ong-term policies create a stable environment for businesses and investors, enabling them to make informed decisions. Stability is particularly important for large investments, which require time to materialise.

Pakistan has struggled to have consistent economic and industrial policies, primarily due to political instability. There have been periods of relative consistency, for instance during the Ayub Khan era (1958-1969) when economic policies were relatively stable, with a focus on industrialisation and infrastructure development.

The Green Revolution also transformed agricultural productivity during this period. A five-year economic roadmap provided by the regime was implemented in letter and spirit. The dictator had a firm grip on the state apparatus that assured implementation of his plans. A later five-year plan, however, faced hiccups as Ayub Khan’s grip on power loosened.

Another period of policy consistency was witnessed during the Musharraf era (1999-2008). His policies were fairly consistent, focusing on deregulation, privatisation, and liberalisation of the economy. Pakistan experienced strong economic growth in the mid-2000s, though this it could not be sustained afterwards. The Musharraf regime sought greater transparency in economic affairs but was unable to implement a five year sector-specific policy.

The first auto policy of the regime resulted in rapid growth in the auto sector but then the government started tinkering with the policy and the import of used cars was allowed. The investors that had entered the Pakistani market based on the policy then faced difficulty in competing with the used cars prices and eventually failed to comply with the localisation of manufacture targets. They were then granted several waivers in this regard.

In the same way, a textile Vision 2020 was announced but the expected investments did not materialise. The roadmap provided by Vision 2020 had anticipated huge investments in value added textiles. However, most of the investments during the era were made in spinning. As a result of this lopsided investment, Pakistan’s growth in the value added textile sector was compromised.

Earlier, the Musharraf regime, too, had announced a five-year textile policy. Unfortunately, it was never implemented in its true spirit. Hardly five percent of the promised allocations and facilitations were provided by the state, during the five years.

Elected governments, too, have a poor record of sector-specific policy consistency. Most of their policies remained subject to revision. This eroded the confidence of the investors. Our automobile production today stands almost at half the production level achieved in 2007-08. In textiles, we are struggling to compete with Bangladesh, Vietnam and now Cambodia.

India has been better generally at executing long-term policies. This can be attributed to relative political stability and a strong institutional framework. Major reforms like liberalisation in 1991 and the recent focus on Make in India and Digital India, show that India can sustain its economic plans for longer durations.

Bangladesh’s success, especially in the textile sector, can be attributed to more consistent policies over the last few decades, including export-oriented growth and focus on the SMEs. The government has also maintained a stable policy framework that attracts foreign investment, particularly in the garments industry.

In comparison, policy execution in Pakistan has been sporadic, primarily due to frequent changes in government, civil-military tensions and inconsistent fiscal and monetary policies. Bangladesh’s success in select industries, like textiles, also highlights the benefits of focused, long-term sector-specific policies.

A ten-year policy is required to encourage strategic sectors requiring long-term development. The policy makers have to periodically revisit the 10-year policies to adapt to changing global or domestic conditions. 

Both India and Bangladesh have demonstrated better policy execution and consistency than Pakistan. Long-term policies in these countries have benefited from stable governance and focused sectoral interventions, something Pakistan has struggled with.

Long-term policies aim for sustainable development by addressing structural issues, promoting innovation and encouraging infrastructure growth, which leads to more consistent economic performance. Consistent policies attract foreign investors, who prefer environments where policy shifts are not frequent or erratic.

Consistent long term policies provide time for institutions to evolve and grow in alignment with national economic goals, helping sectors, such as education, industry and technology flourish over time. Economic policies that prioritise long-term goals tend to focus on education, health and skill development, leading to a more skilled workforce and boosting productivity.

While long-term policies offer stability, interventions can sometimes be necessary if external shocks occur. These could result from financial crises or natural disasters, which require immediate policy adjustments. Inefficiencies can also emerge in the implementation so that course corrections are needed to avoid derailment. New information or technological changes can render the original policy obsolete.

However, frequent tinkering without due cause disrupts long-term objectives and can erode confidence among stakeholders. In Pakistan’s case, tinkering with the policies was mainly meant to benefit vested interests.

Five-year policies are often preferred for medium-term planning. They provide enough time to implement and assess policies while allowing adjustments based on evolving circumstances. Most countries, including Pakistan, have used five-year plans.

Five year policies are good for sectors like textiles where the investor can reap benefits immediately after commissioning of machines. For engineering projects that require long gestation periods, a five year road map may not be enough. The machines may be delivered after two to three years and the commissioning may take another year. The investor is thus left with only one or two year to claim the benefits of the policy.

To encourage strategic sectors requiring long-term development (e.g., energy, infrastructure, education) a ten year policy is required. The policy makers have to periodically revisit the 10-year policies to accommodate changing global or domestic conditions. We have not been able to attract investment for a cracker plant because we do not have a credible long term policy for the investors.

Long term policies work if foreign investors have confidence in the host government and foresee stability, profitability and legal protection for their investments. This includes investors’ confidence in the country’s political and economic environment, including stable governance, sound economic policies and low inflation rates. Frequent policy changes or instability deter investment.

A clear, transparent and consistent legal system that protects foreign investments, intellectual property rights and allows for the enforcement of contracts is essential. Investors seek assurances that laws won’t change arbitrarily and that they can resolve disputes through an impartial legal process. Investors also need assurances that their assets and profits can be repatriated without facing excessive restrictions. This includes guarantees against nationalisation or expropriation of their investments without fair compensation.

Since foreign investments involve cross-border financial flows, assurances about currency stability and access to foreign exchange markets. Sudden depreciation or currency controls can erode profits. Moreover investors seek an environment where they can operate without bureaucratic hurdles, bribery or corruption. Governments must demonstrate a commitment to reducing corruption and maintaining a level playing field.

Clarity around labour laws, including hiring and firing policies, labour rights and wages, is necessary. Investors also look for access to a skilled workforce or assurances about training programmes and labour productivity. Investors require assurances regarding reliable infrastructure such as roads, ports and energy and communication networks to support their operations as inconsistent utilities can disrupt business and raise costs.

The writer is a senior economic reporter