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Globalization must work for all and it should be an instrument of opportunity,
inclusion and not of fear and insecurity, which can bring major benefits to countries that, can participate effectively in the process. The
enlargement of the market, the access to improved technology, and the availability of a higher pool
of investible resources, if properly utilized, can propel a country to a path of
higher sustainable growth and prosperity. Dr. Abdul Hafeez Shaikh stated this during his address to Munich Management
Colloquium, which concluded at Munich, Germany today, says a message received here.
Developing countries on their part also needed to muster the political will to
undertake the necessary structural reforms, which were sometimes difficult and painful, in order to plug into the world economy, he added.
Dr. Hafeez Shaikh further stated that the globalization brought opportunities but
also created serious challenges to the poor nations by permitting a greater international division of labour and a more efficient
allocation of resources. Countries gained access to larger markets, more sophisticated technologies,
and a wider variety of goods and services at lower cost but they also get
exposed to risks, he said.
In his detailed address he said that the process of globalization aimed at efficient utilization of the world scarce resources for the common weal of
human beings. This realization had come about by the fact that precipitate actions of over-exploiting natural resources any where in the world were
bound to ensure immense damage to the human race in the shape of global warming
and its attending catastrophic impact on environment and productivity, he said
and added that It was in this context that the new WTO regime wished to eliminate inefficiencies and in the process was creating
misgivings on global scale.
Addressing on GLOBALIZATION, ECONOMIC GROWTH AND SOCIAL DIMENSION at Munich, the Minister said that economic thinkers might had
broached the subject in the distant past the real features of globalization started
unfolding in 1995 when the erstwhile General Agreement on Trade & Tariff (GATT) was
replaced by the World Trade Organization (WTO).
Dr. Hafeez stated that the year 2004 happened to be the tenth and final year for
the implementation of the agreed WTO regime, which in common parlance was called "globalization". He was
addressing the world's top ranking
leaders from the public and private sectors while identifying the major opportunities and
challenges associated with globalization.
Supplementing his claim of discrimination between developed and developing countries the Minister said that almost half of the
world's population (some
2.8 billion people) lived on less than $ 2 a day, while a fifth (some 1.2 billion) live on
less that $ 1 a day. It is also a fact that less than 20% of the world population
enjoys 80% of the world's resources while 80 percent of the world population has
only 20 percent of world GDP. This horrific
level of poverty persisted despite unprecedented increases in global wealth in the past
century, he said.
Over the past 40 years the gap between rich and poor had doubled, with income in the richest 20 countries now averaging 37 times that
in the
poorest countries and over the next 25 years, two billion people would be added to the world and almost all of them in the
developing world, he added.
Dr. Hafeez said that there was a need to look at a new economic order, based on equity, justice and fairness with equal
opportunities to all to share the common concerns of the developing countries and make them to believe that globalization
process was in no way intended to harm them, since the growth and prosperity in developing countries were in the larger interest of
developed world itself.
For the fruits of globalization to be shared fairly and equitably the developing
countries would like the global trading regime to be made fairer and equitable;
to obtain market access to the products of developing countries particularly agricultural products, textile and clothing; and to
eliminate the frequent use of anti-dumping and countervailing duties. One thing must be noted that for
developing countries debt-relief without increased market access would be meaningless.
He said that the people in the developed countries enjoyed higher per capita income and standard of living while developing countries were struggling
hard to provide minimum basic needs to their population and constantly blaming the unjust economic order for their under-development. The failure
of the international community to rise to the challenges of the goals for international
cooperation had caused severe hardships to the poor and poorest countries of the world, he said.
To exploit the exciting opportunities now unfolding, the developing countries must put in place a set of complementary policies by reforming
their economies in order to remove structural impediments to their growth and prosperity, making efforts to attract FDI an longer scale, improve
social indicators by allocating more resources, improving governance for widerdistribution of the wealth, setting up social safety nets to protect
those segments of population who would be hit hard during the reform process, taking measures to arrest the rising trend in poverty by ensuring,
Pro-poor growth and not growth per se, Investment in education and health, undertaking
direct poverty alleviation programs.
Dr. Hafeez said that globalization must work for all through the developed economies by sharing some of their profits for the development of
infrastructure, both social and physical, in the developing countries. The investment potential of Asian and other transforming economies needed to be
exploited, he urged the developed countries.
Expressing Pakistan's determination to effectively participate in the process of
globalization he informed the august house that a series of structural reform measures that included tax reforms, trade and tariff
reforms, deregulation of prices, financial sector reform, fiscal transparency, improving governance, and
a credible poverty alleviation program had been launched.
Explaining the key features of Pakistan's economy he added that one of the positive elements of Pakistan's economy had been its higher traditional
growth and the country had obtained 5.1 % growth in GDP during the last year and was
trying to achieve 5.5 - 6 % this year, which had declined to its two-third level in
the 1990s.
Highlighting the salient points of country's economic policies Dr. Hafeez said
that the economic and structural reforms, the business climate in Pakistan had
mproved significantly and the investors' confidence had been restored, contrary
to declining global FDI inflows (from $ 1.5 trillion in year 2000 to $ 640 billion in
2002), FDI inflows to Pakistan were showing improvement, which were $ 800 million in the last year. During past 4 years,
FDI had been $ 2 billion plus, he informed.
Comparing the disparity among the developed and developing countries in this regard the Minster said that during the year 2002, developed nations had
received 70 % of global FDI inflows while developing countries received only 30
%. From this, SAARC countries have received only 2 % ($4.6 billion), which is only 0.5 % of the global FDI. As a matter of fact, bulk of FDI flow
to developing countries and Asia, were attracted by China, Hong Kong, Singapore and
Thailand.
He stated that the global foreign direct investment (FDI) flows declined sharply
in 2001 with Inflows falling 51 per cent and outflows 55 per cent, a reversal after
steady growth since 1991 and very large rises in 1999 and 2000, which reflected two factors i.e. the slowing of economic activity in
major industrial economies and a sharp decrease in their stock market activity.
Pakistan had always warmly welcomed FDI since its inception, which was evident from the fact that Two multi-national companies, Burma Shell and ICI
since 1917 and 1940 respectively, which had the longest presence in sub-continent, were still present in Pakistan, he stated.
Detailing the investment incentives extended by Pakistan the Minister said that full legal protection including the permission to repatriate capital
and profits had always been given to FDI and today Pakistan was home to 600 + foreign companies or their affiliates. Out of these 300 were major foreign
companies which were spread in almost all economic sectors like industry, finance &
banking, trading, insurance, shipping, etc. and Sixty foreign companies were listed on the stock exchange and they were enjoying quite
attractive returns on equity, he informed.
Dr. Hafeez briefed the participants regarding the achievements earned after the
restoration of democracy in Pakistan and said that the economy was now more stable with economic policies being transparent and predictable;
confidence of the private sector stands restored; expatriate Pakistanis were
remitting more capital ($ 4 billion + during last year), stock markets were buoyant with market
capitalization at $ 17 billion; external balance of payment was in comfortable
position; foreign exchange reserves had crossed $ 12 billion, the exchange ratewas now stable, inflation was low (3%),
interest rates and domestic and external debts had declined, fiscal deficit had been lowered and current
account balance was in surplus, tax collection was growing, exports had picked up, governance had improved and corruption
at the top levels in the government had been eliminated, which had improved Pakistan's credit
rating in international capital markets to B+, he added.
While referring to the privatisation activity in Pakistan the Minister said that the
policy of privatization, deregulation and liberalization was being followed for
more than a decade with a trust that the private sector had to work as the engine of growth and as a result during last 10 years we had
privatized 138 projects with sale proceeds of $ 2.4 billion. Most encouraging signal was that
foreign companies were now also participating in our privatization process, especially in the financial and petroleum
sectors, he said.
Inviting the investors Dr. Hafeez Shaikh said that the potential areas where foreign investors could participate were Information Technology,
Environmental Technologies including Municipal Waste Treatment, Telecommunications,
Mineral Development, Petroleum Exploration, on-shore as well as off-shore,
Petro-Chemicals, Chemicals, Infrastructure, Roads, Ports / Airports, Pipelines,
Industrial Parks, Agro based Industries, Social development (Health, Education
and Technical Training), Retail Business (food retailing, departmental / chain
stores), Relocation of Textile Industry, Small & Medium Enterprises.