Guidance For Reforms

The High-Level Economic Reforms Recommendation Commission has submitted its final report to the government. Through the report, the Commission has suggested creating a conducive investment climate and bringing the production costs down to revitalise industries in decline, calling for the forces shaping the economy to be based on trust. Among the suggestions that deeply resonated with us is the call for policy interventions to urgently improve the demand side representing goods and services. 

On the one hand, factors like decline in investment, inability to boost credit expansion and fall in real estate transactions are all contributing to the stagnation or even fall in industrial output; on the other, weak demand for the finished products has left our factories running at a fraction of their capacities. Some are even on the verge of closure or have shut down completely. The piling up of cash in banks and the lack of disposable cash in public hands is a testimony to this fact. 

The study has identified this as a serious problem responsible for sluggish economic growth and has recommended that the government take concrete measures to change this situation. Compounding the problem is the locking of the savings of millions of people in the cooperative financial system.  Besides, recommendations have been made for structural reforms on the supply side to create investment-friendly opportunities, make sustainable and optimal use of available natural resources, build a borderless economy and increase the rate of economic growth while maintaining macroeconomic stability.

For legal reforms, the Commission has proposed repealing more than a dozen laws, amending more than a dozen others, and issuing some new laws for creating opportunities, building a trust-based system, and providing freedom to conduct economic activities. If outdated laws are acting as barriers to progress, they must be amended or be replaced with new ones without delay. Suggestions have also been made to lower barriers and expand opportunities in the sectors that power economic growth, such as agriculture, forestry, land, mining, water resources, tourism and information technology.  

The report states that all types of social security should be linked to the national identity card and integrated statistics on social security availability and calls for the government to plan policies and programmes that reduce structural barriers, create economic opportunities, promote innovation, and ensure inclusive access for all. What's more, it has been suggested that the interest rate corridor should be implemented effectively for monetary management and the interest rate corridor should be gradually reduced to keep the interbank interest rate and policy rate close to the target.

As sectoral economic policies cannot work without improving the institutional capacity and credibility of public bodies, the Commission has urged appropriate reform measures, recommending that government agencies pay all outstanding amounts to contractors and propose new projects in the next year's budget only if the budget is available. The Commission suggests that disbursing concessional loans with interest subsidies should be done by the local level rather than by the federal government. 

In a nutshell, the report concludes that sustainable, equitable, all-inclusive and high economic growth is possible only in an environment where individuals can freely harness their abilities and where economic opportunities abound.  The fact that these recommendations and more listed in the report are produced after a meticulous study by experts over years, it's incumbent upon the government to heed them all and leap into action to do as suggested.