Economic Reforms, Corporate Governance and Dividend Policy in Sectoral Economic Growth in Pakistan

Economic reforms are inevitable for the development of an economy like Pakistan. During the last two decades, Pakistan has passed through phenomenal economic changes and reforms. In the 1990’s, we had seen privatisation plans initiated by the government as a major economic reform. Similarly, to demonstrate the seriousness of the government in encouraging foreign investment flows in Pakistan; there has been a perceptible liberalisation of the foreign exchange regime. Allied to these efforts, the trade regime was opened up and the maximum tariff rates were cut down to 25 percent with only four slabs and the average tariff rate was lowered to 14 percent. The financial sector too, was restructured and opened up to the foreign competition. Foreign and domestic private banks currently operating in Pakistan have been able to increase their market share to more than 60 percent of assets and deposits. Central to the economic reforms process is a clear progression towards deregulation of the economy. Prices of petroleum products, gas, energy, agricultural commodities and other key inputs are mostly determined by market. Imports and domestic marketing of petroleum products have been deregulated and opened up to the private sector. More importantly, taxation reforms have been prominently on the government’s agenda, with no real reforms undertaken. This is another area where policy makers and business community has innumerable grievances and dissatisfaction with the arbitrary nature of tax administration.