I got a call last week from our main French customers showing deep concern about their production orders running in Pakistan and future orders because he had heard our Prime Minister say: Pakistan is in a state of war. News travels fast in Europe and, indeed, anywhere in the world these days, as it did not take long for our British joint venture partners to put on hold their expansion plans in Pakistan envisaged for 2012-13; which had taken a lot of time and effort to convince them that Pakistan offers friendly and lucrative investment opportunities and contrary to Western medias propaganda things are pretty much under control. Little did one realise we would turn out to be our own worst enemy, damaging our perception abroad. I am not a politician, foreign affairs specialist or military strategist, but when it comes to business and economy, I can safely state that 'perception holds the key to success in investment, growth, job creation, progress and development and poverty alleviation. I seriously recommend that our leaders also take advice from the economic stakeholders before shooting their mouth off on matters that can hurt the long-term economic prospects of our country - economy after all is and should be our primary priority Ministries have become a bad joke - frequent changes, their use as tools of political give-and-take, absence of focus, incompetence, lack of vision and what not. Personally, I am opposed to the very idea of ministries being run by politicians and support the US model where ministers are technocrats selected by the ruling party, but this is a debate for another time. For the moment the governments in Pakistan would be well advised to select ministry heads on the basis of merit and give them a complete tenure run. It is unfair to expect anyone to create a vision and carry it through in the few months he or she is allowed in their given portfolio(s) - simple governance, I suppose. Inflation is something that has in recent years been haunting the nation and it is fairly obvious that monetary tools on their own are just not adequate to contain this disease whose roots ironically take water from a host of governmental policy errors. In fact, it would not be wrong to say that the government itself is the main inflation driver. Its needless and unproductive borrowing (external borrowing this year alone rose by nearly 10 percent and the internal accounts for more than 60 percent of total borrowing thereby crowding out the private sector, which on its own has some very serious repercussions), inefficient management of the utilities sector, resource draining and corruption-riddled state-run enterprises, lack of focus on basic public support systems in health and education, non-prudent price support interventions in food essentials, failure to act (when required) in restraining staple food exports, breaking cartels, hoarding and black marketeering and finally its unbridled expenses are all elements that combine to act as an engine that fuels prices. These price hikes ironically are sustained through governments appetite of spending, which in turn is financed through its reckless borrowing - sadly for the nation the borrowers of the time are long gone by the time the creditor comes knocking at the door for his money Easy solution: Unleash the tax man on the already burdened one percent, already shouldering the responsibility of generating revenues for the state. Given the sadistic, corrupt and counterproductive record of the revenue collecting agencies, this may succeed in somewhat increasing collections, but will in the long run end up strangulating whatever remains of the organised, documented sector, thus speeding the brewing dangerous economic trend where growth in the undocumented or tax exempt sectors is significantly outpacing that in the documented sector. By some accounts, the documented sector is, in fact, shrinking in terms of paying taxes because of rising cost of doing business and unfriendly business environment. Sensible solution: About time the government spends only what it earns. This may not be possible to achieve straightaway, but countries with similar problems (Greece, Portugal, Iceland, Spain and refreshingly the USA as well) are talking about achieving such a balance based on their circumstances and limitations) in no later than four to five years. These countries have a far better record than ours of taking care of their people and if they feel that they cannot afford to wait any longer to stop their spending from outstripping their earning, then we should be moving much quicker. A buzz term or excessively used by local economic pundits calls for Pakistan to follow the 'export-led growth model like the one adopted by China, the Asian Tigers (Singapore, Thailand, Malaysia, South Korea, Indonesia, etc) and earlier Japan. No arguments with their basic advice, but what they forget is that unless Pakistan first corrects its underlying export fundamentals, an export-led growth is not going to happen. The main consumption markets, USA and Western Europe, have an inflation rate of under three percent on average and with our inflation at nearly 15-20 percent, what we are expecting our businesses to do so is to every year export this intangible excess of 15 percent or more; something that is simply not doable. To succeed in unleashing an export-led growth we will either have to bring inflation down or artificially align our cost of production to the inflation benchmarks of the importing markets or if both these options are not exercisable by us, then we will have to devise a way to absorb these inflation related differentials by ourselves. China, for example, supports its export competitiveness through host of different measures such as ensuring an undervalued Rinminbi, energy subsidies, managed labour costs, cheap finance, rebates and tax breaks. We also need to seriously work out a strategy in this regard because our options for growth are limited and in the limited choices that we have the model that uses cheap exports to earn valuable foreign exchange, while providing the much needed jobs, is good to emulate. Even the word 'growth from a Pakistani perspective can no longer be simply taken by its text book definition. Owing to our continued negligence, gross damage has been caused to our human resource. Politicising academic institutions, erosion of campus discipline and poor governance have resulted in an employable youth (too much of it) that is very low on skill level. Therefore, when we talk about the type of growth and growth strategies, we need to be very careful about determining the areas of growth we plan to focus upon, in the near-term, medium-term and long-term. The important thing is that in the near-term we should primarily confine ourselves to the type of growth that promotes low skilled jobs and let the rest of the fancy stuff come later. At present we will do well by just confining ourselves to a basic agriculture and industrial based economy; the dreams of becoming a service or knowledge based economy can wait Finally, who is going to make it all happen? Answer: your entrepreneur/private sector. It is all very well for bureaucrats, imported financial wizards or experts from the donor agencies or politicians or even academics to talk about and devise textbook policies, set unrealistic targets and announce measures that lack practical sense, but in reality it is the entrepreneur that is going to turn these projections into real life numbers and that is why I always maintain that any exercise without the meaningful involvement and contribution of the private sector and the real stakeholders will end up in failure. Remember, while the others can offer lofty ideas and then have the luxury to disconnect from the actual outcome, the entrepreneur has to 'walk the talk With the budget round the corner and the economy in a mess the government should be thinking on how to lift the stagnant economy at home and not about what it instead has on its mind, the IMF n The writer is an entrepreneur and economic analyst. Email: kamalmannoo@hotmail.com.