Creating more Economic Reform Bodies



By Sultan Ahmed

THERE appears to be no end to the birth of new administrative units or reform outfits in the federal government. It is a result of merrier attitude that prevails there while enlarging the size of the offices. The new units are usually large with high sounding objectives in a new jargon, are headed by senior officials and are costly outfits.

And as new organisations come up, old institutions whose functions they try to take over or expand are not wound up soon. At best they have a lingering death and tend to waste a great deal more of public funds. And no one is evidently evaluating the performance of the new units at fixed intervals, although that is stated to be done now.

The largest organisation to be born this month is the Economic Reform Unit (ERU) which will focus on reforming the private sector, removing its roadblocks and enabling it to follow and promote the best practices in the world. And it is to enable the country to benefit amply from the public-private partnerships make rapid headway.

The ERU is to be launched this month at a meeting convened by Prime Minister Shaukat Aziz. It will be under the ministry of finance and its director-general who will be an eminent person will report directly to the finance secretary. Will that become another institution attached to the ministry of finance and under a usually over-burdened finance secretary. But before defining the scope of the ERU, what it will seek to achieve should be clearly and more specifically defined with the approval of the leading players in the private sector.

In fact it will be far better if the birth of the ERU and its final shape follows a large conference of industrialists and businessmen as well as public sector representatives, who should first of all identify the shackles that hold back the private sector and obtains less than the largest investment. What matters are not only the laws, rules and regulations that hold back the private sector and keep the informal sector very large and greatly unaccountable to the government or the consumers, but also many unhealthy practices in the private sector. The government or the private sector officials alone cannot be blamed for all the drawbacks and the handicaps of the private sector. The common deviant practices of the private sector also retard its growth.

Good governance which is essential for the success of the public and the private sectors is possible in an atmosphere of mutual trust and respect for each other. Mutual distrust and disregard for each other do not help the growth of the private sector which has to acknowledge its responsibility to society and its obligation to the government and should not think in narrow parochial or personal terms.

If for example, the private sector believes in maximum profit and minimum tax payments as is common in Pakistan it is a role which is unacceptable to the government or the country. Instead, it should reform itself and strive for larger profits through increasingly larger turnover and pay its taxes in full to the state.

And it is the obligation of the state to keep taxes moderate and tax collection realistic and the collection methods employed helpful to the tax payers. The higher objectives of the business are what the businessmen should be seeking and not simple pursuit of the primitive traders. There are some much civilised businessmen: others have to follow them if the ERU is to pay proper dividends as well as to the country.

The government says the first generation reforms have produced excellent economic results and the second generation reforms will sustain though reforms and excel the growth rate to eight per cent and over, but the second generation reforms have not been presented in a collected form with its specifics listed. Will it be the task of the ERU to finalise those reforms in the private sector and make it more productive and the bigger economic player?

Now we enter the area of duplication at the cabinet level. How many reformers or reforming organisations are we going to have? The long dormant or neglected Planning Commission has been brought back to life along with the revival of long-term planning. And it has come up with the vision 2030 which is to make the country the 23rd economy in the world from the 39th at present. And the PC with Dr. Akram Sheikh has been given a larger role and is consulted by the prime minister frequently. The Pakistan Institute of Development Economics has come back to life under Nadeemul Haque and has a large volume of research to help the official reformers. It is a useful consulting body with a large body of research in the economic and social sectors and it has now come out with a useful PIED business barometer to reflect the business climate in the country. And in Karachi the non-official Social Policy and Development Centre under Dr. Khalida Ghous now has conducted excellent studies in the social and economic sectors keeping in view the needs of the people. Unlike official institutions, its feet are very much on the ground.

Instead of making use of such studies and the research work of the State Bank of Pakistan, the government is creating new bodies at a high cost to suggest and implement economic reforms in the private sector. This new institution can create real protocol problems unless the prime minister takes a very personal interest in its recommendations.

The creation of this unit owes to the ministry of textiles which has not only a textile owner from Faisalabad as its minister, it has also a minister of state to share the light burden of the minister with small authority.

Added to the ministry of industries and production, under Mr. Jehangir Tareen is the label of special initiatives. All ministries are expected to take special initiatives but Mr. Tareen insisted on the mention of the special initiatives and we have not seen anything very special about the initiatives he has so far taken.

In much of the modern world, there is a ministry of trade and industry like Japan’s MITTI, but we have two separate ministries for trade and industry and there is a third ministry of textiles. We have another minister, Zahid Hamid, for investment promotion and privatisation.

Most of these ministers don’t seem to be pulling together. As a result a report on the state of the commerce which covers largely the private sector for the first time has been on the table of commerce minister Humayun Akhtar for the last two years awaiting policy decisions. All these ministers are expected to suggest reforms in their areas and carry them out with the approval of the cabinet. As a result, one reform body follows another with high sounding objectives.

In addition to the ministries, the World Bank, the Asian Development Bank, the International Finance Corporation and the UN Development Programme have been suggesting a plethora of reforms and have been funding some of them and have offered to provide far more funds if we accept and implement those reforms.

The ERU following the appointment of its director-general will undertake a study of the business climate, opt for international gathering, study infrastructure inadequacies and make a study of the energy requirements. Several reports on such inadequacies are already available with the government and the ERU can make use of them.

The ERU will develop the first comprehensive and coordinated private sector development strategy. The Unit will have two related mandates. One, to improve the regulatory environment and remove the impediment to private sector growth. Two, to remove all other impediments in the private sector development and promote the best international practices and establish a transparent and open regulatory process.

It will also interact with the international aid agencies and seek their help to realise its objectives. It will be better for the private sector to reform itself as much as it can before the government decides to reshape that sector. The trade organisations ordinance should be accepted by the chambers of commerce with the necessary amendments. If the private sector has to play a larger role as the public sector has greatly withdrawn from industrial field, it should become strong, vibrant and socially responsible.


http://www.dawn.com/2007/04/12/ed.htm#4

Disaster management


MOST natural disasters cannot be predicted with any degree of precision. To this day, seismologists can estimate only the likelihood of a major earthquake occurring in a particular region over a period spanning decades, not days or years. Landslides and flash floods too can strike without warning, and by then it may be too late for action to contain the effects. Even in the case of phenomena that can be forecast fairly accurately, such as cyclones and other severe weather vagaries, the human toll can be high in the absence of an efficient disaster response mechanism. As evidenced by the trail of human misery left by Hurricane Katrina in the United States in 2005, coping with a major disaster can be a struggle for the most developed of countries. In New Orleans, poor planning and a mixture of incompetence and official apathy were to blame for the prolonged human suffering. In the case of Pakistan, relief efforts were slow in the immediate aftermath of the devastating October 2005 earthquake. While inhospitable terrain, blocked roads and harsh weather were definitely a factor, matters were made worse by the fact that no centralised system was in place to ensure that help reached those who needed it as quickly as possible.

The promulgation of the National Disaster Management Ordinance 2007 is a step in the right direction. A disaster management institute focusing on policy formulation, training, prevention mechanisms and mitigation measures is to be set up under the ordinance, as is a national disaster management commission whose members are to be drawn from the ranks of the government, the political opposition, civil society and the armed forces. The proposal may be sound but that is no guarantee of success. Commitment and follow-up are in notoriously short supply in Pakistan, where many a good idea dies a slow death because of apathy and neglect. Even those plans that make the leap from the drawing board to implementation can be rendered ineffective by corruption and incompetence. Maintaining a steady flow of funding will also be a challenge. There is no room for laxity and the government must not falter in this monumental task.


http://www.dawn.com/2007/04/13/ed.htm#1

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Yasser Chattha

Reinventing the Government

By Tasneem Noorani

AFTER undertaking administrative reforms through devolution, which in effect was the demolition of a system, the government of late has embarked upon the task of reinventing itself through the setting up of the National Commission on Government Reforms (NCGR).

The first exercise was undertaken through a general whose only likely contact with the system that he was supposed to reform was from the secure environment of the cantonments. The second exercise has been entrusted to a former civil servant who is brilliant and has given a good account of himself as an economic manager.

The proposals drafted by the NCGR are reported to be detailed and systematic, but so were the recommendations of the National Reconstruction Bureau on local government reforms. The main point missed was a reality check and past experience in administrative reforms.

In a recent newspaper report, we were informed that six existing service groups (information, trade and commerce, postal etc) have been recommended to be abolished. It is assumed that the rationale is that some of them have become redundant while the others can be merged. It is not clear what the advantage of doing away with these occupational groups would be, except that it would make the organogram look neat, and the government’s step would smack of modernisation.

We have had similar reforms by the government in the past, one of them being the de facto abolition of the office management group (OMG), with the resultant stoppage of the recruitment of section officers. The result has been that while numerous OMG officers have become secretaries/additional secretaries, the prevention of which was the apparent objective of abolishing the service, there are no section officers left to do the main foundation work in the ministries. So while we may have very competent secretaries, the quality of officers down below leaves a lot to be desired.

The government has had to take emergency remedial steps like recalling retired section officers to work on contract and in some cases, recalling even retired deputy secretaries to work as section officers.

The purpose of recounting the effects of one “reform” undertaken in the past was to highlight what actually happens to our reforms on the ground.

Another example that comes to mind was the recommendation by another high-powered commission in the past, which after months, perhaps years, of deliberation, came up with the idea of abolishing the tier of additional secretary in the federal government. It was implemented in some ‘lawaris’ ministries, while those like finance continued to have a number of additional secretaries. Over the years, this tier has again been added in most ministries, perhaps in larger numbers than before.

Coming back to the issue of the latest recommendation of abolishing certain occupational groups, while the upside is doubtful and will depend on focused implementation, the downside will be that it will ensure years of uncertainty for the incumbents, while issues like ‘dying cadre’, ‘combined seniority lists’, ‘challenged seniorities’ etc are being sorted out. It would mean diversion in the commitment of officers towards their work.

A likely scenario is that while the so-called reforms are being implemented, there may be a change in the political dispensation, with the result that the adversely affected parties will have an opportunity to get the initiative reversed. This will make matters worse.

On the other hand, it can be argued that the existing system was devised by equally intelligent and experienced people, and ensures that each year every specialist segment of government gets a new lot of young officers, who are selected on the basis of merit, and while merging with the culture of the department, bring a fresh and more educated look to the business.

This writer’s experience, for example, with the officers of the commerce and trade group, in his capacity as secretary commerce, was very pleasant. Because of their posting in the Export Promotion Bureau (now Trade Development Authority of Pakistan, another needless reform), their frequent visits abroad with trade delegations, close interaction with exporters in various assignments and specialised training abroad gave the officers great depth of knowledge of local and international trade issues.

It is also understood that the NCGR has recommended the reorganisation of various divisions of the federal government and have recommended an almost identical set-up at the provincial level. We can examine these issues another time.

With reference to the recommendations of the NCGR, the main question that is being asked is why it is considered necessary to knock down the edifice of the civil bureaucracy institutions and rebuild them according to the understanding of our current manager. Why is it that in the army, which is the only functioning and intact institution of the country, no need has been felt to demolish and rebuild?

We see photographs of senior serving officers placing pips on the shoulders of new colonel commandants, who are sometimes retired. Civilians do not understand the philosophy or the administrative need of these well-publicised ceremonies, but this writer for one, respects it as a continuation of a time-honoured tradition, which by all accounts could not have been started by the Mughals and can only be discerned as colonial. Then why are we so gung-ho about demolishing our civil institutions in the name of modernisation and getting rid of this ‘colonial vestige’?

While talking of government reforms, there is mention of all new bodies like the NCGR etc. But there is no mention of the establishment division, which used to be exclusively and on a whole-time basis responsible for keeping the government running efficiently and effectively. It is with regret that one uses the term ‘used to ' because one does not hear the mention of the this division in any of these reform initiatives.

In fact, the NCGR has also been placed with the prime minister’s secretariat as if to say that one does not have confidence in the abilities of the establishment division. This means that the managers have no confidence in restoring and reactivating the existing civil institutions which, in effect, have been disempowered — but to build new ones?

It is akin to believing that building a new house is better than renovating an old one because of limitations on account of the design layout, structural restrictions, inconvenience caused to the inmates during renovation, etc.

Building on existing institutions requires a close look at the inefficiencies of our staff working in the institutions that we have set out to reform and replace. It requires a SWOT analysis and consequential remedies, which would revolve around staff recruitment, training, morale and perhaps in some cases internal reorganisation — all mundane and non-glamorous steps.

Government managers may, therefore, like to consider applying themselves to the mundane task of identifying deficiencies in the existing organisation and trying to sort them out, rather than following the more glamorous path of reinventing the government.

The writer is a former interior secretary.
tasneem.noorani@tnassociates.net
http://www.dawn.com/2007/04/26/op.htm#2

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Yasser Chattha

The Wheat Fiasco


MISMANAGEMENT and profiteering have turned a time of plenty into a problem that could fuel food price inflation even further. Although the country is expecting a bumper wheat crop this year of about 23 million tonnes, up six per cent from last year’s harvest, millers are complaining of higher prices, and flour too is becoming costlier at the retail level. Responding in characteristic ad-hoc fashion, the government has ordered the immediate suspension of wheat exports — a move that smacks more of damage control than an attempt to tackle root causes. This is yet another volte-face in what has long been an inconsistent wheat export policy. The government’s decision to allow wheat exports came less than five months ago, and the scope of this facility was formally extended to neighbouring countries, including India and Afghanistan, as recently as May 3. But now, with a bumper harvest on the way and official carry-over stocks from last year of over two million tonnes, the decision to export has been put on hold and the price of both wheat and flour is increasing. Why this on-again, off-again approach?

Released in December last year, the State Bank had warned in its annual report for 2005-06 that wheat prices may rise even in the event of a bumper crop. The reason: market manipulation, speculation and hoarding by profiteers. The central bank had further advised the government not to allow exports until it had procured and stocked enough wheat with which to counter market manipulation. No heed was paid to this counsel and Islamabad went ahead with the decision to export wheat. Now, while the hoarders continue to operate without let or hindrance, genuine exporters — through no fault of their own — suddenly find themselves unable to meet their commitments with international buyers. Reliability is everything in business and Pakistan’s image as a trading partner is not helped by such ad-hoc measures. Building strategic reserves of staple food crops such as wheat is of critical importance, as are storage facilities that are pest-free and protected from the elements. The profiteers cannot be allowed to inflict further misery on the poor in the name of free enterprise.

http://www.dawn.com/2007/05/25/ed.htm

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Yasser Chattha