The writer is Professor and Associate Dean at Institute of Business Management (IoBM) Karachi.
Pakistan faces a new crisis every few months. Crises have dominated the country whether they are political, social, and economic. The incumbent government has been facing crises since assuming office.
The PTI-led federal government faced a tomato crisis and the prices skyrocketed due to scarcity. Even if the commodity was available somewhere, its price was so high that it was impossible for the common man to purchase. A few weeks later, a large number of tomatoes came in the market due and prices fell by a few rupees per kilogram while traders suffered huge losses.
After the tomato crisis, the country was engulfed in a flour crisis, and as expected the prices increased. The flour shortage created chaos in the whole country and only a few weeks later flour was available in abundance in the market at the old price. This created an impression that the shortage was artificially created. A few weeks later, the flour was supplied to the market at a higher rate.
After the flour crisis, the sugar crisis resurfaced and soon, the prices of the commodity skyrocketed and the same scenario was created. After sugar, the oil crisis and then the power crisis has engulfed the country. Pakistan is facing one crisis after another.
The biggest reason for these economic crises is cartelization. These cartels create artificial shortages by supplying goods below market demand and then make illicit profits by selling at arbitrary prices. The influence of cartels is not limited to the administration or the government. These cartels also dominate the opposition. Since these cartels are also involved in politics, no one is ready to face this mafia.
The government of Pakistan has set up a Competition Commission of Pakistan to prevent cartelization in the country. Unfortunately, very few people know the name of this institution which like other important government institutions is completely unable to perform its duties.
If the Competition Commission of Pakistan really works, then we can deal with the issue of cartelization. Recently, we have seen that sugar barons have created artificial shortages in the market by hoarding and making illegitimate profits by increasing the prices. The important and interesting thing is that before this crisis there were reports that Pakistan has more sugar than required and permission was being sought to export sugar abroad.
An economy that is cartelized rather than competition can never stand on its own feet. Due to the lack of competition, people do not bother to reduce their production costs and as a result, specific groups gain interests.
If the present government is serious about reviving the economy, the first thing is to reduce cartelization in every sector, including cement, sugar, flour, and steel and new opportunities should be created to create an atmosphere of competition.
When the competition increases, prices will also go down and small industries also have a big role to play in this regard. The government can support the economy by giving incentives to small industries.
The Competition Commission of Pakistan is a huge body and its responsibility is just as big but the government’s inattention has crippled this important institution. The epidemic of cartelization can be controlled by creating new business opportunities, promoting small scale industries, and activating the Competition Commission.