Sayem Ali

Education

Ali studied at the University of London, SOAS. He says that at first he questioned why anyone would study or understand demand curves, supply curves and average cost curves. In his account, economics becomes interesting when practical life shows how markets really behave. [1]

Career

Ali says he took part in a relief effort after the 2005 earthquake. He says a global response to the earthquake brought in about 6 billion dollars from the international community. He then moved to Standard Chartered Bank, where he says he worked with international and domestic clients. [1]

Ali says that during the 2008 crisis he helped clients manage their risk. He says his side helped clients save money and reduce their costs. [1]

Teaching at IBA

Ali is teaching at IBA. He says he enjoys interacting with students who ask him interesting questions about the economy. [1]

Views on the 2018 economic crisis

Ali says the government inherited the worst crisis he has seen when it came into office in 2018. He says the crisis was far larger than earlier crises. He says the country had a deficit of about 20 billion dollars with the rest of the world, had to repay about 12 billion dollars of loans each year, and needed about 32 billion dollars within one year. He also says 8 billion of the reported 9 billion dollars in reserves came from commercial bank loans. [1]

On the recovery, Ali says the central bank now follows a market-based exchange rate. He says the deficit fell from about 20 billion dollars to about 3 billion dollars last year, and that the country is no longer in deficit and is now in surplus. He points to quick growth in remittances over the last two years and to exports that have returned to double-digit growth, especially in December. He also says overseas Pakistanis have more confidence and keep more money in Pakistan. [1]

Ali says the economy shrank last year by less than half a percent of GDP. He cites Moody's forecast of 1.5 percent growth for Pakistan in 2021 and 4.5 percent the following year. [1]

Views on the pandemic stimulus

Ali says the IMF and donors acknowledged the stimulus package as very effective. He says about 15 million people received cash assistance under the stimulus, and that the cash was delivered within 60 to 90 days, between March and July. He says the largest number of cash beneficiaries were in Sindh, and that the payments were not based on religion, area or political leaning. [1]

He says each rupee spent generates three to four rupees of goods and services. In his view, cash support to people is probably the biggest reason Pakistan is recovering when other countries are not. [1]

Ali also describes support for businesses. He says money equal to three months of power bills was provided through the power bills, and that about 1.6 million business loans were extended for a year on softer terms. He adds that about 2,500 small and medium enterprises received payroll assistance. [1]

Views on construction and housing

Ali calls construction the most labour-intensive industry globally. He says each housing unit built creates about two jobs and that about 40 industries are linked to the construction sector. He says policymakers chose agriculture and construction because they create jobs. [1]

He says the 5 million housing units target was raised as a slogan before the government came into office. He says work began on three new dams, which he describes as a first in the country's history. He calls a construction and housing policy the most comprehensive of its kind to have been brought forward, and says about 150 projects are coming through the construction scheme. [1]

Ali says construction spending was 300 billion rupees last year and may reach 1.5 trillion rupees in 2021. He estimates that building one million houses over three years could create about 2 million jobs. He puts the housing shortage at about 10 million units, and says rents will not rise further and may begin to fall in some areas. [1]

Views on taxation

Ali says there are about 2.4 million filers. He says popular opinion is that most people are outside the tax system, and that retail contributes about 20 percent of GDP but only about 1 percent of tax. He says the FBR target is 5 trillion rupees, while independent studies suggest about 8 trillion rupees could be raised. [1]

He says he shares the view of taxpayers who feel burdened when tax is deducted from their salary, and notes that GST is paid even on everyday items such as toothpaste. He says customers may be paying sales tax that does not reach the national treasury. [1]

Ali says about 1,000 large retail outlets have signed agreements and implemented automated point-of-sale systems, and that point-of-sale sales data reaches the FBR in real time. He says the government is trying to close tax gaps through technology, and that under-declaration and under-invoicing at customs are a major source of revenue leakage. [1]

He says the government eventually wants to lower tax rates on the general public, but must first fix its fundamentals. In his view, lower prices would increase tax compliance. [1]

Views on payments, markets and investment

On payments, Ali says a link now lets UBL Bank and EasyPaisa transfer money to each other in real time. He says the final end-consumer applications still have to be developed. He cites Kenya, where about half of all payments are made by mobile phone. [1]

Ali says stock markets are rallying, but the rally depends on zero interest rates and quantitative easing. He says that as soon as the plug is taken away, major corrections will follow in the stock market. He says stock prices are backed by real companies and their financial performance. [1]

He says he does not invest in Bitcoin and is very concerned about people who do. He says Bitcoin has no backer, so no central bank would step in if it fell to zero. He calls gold a very volatile commodity, says few asset classes now offer good returns, and says stocks are often the remaining option for investors. [1]

Ali describes Elon Musk as a pioneer who has added value to whatever industry he enters. He cites Musk's work in cars, rockets, transportation and power. [1]

Views on young people and startups

Ali says young people should not simply copy the corporate career path of older generations. He says many jobs held today will not exist in five years, and that this is an age for entrepreneurs. He says anyone with an idea can create an opportunity, and that goods or services that differ from what others produce will be valued going forward. [1]

He cites an example of an idea started by a Pakistani in the Middle East that then expanded outside it, and says the company he cites owns not one car but controls its market. He also says about 27 million dollars was invested in Pakistani startups during COVID, citing a figure for the 2019-20 fiscal year. [1]

Ali says the lack of a payment gateway raises the cost of doing business for young entrepreneurs, and that the financial and regulatory building blocks for startups are limited. He says large banks and corporate groups need to step in to support entrepreneurs. [1]

Views on growth and outlook

Ali says Pakistan is much better today than it was a few years ago. He says the crisis has in effect halted and that the COVID first wave was managed successfully. [1]

He says agriculture output has been in decline for ten years and that local producers struggle to compete even in the domestic market. He says growth of 8 to 10 percent will take time to reach, and that local production capacity will determine how fast the economy can grow. [1]

Timeline

2005

Ali says he took part in a relief effort after the earthquake.[1]

2008

Ali says he helped clients manage their risk during the crisis.[1]

2018

The government came into office, inheriting what Ali says was the worst crisis he has seen.[1]

Appearances

Frequently asked questions

References

1. Pakistan's economy faced its worst crisis, then recovered . Thought Behind Things , 2021-01-18.