Musings- Sept 2025

Dr Manzoor Ahmed

No industry has ever flourished behind high tariffs walls and without being exposed to competition. Not sure US can be an exception. Before Trump, US had the lowest tariffs and so number 1 economy. Now China, EU have much lower tariffs.

History clearly shows that tariffs have had devastating effects on almost every country that isolated itself from the global economy. The US suffered severely in the 1930s but rebounded rapidly once those tariffs were removed. Today, its industry already appears to be in serious trouble. It does not seem likely that it can continue on this path for long without serious consequences.

Yusuf Hussain

Well China, Europe, India, pretty much the rest of the world have been imposing tariff and non-tariff barriers for decades. Key tech like sub 5nm silicon chips and lots of military tech were banned from export to China. Chinese critical tech exports like 5G were banned. Yet without this trade and competition, China flourished.

Though do agree that too early to tell about Trump Tariff plan, though he did go against the advice of major economists, and till now what the economists predicted would happen, didn't happen.

From a national strategic economic perspective, and using a variant of the BCG matrix, IT is a Star, in fact the only Star, amongst all sectors, for two reasons: First it's the only rapidly growing sector whose size is on the verge of being classified as high market share. Second, the earnings are in USD, holding the promise of ridding us of the debt trap and stringent IMF demands.

It is important to provide Stars with special incentives and handling, because they are so important to the national future.

Also, with possible sanctions on IT Services exports and Indian H1-B visa holders in the near future, demand would rise.

Lastly, IT has spinoff effects which benefit the entire economy, society and government, that is if utilized competently and ethically.

Other sectors cannot be classified as Stars. Textiles, for example, are a Cash Cow, because of large market share but low growth. They are to be milked.

Talent development is a moot point. Everyone is for it. Many programs launched. But we have what we have.

Nobody is asking that incentives, in any but critical industries, go on forever.

That is where long term, industrial policy comes in.

Again, building manufacturing, tech and otherwise, is a moot point. Everyone agrees, thereby SEZ and STZA.

Paul Romer won his Nobel Prize, among other reasons, for the concept of startup cities, islands of innovation, isolated from the bureaucratic morasse in the rest of a country, and essential to build innovative, high growth economies.

Osman Nasir

there is a major shift which is visible in this for the past four to five months, and it is not a very good news.

The freelancer share of the exports used to be around 9-12% of the total export numbers. The industry had a concern about company employees leaving their jobs and becoming freelancers. All because of heavy taxation of +35% on salaried employees vs just 1% on freelancers. It means if you are an employee of some company, you are effectively working 4 month for the government of pakistan for each fiscal year.

I used to tell the industry that the data reflected in the state bank Purpose codes does not reflect that concern (at that time) ….. Now for the past 4-5 months the freelancer export % has started to tick up all of a sudden, and now has crossed 25% of the IT export for july 2025 figures.

The data wasnt showing the trend then, but now it is actually happening.

People are leaving the organized services sectors and opting to become freelancers, the top 20% of the employees’ next step will be to get a residence visa of qatar/uae/malaysia and leave the country…..the greed and ultimate myopia of FBR will kill another industry of this country, and this time the damage will be irreversible