Ref: LETTER TO EDITOR Date: JAN 23, 1998

The problem with the packaging of the IMF for Pakistan was that there wasn't much honesty about what needed to be done to transform the economy from a traditional system to an open market-based system. Governments took the money, but then were unable to carry through.

It's worth remembering that the Koreans and their buddies, in Indonesia, Malaysia, Thailand, etc, are falling on hard times because of cronyism and duplicity. They lied to each other and to their banks, about the state of their businesses. They scratched each other’s backs and chose to ignore all signs of weakness. Because they were able to protect themselves from competition all these many years, they created too many "successful" firms all trying to do the same things, all highly leveraged, in a largely competitive international market place. As the leveraging got shorter and shorter, the likelihood of problems became an obvious inevitability. These people are now paying heavily due to the "massacre" of their currencies, economies, and other macro fundamentals. All these countries are now again dependent on the IMF bowl of soup. They may blame George Soros and others like him, but no matter how they cut the cloth, the paramount blame lies with the businessmen of these Asian Tigers.

On the other hand, when Korea and the other Asian Tigers come out of this imbroglio, and if they do liberalize and take the needed bitter hits, they will be tougher competitors. They have a terrific, well-educated, and disciplined work force, and they have knowledgeable, if chastened entrepreneurs. If they don't take their medicine, they'll suffer from the Japanese disease for a few years until they, in slow motion, work off their financial sector problems. It is much like what the U.S. did in the mid-80s with savings and loans debacle.

The Chinese have been sending 12000 students to the U.S. for graduate study for years. Maybe the number is down today, but all in all, that is technology transfer. Moreover, when the U.S. economy turns sour, they take a plane back to the home country. Even if half stay over in USA, yet China gets real world class technology transfer. And, the icing on the cake is that most of these students in technical areas can get graduate fellowships in USA universities, which pays for their education.

Pakistan can compete internationally, as it has demonstrated all these years. The government needs to focus on educating the people, on creating a disciplined, skilled, and sophisticated work force that creates superior value, and is not dependent on protectionism. Leave protectionism to the Indians and let them fall behind.

Another way to look at Pakistan's needs is the "Ahmed Gates Test". Can a nerdy Pakistany come back from USA, start a business, find capital at a reasonable price that doesn't tie his hands, not have to take VIP partners, not have tax collectors take him to the cleaners, not to have petty government functionaries hound and harass him, and also have recourse to honest courts in the event of commercial disputes? When the answer is yes, Pakistan is getting close to being a competitive state. If an "Ahmed Gates" can't come along, then where will sound development come from?

Sincerely:

MAJYD AZIZ