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The Print
3 days ago
- Business
- The Print
Pakistan's economic reforms a pushback against elite but it may backfire
For many, it is a 'wake-up call'. But at the same time, the script is all too familiar. Economic crisis, an eleventh-hour bailout from the International Monetary Fund (IMF), and a promise of sweeping reforms that mostly tank. It is Pakistan's 26th engagement with the IMF in 66 years. Though the government hails the reforms as a 'historic step', economists, industry bodies, and editorials in national dailies have met them with cautious optimism, tempered by warnings of potential economic disruptions. New Delhi: A crippling economy, an impatient IMF and a recent military conflict with India that exposed its vulnerability has introduced a sense of urgency in Pakistan vis a vis economic reform. Tariffs are being slashed. State enterprises are being privatised. Even the agriculture sector, long protected by subsidies and loopholes, is being pulled into the tax frame. 'The recent war with India has added further momentum to the reform efforts. This is because there is a clear belief in Pakistan that the country faces a real and existential threat emanating from the east,' Uzair Younus, Principal at The Asia Group, a strategic consulting firm based in Washington DC, told ThePrint Trade and tariff overhaul The centrepiece of Pakistan's latest reform drive is a dramatic overhaul of its trade and tariff policy. Starting 1 July, the government will begin reducing customs duties and tariff rates across thousands of products, and phasing out protectionist barriers that have shielded local industries. The goal, government officials say, is to push exports, bring foreign investment, and modernise a muted industrial growth. According to the new plan under National Tariff Policy 2025–30, the average import tariff will be halved from 19 per cent to 9.5 per cent over the next five years, with high-impact sectors such as auto, steel, textiles, and plastics facing major disruptions. Economists are calling it a 'pushback against elites in Pakistan'. 'Pakistan's slew of reforms is a 'wake-up call' and has seen greater momentum post the India-Pakistan conflict. It is also a pushback against the elites in Pakistan who have always downplayed reforms,' said Younus. According to Younus, Pakistan has had many IMF bailouts in the past, but its ruling elites have always had the agency to resist reforms under pressure. 'This time around, the likelihood of these reforms going through is higher because this is something senior leaders in the government believe in,' he added. Also read: TLP chief tells Pakistanis to take up arms against India. People call him rioter & a sell-out The skepticism Pakistan's Finance Minister Muhammad Aurangzeb has described the reforms as vital to building an export-oriented economy. Prime Minister Shehbaz Sharif has also championed the effort, calling it 'a new economic direction.' But not everyone is convinced. 'Industry is at a loss for words when describing what is about to happen. The plan is a radical one, no doubt. It may sound fine, but it does run the risk of turning Pakistan into a trading economy, since it will undoubtedly gut large sections of manufacturing, but may or may not spur exports in the way its proponents expect,' Pakistani business journalist Khurram Hussain wrote in a Dawn article. 'Frankly, I am not convinced that the economy can withstand the shock, especially to the reserves, that could come from the sudden surge of imports such a step could trigger,' he added. The IMF's fingerprints are unmistakable on Pakistan's reform push. The country is currently under review for the release of the final tranche of a $7 billion loan programme, and the IMF has made privatisation and structural reform non-negotiable conditions. The IMF projects Pakistan's economy will grow 2.6 per cent this fiscal year, rising to 4.5 per cent annually by 2030, driven by planned fiscal reforms and policy commitments aimed at long-term stability— but only if it adheres to every item on the checklist. The tariff overhaul is a balancing act that is expected to disrupt industries long shielded from global competition, and has few takers for now. Critics have labelled it a 'death knell'. 'For a large number of industries that rely on these duties to make their products competitive against imports, this is nothing short of a death knell. The government is doing this in what it says is a bid to spur exports. The affair began as a duty reduction plan for raw materials and intermediate goods used in exports, but grew in scope as it travelled through the process of consideration and approval until it became a robust trade liberalisation plan,' Husain pointed out. The Pakistan government has yet to release a detailed impact assessment. Critics say this lack of transparency, especially regarding potential job losses and foreign exchange outflows, risks turning a sound economic idea into a political liability. Even Dawn, which called the plan 'a major positive shift' in its editorial, warned that unless accompanied by structural reform and improved governance, the policy could falter. Other concerns loom. Customs evasion, under-invoicing, and smuggling are already rampant. Weak enforcement could allow liberalisation to reward bad actors while penalising compliant businesses. 'The concern is not the policy, it's the capacity to implement it,' Pakistani economist Javed Hassan told ThePrint. 'Without strong governance and investment in human capital, this could backfire badly,' he added. Short-term risks Pakistan's economy is under strain across the board. The power sector is crippled by circular debt, agriculture remains low-yield and untaxed, PIA, the national carrier, is buried in losses, and manufacturing suffers from outdated protectionist policies. State-run banks are inefficient, and food markets are distorted by subsidies and smuggling. Decades of mismanagement and elite capture have entrenched a system built to serve the few. A 2021 United Nations report estimated that Pakistan's elite, including the corporate sector, feudal landlords, political class, and military, receive economic privileges worth $17.4 billion annually, about 6 per cent of the country's GDP. The Business Recorder, an English-language daily in Pakistan, called the reforms 'Pakistan's last real chance to get it right.' But it also warned that failure to crack down on under-invoicing and GST evasion could reverse the reforms. 'There's a growing segment of elites in the country who now accept that the old ways cannot be sustained. As a result, we are seeing a reform orientation across sectors, although it is slow. The downside is that the status quo economy is great for a narrow segment of the elite,' Younus said, underlining the downside. 'The resistance is likely to be real and persistent, and it'll be up to the government and the military to not lose sight of the reasons why the status quo cannot be sustained,' he added. That resistance is already visible. Business groups like the Pakistan Association of Auto Parts and Accessories Manufacturers (PAAPAM) are warning of mass layoffs. Meanwhile, the Karachi Chamber of Commerce and Industry (KCCI) has cautiously supported the reforms, pointing out that high tariffs have only encouraged smuggling, especially in auto parts, where the black market now accounts for an estimated 60 per cent of sales. 'The reduction of import barriers may widen the trade deficit in the near term, but as research has shown, import barriers are effectively a tax on exports. The way to manage the near-term pressure is to use the market-determined exchange rate as the first line of defence. Over time, the economy will adjust and things will fall into place,' Younus said.
Mint
10-05-2025
- Business
- Mint
US-China meetings might cut tariffs. Uncertainty won't go away.
A path for the U.S. and China to back away from tariffs that have virtually halted traded between the two could emerge this weekend. Yet it isn't clear how they would move beyond that, and whether that initial step would reduce the uncertainty gripping the global economy. The economic and political stakes are high. With 145% tariffs on Chinese imports and levies of 125% on U.S. goods entering China, direct trade between the two countries has been paralyzed. Shipments of cargo to the West Coast are tumbling, and companies are warning of disruptions. While retailers have only a couple of weeks to put in orders for the Christmas season, substantial relief isn't likely unless tariffs are rolled back below 60%, if not further. That means the Trump administration risks becoming the Grinch that spoiled Christmas. Whether this weekend's meetings in Geneva bring tariffs low enough to restart trade, or unthaw the relationship enough for Xi Jinping and President Donald Trump to seek a truce via a phone call, is still unclear. But former trade officials and geopolitical analysts expect both sides to scale back tariffs in the coming week—the U.S. is likely to set them below 50% to 60%—as long as something doesn't go wrong in Geneva. Both sides want a de-escalation and have signaled a shift in their messaging. Earlier in the week, Trump said he wouldn't roll back tariffs before the meeting, and Treasury Secretary Scott Bessent has stressed that Trump is the final decision maker on trade. But on Friday, Trump seemed to give Bessent the green light to de-escalate, posting on Truth Social, "80% tariff on China seems right! Up to Scott B." Still, anyone looking for a quick fix may want to lower their expectations. Investors should think of these talks—Bessent and U.S. Trade Representative Jamieson Greer will meet with their Chinese counterparts—as disarmament negotiations, rather than discussions likely to bring a resolution, says Ambassador Kurt Tong, managing partner of consultancy The Asia Group, who held senior roles throughout Asia in a 30-year State Department career. A tariff rate of 80% wouldn't be low enough to restart trade, or necessarily get Beijing's attention. There is also growing evidence that tariffs aren't returning to where they were before April 2, even for friends, as the administration looks to the revenue they bring in to help its tax-cut legislation get through Congress. Take the United Kingdom. Despite being an ally and having a trade deficit with the U.S., rather than a surplus like China's, the U.K. was still stuck with 10% tariffs in the agreement the White House heralded on Thursday. In any case, deals such as the one with the U.K. are more promises to keep talking than detailed agreements. Though the White House called it a 'full and comprehensive deal," Trump left open the possibility for adjustments 'because we are flexible and think we could do better." Any deal with China is likely to be even less substantive. 'I see the potential for some sort of agreement with China that is even less detailed than the deal with the U.K. and de-escalates a bit, but I would be surprised if any announcement takes tariffs to low double-digit levels," said Ryan Majerus, a partner at the law firm King & Spalding, who previously worked in the Commerce Department and Office of the U.S. Trade Representative. Analysts point to a list of potential negotiating topics if U.S.-China talks continue, from fentanyl flows and the sale of TikTok to China opening up U.S. access to certain markets. But those are likely to be the subject of further talks, not this weekend's discussions. 'If President Donald Trump insists on a whole raft of measures to do an equal reduction of tariffs by both sides, he isn't going to get it," says Tong, the Asia Group managing partner. 'China feels it has more leverage, more than it did eight years ago, and is less likely to quickly make a lot of concessions." While both sides are feeling economic pain, Washington may be under more pressure to act than Beijing. China's exports to the U.S. have tumbled, but its exports elsewhere have risen—an indication that it is shipping goods around the tariffs, through Vietnam or elsewhere, to cushion the blow. Beijing also has a bigger tool kit and patience on its side to manage the economic hit. Analysts expect the government to ramp up fiscal and monetary support—including aid for exporters—while the U.S. is trying to cut spending and the Federal Reserve has made it clear it is in no hurry to cut interest rates. An additional challenge is that the Chinese have been wary about negotiating with Trump, given his tendency to go back with new demands, making them less likely to offer much in concessions, says Derek Scissors, a senior fellow at the American Enterprise Institute who focuses on China. What most investors want is some sort of stable framework as the countries move to delink their economies and navigate a deteriorating relationship. That is something Scissors thinks isn't going to come out of the weekend talks. 'It's going to be very messy analytically because we have uncertainty around where the tariff rates are set, timing, how long a de-escalation would be in place and what is next in terms of exemptions, how much rerouting of trade there will be via other countries, which offers a safety valve," says Michael Hirson, a former Treasury official who heads China research at 22V Research. In other words, neither markets nor the economy may be off the hook even if the Geneva talks go off without a hitch and result in a rollback of tariffs. And there still is the risk that the meetings don't yield a de-escalation, or worsen tensions. 'Unless there is a real dramatic reversal where the Trump administration openly, or privately, waves a white flag, the stalemate the U.S. is in with China and others is likely to endure, certainly through the end of 2025," says Scott Kennedy, a senior adviser focused on China at the Center for Strategic and International Studies. Write to Reshma Kapadia at
CNA
06-05-2025
- Business
- CNA
CNA938 Rewind - Things to know about the Australian election result
CNA938 Rewind - Things to know about the Australian election result Polls predicted a tight race in Australia's election, but Prime Minister Anthony Albanese has won a second term in a landslide. His rival Peter Dutton has suffered a humiliating defeat, losing even the seat he held for 24 years. Andrea Heng and Hairianto Diman break down the result – and what it means for the country, with Dominic O'Sullivan, Professor, Political Science, Charles Sturt University. 15 mins CNA938 Rewind - All eyes on the make-up of Singapore's 15th Parliament As the general election dust settles, all eyes will now be on the make-up of the new 15th Parliament. With some previous political office holders not contesting in the recent general election, there are positions left vacant. So, who among the current slate of MPs will step up to fill the gaps and will we see a reshuffle of the cabinet ministers? Andrea Heng and Hairianto Diman speak with Nicholas Fang, Senior Advisor of The Asia Group & Managing Director at Black Dot Research, to find out. 14 mins CNA938 Rewind - Warren Buffett retires – How Abel is his successor? In a shocking announcement, Berkshire Hathaway's Warren Buffett expresses his intention to retire at the end of year. He will pass the baton to Greg Abel, who's been his designated successor for years. Andrea Heng and Hairianto Diman speak with Thomas Hayes, Chairman and Managing Member at Great Hill Capital, to find out more about his successor and how he's going to fill the big shoes. 11 mins
CNA
06-05-2025
- Business
- CNA
CNA938 Rewind - Warren Buffett retires – How Abel is his successor?
CNA938 Rewind - Things to know about the Australian election result Polls predicted a tight race in Australia's election, but Prime Minister Anthony Albanese has won a second term in a landslide. His rival Peter Dutton has suffered a humiliating defeat, losing even the seat he held for 24 years. Andrea Heng and Hairianto Diman break down the result – and what it means for the country, with Dominic O'Sullivan, Professor, Political Science, Charles Sturt University. 15 mins CNA938 Rewind - All eyes on the make-up of Singapore's 15th Parliament As the general election dust settles, all eyes will now be on the make-up of the new 15th Parliament. With some previous political office holders not contesting in the recent general election, there are positions left vacant. So, who among the current slate of MPs will step up to fill the gaps and will we see a reshuffle of the cabinet ministers? Andrea Heng and Hairianto Diman speak with Nicholas Fang, Senior Advisor of The Asia Group & Managing Director at Black Dot Research, to find out. 14 mins CNA938 Rewind - Warren Buffett retires – How Abel is his successor? In a shocking announcement, Berkshire Hathaway's Warren Buffett expresses his intention to retire at the end of year. He will pass the baton to Greg Abel, who's been his designated successor for years. Andrea Heng and Hairianto Diman speak with Thomas Hayes, Chairman and Managing Member at Great Hill Capital, to find out more about his successor and how he's going to fill the big shoes. 11 mins
Business Times
25-04-2025
- Politics
- Business Times
Lens on Singapore: A voters guide to GE2025
As a Singaporean, I know the buzz that surrounds election season. Everywhere you go, people are discussing party manifestos, candidate profiles, and what the future holds for our island nation. With GE2025 approaching on May 3, there are many things to discuss and consider. That's why I'm excited to share the latest episode of Lens on Singapore by The Business Times, where I am joined by expert guests—Dr Felix Tan, independent political analyst, Anthea Ong, social entrepreneur and former nominated member of parliament and Nicholas Fang, senior advisor at The Asia Group and managing director at Black Dot who is also a former nominated member of parliament. The issues for Singapore One of the highlights is our roundtable discussion on what our guests think are the pivotal issues for Singaporeans in this election. Tan suggests that while Singapore might just be collateral damage in larger global conflicts, the immediate concerns for voters remain domestic issues like GST hikes and housing woes. Ong talks about giving everyone a fair shot, ensuring no one is left behind. Fang shares his view on the resonance of political candidates with the electorate. These diverse perspectives provide a balanced view of the electoral landscape. Another hot topic we cover is the influence of social media on politics. The power of social media BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Fang highlights how platforms like Instagram and TikTok have become battlegrounds for political narratives, often stirring up emotions. He shares his own experiences of scrolling through social media feeds filled with politically charged content. This phenomenon is particularly relevant for younger voters who consume vast amounts of information online. Tan underscores the importance of integrity and values in candidates trying to connect with this younger demographic. As we discuss the global landscape's impact on local elections, it's fascinating to see how external factors can shape voter sentiment here at home. Fresh faces for rejuvenation Learning from past elections, our panelists provide insights into what this influx of new candidates means for the People's Action Party (PAP) and opposition parties alike. Both Ong and Tan agree that while fielding many new faces is a bold and necessary move that also comes with risks. The discussion on rejuvenation of leadership leads to questions of how these fresh faces might resonate with the voters. The perspectives presented by our expert guests offer an opportunity for a deeper understanding about Singapore's upcoming general election and the issues candidates may need to overcome to win the people. For more election coverage, visit our GE2025 microsite For more episodes, go to and if you have feedback or a question you'd like answered on the elections, please get in touch at btpodcasts@ --- Hosted by Claressa Monteiro, edited and produced by Claressa Monteiro, Emily Liu and Chai Pei Chieh. With Dr Felix Tan, independent political analyst; Anthea Ong, social entrepreneur, former nominated member of parliament; and Nicholas Fang, senior advisor at The Asia Group, managing director at Black Dot, former nominated member of parliament. A podcast by BT Podcasts, The Business Times, SPH Media --- Follow BT Lens On: Channel: Amazon: Apple Podcasts: Spotify: YouTube Music: Website: Do note: This podcast is meant to provide general information only. SPH Media accepts no liability for loss arising from any reliance on the podcast or use of third party's products and services. Please consult professional advisors for independent advice. --- Discover more BT podcast series: BT Money Hacks: BT Correspondents at: BT Market Focus: BT Podcasts: BT Branded Podcasts at:
