Beyond flags and fireworks: unfinished task of economic independence

Business Recorder

21 hours ago

As Pakistan marks its 78th Independence Day, we are called to celebrate not only the birth of a sovereign state but also to reflect, honestly and urgently, on the unfinished business of our independence: economic freedom.
For while flags will fly and anthems will rise this August 14th, the sobering reality remains that true independence continues to elude us — not for want of patriotism or potential, but for lack of economic self-reliance, policy clarity, and structural reform.
Today, the average Pakistani citizen is burdened under the weight of rising costs, stunted wages, and dwindling opportunities. Our economy continues to rely heavily on external debt, concessional aid, and remittance-fuelled consumption.
The vision of an independent, self-sustaining Pakistan — one that was so passionately articulated by Quaid-e-Azam — remains hostage to our inability to transform political will into bold economic choices.
Nowhere is our economic entrapment more obvious than in our energy sector. Pakistan has among the highest electricity tariffs in the region — averaging around PKR 50 per unit for residential consumers as of mid-2025 — largely due to capacity payments, inefficiencies in transmission, and the perennial monster of circular debt, which has ballooned to nearly PKR 2.4 trillion.
In the petroleum sector too, a distorted pricing mechanism, excessive taxes, systemic leakages and reliance on expensive imported fuel have distorted both consumption and investment decisions. Our taxation regime is similarly punitive and misaligned. Over 60 percent of tax revenue is collected through indirect means, disproportionately impacting the lower and middle classes, while leaving large segments of the elite sectors under-taxed.
Agriculture, real estate, and wholesale and retail trade — which together contribute over 35 percent of GDP — continue to largely operate outside the documented economy. It is no surprise then that both local entrepreneurs and foreign investors remain wary of committing capital in a system so burdened by policy uncertainty and inequity.
Amidst this stagnation, however, ordinary Pakistanis — both households and businesses — are quietly taking matters into their own hands. Solar panel imports surged to over USD 1.4 billion in FY24 alone, a clear signal that grid defection is no longer a future risk but a present-day reality.
Entire housing societies are moving off-grid, factories are turning to hybrid solar-wind setups, and a quiet revolution in distributed energy is already underway. Yet policy continues to lag. We persist in funnelling scarce public resources into subsidizing a broken grid instead of embracing deregulation.
Our energy strategies remain locked in supply-side interventions — more power plants, messed up LNG — while the real opportunity lies in enabling open access, competitive retail supply, and genuine consumer choice. Without a massive deregulation drive, we risk ending up with stranded assets and an obsolete grid infrastructure, all while consumers increasingly opt out of the system altogether.
The establishment of the Special Investment Facilitation Council (SIFC) has created a unique opportunity — perhaps the most credible institutional innovation in decades — to drive cross-sectoral economic reform through a whole-of-the-government approach. It has brought together civilian ministries, provincial governments, and the military in an unprecedented framework aimed at facilitating investment and cutting through bureaucratic red tape.
But institutions, no matter how robust, are only as effective as the political choices that back them. If there was ever a moment to take politically difficult yet economically necessary decisions — whether in power pricing, SOE divestiture, or tax reform — it is now. We must act while there is alignment at the top and a rare confluence of national interest and political pragmatism. As global supply chains diversify and capital seeks new destinations offering both stability and return, Pakistan cannot afford to hesitate.
Geopolitically, the tide may finally be turning in our favour. The evolving contours of US trade policy — particularly in a potential post-Trump tariff recalibration — present Pakistan with an opening to expand its exports. With India's trade relationship with the US occasionally strained, and Bangladesh approaching graduation from the Generalized System of Preferences (GSP), Pakistan's textile sector in particular could gain significant ground if supported by a coherent government-to-government and B2B engagement strategy.
Pakistan's textile exports to the US crossed USD 5.1 billion in FY24 — a respectable figure, yet still far below our potential. For the fiscal year ending June 2025, exports to the US further rose to around USD 6.03 billion — a 10.7 percent year-on-year increase. If we harmonize the energies of private exporters and government facilitators — particularly by improving compliance with ESG standards, traceability, and labour practices — we could aspire to double this figure over the medium term.
Likewise, our IT and Business Process Outsourcing (BPO) sectors, growing at 15 percent annually, need strategic policy support to capture the expanding demand for nearshore digital services in North America.
The real challenge, as always, lies in execution. We know what needs to be done: broaden the tax base, deregulate energy, divest loss-making SOEs, digitize governance, and bet on competitive sectors. What we lack is not diagnosis but daring — the courage to prioritize long-term gain over short-term optics, to build national consensus beyond partisanship, and to tell the people the truth: that there is no prosperity without reform, no dignity without documentation, and no independence without economic resilience.
We cannot afford to waste another decade in denial. Pakistan's median age is 20.6 years. This generation is connected, conscious, and impatient. They will not be pacified with slogans. They want results — in employment, in energy bills, in upward mobility. If we fail to deliver, we risk a deeper crisis of confidence in the state and its institutions. But if we succeed — if we seize this moment, reform boldly, and act together — we can finally earn the economic independence we have been chasing since 1947.
We can become not just a nuclear power, but a functional economy. Not just a strategic location, but a strategic supplier. Not just a state with borders, but a state with purpose.
On this Independence Day, let us not merely commemorate our freedom — let us commit to completing it.
Copyright Business Recorder, 2025