Low tax-to-GDP ratio needs to change: COAS

KARACHI: Chief of the Army Staff (COAS) General Qamar Javed Bajwa said on Wednesday that Pakistan’s tax to GDP ratio is abysmally low and this needs to change if we are to break the begging bowl.

Addressing a seminar on ‘Interplay of Economy and Security’ here, the army chief said that in today’s world, security and economy were interlinked. He said the country’s economy was showing mixed indicators, the growth had picked up, but the debts were sky high. He said infrastructure and energy had improved considerably, but the current account balance was not in Pakistan’s favour. “At the same time, the common man across Pakistan needs reassurance of benevolent and equal treatment from the state in return,” he added.

General Bajwa said economy touched almost all aspects of human life. He said it would not be wrong to say that economy was reflection of quality of our life. “It reflects the wealth of a nation, but in doing so, it also indicates the nation’s health, including the strength of its institutions and the trust of its people,” he remarked.

“Erstwhile the USSR had no dearth of armoured divisions but it broke up due to weak economic base,” he said. Similarly, he said, rich countries without corresponding security apparatus might invite aggression from others. “All nations today are reviewing the old dilemma of ‘Guns versus Butter’, that is how to achieve a balance between economic viability and national security. Countries like Pakistan never had the luxury of such a review. We live in one of the most volatile regions of the world, dealing with multiple crises since inception, but increasingly so during the last four decades,” he said.

Therefore, he said, we must be able to evolve on the way. “We have to continuously ensure a viable balance between economy and security. Only then will we arrive at a future that ensures sustained peace and happiness for our people,” he added.

The seminar was organised by the Inter-Services Public Relations (ISPR) in collaboration with the Federation of Pakistan Chambers of Commerce and Industry.

The army chief said the China Pakistan Economic Corridor (CPEC) was the future of Pakistani people and there would never be any compromise over it. “This (CPEC) is the future of our people, a vital national interest on which we will never compromise, regardless of the loudness of opposing voices,” he said.

The army chief said that CPEC was not just a collection of infrastructure and power projects but in fact a complete development platform that had the potential to act as a powerful springboard for shared development in the entire CASA (Central Asia-South Asia) region. “It is also an example of regional cooperation and a break from politics of confrontation. We want all to benefit from this project,” he said.

However, he said, the completion of the project and, more importantly, optimisation of its socio-economic dividend for Pakistan and the region hinged on one word — ‘security’.“Our region in general and the immediate neighbourhood in particular has failed to take off due to peculiar security challenges. I sincerely believe that the region will sink or sail together. That is how it has played out across the world,” he said, adding: “I want to use this opportunity to earnestly convey to our neighbours to the East and to the West that our destinies are inextricably linked.”

He said until the current environment of mutual distrust was eliminated, it could not be possibly imagined for the nations of the region to rise together into enduring peace and socio-economic development. “Peace and stability is in the interest of all and we must strive for it,” he maintained.

General Bajwa said that Pakistan was capable of creating sufficient fiscal space to address underlying structural problems through tax reforms, documenting economy, diversifying the export base and encouraging savings to finance a level of investment that could sustain growth rate higher than the rise of population.

“But this is not all, we have to rise together. We have to ensure that Balochistan, interior Sindh, Fata, southern Punjab and Gilgit-Baltistan also join us on the trajectory of growth and then move forward. It is with this integrated approach, that we will fulfil the vision of Quaid,” he added.

The COAS said the vision of integrated economic growth across Pakistan and across the region was noble, but it also needed to be secured. “In today’s world, security does not come cheap. It is dependent upon economic prowess. It is here that our entrepreneurs must contribute by producing and exporting more. We have done our part on the security front, now it’s up to you (entrepreneurs) to take initiative and turn the economy around,” he said.

The task at hand, he said, was difficult, but the Pakistani nation had done it before. “In the ‘60s, we were among the economic leaders in Asia. The seventies brought trouble that tested the very fibre of our nationhood. We have fought hard to stay afloat ever since. We are just finding our feet with improved security. We need to start afresh on the economic front as well,” he said, adding: “If any nation can survive what we went through, it can also make its mark when the going is relatively easier.”

The army chief said national security was a wide-ranging subject and across the world it was the product of an interplay of factors that encompassed political, economic, military, social, human and environmental facets. He said today Pakistan had a much improved security situation on the internal front.

“The challenges to the state’s writ have been defeated, though residual threat still resides. The situation is stable but there is apparent fragility at places,” the army chief said. Therefore, he said, we need a comprehensive effort to pursue the National Action Plan and remove vulnerabilities well before they turn into threats.

“Many of the planned measures, if implemented timely, will contribute directly to the economic and even political stability of the country. Police and judicial reforms are obvious examples. Madrassa reforms are also vital — we cannot afford to leave a large segment of our youth with limited options,” General Bajwa said. He said Madrassas must enable their students to become useful members of the society, who are not left behind in any field of life. He said the external front continued to remain in a flux.

The army chief said Pakistan had a belligerent India on its east and an unstable Afghanistan on its west. He said the region remained captive due to historical baggage and negative competition.

“But on our part, we are making a deliberate and concerted effort to pacify the western border through a multitude of diplomatic, military and economic initiatives, not to mention the phenomenal boost to human security that we have provided in Fata and surrounding areas,” he said. General Bajwa said what Pakistan had done in Fata and started in Balochistan could easily be termed the best example of a holistic approach to security.

“We have also expressed and demonstrated our genuine desire to have normal and peaceful relations with India, however, it takes two to tango,” he said. General Bajwa pointed out that due to dedication and sustained hard work of army and other law enforcement agencies, improvement in security environment had started to pay off.

“We have had mega events in the country in the fields of sports and culture this year. Recently, we not only had the most peaceful Muharram in years but the Bohra community validated our claim of improved security by selecting Pakistan for their annual gathering. Similarly, early harvest projects, both CPEC and non-CPEC, are nearing completion with Pakistan Army providing security to our Chinese friends,” he added.

General Bajwa said it was high time for Pakistan to place economic growth and sustainability at the highest priority. “In order to secure future, we must be ready to take difficult decisions. We have to increase our tax base, bring in fiscal discipline and ensure continuity of economic policies,” he said. At the micro level, he said, nothing exemplified the linkage between economy and security better than the city of Karachi itself.

“Karachi, the economic capital of Pakistan, generates a significant part of our revenue. When our enemies want to choke Pakistan, they try to destabilise Karachi because when Karachi bleeds, Pakistan bleeds,” he said, adding: “It is because of this sensitivity, that peace in Karachi has been our top priority. We have worked very hard to restore peace and now hope that economic activity would return at a fast pace.”

General Bajwa assured that Karachi would remain safe and sound now. However, he said, in order to maintain sustainable growth and progress, we must ensure law and order in the entire country. The army chief said at the macro level, the relationship between security and economy was intricate, therefore, solutions were more complex.

“Today, Pakistan is a strategically-challenged state and external actors are attempting to assert control and dictate its (Pakistan’s) security priorities that have strong linkages its economic future. The centrepiece of that effort was CPEC,” he added.