At the beginning of June, the World Health Organization sent a letter to all the provinces of Pakistan announcing that the country ranked among the top 10 countries in the world reporting the highest number of new cases of COVID-19 per day. After some debate, Pakistan decided to impose a “smart lockdown” trace and testing strategy in parts of the country that are considered hotbeds for coronavirus.
Currently there are 173,590 confirmed cases in Pakistan and 3,590 have died of the virus. The government has asked citizens to take precautionary measures, avoid going out, wear masks and wash hands as the healthcare system will not be able to handle the burden of new cases.
As COVID-19 cases jumped to 165,062 after 4,944 new infections were detected in Pakistan over the past 24 hours while 136 more people succumbed to the deadly disease, is the smart lockdown proving to be effective? pic.twitter.com/E0zJHwW77q
— Global Village Space (@GVS_News) June 21, 2020
Eased restrictions leads to surge in cases
In mid-March, the Pakistani government began to implement its first lockdown measures. Prime Minister Imran Khan had been saying from the start that Pakistan could not afford a full lockdown because of fears that 25% people who live below the poverty line would die of hunger. The government banned public gatherings, shut down restaurants and all other daily activities and closed education institutions until July 15. While stores selling daily use items, vegetable and fruit shops and pharmacies remained open.
On May 10, just two weeks before Eid, an Islamic celebration after Ramadan, the government eased the lockdown after the business community started putting pressure on the government to relax restrictions. The Supreme Court of Pakistan also took a Suo Motu Notice (when a judge takes notice of a public interest incident without any party applying for its consideration) and issued a directive asking the government to reopen shopping malls across the country.
Pakistan reports 520 new cases and 17 new deaths in the past 24 hours. We are not ready to ease the lockdown. The state, such that it is, is privileging some half-baked idea of economic necessity over the lives of many.
— Kamini Masood (@hastobuud) April 16, 2020
The Pakistan Medical Association believed that the government should have taken the virus seriously and Supreme Court should have reconsidered their opinion. Doctors were afraid that the country did not have the necessary infrastructure to deal with patients if the government chose to push for herd immunity.
When the lockdown was eased, the public was asked to “become responsible and intelligent citizens”; however, people flocked to markets for Eid shopping by the thousands and violated all SOPs. In an interview with market goers refused to believe that coronavirus exists.
????#Peshawar Sadar Bazar today
Note: Peshawar is the city leading with deaths because of #COVID__19 in #Pakistan, daily 80+ positive cases and after ease in lockdown this is situation pic.twitter.com/WCn8hvQJR3
— Jalal Qazi (@JalalQazi) May 11, 2020
After a month of opening up, Pakistan had over 100,000 cases which has put severe pressure on the healthcare system.
You can predict peak only when you have taken the necessary steps (lockdown, aggressive testing, and contact tracing etc.)
Pakistan has slackened on these steps. hence the peak projection keeps shifting from one month to the other. /2https://t.co/2T5aCLw3aH
— Awais Saleem (@awaissaleem77) June 21, 2020
As expected, the cases started rising and the World Health Organization letter to the provinces pointed out that Pakistan was not conducting enough tests and must increase them at all costs. To which Bilawal Bhutto, Chairman of Pakistan Peoples Party, tweeted:
WHO letter to Sindh government raises valid concerns & suggestions. Will be discussed by Sindh govt before being taken up at national level. We’ve long called for national policy to be linked to facts & our own capacity. Unfortunately so far this hasn’t been national approach.
— BilawalBhuttoZardari (@BBhuttoZardari) June 9, 2020
Pakistan's Minister for Planning, Development & Special Initiatives, Asad Umar, warned in a press conference that the confirmed cases of COVID-19 could double by the end of this month and reach 1 million to 1.2m by the end of July if precautionary measures are not taken by the public.
Smart lockdown arrives
Last week's decision by the Pakistani government to implement ‘selective ‘or ‘smart’ virus lockdown was met with confusion and challenges. A smart lockdown is targeted tracking, tracing, testing and quarantine mechanism with the help of national security apparatus to stop the spread of coronavirus. The aim is to seal the areas that have a high number of the infected population while easing restrictions on economic activities under strict SOPs. But social media users are debating this move as they believe that Pakistan should go under full lockdown.
” smart knockdown”
“Hafta itwar band baqi din khuly”
Pakistan aa k corona b pagal ho gya hai;)
— Aleezy_khan? (@victorious_55) June 21, 2020
“Markets Closed on Saturday Sunday rest of days open”
After coming to Pakistan corona has gone mad ;)
Some provinces like, the Sindh, are facing challenges to implement the smart lockdown effectively because of a lack of resrouces, manpower and public misunderstanding.
After the letter from the WHO, all provinces started reimposing a lockdown in areas that are hot spots of coronavirus. The government is following a trace, test and quarantine strategy, following strict protocols outlined by the WHO and is also using technology, police force and a team of volunteers to help identify adherence restrictions.
COVID is an opportunity to re-orient the manufacturing strategy, of Pakistan
The Manufacturing Matrix in Pakistan
Option 1 – The Pre-Requisite
Captive Raw Materials – For Captive Raw Materials in the Agri and Mining Sector,the State has to support the complete value addition of the product,near the source.These 2 cordinates,combined with Tax Holidays,will make it a viable venture,for any Foreign Capitalist – subject to Politiical Risk.Take the Sugar sector – for Political Risk – and so, only Pakistani Politicans,can set up Sugar Mills.
However, one needs to be practical here. Just because Pakistan has the best Cotton in the world (along with long staples, from Egypt),does not mean that yarn or fabric units, will be viable in Pakistan. Large Technologies of Scale, allow imported raw material from the Moon (like Helium),and still be viable. So there is no harm in exporting the cotton or some minerals. If the same technologies of scale, were set up in Pakistan – it will involve large capital costs – and would accentuate the financial and political risk,of the project. And if it sinks,it will doom the Pakistani Banks (like in India).dindooohindoo
Pakistani Capital should be used where Pakistani has an exceptional edge,like in the Cement Sector (with complete maaterial and logistics integration).Another example is the Agri Processing,Foos and Agri Waste Insustry.These also provide large scale employment,as they have extensive supply and value chains.
Option 2 – Strategic Leverage
Some Manufacturing is required as a strategic leverage,to ensure that Pakistan is not coerced, in pricing,in international procurements.Therefore,there have to be sufficient capacities,in some critical sectors,like steel,oil,food,fertilisers etc. Howvever, this is an offset,to procurement price risk.If there is a Force Majeure event or a Trade embargo – then,there will be no raw material imports,in any case – and the fertiliser plants etc,will be mothballed.
Option 3 – Manufacturing Hydrogen for the Balloons
So let us say,you have floated a billion balloons,by importing hydrogen – and now, the balloons are used,for entertainment,space travel and advertisements. Next Step,is to manufacture the Hydrogen.Just like Pakistan,is sponsoring the manufacture of mobile phones and accessories,in Pakistan to STOP their imports,as it is a waste of USD and much cheaper to make.Just like the Auto sector,it is an assembly operation – and so,the capacities are modular for the phones and their parts.At any stage,of the manufacturing, any process can be outsourced to PRC,at any time,by IMPORTING the interemediate products.
Thus,there is large scale employment – with impact on entrepreneurship and tax revenues and FX savings and reduction in economic costs.
The Crux is to LET THE PRIVATE SECTOR EXPAND THE BALLON (THE MARKET).LET THEM USE ANY MEANS (SMUGGLING ETC.). Then when the supply chain,logistics,servicing, spares,maintenance,skilled and unskilled labour value chain,is in place – BRING IN MANUFACTURING OF THE PRODUCT.
Option 4- Manufacturing to Stop Smuggling
There are several imports into Pakistan where the market is highly matured and seasoned.No one likes to pay import duty.The Philosophy is,that the importer has spent time and money to locate and hide the supplier,and is giving JOY to 200 million people,by selling cheaper and attractive products.If you travel to Yiwu or Guangzhou, you will find Pakistanis relabelling their cargos (to be shipped),so that competition CANNOT trace the supplier.They stuff the container far away from the port – drive it to the port – seal the container – and then,track it on GPS sites ! There is a large group of the Pakistani traders – as they carry large amounts of cash (which has to be stored and guarded) – as the suppliers are paid in cash – and since, there is no insurance or underinsurance, there is a lot of tension in the supply chain.
So Y Should they pay Import Duty ?
However,after the market in Pakistan,is seasoned and matured – the Pakistani state should ban imports,and allow manufacturing.The same importers can bring in the Chinese,as a JV into Pakistan.For FMCG and Consumer Goods,like Toys,Stationery etc.,all the raw materials, which are used in PRC,are available in Pakistan.Labour Cost in China is 10 times that of Pakistan.It is simple Maths
But the real gain is that – IT WILL BOOST GOVTT REVENUE.As the manufacture will leave a forensic trail,from power meters to pollution,and so,the state will earn large revenues which were lost before,and also save FX.
Option 5 – Manufacturing Intermediation
If you look at the state of pollution and effluents, in Karachi – it is a BAD and SAD situation. However, that is what has led to the COVID immunity in Pakistan. So the Good news just does not end.But this poisoning of the air,water,food,fish and meats – will take an incalculable toll on the intellectual,spiritual, social, sexual and physical evolution of Pakistanis.
Therefore,it is time to OUTSOURCE pollution,using Manufacturing Intermediation,by carrying out Manufacturing from Intermediates.Hence,Pakistani manufacturing should use imported intermnediate products – wherein,all the poison,effluents and pollution,are in the exporting nation.PRC has the effluent treatment and waste recovery plants and dump sites on a scale,cost and technology,WHICH NO NATION IN THE WORLD HAS (not even the USA – as the USA,imposes a TAX,on storage of Hazardous Cargos).Of course,then COVID breaks out – but then,the PRC export it,and recover all the costs,of the effluent treatment.
Option 6 – The Ponzi Manufacturing Model
Robbing Peter to Pay Paul,is the Principle of Collaborative Capitalism – because,Humans have to be occupied – mentally and physically.Else you have chaos,anarchy and revolution.
Country A has to produce a Product X,although the said product,can be imported at 2/3rd the cost,in Country A (excl importing duty).Hence,The nationals of Country A,have to pay Billions of USD EXTRA,to consume Product X,made in Nation A,since the factories which produce X,in nation A,employ millions of nationals of nation A.This is Ponzi Manufacturing,like we have in India – and which has doomed,the entire Indian Banking system.
As time passes,nation A which is a Bogus nation – like India,as a part of its strategic politics,will ally with the US and EU etc., and will have to drop tarriffs and non tarriff barriers.Then the imported substitutes of X,will storm the market and wipe out,the local factories.
Y ? Simple ! The nationals of nation A,will ask 1 question ! Y should be pay more ? End of Ramayana – Part 1 !
There is 1 more Ponzi Angulature.A Bank – B,gives project loans to the factory,which makes X.Then the factory finds a banker – C,to give the working capital loans to the factory.After some time,Banker D comes in,and gives loans to the staff of the Factory,which makes Product X for cars,homes etc..After some more time,Banker E comes in,to give consumer credit,to the buyers of Product X.After a few years,Banker F to Z,give project and working capital loans, to the auto,real estate,cell phone companies,whose products were sold to the staff,of the factory of Product X (whose staff loans were funded by Bank D).This is the multiplier effect,of the Ponzi Model.After some time, Bank A which gave the term loan to the factory,which makes Prouct X,targets the borrowers of Bank B,C,D and E and the employees of the borrowers.After 5 years,the factory which makes Product X,goes bust – and then,all the Banks from A to E,using the profits that they earned,from the No Brain Credit spreads – do a CDR/OTS,and fund a NEW ENTREPRENEUR,To take over the factory,which makes Product X.
The only fools who DO NOT GET THE CDR,are the fools working for the factory,which made product X – and who TOOK Consumer loans for cars,houses etc.- and the fools,who took bank loans,to finance the purchase,of Product X.But the biggest fools,are those who put their cash,in the banks,as depositors.
Pakistan also needs this Ponzi model,as it HAS To employ,the millions of urban and rural folk. Therefore, selection of the industry is critical,and the
Economic Costs are to be considered.Focus has to be on SME (so that capital,political and Technological risk,is,as low as possible) and labour intensity and medium technology and medium power consumption – such as imports on CKD/SKD form,and/or last point of manufacturing,packaging and re-packaging etc.
In the next stage,comes in all the items of daily consumption.As an example,if a person wants to buy a T-Shirt,there is no need to set up a yarn,textile,fabric and garment unit,in Pakistan.Just Import it – and the downstream retail,will employ 10s of 1000s of people.But for some applications,like school bags or uniforms – you can just import the fabric – and then the SME take over.Like this, there will several fool proof Ponzi Models – which will ensure the minimal loss – even in a doomsday scenario.
Option 7 – Decentralised SME manufacturing
Transportation is a dead loss and an economic loss.Suppose you transport a raw material from Torkham,to a place near Karachi,to make a Product Z,and then transport it back,to near Torkham to sell it to dealers – then you have a disaster of freight.The only happy person,is the transporter and the transportation supply and value chain. Therefore, Pakistan needs SME manufacturing near Point of Sale of end product,with labour intensive operations,and a combo of Entry Tax and 1st Point/Last point Tax,to ensure that the market of the SME,in a 100 kms radius,is protected.The Incremental NSR for the SME,due to savings of freight,will offset the probable higher manufacturing costs,of SME – which can also be offset by labour intensity of operations.
Volumetric cargo transportation,is a disaster for a nation,in terms of economic value.The happiness is only for the transporter as he charges the same freight as for a Bulk Cargo – but his fuel and operating costs,are lower.In a nation like Pakistan – freighting should be expended,on metric cargos
Option 8 – Cash Based Manufacturing
Pakistan should NEVER make the BLUNDER of the CHAIWALA’s Notebandi.This clown has destroyed the unorganised manufacturing forever.Notebandi + GST + COVID Lockdown ! The CASH MODEL of manufacturing is a REALITY OF LIFE in the whole of Asia – including Nippon.It is a legitimate FORM OF COST REDUCTION.A person who buys a car
does not get any VAT or IT offset on the taxes paid.If he could buy the same car free of taxes and lose out on some benefits like scope of insurance – he would
take it ! There are many people who will NOT buy a car WITH TAXES.
To make a car w/o taxes,you need steel free of VAT.For that,you need to do your purchases,and all costs,in CASH.You need to borrow in cash.And that credit comes from BLACK money operators,and the CREDIT COST IS,in many cases,less than half the bank cost – and has PERFECT SENTIENT no asset collateral.You do not pay – you die !
If Taxes on a box of chocolates is,say 25%,then the cash producer,can sell it at,less than half of the branded price,as he has NO TAX,across the supply chain,NO PF/ESI and most importantly – No Advertisement costs and ultra low finance costs.It is a manufacturing model for a CERTAIN CLASS OF PEOPLE,AS USERS AND WORKERS.
And this sector,employs billions across the world – who would,otherwise just die ! And that is what the Chaiwala has killed,and COVID has incinerated,the dead body.
Pakistan should NOT make that mistake.