disruptions and breakdown in supplies, in power, gas, oil pipelines, ports, railways, and congestion in roads and highways are removed. this requires huge investment in each of these areas. public sector development program can finance only one half of the annual requirements of us $ 3 billion. the remaining requirements will have to be filled in by the private sector. 4. regional hub : another reason for large investment in physical infrastructure is to exploit the potential of pakistan ’ s strategic location as a regional hub for the middle east, central asia and western china and south asia. gwadar port is being developed to take advantage of this potential but developing a network of highways, warehouses and terminals, oil and gas pipelines, power generation plants, facilitation of cross - border trade, harmonization of tariffs and duties are some of the ingredients that will pave the way for meeting this objective. peaceful relations with the neighboring countries and greater cooperation in areas of trade and transit will lay the solid foundations. 5. productivity increase in agriculture and industry : compared to the countries in east asia and china that should serve as the benchmark for pakistan ’ s competitiveness we lag behind in total factor productivity as well as productivity gains in commodity producing sectors. although the yields per hectare of major crops have risen over time these are still lower than those in indian punjab and haryana. except for export industries the productivity levels in manufacturing are sub optimal. on - the - job training and injection of new skilled workers are some of the short term measures that can help but in the long term, emphasis on technical and vocational education rather then producing graduates with generalized education will yield the desired results. 6. judicial and legal reforms : it is believed that the financial sector and real sector of the economy will benefit immensely if land titles were clear, coded, actively traded, mortgaged and exchanged without much hassle ; if the court system is unclogged and the enforcement of contracts is much quicker with low transaction costs and if the poor have equal access to the police and the judiciary for redressing wrongs done to them. in pakistan, the slow and cumbersome legal system combined with unequal access to the poor to the system have to be put right both for efficiency gains as well as for attaining a just and equitable distribution. 7. widening the tax base : the tax administration that has been practised in pakistan has deployed indirect means, presumptive assessment and compulsory withholding taxes to collect most of the taxes

prevailing international prices without any duties or barriers if they believe that the domestic crop is short. government no longer imports petroleum and petroleum products but the task has been assigned to the private sector. nor are the fortnightly prices of local pol products determined by the ministry of petroleum but by the distributors themselves. subsidies on fertilizers have been removed and most of the production, marketing and imports or exports are carried out by the private sector. the prices of end products rise and fall according to the dynamics of supply and demand. trading corporation of pakistan does step in on occasions but its main task is to intervene in the market where shortages or excesses threaten orderly market conditions in essential commodities. the most successful experience of deregulation has taken place in the telecom sector. the monopoly of the state owned ptcl has been broken and new licences have been issued for local loops, long distance and international lines. cellular telephone segment has shown highly impressive growth during the last few years and two new international investors have purchased licences through open auction. the subscriber base in cellular phone has jumped from 3 million to 7 million in the last one year and it is expected by 2005 the number will cross 15 million - an unprecedented feat. 6. privatization : the government has made it clear that it is not in the business of running enterprises and it is, therefore, divesting its interests in state owned enterprises by selling them to strategic investors in the private sector. most of the banks, industrial companies, etc. have already been transferred to the private sector. the shares of some utilities and infrastructure companies have been floated through stock exchanges. but now is the turn to sell large ticket items such as ptcl, pso, power distribution and generation companies, integrated power utility such as kesc. the calendar for future privatization is quite crowded and it is expected that most of these companies will be off the books of the government by the end of year 2005. the efficiency gains, tax revenues accruing to the government instead of subsidizing their losses, improved customer service and expansion through new investment are some of the direct and indirect benefits to the economy from privatization. 7. trade liberalization : pakistan was known for its extremely high tariff rates that were used to raise government revenues and also to protect domestic industries. in the early 1990s the maximum tariff rate was more than 100 percent. these higher tariff walls, in fact, had highly pernicious effect as wide spread smuggling discouraged domestic production and promoted imported goods