FROM HIS EXCELLENCY MUHAMMAD NAWAZ SHARIF THE PRIME MINISTER OF THE ISLAMIC REPUBLIC OF PAKISTAN ON THE OCCASION OF LAUNCHING OF PAKISTAN 2010 PROGRAMME It is a matter of satisfaction that the 2010 Programme, which is spread over 12 years, is being launched today. This programme translates the vision of our socio-economic philosophy. The objectives of this programme are to restore good governance, double the per capita income through export-led growth, ensure the equitable access to economic opportunity and improve the quality of social services. The long term objectives also include adequate investment in physical infrastructure, human resource development, industrialization, enhancement of agricultural productivity, and physical infrastructure, human resources development, industrialization, enhancement of agricultural productivity and overcoming problems like unemployment, illiteracy, population growth, eradication of corruption and removal of bottlenecks in good governance. Pakistan Muslim League won the last election on the commitment with the people of Pakistan that they will transform the existing social-economic system with a view to usher an era of economic prosperity and sustained industrial growth. We ensure advancement of science and technology in Pakistan. 2010 Programme has been conceived to achieve these objectives. The programme has been prepared by the experts after extensive consultation and dialogue at national level.

PAKISTAN 2010

The programme has been prepared by the experts after extensive consultation and dialogue at national level this makes it a unique and more practical exercise as compared with the erstwhile efforts. I congratulate Mr. Ahsan Iqbal, MNA and Chief Coordinator for his devotion and commitment to this task. Pakistan 2010 Programme will be integrated with the national planning process at all levels. I am also sure that his programme will receive full cooperation of private and public sector.

PAKISTAN 2010

PAKISTAN 2010: AN INTRODUCTION

On the eve of independence, the Quaid-e-Azam held out a glorious vision for Pakistans future, a vision of prosperous and tolerant people, a responsible government free from corruption, nepotism, and jobbery and an enlightened society based on the Islamic values of justice and equity. That was the spirit of 1947. Fifty years later, we are no where close to that vision. Pakistans respectable economic growth and the phenomenal increase in infrastructure have justifiably been lauded. But they have not helped create the world that the founders had imagined. The society is still mired in ignorance, disease, poverty, intolerance, corruption, injustice, and backward. This is a sobering moment but not one for despair. Rather than dwell on what might have been accomplished, it asks us to look toward to what can be, and will be accomplished with proper resolve should policies and good governance. On other occasions too, the Pakistani nation overcome overwhelming odds. Its creation and very survival in the early years was seen by many as impossible. But a shared moral purpose and dedicated leadership changed the impossible into the possible. Today, again we need that wining combination, the spirit of 1947. Anniversaries are a time of reflection and introspection. The 50th anniversary of independence is the time to reflect upon and recover our founding vision, a vision based not on others ideas, values and histories but on our own. Economic prosperity is essential to this vision. Yet, it cannot be the only element, nor even the most important one. The centre piece of Pakistans vision must be justice. Pakistan itself was born out of the struggle of the India Muslim community for justice. Today justice must once again

PAKISTAN 2010

be placed at the centre of our definition of the good life, justice for all Pakistanis, including women, minorities, and all vulnerable groups. The society must free its citizens from hunger and starvation, ensure equitable access to nutrition, health care, education, and employment and the pursuit of knowledge for production and competition and for its own sake. Fourth, is the goal of entrepreneurship, not in the sense of the ability to exploit others, but rather as behavior that innovates, produces, and serves society. If we are able to achieve these goals, prosperity too, will come within our reach otherwise it will remain forever elusive. Our ability to achieve goals justice, tolerance knowledge, entrepreneurship, and prosperity depends upon the restoration of governance. Many undesirable

consequences flow from the crisis of governance. It sanctions corruption, misuse of power and violation of human rights. It lowers the quality of services, obstructs economic activity, and erodes confidence in judicial and political institutions. It creates an atmosphere of distrust and paranoia, encourages extreme views and action, alienates young people from mainstream social activity, and contributes to intolerance and violence. It leads to the suppression of information and undermines civic spirit and civil society. It creates a justification for oppressive laws and institutions. It divides society along linguistic, sectarian, religious, and ethnic lines. And it places the lives, honor, and livelihood of the weak at the mercy of the powerful. The Pakistan 2010 Programme aims to realize the founding vision. Its immediate goals are restoring governance, doubling per capita income, and ensuring equitable access to economic opportunity and quality social services. To achieve these goals requires a broader definition of development not as catching up which focused almost exclusively

PAKISTAN 2010

on physical capital, but as making things work with a primary though not exclusive emphasis on social and human capital. Pakistan persistent under-development no longer can be explained by a low endowment of physical capital, but by a low capacity to operate and maintain that capital effectively; not by a lack of institutions, but by a dearth of standards of behavior that enable institutions to perform effectively; not by an ignorance of good policies though many policies were less than ideal but by the inability to implement such policies effectively; not by the paucity of laws, but by the absence of norms and conduct that prevent the misuse of laws. The experience of the East Asian countries provides certain lessons on how to reduce poverty and double incomes in a decade. Their details and contexts differ from Pakistan. Nevertheless, their experience and ours has shown that six key enabling conditions are necessary to achieve the 2010 vision. 1. A sound system of governance with political stability and a reasonably competent and honest public service. 2. High investment in education and research 3. A culture of high savings, investment and exports 4. The ability to take advantage of emerging international opportunities; 5. Responsible economic and financial institutions, and 6. Collaborative partnerships between the government, the private sector and citizens. In keeping with the partnership approach the Pakistan 2010 Programme has not been developed in isolation. Rather it is based on extensive consultations with a wide cross

PAKISTAN 2010

action of stockholders. This is the first instance in which an appeal was issued directly by the Prime Minister for ideas for the programme. The appeal resulted in hundreds of letters, faxes, and calls from people from all wakes of life. Besides this consultants and open hearings were conducted in Islamabad, Lahore, Peshawar, Quetta and Karachi with representative of a wide cross section of society, academic scholars, and journalists. NGO leaders, government officials, lawyers, politicians and business leaders. Finally, the evolving ideas of the programme have been presented before audiences in a number of seminars and lectures around the country. The total number of individuals consulted thus far, directly or indirectly runs into thousands. Many of their ideas have been incorporated into the background documents for the programme. Such consultations will continue during the entire implementation phase to ensure that the programme does not lose direction, that it enjoys broad ownership in society, and that it builds upon the energies of the millions of Pakistanis who wish to see this country transformed into a model for ourselves and others. Ahsan Iqbal Chief Coordinator / Minister of State Pakistan 2010 Programme Ministry of Planning and Development Islamabad

PAKISTAN 2010

THE CONTEXT

a. Pakistans Socio Economic Record The historical economic record of the last 50 years shows respectable but suboptimal performance (Table 1). Real GDP increased 13-fold but per capita income grew only three and half times, because of the quadrupling of the population. Still the country has been able to feed the expended population with food grain production growing with increase in average per capita calorie intake. This was made possible by the green revolution combined with a 50 percent increase in cultivated area and more than doubling of water off take. In absolute terms, infrastructure growth was the most impressive: total energy consumption increased 36 fold and in per capita terms 11 fold; electricity generation capacity over 500 fold; road length 163 fold; number of vehicles 300 fold and the number of telephones 200 fold. The record in infrastructure improvement has not been matched in other areas. The weakest are social services, the environment savings mobilization, and export. The poor social sector performance is explained in part by the low base at the time of independence when literacy was only 13.6 percent, primary school enrolment 16 percent, life expectancy 38.7 years infant morality rate 101 per thousand and population per physician 75,470. The corresponding figures for 1997 are significantly better but still unacceptable: literacy 35 percent, primary school enrollment 75 percent, life expectancy 62 years, infant morality 90 per thousand and population per physician 1573.

PAKISTAN 2010

The growth process has been accompanied by severe and accelerating environmental generation. The loss of forest cover and the adverse effects of environmental degradation on the health, life expectancy, and livelihood of people especially the poor is a matter of popular concern. Although historical statistics on forest area are not very reliable, various accounts suggest a massive rate of deforestation, resulting in a forest cover of below 5 percent of the total land area. Air and water pollution have increased dramatically and threaten peoples lives, especially those of the poor, the old and the young. Soils are being lost to water logging and salinity, affecting agricultural productivity and rural incomes. In the traditional economic sphere, the problem areas are savings and exports. The savings rate has hovered around 13-14 percent of GDP; it is a major improvement over the 2.5 percent in the early fifties but is quite inadequate for the development needs of the county. The low savings rate has yielded low investment rates, which ranged generally between 16 and 20 percent of GDP. The governments narrow and inelastic fiscal base results in excessive demands being placed upon domestic credit and thus a squeeze on private investment. The solution chosen in the past was to supplement domestic savings with external official development assistance (ODA) but as ODA levels decline (and even reverse) worldwide, domestic investment will be squeezed even further. Moreover, on the export side, performance side, performance is highly inadequate for the country\s needs. Exports started at a low base of 4 percent of GDP, and have grown at only about 8.7 percent per year, rising to 14 percent of GDP.

PAKISTAN 2010

TABLE 1: 50 YEARS OF DEVELOPMENT Population(millions) GDP(195960Rsbn) PerCapitaIncome(195960Rs) Percapitaenergy(kgs) Electricgeneration(MW) Roadlength(000KM) Vehicles(000) Telephones(000) Doctors Hospitalbeds Primaryschoolenrolment(000) Primaryschoolteachers(000) Foodgrainproduction(000tons) Calorieintake Cultivatedarea(000ha) Waterofftake(MAF) Forestarea(000ha) Exports(US$million) Imports(US$million) CottonProduction(000tons) WheatProduction(000tons) IndustrialValueAdded LiteratePopulation(%) 1947 34.4 10.9 316 0.2 25 14 12 12 1,014 13,769 544 17.8 6000 2078 14520 63.9 3.3 444 319 194 3301 7.8 13.6 1997 140 145.5 1039 2.2 13047 2280 3670 2470 77167 86921 15,553 3339.5 33743 2579 21550 132 4.2 9000 12000 1594 16377 17.9 35.0 Increase 4.1 13.3 3.3 11 522 163 306 206 77 6 29 19 3.8 1.24 1.5 2.2 1.27 20.3 37.6 8 5 2.3 2.7

To place the savings and export record in perspective, it compares poorly in every respect with fast growing East and Southern Asian economies and in some respects even with the countrys South Asian neighbors. Even the expansion of infrastructure, although dramatic when viewed in isolation, is far below what is possible and what is required.

PAKISTAN 2010

The rate of growth in the manufacturing sector has been fairly respectable, averaging about 8 percent per year, still, manufacturing is heavily concentrated in low tech, and raw material based especially cotton based production. Productivity growth has come mainly from new investment rather than dynamic imprudent in management There is visible dependence on projectionist government policy, and significant industry resources are devoted to lobbying and influence pending. High tech high quality products are a relatively small fraction of the total. These are produced in spite of an unfavorable institutional environment namely an absence of quality control and certification systems, access to market information, and suitably trained labor force. Infrastructure has been created. But that infrastructure has not made the government work better, nor social services improve indeed, the quality of the resulting services has deteriorated. While some improvements in quality have begun to take hold in selected areas, the overall standard in most contexts is well below per schools, colleges, hospitals, highways, railways telephones. Maintenance is poor and uneven operation and management are inefficient and non transparent. There is virtually no attention to consumer needs or concerns and institutions that set standards or perform consumer protection roles are weak or undeveloped. The preference for direct state control and monopoly has contributed to the inadequacy of social services; it inhibits complementary private investment and encourages indifference to service quality and customers needs. This is related to the uneven improvement in the system of governance. On the positive side, after a long period of authoritarian rule the country has been able to establish a democratic polity, a judiciary that is becoming increasingly strong and achieve, a robust

PAKISTAN 2010

and entrepreneurial private sector, and an organized and highly motivated NGO sector. Yet weaknesses remain. Government as well as the judiciary is accused repeatedly of corruption, inefficiency, and mismanagement corporate governance including intuitions for auditing, monitoring and financial intermediation remains weak and underdeveloped and collective institutions in every sector e.g. business associations professional associations trade unions, student unions, NGO association, political parties tend to play only narrow lobbying roles rather than upholding collective public interests. b. The International Context In the past, concern about all of the above mentioned deficiencies was based on principles of equity and human rights. Today, addressing these deficiencies is viewed as even more critical because it is widely recognized that they are linked to poor economic performance. Indeed, the link between governance, human development, and economic growth is becoming stronger in the changed international context. The knowledge driven and export oriented production systems and a generalized receptivity towards international investment. Conversely, countries with poor systems of governance, a limited based for technological adaptation, a lack of competitiveness and quality orientation, and an unattractive environment for external investment will be a an even greater disadvantage. Pakistans ability to progress in the next decade will depend critically on a proper understanding of the opportunities and constraints offered by the changing international situation. While this is a complicated process, a number of salient trends can be indentified. First, international trade is expanding rapidly, and success will depend

PAKISTAN 2010

critically on the ability to participate in it. Second, the comparative advantage has already shifted from mainstream manufacturing towards knowledge based industries. Third, private capital flows provide the bulk of international investment, far outstripping official development assistance; these flows bring in their wake the possibility of severe economic cost of inappropriate policies. Fourth, the international market has become more sophisticated, consumer demand more discriminating, and quality of goods and services more important. Fifth, production systems are also undergoing transformation and the advantage is shifting assembly line based mass production towards relatively decentralized production by teams or networks. Sixth, product life cycles have become shorter, the comparative advantage is shifting from one region to another at a much more rapid rate and competitive advantage has become the new foundation of economic success. c. Implications for Policy The purpose of policy then is to prepare the economy to carry forward Pakistans vision in the light of these six trends, to enable it to benefit from emerging opportunities while protecting it from adverse consequences. The following table brings implication of the changes.

PAKISTAN 2010

EMERGINGTRENDS AnewglobaltradingRegime

Changednatureofinternationalfinancial flows:Netofficialdevelopmentassistance ODAhasdeclinedinrealtermsandinsome caseshasbecomenegative.Ontheother hand,privateinternationalcapital,whichwas lessthanODAatthestartofthedecade,are morethansixtimesODAtoday. Asophisticatedglobalmarket:consumersare Productionsystemsshouldbegearedtowards concernedaboutquality,diversity theprovisionofhighqualitydiverseproducts environmentalandsocialcostsofproduction. andtocustomersatisfactionPakistans governmentshouldProvidesupportforthe achievementofthesegoals,especiallythrough supportforISDcertification,accesstomarket information,managementtrainingand networking. NewIndustrialPatterns:assemblyline Pakistanneedstoinvestininformation methodsmaynolongerbethemost technologyandlocalinstitutionstotake competitive.Teamproduction,networking, advantageofthecompetitiveedgeprovideby flexiblespecialization,collectiveefficiencyare thisindustrialstructure.Pakistanssmallscale importanttoday aninformalsectorcouldbeupgradedto benefitfromthistechnology. KnowledgebasedProduction:theadvantage Pakistanneedstoinvestinhumanresource linesnolongerwithmachinerybutwith development,informationtechnology, knowledge.Useofcomputeraideddesignand associatedinfrastructure,anddevelop productiontoreducewasteandincrease enlightenedentrepreneurship efficiency,informationtechnologytoretain accesstomarketconditionsandsoftware devilmentandexportarebecomingmajor linkageindustries Productlifecyclesarebecomingshorter Firmsneedtoinvestincontinuousup comparativeadvantagewillmovearound gradationoftechnologyandproductivity. fromquickly,andretentionofcomparative advantagewilldependoncontinuous improvementinproductivity.

REQUIREDRESPONSE Pakistanhaslessflexibilitytoprotectits industriesandwemayhavetoprepare ourselvestoavoidsocialandenvironmental conditionalities. Nationalpoliciesshouldbeorientedtowards attractinginvestmentinsteadofODA.Policies shouldaimtoavoidinstabilitycausedby speculativefinancialflows.Countrieswillhave lessflexibilityincontrollingcapitalflowsor fixingexchangerates.

PAKISTAN 2010

THE VISION AND THE FRAMEWORK PAKISTAN 2010


The Pakistan 2010 Programme is an attempt to learn from and respond to these changes, build upon the successes in economic expansion in general and infrastructure expansion in particular and addresses problems that obstructed the growth process in the past. After considerable consultation, we have identified five areas as strategic entry points for state intervention: the productive sectors industry and agriculture exports science and technology, social service and governance. The uniqueness of Pakistan 2010 lies not in its overt goals or intermediate targets but in its approach, its choice of strategic intentions and deeper and deeper objective to create a new partnership between stake holders a new government, a new policy a new economy a new approach to development and ultimately a new society. While all sectors are important for a nations progress, the highest economic growth rates have been observed in the industrial sector. The doubling of per capita income by 2010 will require an industrial growth rate of 9-10 percent per year, which can be produced only by an orientation towards international trade and exports. Comparative advantage, customer satisfaction, dynamic product growth, and knowledge based scientific infrastructure a partnership between the sate, the private sector, and the citizen a culture of saving and exporting and most importantly, a system that ensures justice and equity, and protects the lives and livelihoods of citizen. The new approach must integrate these objectives.

PAKISTAN 2010

A central plank of the 2010 approach is the replacement of catching up i.e. adding more assets with making this work i.e. improving the efficiency and deployment of assets already created. In other words, a shift from planning to policy, from development expenditures towards recurrent expenditures, from the quantity of infrastructure to the quality and productivity of the services. In the earlier philosophy, the belief was to make new things physical capital, intrusions, laws and assume that productivity, quality, maintenance and operation will take care of themselves. Pakistan 2010 does not take this for granted, and proposes not only to invest in new capital and new institutions, but also in the improvement, management, operation and maintenance of existing ones. The investment in new capital will be the responsibility of the private sector, while the public sector will limit itself to strategic areas the economy and society are now robust though that if the social demand exists, investment and supply will follow.

a. SIX STEPS TO ENTERPRISE PAKISTAN


i. From distrust to partnership The above considerations out across all sectors, industry trade, technology, social services and governmental services. In place of earlier philosophy of the government providing the main investment resources the new strategy involves a partnership between the government and private sector, with the role of government restricted to serves as that cannot be provided by the private sector, the regulation and mentoring of private services, and ensuring the quality of services. This involves the strengthening of institutions of monition certification, and rights protection in the government and civil

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society supporting institutions for citizen involvement in decision making and establishing a partnership between the government, the private sector, and the citizen to generate4 synergy and collaborative effort ii. From material based to knowledge based production A second shift in from material based towards knowledge based production, the international context has changed dramatically over the last fifty years, and comparative advantage has shifted from those with access to raw materials to those with the access to knowledge. Pakistan must be prepared to operate in the new scenario. To this end, policy must guide investment into high tech areas, through support for information technology, technical education, incentives for knowledge production, provision of free and open access to information, opening up credit markets to knowledge industries, and generally creating an enabling environment for research and technological

development. Accordingly, Pakistan 2010 includes a concerted programme for upgrading the science and technology infrastructure in the country. PakistansPosition FemaleLiteracy InfantMortalityper1000 %peopleLivingonlessthana$/day Householdswithelectricity Telephonemainlinesper1000people %oftotalpopulationwithaccesstosanitation SelectedBenchmarkcountries 76 Malaysia 22 Indonesia 90 Indonesia 51 Malaysia 11.6 Malaysia 0.05 Thailand 31 Thailand 43 Korea 8 Malaysia 89 Thailand 30 Indonesia 55 Philippines Malaysia 94

22 12 0.1 100 24 75

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Box:1.Pakistan2010Goals Doublepercapitaincometo$1,000 Increasedinvestmentto30percent,savingto 28percent,andexportto20percenttoGDP; RaiseindustrialshareofGDPto22percent, andsavingindustrialgrowthof9percentper year; Promotescienceandtechnology Maintainaverageagriculturalgrowthof6per centperyear; Attainlifeexpectancyof66years,literacyrate of65percent,universalaccesstoprimary healthcareandprimaryeducation,50percent secondaryenrollment,andtheinclusionofat leastfivePakistaniuniversitiesamongthetop fiftyAsianInstitutions; Improvethedistributionofincomeandassets acrossindividualsandregions; Enhancetheroleandstatusofwomen; Conservetheenvironmentandnatural resources; Lowernationaldebtandmaintainlowinflation andunemployment; Eradicatepovertyandmalnutrition; Eradicatecorruptionbycombinationof incentives,institutionalstrengtheningand penalties; Decentralizedecisionmakingtolocal,district, andprovinciallevels; Empowercitizensthroughaccessto information,acknowledgementofrights,and supportoftheirdefense; Reformandstrengthsthethreebranchesof governmentofcivilservicesthelegislature, andthejudiciarybytheincentive,innovation, andperformancebenchmarks; Ensurethatthesystemoflawandorder,and justiceprotectstheweakagainstthestrong, ratherthanbecomingtheinstrumentforthe strongtocontroltheweak. Box:2.Longtermvision Insteadofgovernmentmanagingalltheissues directly,theprogrammewillhelpintroducea newpartnershipbetweenthegovernment, theprivatesectorandthecitizen. Themeanstothisendisanewgovernment, smallbuteffectivedecentralized,responsible, customerorientedandmanaged professionally. Theconsequentlimitationsandpowerofthe government,andtheprovisionsofincentives andsupporttolegislatureandthejudiciary wouldhelpcreateanewpolitics,cleanstable, decentandbasedonrespectforthe opposition,forbusiness,formedia,for academia,andcivilsocietyinstitutions(trade union,professionalassociationsandNGOs). Theseinfrastructurechangesarenecessaryfor aneweconomytotransformtoinward orientedstatedriven,lowtechproduction structureintoadynamic,outwardoriented technologicallycompetitive,partnership basedsystem,drivenbymarketandquality concernsratherthanthoseofinput exploitationandquantitativetargets. Behindtheprogramme,liesanewparadigm todevelopmentbasedonknowledgecreation anditsutilization,asopposedexclusivelyto infrastructurecreation. Thesearethebuildingblocksofanewsociety basedontrustandcharacterizedbythe Islamicvaluesofi.Accountabilityii.Courtesy iii.Disciplineiv.Excellencev.Honesty vi.Innovationvii.Justiceviii.Moderation ix.Respectx.TeamPlayxi.Tolerance xii.Wisdom.TheSouthEastexperiencebrings outclearlytheimportantroleplayedbythe noneconomicfactors(includingvalues, cultureanddegreeoftrustprevalentin society)intheprocessofeconomicchange. Thesenormsofconductalsoneedtobe incorporatedingovernmentfunctioningat levelsandshallbepromotedthrough educationalcurriculumandperformance.

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iii. From protection to competition The third shift is from protection to competition in order to induce industry as well as provides of social services to innovate and improve their product and process continuously. To this end, policy will seek to ensure the orientation of production towards trade and exports to induce producers and services provides to initialize the demands of the international market. The main instruments are creation of a level playing field for everyone instead of a few islands of inefficiency, supports for quality control systems ISO certification, governmental monitoring, user involvement for industry as well as social services and government, qualitative productivity targets as opposed to quantitative performance targets and dynamic productive planning instead of static investment planning. iv. From consumption to investment Fourthly, a major obstacle against the realization of high growth rates is the low level of savings in the country. Pakistan 2010 proposes a concerted programme for the mobilization of savings, including strengthening of financial institution, introduction of mandatory pension scheme, strengthening of stock exchanges, gradual reduction of government borrowing and introducing flexibility into private saving instruments. v. From state controlled to customer oriented services Fifth, the new industrial and trade program requires support in the form of an educated and healthy population, and thus an enhanced quality and quantity of social services. Once again, quality issues are important. The primary reason for the past poor

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performance in social development was not only the low allocation to the social sector, but poor deployment of resources, poor staff motivation, low return for quality services, a failure to enlist the participation of citizens in the process, and incentive problems created by the politicization of investment, site selection staffing. Non availability of authentic data, encompassing all citizens, remained an impediment in smooth implementation of policies. Future programs must redress these deficiencies. They must also involve a meaningful partnership between the government, the private sector, and the citizen, whereby the government assumes primary responsibility for primary education and health including public health and maternal and child care, while the private sector and NGOs provide the bulk of the effort at higher levels of service provision. This would involve a strengthening of the monitoring and regulatory machinery of the government, and the formal involvement of citizens in evaluation and assessment. vi. From injustice and intolerance to social justice Sixth, and finally none of this would be possible without the creation of the appropriate enabling conditions. The previous fifty years have seen several non-economic obstacles to the growth process, including corruption, policy instability, civic strife, oppression by state agencies as well as organized mafias, and a gradual weakening of the institutions of law and order and justice. Besides the direct impact on the rights of citizens, these conditions also relate perverse incentives for investors, managers, workers, service providers, government officials, judges, lawyers and political leaders. A central plank of the Pakistan 2010 Programme is to begin the process of restoration of governance, and to create a safe and predictable environment in which peoples lives and livelihoods are

PAKISTAN 2010

secure, the rights of the vulnerable segments of society, including women, minorities, the poor and the children are protected against usurpation by the strong, and people are treated with justice and respect. Without these condition, economic growth also would be futile and of no consequence, indeed, economic growth would be impossible unless these preconditions help create the basis of trust and tolerance in society. Many of the above recommendations are aimed not at simple legal changes, but in deep rooted changes in how the society works. It involves changes in norms of conduct and standards of behavior, in values and customs. Such changes take a long time, but they respond to legal and institutional reforms. In other words, the purpose of these reforms is not only the promotion of growth but also the creation of new norms, behaviour, and values that can ensure sustained growth, prosperity and justice. It means the creation of a new society.

FROM VISION TO REALITY: THE 2010 PROGRAMME

To convert this vision into reality, Pakistan 2010 presents the following detailed programme. It is focused on strategic interventions in the five distinct areas, and will build upon interventions already in place or being implemented separately. The five areas of intervention are the productive sectors (industry and agriculture), exports, science and technology, social service provision, and good governance.

PAKISTAN 2010

a. Macroeconomics framework The alternative approach presented here will have to demonstrate its effectiveness in conventional terms, namely in an increase in per capita income and quality of indicators, and a reduction in poverty, malnutrition, an environmental distress. In aggregate terms the goal of Pakistan 2010 is to raise income per capita to US$ 1000 by the year 2010. The involves more than doubling of income over the next 13 years, an unprecedented rate of growth of the economy, it translates into an average annual growth of per capita income of 5.2 percent and given a projected population growth rate of 2.2 percent per year, an aggregate GDP growth rate of 7.4 percent per year. This compares with a historical average growth rate of 5 per cent per year. Given an optimistic estimate of the incremental capital output ratio (ICOR) of 3.5, the investment requirement for the period works out to 26 percent of GDP on average, rising to 30 percent of GDP by the end of the period. With foreign savings estimated at 3 percent if GDP, the domestic savings requirement works out of 23 percent of GDP on average, rising from its current level of 13 percent to 28 percent at the end of the period. This has policy implications in three areas: Domestic savings mobilization, attraction of foreign savings, and maintaining a low ICOR. These policy implications can be summarized under three heads, namely: strengthen the financial and fiscal systems, creating a favorable investment climate to attract foreign investment, and improving resource allocation. Financial sector reform is already in progress and includes giving greeter autonomy and powers to State Bank and the Corporate Law Authority, better monitoring and regulation of the banking sector, strengthening of stock exchanges, and

PAKISTAN 2010

greater commotion in the sector. Other mechanisms to mobilize savings include the institution of mandatory pension schemes, the increase of government savings through budgetary stringency and improvement in tax administration. Finally, the reduction of governmental dissavings depends on high tax collecting which requires a wide ranging reform of tax administration. Attraction of foreign savings depends on the creation of favorable investment climate: maintain political stability, curbing corruption, improving bureaucratic efficiency, building communications infrastructure, investing in human resource. The ICOR depends on improvements in resource allocation among sectors e.g. between tradable and non tradable), among types of firm (public vs. private, large scale vs. small scale) and type of technology. It also involves investing in human resources and dynamic productivity enhancement measures. An important contributor to savings mobilization and foreign investment is policy credibility. In the past, governments introduced minute and unanticipated changes in tax and tariff rates, exemptions, controlled prices, or credit variables, frequently and at will. The result was that on the one hand the unpredictably discouraged long term investment, and on the other hand the policy stance encouraged diversion of private sector resources into lobbying and influence peddling. Policy credibility requires the revamping of the system of SROs placing voluntary restrictions on the governments flexibility over the tax and tariff policy as well as prices, and involving the parliament and opposition parties to endorse major policy innovations.

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b. The productive sectors The leading role of manufacturing implies that it share in the GDP will rise from the current level of 17 percent to 22 percent by the end of the period, as industrial output grows at an average rate of 9 percent per years. Similarly, employment in the industry as well as a whole will rise from 19 to 26 percent of the total labour force. The major focus of the strategy is on export led industrialization especially technology based industries, both small and large scale. The goal is to create an entrepreneurial culture, a culture of investment, in which people with managerial and technical skills team up with those with access to financial resources to invest and produce goods and services for the market. The strategic framework as described earlier is based on partnership between the government, the private sector, and the citizen. The primary function of the government will be to provide a suitable investment climate, and to protect the rights of the citizen, the private sector will be expected to invest not investment climate, and to protect the rights of the citizen the private sector will be expected invest not only in the form of physical capital, but also as innovations in process and management to engender a continuous improvement in productivity. Finally, the citizen will play an active role thought various associations and also as a consumer to ensure that product quality and that the product as well as the process is consistent with the rights of the citizens to a healthy life and a clean environment. The idea of a partnership will be put into practice though the establishment of Pakistan Business Council, comprising leading representatives from industry, finance, trade

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government ministries, and civil society parliament media NGOs professional associations. The umbrella business council will be chaired by the Prime Minister. The purpose of the business council would be to devise an industrial and exports strategies and ensure that it is reflected in mainstream of the government. The primary responsibility of the government in the scenario is the creation of a favorable investment climate, including communication infrastructure, a sound and credible financial system, adequate ready credit availably, a simple and transparent regulatory system through autonomous statutory bodies wherever possible, a transparent and effective tax and tariff system, a stable policy regime, a reliable certification system a planning system oriented towards indicative planning to assist investors in forecasting failure economic trends collaborative policy making, and revamped SROs. It will also include provision of information and technical assistance to industry in strategic areas, especially market intelligence services, information on government decisions and planning and assistance for obtaining ISO certification. Besides these, the government would undertake targeted programmes for small and medium scale industry including targeted vendor assistance programmes in collaboration with the large scale industrial units into attract foreign direct investment. In keeping with this clearly defined role, the privatization process will help reduce the governments investment in the production process itself. The functions of investment and marketing will be allocated primarily to the private sector. Even the minimal public sector involvement, justifies by historical, social or security reasons, will be patterned on market lines, and private sector representatives and professions will be involved in their governance to the in promoting the collective

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interest in this process. Finally civic group will be involved in the protection of the interest of the consumer and the citizen at large. This includes matters of product quality, health effects, especially female labour poor communities. c. Trade liberalization and exports The export initiative will lead to an annual growth of 9 percent in export revenues, resulting in an increase in the ratio of exports to GDP from 14 to 20 percent by 2010, imports are projected to rise at only 5 percent per year, thus reducing the payments deficit to only 2 percent of GDP by the end of the period. Once again, the main goal is to create a culture of export from the top to the bottom of society, and including civil society institutions in a major way. Media institutions, professional associations, community development organizations, educational and research institutions and NGOs need to be involved in creating such a culture. Again, the primary vehicle for achieving these objectives is a partnership between government, the private sector, and the citizen. Besides the measures cited earlier, the government will be involved in providing market intelligence support for marketing expenses of firms establishing links with buyers in growing economies (especially HPAEs) providing technical transfer especially in management skills and methods to trade the related industry, support for background research in export potential, improvement the efficiency of the duty drawback package, strengthening intuitions dealing with certification standards, and measure. The government would also strengthen intuitions (whether in government or outside) dealing with the World Trade Organization. It would target foreign direct investment for production for exports.

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Industry will take the lead in investment and marketing. However, industrial associations will be encouraged to open trade officers in key partner countries, gradually replacing government commercial offices abroad. d. Science and Technology Given the shift in shift in competitive advantage, in favor of knowledge based industry, a major strategic intervention will be required in science and technology. As in other sectors, the purpose of governmental action is to create a culture of research, by strengthening the research superstructure, especially national innovation system, providing incentives for research in the form of open grants, or through a science and technology trust fund, providing protection to the results of research through stronger patent laws, and creating an supporting an international linkage programme of Pakistani and external institutions. The government would also create conditions for leveraging Pakistani resources worldwide by attracting external experts into Pakistani institutions not only as short term consultants. Finally it would link Foreign Direct Investment to technology transfer programme. The private sector would be involved in strengthening of the research network, through governance of existing institutions, and also through applied research and development work for which venture capital funding and governmental support would be available, and through Cluster Councils to promote R&D activity in every industry.

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e. Social Services As general point, the low allocation to the social sector in the past is not the only factor (and perhaps not even the primary factor) hindering the improvement of social development. Instead, the main obstacles have to do with the poor standards of deployment of resources, low staff motivation and the lack of participation of users. The main goal of the programme will be to improve resource use through improved management, third party inspection and local control of services provision. The goals of the programme are familiar: universalization of primary education, raising levels in higher education, improving quality at all levels, especially at higher levels, and vocational education to the market, strengthening and improving the quality of rural health services, poverty eradication, and ending discrimination against women. The long term purpose is to create a culture that demands highly quality services actively, either through the market or through state agencies. The instruments would be the improvement of the regulatory framework to encourage private sector investment in education and health, involvement of the local population in supervising the provision of these services, involving community development organizations in poverty eradication and social service delivery, entrusting primary education and health services in urban areas to local institutions, and initiating a programme for the transfer of rural services to these institutions in due course. There would also be a decrease in subsidy to higher education to bring to closer to market trends. This will be accompanied by a large scholarship programme to provide universal access to capable students to the educational system.

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5.

MAKING THE PROGRAMME WORK: GOOD GOVERNANCE

As may be evident, a cross-cutting factor in all the above is good governance. Neither sustained economic growth nor improvement in social services is possible without the restoration of governance in the country. The crisis of governance has many features. At the most dramatic level, it is the breakdown of law and order, threatening the very life and livelihood of citizens, because of crime, civic conflict, terror, and widespread corruption and inefficiency. A related contributory factor is the loss of public control over major state institutions (especially the police and security agencies), and in some cases even the criminalization of the latter. A second major issue is that of corruption that pervades all three branches of government: the executive, the legislature, and the judiciary. The result is that none of three branches acts as a check upon the misfeasance of the other two. The powers to appoint or reward public officials are used arbitrarily, public property is handled in a cavalier fashion, the system ignores (and often rewards) financial corruption and the property is handled in a cavalier fashion, the system ignores (and often rewards) financial corruption and the misuse of powers, financial institutions have been burdened with unserviceable loans, public lands have been doled out in return for political or financial favor, and publically controlled institutions are badly managed and respond neither to citizen needs nor to financial imperatives. The resulting social frustration feeds upon and encourages civic violence, generalized dysfunctional behavior, and involvement in criminal or terrorist activities.

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A third issue is policy ineffectiveness, including for example the inability to raise revenues for the government, target policies to selected groups or regions, ensure that governmental assets are used and maintained efficiently, provide social services of adequate quality to citizens, regulate or monitor potentially hazardous economic activities, or generally protect the lives and livelihood of citizens. The inability results in a widening gap between announcements and results, and leads to an erosion of confidence in the government. Indeed, the greater the ineffectiveness, the higher is the propensity to make grandiose announcements. Finally, as already mentioned, ad hoc policy making contributes directly to economic instability and unpredictability, discouraging long term investment, and encouraging lobbying and influence peddling. The above factors have contributed to poor economic performance, low industrial investment, inadequate and mediocre social services. They have led to wastage of national resources, competitive disadvantages for producers of quality goods and services, a crisis in financial institutions, an inability to control crime or lawlessness, an inability to protect the weak against the strong, an erosion of credibility and legitimacy of the government, social frustration, and have provided an inducement of dysfunctional social behavior. Consequently, much of the Pakistan 2010 reform package focuses on making things work, namely changing the system of institutions and incentives that affect the behavior of public officials, business entrepreneurs, and citizens. Besides the specific measures described in the five areas identified above, across the board reforms are needed for

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the restoration of governance in the country. These reforms can be divided into the following categories: civil service reform, legal and judicial reform, legislative reform, decentralization, eradication of corruption, promulgation of citizens charter and creation of all encompassing, comprehensive National Citizen Database. The conceptual entry point of this reform proposal is the principal of incentive compatibility. It starts with a pragmatic perspective on how to make the government more responsive, efficient, and legitimate, rather than dwelling upon political, moral or philosophical questions. a. Civil Service Reform The goal of civil service reform is to ensure that the civil servant is motivated to act in the public interest by the incentive structure, institutions, and training. The proposal seeks to create a judicious blend of autonomy and responsibility, by protecting the right of the government to appoint or transfer individuals, while ensuring that this right is used in the public interest and in a justifiable manner. The centerpiece of the programme is the recommendation to establish an autonomous statutory body, the Good Governance Commission, charged with reforming government rules and procedures on a regular basis, ensuring the protection of tenure and rights of civil servants, and amending the salary and benefit structure in accordance with changes in cost of living and service conditions. Members of the GGC, like all members of statutory bodies will be appointed in the manner of judges of the superior courts, and will enjoy similar protection against arbitrary removal or harassment.

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b.

Legal and Judicial Reform

The proposals for legal and judicial reform follow the same lines as that for civil service reform, and are aimed at improving the incentive structure faced by judges and judicial officers. They also involve modifications in salary and benefits packages to bring them in line with market conditions, and the supervision of tenure and service conditions by the Law Commission. The Law Commission will also oversee staffing, recruitment, training and monitoring needs. Finally it is recommended to provide additional resources, both human and financial, to assist in the functioning of the system of justice along with reforms to strengthen lower judiciary where people face long delays in getting justice. c. Legislative Reform

The legislature is the third branch of the government. It too faces perverse incentives, in the sense that there is no system for rewarding good performance or punishing poor performance. The proposed reforms of the legislature focus on improving the incentive structure. Beginning with providing legislators with adequate salaries and staff support, the proposal recommends measures to strengthen the committee structure of the parliament, improving citizen access to parliamentary records, providing funds for research and analysis of parliamentary functioning, and ensuring that the overall set of incentives faced by legislators induces the protection for the rights of citizens and upholding the public interest.

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d.

Decentralization

A major failure in the system of government in many Southern countries is the high degree of concentration of powers. The 2010 Programme recommends a phased decentralization of the polity and administration through three set of mutually supportive measures. First, deconcentration, i.e. shifting administrative and financial powers to lower levels of the hierarchy, to be undertaken by the GGC. Second, delegation, namely the transfer of functions and responsibilities horizontally to autonomous agencies, nongovernment organizations, and the private sector (i.e. privatization) in a phased manner. Third, devolution, i.e. transfer of powers and responsibilities to lower tiers of the government, i.e. local government, district government, and provincial government. The operational principle proposed here is that of subsidiary: namely that decision should be taken at the lowest possible level, at the local (i.e. village or mohalla) level where possible; if not at the district level, then at the provincial level, and only where necessitated by technical, economic, or political considerations, at the federal level. However, this has to be a phased programme, since most institutions for oversight and accountability of governmental functioning do not exist at all the proposed tiers. It requires an investment in systems of accountability local judiciary, local media, local auditing institutions, election commission, and citizen groups at all the proposed levels of government, including training programmes, infrastructure provision, and access to information. In accordance with the phased programme, the different tiers should be created through legal or constitutional amendments, and invested with administrative, financial, and political authority.

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e.

Eradication of Corruption

Corruption has become a central political and social issue, and a set of actions to address it have already been put in place. However, besides the punitive measures, that tend to be backward looking, there is also a need to take a forward looking view, and to introduce steps that would minimize the incidence of corruption in the future. These include some revision of salary structures (which may be necessary but not sufficient), changes in procedures for appointment and transfer of public officials, amendments to service and operational rules, improving access of citizens to information (please see below), strengthening auditing systems in the public as well as private sectors, introducing performance based management in public institutions, and establishing organizations. f. Citizens Charters effective systems of oversight and governance of autonomous

The restoration of governance is impossible without citizen involvement in oversight and accountability. This requires the provision of open access to information to all citizens (through the enactment of the Freedom of Information Act), establishing performance criteria for all public offices, publishing and enforcing citizens charters that elaborate the rights of citizens with regard to every public agency and every public official, and finally providing open support for independent research and analysis of the functioning of public institutions.

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g.

National Database

Undocumented population growth and absence of standardized data pertaining to all the citizens of Pakistan has germinated numerous evils in our society. The perspective planning in social action programme is seriously hampered by non-availability of authentic and accurate data envisaging prevalent social and fiscal indicators. This necessitates creation of a National Citizen Database as soon as possible for updated, integrated and precise inputs to all user agencies, ensuring our entry into the next millennium with a changed profile and embarking on the IT Super-highway in a befitting manner.

6.

AN AGENDA FOR COLLABORATIVE ACTION

The above is a massive agenda for reform. As mentioned earlier, its centerpiece is the effort to make things work rather than to catch up. In every sphere, the reform effort will focus on why things do not work, and seek to redress the deficiencies. However, it is not a programme developed in isolation. It has been prepared after extensive consultation with stake holders for all walks of like. The real goal of the programme is to give confidence to all these stake holders and mobilize their energies for the task at hand. Accordingly, even the implementation will be based on a system of continuous and detailed interaction with stake holders. It is collaborative programme that will involve the government, the private sector, and the citizens as equal partners.

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To this end, over the year, sector meetings will be organized in twenty-one major areas of interest:
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Agriculture Education Energy Environment Exports FinancialServices Health&Population Housing InformationTechnology Industry Investment 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. LawandorderandJustice Massmedia ScienceandTechnology SmallBusinessDevelopment Sports Taxation Telecommunications Tourism Transportation ValuesandCulture

Consultations will be held in all major cities in the country, with representatives from the government as well as civil society to refine and improve the recommendations in an interactive manner. They will help identify people who are prepared to give their time and energy to this task, the concept champions, who will lead the effort, members of formal institutions (such as steering committees and the like), and those who will provide the background work on which decisions can be made. Specifically, to monitor this process the Prime Minister has set up a 2010 Council and Steering Committee. The 2010 Council and Steering Committee consist of eminent persons from the cabinet, parliament, bureaucracy, business, media and other civil society leaders. The Steering Committee will meet every quarter to prepare a monitoring report for the Prime Minister and develop and approve a plan of action to set in motion a process to conduct a set of national stakeholder conferences that cover the above mentioned twenty one key areas in need of reform. The goal of the various stakeholder consultations is to build a network of 5000 Champions of Reform. The

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process will be self-legitimating. And the stakeholders will be called on to assist in implementing this plan of action over which they will have developed a sense of ownership and authorship. These consultations will be held in 1998, targeting the 21 priority areas of reform including, for example, justice and law and order, taxation and education. This is the method by which a broad and collaborative partnership of government, the private sector and citizens will be forged and which in turn, will create a new constituency for social and economic reforms and development. The targets of 2010 will be materialized through 9th & 10th five years plans. The effort will be backed up by a secretariat, which will undertake policy research, provide advice, and support the advocacy efforts of the concept champions. The Prime Minister has setup and effective framework for monitoring and implementation of the programme. However, the lead role will be given to the Champions of Reforms. This is a unique proposal and a unique approach to social improvement. But given the massive agenda before us, this is the only one that can succeed. Pakistan 2010 is a call to all Pakistanis to join in the effort to transform the country into a model of economic and social success. It is a call for entrepreneurship, and for championship of social causes. It is a call for partnership between the government, the private sector, and the citizen, for venturing into new markets, new products, new technologies, and new ways of social reform. It is a call for establishing the rule of law and a system that ensures justice to everyone. It is a call for eradicating poverty and malnutrition. It is a call for instituting the values of tolerance, mutual respect, and justice. It is a call for establishing new norms of behavior and new standards of conduct in order

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to create an environment of trust between the state and the citizen, between various nationalities, religions sects, and men and women, between the worker and the capitalist and between the buyer and the seller, in order to promote activities that maximize welfare and create social harmony. It is a call to help realize the Quaids vision of Pakistan: to revive the spirit of 1947.

VISION
Knowledge-led, Tolerant, Just, Enterprising & Prosperous Pakistan Pakistan 2010 will achieve a well-functioning socio-political economic dynamo that will provide income equity, technological sophistication, and export-led growth through enhanced global linkages, effective private sector involvement, good governance, sustainable development and social justice based on universal principles of Islam.