J A N UA R Y

P&R

PIDE

2021
PIDE’s GUIDE TO POLICY & RESEARCH

Cities and
Urbanization
Cover Story
Cars, Cars
Everywhere

Exclusive Interviews
PA K I S TA N I N S T I T U T E with

OF DEVELOPMENT Arif Hassan

ECONOMICS Reza Ali

Babar Mumtaz
Sharukh Wani
 PIDE P & R
PIDE’s GUIDE TO POLICY & RESEARCH

VOLUME II - ISSUE I

Pakistan Institute of Development Economics (PIDE)

 January
2021

PIDE Policy & Research is a guide to policy making and research. Each issue focuses on a par-
ticular theme, but also provides a general insight into the Pakistani economy, identifies key
areas of concern for policymakers, and suggests policy action. The publication offers a quick
orbit of the country’s economy and is a hands-on and precise go-to document for the policy-
maker, businessperson, academic, researcher, or student who seeks to remain updated and in-
formed. This issue is themed around PIDE’s recent research efforts regarding the diagnostic of
growth. We welcome contributions from within PIDE as well as from any external contributors.

Disclaimer:

The views expressed by the contributors do not reflect the official perspectives of PIDE.

Managing Editor Design

Pervez Tahir Muhammad Ahsan Zeb

Associate Editor Fizzah Khalid Butt

Fizzah Khalid Butt Photo Credits

Contributing Editors Fahd Zulfiqar

Hafeez-ur-Rehman Hadi Fizzah Khalid Butt

Raja Rafi Ullah

Founders

Nadeem ul Haque

Durr-e-Nayab

For contributions and feedback, please reach us at policy@pide.org.pk

Page 4
 TABLE OF CONTENTS

Vice Chancellor’s Message 06

Editorial 08

Cover Story

Cars, Cars Everywhere 10

Interviews

Arif Hassan 21

Reza Ali 25

Babar Mumtaz 26

Shahrukh Wani 29

Webinars & Articles

Lahore’s Urban dilemma 32

Pakistan’s Urban Policy: Turning Cities Into Slums 35

Construction package: Not a silver bullet! 38

Webinar: I. Cities for humanity and development 41

Webinar: II. Cities for humanity and development 43

Webinar: III. Cities for humanity and development 44

Webinar: IV. Cities for humanity and development 45

Webinar: V. Construction 46

The opportunity of dead capital 48

Urban enigma: Becoming of today’s Karachi 54

Islamabad: Is it the city of future? 56

No more master plans, Please! 59

Mobility and social outlook 62

Edward Dodson on Rentier privilege 65

The lesson of Anandi 66

The Pakistan Paradox 67

Lahore’s OmniBus 67

HHI Index for Competition in Car Industry of Pakistan 68

Why does the myth of rural Pakistan persist? 69

Construction without real estate development 71

Spading the real estate industry in Pakistan. 73

Supplement

Making exports a policy priority: nothing mercantilist about it 76

Page 5
 Vice Chancellor’s Message
How not to develop cities?

Once again, PIDE is providing you with substantive yet entertaining public policy thoughts, ideas and
research for the curious in an enjoyable magazine. I congratulate the PIDE team on this issue which I
hope will provoke you to join us in debating a better future.

The story of Pakistan’s urban development illustrates very many faults: our lack of public sector
capacity, the inability to develop local government, the intellectual inertia as well as the overwhelming
elite capture. We remain besotted with 20th century central planning which meshes well with our
inherited colonial extractive institutions. As a result, cities have been stifled through over-regulation.

A good crutch has been found in the early 20th century central planning paradigm which our
centralized bureaucracy uses to keep cities overregulated. Outmoded plans are even used by courts to
curb development (See https://www.pide.org.pk/pdf/Policy-Viewpoint-16.pdf.)

While this issue will give you details, let me illustrate the key points in three charts.

Lahore’s population has grown from a few hundred thousand to 11 million in 2020. The annual rate of
growth has been between 3-4%.

Page 6
Meanwhile the area of Lahore has grown at a
much faster pace. Available data suggests Lahore
was 42 sq kilometers in 1975 and it is 688 sq
kilometers in 2020—a growth rate of 6.3%.

As a result, population density of Lahore has

declined opposite to what should be happening in
a growing city. The density in 1975 was 571 per
hectare and in 2020 it is about 172 per hectare.

As PIDE has been noting for a while, we are

building suburban sprawl for cars and villas
(See https://www.pide.org.pk/pdf/Policy-View-
point-12.pdf and https://docs.google.com/
forms/d/e/1FAIpQLScKQcdUKpwq9pWOfvw0P_
eeFZlwfnQWui5j556JhIHIZ-3lSw/viewform)

This is being done at huge cost and without regard to maintaining public services.
It is also being done to starve many important activities such as schooling, community, health, commerce
to develop. Most importantly the poor are squeezed out of the city
(See https://www.pide.org.pk/pdf/Policy-Viewpoint-12.pdf )

The Prime Minister and many governments before him have lamented the inadequate supply of hous-
ing. We also lament the lack of investment opportunities, declining growth and unemployed youth. Yet
outdated planning and heavy-handed regulation are starving cities of investment growth.
There is a strange belief in government circles that growth will happen outside cities. Here we challenge
this yet again.
For prosperity, our cities must be liberated of the yoke of poor planning, administration and heavy-handed
regulation.

Nadeem ul Haque
VC, PIDE
 Editorial

Another year, another chance to improve ourselves individually and collectively, think positive and keep
testing negative. Covid-19 has cumbersome effects on our daily lives, mental wellbeing and economies
around the world. Entering a new year, we wish this to be a splendid year for everyone around the globe.

Wishing everyone a pleasant and successful 2021. Happy New Year!

Talking about how Covid-19 has affected the economies for the worse, we have seen silence in the cities
that never slept, we have seen the roads calm and streets empty, finding the silver lining of it we have
witnessed the sky more blue and water more clear just because the urban business was halted; the
environment blossomed. Why can’t this be the new normal? Why can’t we try to make our environment
clean and less noisy by, may be, promoting less cars on the roads and more public transport in order
to lessen the pollution and congestion. More cars on the roads make it hard for the walking majority,
making urban life difficult for the poor. The less congested roads always extend the city experience. The
more public transport on roads makes economic as well as environmental sense.

Multiple housing societies and single unit houses have also added to the congestion of the cities and
increased the urban sprawl unknowingly. The master plans for the cities have mostly failed as they were
made with “in the present” scenario, thus failing to forecast future of the cities. We really need to go back
and revisit those plans and make changes NOW in order to survive and make cities and urbanization an
experience to cherish and boost economy rather burdening it.

The PIDE P&R this month is focusing on what is wrong with the cities and what is to be done. Let us
not forget that cities were made for the ease of humans, but they have taken another shape. In this is-
sue, key thinkers and researchers in the field shed light on the multifaceted issues in Pakistan’s urban
development. It is an attempt to enlighten citizens and communicate to the policymakers, what good
cities and urbanization have to offer. “I have an affection for a great city. I feel safe in the neighbourhood
of man, and enjoy the sweet security of the streets”
 Cover Story
Cars, Cars Everywhere
 Cars, Cars,
Hafeez Ur Rehman Hadi
Everywhere
“Cities have the capability of providing something for everybody, only because, and only
when, they are created by everybody.” Jane Jacobs

The cities are the people, their activities, and the mobility those people exercise. These cities, in
themselves, provide the engines of growth for the countries. The cities need to allow freedom and
facilitate mobility; and not restrict. Equitable service delivery and access to the city services ensure
a robust economic activity and city growth; and, contrary, clique access to these facilities hinders the
growth. Mobility in Pakistan is one such exercise that has been usurped by the car-owners in the garb of
gentrification, road infrastructure development, and converting public spaces into parking spaces.

In the past decades, the rate of car ownership in Pakistan has been on the rise. To facilitate the car
owners, cities often try to provide a robust infrastructure of roads for cars so that the smooth flow
of traffic can be ensured, disregarding the non-motorized or public transport mobility. The road
infrastructure, therefore, makes the largest part of the development budget in Pakistan. Consequently,
this aggravates the demand for new cars. When new roads are built, they seamlessly facilitate cars, and
travelers find it easy to own a car for traveling to homes, schools, offices, and city centers.

We look at the rising car ownership and facilitated road infrastructure by city authorities. We maintain
that a large portion of a city or provincial finance is routed to road infrastructure. Further, we look
at how other world cities have created a balance between car ownership, road infrastructure, parking
provision and charges, and public transport; and are increasingly making walkable streets. Lastly, we
prescribe how Islamabad, Rawalpindi, Lahore, Karachi and other cities can employ parking charges,
amongst other measures, as a tool for revenue generation and move old fleets of cars out of the cities—
and increase the use of public transport.

The world cities are fast realizing their ‘planning mistakes’ of expanding the spaces for cars while
shrinking public spaces; and are now on reversing the phenomenon by realizing streets and roads as
public spaces.

Page 10
Urban mobility and car ownership

People move to urban areas in pursuit of

employment, better lifestyle choices,
health facilities, improved service delivery,
proximity to amenities, and much more. Urban
spaces are built on the single principle of
keeping many aspects of life in a finite amount
of space - agglomeration. When a small piece of
land is used for multiple types of land utility, it
results in people living and working together.
In an agglomerated city, if the city is unable to
manage crowding then it results in congestion
that chokes the service delivery mechanism.
This also results when interest groups start
benefiting from skewed and stunted policy-
making processes of city planning. The secret
for any city to thrive is to achieving maximum
utilization of space by fine service delivery of
functions of a city from transportation, sewer-
age, cleaning services, utilities, etc. The battle
to create a balance keeps the city authorities
on their toes because of high rural to urban
migration.

Pakistan has now one of the fastest rural to urban migration and, resultantly, Pakistan now has some
of the largest cities in the world. While the world is adjusting to high-rise buildings and constructing
residential towers, Pakistan chose to horizontally expand the cities resulting in huge urban sprawl. As
these cities have become populated, the usual urban problems - traffic congestion, poor city livability,
and health issues - have arisen.
People need mobility and cities must facilitate it with infrastructure that is inclusive and accessible for
its residents. City authorities of Pakistan have limited capacity to cope up with the growing metropolises
and their urban issues. However, cities in Pakistan have chosen to make mobility an eased experience for
car-owners and a daunting task for those who do not own cars.

Page 11
 1. High costs of mobility

As cities grow, the cost of moving around the city increases with distance therefore people need
affordable and accessible transportation modes. As the cities in Pakistan lack public transportation,
the facilitation to pedestrians and cyclists is not only poor but dangerous, hence people resort to cars.
Historically, this lack became a stimulus for owning cars that in return facilitated urban sprawl.

Therefore, we assert the need of having a car policy for urban mobility with mobility options, lower
environmental and human stress. The rising number of car-ownership, its contribution to traffic and
pollution calls for a policy that outlines the effective usage of cars. A forward-looking car policy must
be devised to address the issues of urban planning and cities’ governance. In this regard, the Pakistan
Institute of Development Economics is proposing a car policy to make ailing cities livable.

Since ride-hailing services are quickly becoming the default mode of transportation from the
middle-class jobholders, there is a rising portion of income that is spent on mobility within the city. The
average monthly cost of a job holder in Pakistan using the ride-hailing services reaches 12,000 to 15,000
without any freedom since these are demand-based rides and do not offer stops in-between.

2. Cars and cities

People agglomerate in cities to find jobs and seek economic and social mobility, similarly, firms tend
to be officed in the city centers to be close to the market or amenities. As cities grow, the cost of
moving around increases with distance. People need transportation modes, accessible; and lack of public
transportation, poor facilitation to pedestrians, and bicycle riders, they resort to cars. The increased
car ownership excused with urban spread-out has discouraged the development of public transport
systems, fewer bicycle, and car lanes.

While the developing countries are facing an exponential increase in car ownership in face of bad
public transport, the developed countries are programming to make cars the ‘things of the past’ by
providing better alternatives- public transportation with better connectivbicycle lanes, and street space for
pedestrians. In the face of congestion adversity and high environmental costs; cities are rethinking the
usage of streets, cars, and cities themselves.

3. Congestion Costs Vs. Agglomeration Benefits

There is abundant evidence that agglomeration benefits outdo the congestion costs. The evidence
exceedingly suggests that countries with poor urban governance have far more congestion costs
than the cities with better urban governance and higher agglomeration. Cities have developed
mechanisms that not only avert the congestion in cities through speed-lanes, higher parking fees, congestion
taxes, restricted cars in city centers; but also, have made them long-term sources of their revenues, as
discussed later part. The cities of London, Stockholm, Singapore, among others, generate positive cash
flows through their car policies within the city.

These congestion costs can further be minimized by exercising due pricing. Baert and Raynaert estimat-
ed that for a 1% increase in the agglomeration benefits, the positive effect is 0.073% in productivity—
and varying increase in economic activity. And losses incurred through 1% increase in congestion are
0.01%, suggesting the huge comparable advantage of agglomeration.

Page 12
 Congestion Agglomeration

Pricing Reduced by Congestion Pricing Low Transportation Costs

Environment High Costs; but Can be reduced by redesigning Net Low Emissions
Public Spaces and Roads Overall Low Environment
Degradation

City Life The vibrancy, City Experience Confined to City Centres

Cars Caused by Cars. Cars can be reduced by 80% Public Transportation with Low
with alternative available Costs

Transportation Low Walkability and Cycling, Poor Public Closely Knitted—low-cost

Transport infrastructure

Opportunity 2/10 of the Agglomeration Benefits 5 Times higher Benefits and Can
Cost be improved

Crowdedness Efficient Use of Transportation Evenly Crowded-High Density

Streets Covered with Cars and Parking Spaces High Economic Activity, Inno-
Need to discourage car ownership for Low vation, Entrepreneurship, High
Traffic, More Space Social Mobility

Parking Due Pricing as per Driving Costs Cars only for luxury—comes with
-same revenue with lesser cars a price

Examples Beijing is increasing Car Ownership and often London, Stockholm, Oslo, Copen-
chokes with Traffic. Countries with poor pub- hagen
lic transport are paying high congestion costs.

4. Streets are shared public spaces

The street experience is fast becoming the focus of urban governance; from city centers to off-street
parking requirements. The cities are realizing the foregone value of land utilized by the cars. Ben
Toderian, Donald Shoup, Nadeem Ul Haque and many others have been asserting that streets must be at
the center of city experience. Streets are shared public spaces and part of city land that must be priced
commercially and indiscriminate. Therefore, streets must be used to generate social and economic
activity rather than perishing to parking and car-traffic.
Ben Toderian and Janette Sadik Khan have
extensively worked on designing streets for
public and advocated accessible streets
for all. These car-free areas generate more
economic activity. A recent study in Barcelona
suggested a 9.7% increase in retail activity in streets
with public spaces and walkability rather than
car-owned roads. In terms of space, 10% of car
owners occupy more than 80 % of streets and
roads. Higher car ownership causes low city
experience. It is established that social activity by
redesigning streets for public use increases the
vibrancy.

Page 13
 What are cars for? but are rather absent in the case of Lahore and
other cities. The kids must be the last recipient
Since the cars are so central to our urban of the pollution, yet they suffer in the congestion
planning, therefore one must ask the basic equally.
underlying question: What are cars for? The
cars provide freedom of movement, and beyond II. High contribution to pollution
necessity; car ownership is a luxury.
According to Dawar Hameed Butt, an
This leads to the following question: Does paying environment activist, the AQI index, before
to own the car provide the owner with exclusive the COVID-19 hit the cities, had reached the
rights of freedom and luxury in society? Cities dangerous levels of 500 points. During the
must realize the real costs of luxury and free- COVID-19 lockdown, the lack of traffic had
dom are not of cars but also road depreciation, brought the AQI to 70 points.
pollution, usage of space for parking and
opportunity cost of that land usage, etc. This staggering difference shows that the high
contribution of cars in air pollution and smog that
Therefore, the literature on car ownership has is fast becoming the routine problem in the city.
started posing an essential question in the
urban planning of a tradeoff between individual 2. Multiple car ownership
prosperity collective betterment.
The cars in Pakistan are expensive, however,
1. The associated problems owning and maintaining the ownership is fairly
cheap and evasive. The process of registration in
The car ownership in Pakistan has several Pakistan is highly rigged therefore even in larg-
associated issues and challenges including er cities there are higher numbers of non-Cus-
traffic congestion, high pollution costs, health toms registered cars. Unlike many developed
deterioration, and higher costs of mobility. countries, there is no compulsion of having
Intuitively, urban sprawl should decrease insurance or maintenance standards, therefore, the
traffic congestion because of the spread of urban households keep on owning multiple cars.
communities and societies. However, since this
urban sprawl simultaneously encourages the 3. The car registration process
car-ownership; this leads to higher congestion
The general car registration process in Pakistan is
costs without agglomeration benefits.
highly rigged. The vehicles can undergo overhaul
I. Traffic congestion in cities - changes to get registered under different chassis
Example of Lahore numbers. The car owners can delay paying the to-
kens of cars for decades without the fine. At times
In Lahore, the largest city in the Punjab, the car of sales, car ownership is often not transferred,
ownership in some sectors of DHA, Askari, Bahria hence giving people a chance to not show the cars
Town exceeds 2.1 cars per household, as per as assets. The ease of ownership has decreased
our study. This high number of solo-driver cars the dependence on public transport within cities
in the city and country at large are a source of and trains, rail, buses for inter-city transport. This
congestion in city spaces. The traffic in peak hours independence has assisted the city-elites to evade
is so congested that on Noor Jahan Road—Liberty the responsibility of demanding inclusive public
Roundabout to Hussain Chowk—a car can take up transport. Whereas, with the new computerized
to half an hour for what is an average 1-minute system of registration, which is in place at a very
drive on the empty road. small level as yet, such issues can be resolved.

This congestion further leads to more accidents 4. The cost of driving

and health injuries, not disregarding the fact
that noise pollution and excessive fuel costs are The true price of car driving is not what the driv-
other externalities. During the daytime, the er pays while purchasing a car or paying for the
Zahoor Elahi Road and many other roads with gas he uses. It goes beyond in terms of roadwork,
schools are choked with traffic because there emergency services, damage to the environment,
is no transportation system by the schools or and the use of land in terms of parking and other-
government to pick-and-drop the students from wise used by car.
their homes. Lack of such facilities should lie at
The associated costs can be categorized in Fore-
the core of the city’s mission to facilitate students,
gone Revenue by using land for parking rather
than economic activity, pollution costs—
Page 14
inadvertently borne by society. Accord-
ing to Shoup, it takes 1-2 % of maintain-
ing roads for pedestrians and bicycle
lanes than building roads and parking
for cars. Similarly, the incremented eco-
nomic activity revenue generated from
the increased economic activity exceeds
the parking costs in cities with streets as
public spaces more walkability. Similarly,
the researchers associate higher risks of
a medical emergency; deaths, and costs
attached to these emergencies with the
indirect costs of car ownership in cities.
The policies are needed to distinguish
the use of a modern car from need to
luxury, and charge a price on that luxury like other commodities. The lack of walkable spaces in cities
supports car ownership. Several studies suggest that the provision of good public transport and walka-
ble spaces deter car ownership. In a city in the United States, if due to installed public transportation, the
city gives up 15,000 cars, the city has $127,275,000 saved in terms of purchases, gas uses, parking, etc.

How does the world view cars?

The cities worldwide have emphasized working on shared modes of transportation that are inclusive,
cater to the agglomerated urban experience, and with the least congestion can mobilize millions of pas-
sengers daily. The transportation structure of London, Seoul, Beijing, Tokyo, New York are testaments to
these priorities. Rather than owning the car, the residents of developed cities are relying more on public
and shared modes of transportation.

1. The Car-Free Areas

The City of London has started exercising the car-free areas in the restricted zones of London on several
days in a week to reduce GHG emissions, increase walkability, and making cities conducive for the pub-
lic. These car-free days are making considerable improvement in the environment, city experience, and
encourage the use of public transportation. The revenues are collected by the city governments and can
be allocated to the same areas, thus contributing to the local welfare.

I. Parking Rules

Donald Shoup highlighted The High Cost of Free Parking and suggested that city governments must
remove the off-street parking with high on-street parking. The associated costs with on-street parking
shall deter the drivers to be part of congestion, and the fee shall discourage car-ownership. Many of the
cities worldwide have taken his advice and are working on charging parking costs and eliminating off-
street parking. The staggering facts of high costs of land dedicated to parking and the maintenance costs
outnumber the rationality of efficient usage of land or resources.

II. The free lunch

In developing countries, ownership of a car is a luxury, but it also evades the associated costs. The road
services, land that cars use, and pollution are paid by the general public. A car normally occupies a space
of 330 square feet, which is attributed freely for a car. This forgone cost is paid by society. In Islamabad
every day around 280,000 cars enter through the vast road infrastructure present, if half of the traffic is
charged for parking of paltry PKR 10 then the city government can daily generate a revenue of PKR 2.8
million.

III. Repurposing Roads—Congestion Pricing

The cities are using their roads to streamline the traffic. In the United States, highways have congestion
pricing strategies to make people avoid traffic. To take the express lane, the driver shall be priced. This

Page 15
 pricing of car-ownership and using the express traffic and road accidents.
lane assists in maintaining the services of high-
ways Traffic policies are central to regulate car owner-
ship. City governments can coordinate with pro-
IV. Streets and Public Spaces vincial and federal governments to come up with
comprehensive plans that ensure the autonomy
The cities are realizing the importance of public for cities to implement the car policies along with
spaces, and therefore the outdoor public spaces the coherent national policy suitable for the cities.
are being created. The cars in certain streets are
banned or charged highly to provide city-experi- The mobility in Pakistan
ence to visitors. In the attempt to choose between
The urban and transportation planners in Paki-
the Individual prosperity vs collective better- stan have long seen mobility and urban develop-
ment, cities are tagging a high price on individual ment as a means to facilitate car mobility—Traf-
prosperity. fic View of Urban Planning. Their planning has
barred the accessibility and mobility view for
2. Car Policies in Global Cities
urban citizens. The construction of no-signal cor-
Cities worldwide are fast becoming cognizant of ridors, brick-and-mortared bus stations, sparse-
the costs attached to increased car-owning and ly constructed overhead bridges, lack of zebra
therefore are planning to reduce the car presence crossings, no provision of cycling lanes of walking
in cities. Oslo, Copenhagen, Stockholm, New York, paths have led to the inaccessibility of amenities
for citizens.
and London are few of many cities levying price
over cars in city centers and are using various In Pakistan, transportation planning has been
ways to discourage cars. We took the 15 cities and dominated by the ‘Traffic View’, and that too has
studied their recent actions to contain car pres- resulted in the chaotic traffic jams and poor ac-
ence, and enlist why the cities are reducing the cess to urban amenities. The cities worldwide are
car numbers. Pollution is the single most signifi- opting for multiple mobility options at once to
cant concern of these cities to cut down the num- facilitate the agile movement to-and-from inter-
ber of cars within cities. and intra-city.

These cities are heeding the concerns of new ur- According to the Transport Manager at Faizabad
banism as they underscore the need for accessible Bus Station in Islamabad, Shahid, the government
cities with centers of maximum social interaction has ‘strangled’ the independent transport-owners
indiscriminately. by not allowing the private transport in Islama-
bad and very restricted the movement of wagons.
By reducing the number of cars, the cities are ex- This is aggravated by non-issuance of route-per-
pected to turn 30-75% of roads into public spac- mits, safety licenses to public transport vehicles,
es within 25 years to enhance physical and social and frequent ticketing of wagons as fines. Despite
mobility within the city. the interest of transport owners to run operations
in Islamabad, the city administration has orches-
Public Transport is the most rewarding incentive trated ways to reduce public transport within the
to reduce the number of car owners. Cities like city. Therefore, the average time for a citizen to
Seoul, London, New York, and Copenhagen are access public transport has increased from 8 min-
heavily investing in their public transport infra- utes to 31 minutes in Islamabad City.
structures to complement their goals. The citizens
in these cities are increasingly opting for Bicycle The developing cities, like in Pakistan, have a
and walking as healthy measures and the burden double-edged sword of planning on its citizens:
on health services delivery has decreased. the city planners are very fond of planning and
regulating hence the regulations are excessively
As per WHO estimates, around 40,000 people passed; and then there is a poor implementation
die in crashes on US roads, and out of which the of those laws. This leads to the stunted growth of
owners of vehicles make the largest proportion. cities, and mafias benefit.
The responsible public transportation and less
Pakistani Cities and Funding
traffic make the cities less vulnerable to such high
losses. Therefore, the cities are using alternative The world Cities are using the service delivery
measures to reduce the risk of deaths because of and provision of accommodating citizens as a

Page 16
source of generating revenues. The collection of least desirable spots for the traffic officers.
council taxes, utility charges, parking fees, and
other sources of revenue make cities largely The options—Pakistan’s Way Forward
self-sufficient in terms of planning urban mobility
options among other things. However, in Pakistan, Pakistan’s government has divested from its re-
the lack of experts in district administrations has sponsibilities and city government have long
resulted in poor management of cities, non-exist- been managed by the generalists rather than the
ent sources of revenue, sub-optimal utilization of urban planners. This has led to a narrower view
land, benefiting the car-owners. of urban planning and not governance. The pleth-
ora of legislation, regulation, and laws have halt-
Cars Or Substandard Transportation: ed the natural growth of cities. This, consequently,
The Transport Extremes led to urban sprawl and increased car-ownership
among other problems. PIDE has argued that the
Since the cities in Pakistan are unable to provide country needs the framework for growth that
safe, sustainable transport options, the ownership
transcends the brick-and-mortar model and inte-
of cars is considered a necessity beyond luxury.
grates the nuances of the locality.
However, the citizens unable to afford resort to
other options—in case of mobility: sub-standard 1. Shared Modes of Transportation
wagons, rickshaws, Qing Qi, Bike without proper
safety guards. The cities eventually run out of car spaces, the
available options include the cities to grow—in-
In such instances, any incidence of public trans- creasing the cost of travel, increasing the value of
port provision becomes a source of political
land, and de-cultivating the city lands.
propagation rather than the provision of ‘public
good’. The BRTs system developed in Pakistan has As per Donald Shoup, the parking rules must
become such a nuanced idea where large infra- be based on discouraging car ownership
structures are developed to manifest the tangible and encouraging public welfare, and not the
notions of ‘development’ with approximate costs other way around. Therefore, the regressive
of as large as 10times than the provision of pub- parking charges can be used based on car us-
lic transport through alternative options of wag- age of amenities, roads, and parking spaces.
ons, buses, and railways. Due to the lack of public
transport, female citizens feel apprehensive of 1. The cars must be insured at the registra-
using any public transport limiting female mobil- tion process.
ity within the city without private vehicles nearly 2. A comprehensive parking cost must be
impossible. evaluated by cities, and levied upon the car
parkers.
The case of Faisalabad
3. Encouraging and normalizing ride-hailing
The City Government of Faisalabad, formerly Ly- services can discourage car ownership.
allpur, has recently planned to restrict the move- 4. The local governments need to heavily
ment of cars and vehicles in its City Centre (Clock invest in walking, bicycle lanes, and public
Tower and 8 Bazaars). Although the policy seems transport.
to have accorded accessibility, walkability, and 5. The provision of the pedestrian-only zone,
mobility to people without cars, the Traders Un- public transport, and bicycle lanes shall
ion have readily started violating the plan. greatly discourage car ownership and traffic
congestion.
A traffic police officer, Adnan, suggested that 6. Solo Driver cars must be taxed in cities.
cars have taken over the historic bazaars around 7. The schools should be encouraged to run
clock-tower. This has not only restricted the mo- the school buses to discourage traffic conges-
bility of customers and tourists but also provide a tions on roads.
greater problem in managing transport in the city.
As per plans, if the traffic police officers challenge
the parking and movement of cars on streets of ba- This results in widening roads—the less space for
zaars, the trader’s union asserts pressure to cor- the open space cafes and public entertainment
ner the traffic police officers. A City-Centre where and walking, or lessen the use of cars.
the mobility should be at its highest, traffic-jams,
extra deployment of traffic personnel makes it the

Page 17
 To avert such losses and poor urban catastrophe, the citizens need to move towards walking, cycling,
and more shared mode of transportation that includes public transport, ride-hailing services, rails, and
buses. The ride-hailing and ride-sharing services—can increase per car use from 9% to 55% of the time.
In the last decade, the ride-hailing services Uber, Careem, Bykea, etc. have captured a large market but
remain an elite solution. In shared modes of transportation, public transportation remains a failure,
while in the last one year, ride-sharing Airlift and Swvl have stirred the transportation sector and must
be encouraged.

2. Parking Bye-Laws

Local Governments Act 2013 of Punjab suggests that the local government has the provision to develop
their parking bye-laws. However, there are no comprehensive parking laws followed by any local govern-
ment throughout Punjab as per 2020.These parking prices can be a regular source of local governments
and can assist in a) documenting the cars, b) data generation of cars’ transport, c) revenue generation
for localities that could be spent on local welfare and service delivery.

3. Parking Rules

The cities provide services to its residents and visitors and in return collect revenues for its services.
There are no standing rules for parking in Pakistan.

4. Traffic Rules

Within cities, the traffic rules can greatly change the proportion of the car-ownership. The introduction
of car-free days, car-free areas, parking charges, congestion pricing, and introducing speed lanes can
lessen the traffic while also encouraging social activity. Pakistan must revise its Provincial Motor Vehicle
Ordinances dated back to 1965 to regulate with the modern-day needs and regulations of safety and
health.

5. Public Transport—Nay to BRT and Brick and Mortar

The development model in Pakistan is based on the project approach where the implementors are sup-
posed to construct, built brick and mortar to project the efficiency. This has also been translated into the
transportation sector where large public funds were invested in the construction of infrastructure for
the Bus Rapid Transits (BRT) in Lahore, Multan, Islamabad, and Peshawar. The discouragement in own-
ing cars shall lead to pressing demand of having public transport thus having more refined experiments
in introducing modes of public transportation, but simultaneously the government must provide more
accessible public transport rather than constructing high-cost bus-transit stations.

6. Streets

Streets are engines of public activity, and the streets in city centers are critical in estimating the capital
of cities. Cities worldwide are using streets as a critical starting point to regenerate themselves. Pakistan
can use the city streets as public spaces by doing away with free parking at roads and charging the park-
ing fee minimum to the marginal social cost of having cars on these streets.

These streets can be furthered for public use through open space cafes, restaurants, and organizing so-
cial activities. Making these streets car-free shall make cycling and walkability easier and the public can
reclaim streets as accessible city points developed for themselves.

POLICY IMPLICATIONS
Roads infrastructure is very costly to maintain and cities are made for economic activity not providing
luxuries to the rich stratum of the population. To create a balance, cities need to start charging the car
owners the due price.

1. We need to alter our city development policies which facilitate urban lifestyle in a distant rural set-
ting and necessitates the use of cars for mobility.

Page 18
2. Enrique Penelosa, Mayor of Bogota, suggested that cities cannot thrive without mobility and public
transport is an integral part of that mobility. Cities around the world have learned that walking and
bicycling are less costly for the government, environment friendly, and provide more chance of social
cohesion.

3. Subsidizing cars resulted in having little space for bicycling and walking. Roads are widened to facil-
itate more and more cars.

4. Designated spaces for parking have to be announced with parking charges, Islamabad can generate
a sum of around Rs. 2.8 million per day if it only charges Rs. 10 per car as parking.

5. Congestion charges need to be allocated in busy hours to demotivate the movement of cars which
will free up the road space for most important things.

6. Projects like Metrobuses and Orange lanes are very costly for the cities as well for the provinces. All
across the world public transport is given a priority lane. It can be done in Pakistan as well.

If our city government become successful in rethinking how they develop a city, our crucial city prob-
lems would find quick resolution. As discussed widely in earlier publications of PIDE, the city-center
needs to be established with mixed-use high-rise development.

HAQUE SURVEY

Page 19
 Interviews
Page 20
 Interviews

Pide P&R Talks To

Lead Thinkers

Arif Hasan
Arif Hasan has defined the Pakistan’s architect,
planning and urban activism culture. He has a
keen eye on urban issues, street economy like no
other, and he has been involved in dialogue on cit-
ies, planning and architecture in country for dec-
ades. His work in Karachi and other parts of coun-
try has invited great attention and laud; therefore,
the Pakistan Institute of Development Economics
invited him for a talk. In the following lines, we
are presenting his interview and responses to our
questions.

PIDE: Do we have any good cities in Pakistan? Why do we have strong fascination with homes
as we see our Schools, shops, warehouses are all developed in houses, largely. What has gone
wrong?

A part of it largely is because of our colonial inheritance. Bungalows were the unit showing enrich-
ment and affluence, and became important for elite. We never thought of planning in terms of essen-

Page 21
 tial services. We didn’t develop cargo terminals accumulated profits than one big project. This
etc. We are bound to have city master plans every way they can avoid formal procedures, labour
10 years which are not researched. These plans laws, and can engage informal vendors. The flats
are designed around land speculations. Cities are built in this country are largely for higher income
empty with announced schemes. No regional plan groups. Most are for speculations. There are
to protect ecology or share resources. Urban land 68,000 empty flats as per our estimates and more
reforms essential. What you want our cities. than 300,000 plots in the city. Therefore, these
developers go for smaller projects as they can get
PIDE: If you’re mandated to suggest urban re- through without following rules.
forms, what would you include in urban re-
form? Rent laws are in favour of renter in Pakistan.
1. Non-utilization fee on certain types of devel-
opment. Higher densities for higher and middle PIDE: There’s seems to be no middle class in
income groups. country, can most people afford the housing in
2. By laws and regulations shouldn’t be an- Pakistan? what do you call middle class?
ti-streets and anti-mixed use. There should be
institutions of research and development. Cur- We call these people waiters. They wait all their
rently, LDA officer just scrutinizes the proposals lives to get some housing unit in reasonable area
by the rules he follows. Environmental impact only to sell their house to get 5 smaller plots in
assessment is highly rigged. Corrupt practices of far-flung area? In this country, poor can’t get
approving maps, changes made in violation of law mortgage. By depriving the middle class of hous-
can be approved. Profession needs to change. ing, we have lost the vision of city. Karachi’s vision
was to be world class city. Over the last 25 years
PIDE: Is there housing inadequacy in Paki- we’ve replaced planning with projects. But there’s
stan? Is there homelessness in country? no criterion to accept or deny the project. You get
the money, and accept the project. More often
There wasn’t inadequate housing a decade ago, than not, the projects have been failures. They
but now it’s becoming reality. Can we support this overlook ordinary needs. As the money from pro-
high density? Formal developer comes in. there’s ject ends, the donors compile their reports and
demand. Process in place, has faulty process. First disappear. We are unable to think long-term and
problem from politicians and real estate develop- beyond documented rules.
ers. Policy, teaching process, ground realities ac- For example, a justice ended 60-70 thousand jobs
ceptance. just by removing vendors through an order to im-
The Prime Minsiter’s announcement of providing plement a city plan. Even though this is according
5 million houses is unrealistic. Building 50,000 to law, but there is difference between law and
houses shall be an achievement as well. This is justice. We should have that debate.
because poor can’t afford the houses that are be-
ing built currently and on other hand state can’t PIDE: Karachi has Katchi Abaadis and high-
afford subsidising. Also, now there’s lack of land rise. Lahore and Islamabad don’t have katchi
now, and it is becoming a big issue. Until you ap- abaadis. How do you see Punjab?
prove legislation for the acquisition of land, we
don’t have land. With some knowledge that I have, Faisalabad has
In order to develop the cities that are hu- 2,000 to 3,000 houses built in formal sector every
man-friendly, people need to have love for cities. year. In informal sector the number rises to ap-
The developers of NYC looted the land. The next proximately 10,000 to 15,000. The informal sec-
generation developed the city. tor is discounted from agricultural land and is fa-
cilitated by patwaris, and MPA/MNAs help secure
PIDE: Why are our real estate developers gas and water through their funds and streets are
working in silos and shadows? cemented. Many of these settlements are away
from home. In cities there are housing schemes
There are rarely real estate developers listed with expensive land that are lying empty. Because
big listings or in stock exchange. This is possible of motorbikes, there is increase in the sprawl. It
because the real estate developers can operate is eating away agricultural land. That’ll impov-
at small levels with higher profit margins. They erish countryside and has already impoverished
prefer running 10 smaller projects with grater agricultural land.

Page 22
 Interviews

PIDE: What does informal labour do to infor- 3,495 shops and removal of 9,000 hawkers in-
mal land? Street Vending is banned by court in cluding at least 82 women hawkers from em-
Karachi. press market. In Saddar, it led to increase in
Bhatta. Government promised alternative lo-
In 1986 Vendors were being removed, I made a cation, some who got were too far from origi-
plan for rehabilitation as per training in the West. nal location. This time anti-encroachment drive
We thought it was a good plan. When I took it to was successful as compared to previous years.
the vendors, they literally tore it to shreds. They
said it doesn’t fulfil requirements. Urban Resource
Centre started meeting and cooperating with ven-
dors. And we published it all. In early 2000s we
conducted a study and published it in book The
Hawkers of Saddar Bazar. That study informed us
that it wasn’t about vendors, there’s whole world
of retailers, whole sellers, importers, exporters,
urban cyclists that ends with vendors at tailing
end. The study looked at various relationships
that the vneors had with each other, their suppli-
ers, the government agencies and those who ex-
torted bhatta from them. It took 3 years to com-
pile the study and we found that vendors were a
small part of huge street economy.

PIDE: What are the effects of Supreme Court There was huge economic and social including
Decision on implementing City Plan? loss of social and economic informal relations
build in last 70-80 years. The number of commut-
The supreme court ordered in 2018 the demoli- ers has declined 50% after the demolition.
tion post the 1975-85 plan. The street economy of
Karachi was badly mauled. PIDE: What were the key take-aways of your
study on street economy in Karachi?

The street economy is part of a larger informal

economy which employs 72% of Karachi’s work-
force. All formal markets have active street econo-
my around them. These places also become major In order to evaluate the size and impact of street
transport hubs, and often because of vending ac- economy, we studied District South and Orangi
tivity, markets develop. Town in District Wing and has included mapping
The Supreme court through its order of October of locations, scale, and nature of businesses. It
2018 ordered the removal of all street activi- took observation of thousands of hawkers, de-
ty that was obstructing pedestrian and vehic- tailed interviews of 182 hawkers, formal business
ular movement. According to Urban Resource owners and customers. We used Dr Noman’s 14
Centre survey, it resulted in the demolition of parameters including transport connections etc.

Page 23
 The hawkers are preferred to formal sector by
low-income and lower middle-income groups It should not increase poverty, and cause no dis-
because of selling approximately 20% cheaper, ruption to the existing economy. The policy must
culturally closer to people and located at conven- be placed in stage and in wake of COVID-19, there
ience. Some shopkeepers install hawkers in front should a policy of no evictions and demolitions.
of their shops intentionally to attract customers Bachat Bazaar should be promoted and special
and increase sales. They paid Bhatta, paid to secu- bylaws and zoning regulations must be intro-
rity guards, local government etc. It takes 20,000 duced for hawkers in parks and recreational are-
to 25,000 to establish a business and the supply as. A special focus should be on hygiene of public
chain is complex. toilets, and provision of clean water. There should
be well-representation of stakeholders and civil
Government has largely tolerated vendors and society in policy formulation.
established bachat bazaars. Kiosiks and shops es-
tablished by the Mayors paid rents to local gov-
ernments. Karachi Municipal Corporation built
many shops and the government received the
rents. Street economy grows significantly during
the religious and celebratory occasions.

The major reasoning again regularization of ba-

zaars is that the street economy disrupts pedes-
trian and vehicular movement, creates unaes-
thetic conditions in city and is unhygienic; and
deprives the city of revenues as hawkers don’t pay
taxes. There is need to develop criteria for poli-
cy of regularizing the street economy of Karachi
because it already exists and is an important part
of informal economy. It generates 72% of jobs in
city. 75% say that they have direct dealing with
hawkers, dhabas, and informal eating places.
What are your policy recommendations in
case of street economy?

Page 24
 Interviews

Reza Ali
Q. Almost two decades since you estimated the
actual percentage of urbanization in Pakistan
– why do you think the myth of ‘rural Pakistan’
still persists in certain policy circles?

A. We have a new series covering the 1981, 1998

and 2017 preliminary results for Pakistan prov-
inces and sub-provincial regions. So if someone is
interested, this is all available.
But Pakistan is a rural country and the future of
our eco-survival will be decided in the rural space.
So for me rural Pakistan is not a myth but a social,
economic and cultural reality and the ultimate
refuge in the battle for our survival as a species.

Q. Do you think the urban population in cen-

suses are under-reported in Pakistan?

A. No, I don’t think so.

Q. Do you think master planning of cities can

assist in creating cities that are public-friend-
ly with robust public service delivery mecha-
nisms?

A. This is a question of class and power. We cannot

have pro-poor cities given our power structure.
Our planners cannot produce people-friendly
Reza Ali is honorary director of the Urbanization plans as they do not work for the people but for
Research Programme focusing on understanding those who have political and economic power, and
of the urbanization process, its dynamics and im- even if they themselves come from more humble
pact. In 2013, the Programme produced its mon- backgrounds their aspirations do not allow for
umental work, Pakistan: An Emerging Spatial this. Then, at least in Pakistan, our planning and
Geography. architecture training schools do not expose them
to the issues of our people (there are a few no-
table exceptions in Karachi). However, this does
not mean there is nothing that can be done. We
can have investment projects and grand designs
for reforms. And we can build flyovers and rapid
transit systems. But people may really not figure
in all this.

Page 25
 Babar Mumtaz

guidelines for social and societal behaviour - but

they all belong to an earlier phase of our existence
when we were transiting from a hunter-gathering
state to a settled agricultural economy. All of the
religious texts are built on rural references and
imagery...of flocks and lambs and shepherds in
their huts (and of course, the kings in their palac-
es). Islam I think, was the first and perhaps only
urban religion, built on trade, exchange and in-
ter-change (the gardens are for the life hereafter).
Babar Khan Mumtaz is an economist and architect, The planning of cities consisted of apportioning
formerly Director of the DPU, University College sections on the basis of tribe or vocation, with
London. He has worked for governments and in- bazars along the streets that ran between them.
ternational agencies in Africa, Middle East, South The planning of the space in-between was based
Asia and the South Pacific for over 45 years. on 2 principles: it must be possible to reach each
household with a street wide and routed such as
Q. In your opinion, are there commonalities to allow the transport of funeral cortege, and sec-
when it comes to planning issues that afflict ondly, that any water reaching a plot must be al-
cities in high income Global North countries lowed to flow freely across it and to the other side
and low- & middle-income countries of the unimpeded.
Global South? This served well until the industrial revolution
separated work and workers, and later, the auto-
A. It goes without saying that yes, there are com- mobile drove out the people out of the city and
monalities, and indeed, always will be, regardless introduced commuting. Now, as we enter the 5th
of the size of the city, it’s economy or its social Industrial Revolution, where geography is history,
composition. Furthermore, regardless of the de- we could be on the cusp of a post-Corona end of
tail, the “problem” for urban planners everywhere the city as the dominant feature of our landscape.
is essentially one of how to provide appropriate Instead of the dominant urban problem being mo-
accommodation, mobility, employment and en- bility and employment our focus may be accom-
joyment within the available resources. People modation and enjoyment.
are not easily satisfied - and indeed our econom-
ic paradigm requires that they are not - so it is a Q. Urban areas in Pakistan are facing uncon-
continuous struggle. Drastic and dramatic events, trolled urban sprawl. From you experience
natural calamities, wars and pandemics tend to and understanding what are prime causes of
create opportunities for change, precisely be- this sprawl and what could be examples of
cause they disrupt the status quo, and allow for some useful policy interventions?
some re-examination of assumptions of where
are we going but also a questioning of how we are A. There are a number of reasons why we have ur-
doing so. ban sprawl, but to my mind, we can lay the blame
The need to plan is a basic human trait - and one on urban planning. It is not that urban planners
that allowed mankind to dominate all the other produced plans that promoted or advocated or
species despite our physical limitations. Inte- even facilitated urban sprawl so much as that
grated and underlying all of the religious texts are there has been very little urban planning. That is

Page 26
 Interviews

not to say that urban plans have not been commis- None have delivered, many have not actually built
sioned so much as that they have not been prac- any houses at all, and even those that have been
ticed. There seems to be reluctance amongst both heavily subsidized and not gone to the right peo-
our bureaucrats and our decision-takers (both ple. The only beneficiaries of the schemes have
civil and military) to not want to have their hands been the property developers who have been al-
tied by planning and thus limiting their room for located public land.
maneuver. We are also reluctant to delegate de-
cision-making. The result is that our plans are The reality of housing in Pakistan is that accord-
often left to play catch-up. We all know that the ing to PSLM 2018-19, over 84% of all Pakistanis
size of our cities will double over the next 10-15 (91% in rural areas) own their houses and anoth-
years, but have no idea how or where this popula- er 5% live in free housing. Over two-thirds have 2
tion will be housed. Those who take decisions are rooms or more. So there is no huge “shortage” of
the ones who make them. The city is defined by houses; there is no yawning “housing gap”.
the development of colonies for the defense and 96% of the urban houses (70% of rural houses),
the bureaucrats. It is this that is responsible for have brick walls and rcc or cgi roofs. So there are
urban sprawl. very few “katcha houses”. The abadis are called
In Lahore, in 2012, according to the Urban Unit, Katchi because they are not legally sanctioned
the poorest 50% of the population was living on settlements.
10% of the land while the richer 10% was living
on 50% of the total area. Virtually all houses have been built without re-
A moratorium on development of (or on) new course to formal housing finance: only 2% of
land, coupled with the right to develop all land Pakistani houses have any formal housing loans.
up to 4 stories, subject to structural confirmation There is no house in Pakistan that has been built
and the payment of development changes (which using formal housing finance only. So “Housing
will be used to expand or lay additional sewer, Finance” and “Affordability” is not the problem.
water and gas lines), would increase densities The reason that some areas of cities are “slums”
and accommodate future population growth with and “unacceptable” (some UN estimates put this
thge need for developing new land or extending figure at 55% of all housing) is not because of the
the built-up area of cities. actions of the households so much as the lack of
action by urban authorities: 3 of the 5 criteria
Q. The incumbent government used the slogan that define slums are to do with urban servic-
of ‘providing affordable housing options’ for es, the other 2 arise from insecurity of tenure.
the poor during its election campaign. On a Katchi abadis are not formed by newcomers or
practical front, do you think it is possible for a migrants – knowledge of the land market and
country like Pakistan to execute such a prom- police and political protection is needed to initi-
ise given the lack of public funds and the ex- ate settlements (Arif Hasan has documented this
tremely high land and construction costs? extensively) – nor are rural migrants attracted by
“housing” – that is about the only thing they al-
A. Every government in Pakistan has promised ready have. What they come to the cities for are
to “solve” the housing problem, whether by the jobs and services.
Prime Minister’s Housing Scheme, the 7 marla
housing, the 5 marla housing scheme or the mil- The “Housing Problem” in Pakistan, and especial-
lion houses programme. ly in Pakistan’s cities consists of quality and not
quantity. Moreover, the “quality gap” is most
likely caused not so much by finance or capability
or willingness on the part of the households as it
is of the legal frameworks and their application.

As for whether the government of a poor country

“solving the housing problem”, of course it can,
but not by building houses. Instead of transfer-
ring public land to developers, give tenurial rights
to the squatters on public land (create group own-
ership), provide urban services to these settle-
ments. Allocate land within upper income hous-
ing schemes. The poorest 20% of the population

Page 27
 uses only 4% of the land. one of the region’s most polluted bodies of water.
To combat these issues, the Eskisehir Metropoli-
tan Municipality created a network of natural in-
frastructure to restore the Porsuk, expand public
green spaces and link the entire corridor with a
sustainable public transport network.
The Eskisehir Urban Development Project inter-
weaves green and grey infrastructure with a new
electric tram network to create a modern, na-
ture-based city. Parks along the river have helped
improve water quality and control flooding, while
also spurring new commercial growth and pedes-
trian traffic.
Since the project launched, green space per city
resident has increased 215 percent, 24 miles of
electric tram lines move more than 130,000 peo-
Q. Why do you feel high-rise development and ple per day, and the city has become a hub for do-
mixed-use of urban land has not gained much mestic and international tourism.
traction with successive governments and its
policymakers in Pakistan? Q. According to recent estimates about half of
Pakistan is urbanized. Given this, why do you
A. Partly the reason is the same as for urban think the myth of Pakistan being predomi-
sprawl, and this is further reinforced by the pre- nantly a ‘rural country’ still persists in certain
sumption that the “bungalow” is a sign of status policy circles?
and wealth. Consequently, legislation does not al- (Conventionally urban located sectors of ser-
low high-rise. As long as flats are only restricted vices and industry account for over 75% of
to the middle classes, high-rise will not happen. GDP).
As for mixed development, that too is enshrined
in the legislation, but in practice, there is a lot of A. On the one hand, traditionally, political power
mixed use, ranging from schools, clinics etc. to of- was more firmly entrenched with the feudal fam-
fices and gyms and restaurants. ilies, and they were able to deliver votes more
consistently, whereas urban voters were far more
Q. From your experience or otherwise, can you fickle and less reliable.
share an example of a country/city that suc-
cessfully transformed its urban landscape?

A. Gent, in Belgium, is a vivid, vibrant, and grow-

ing city. This has plenty of advantages, but also
brings with it some challenges, as the pressure of
motorized traffic on the city keeps on growing. To
ensure Ghent’s accessibility and livability in the
future, the city council decided to implement a
new Circulation Plan in April 2017.
Whoever now wants to move from one city dis-
trict to another must make use of the inner-city
ring road. The ultimate goal of the Circulation Their hold over budget allocations was there-
Plan is to take through traffic out of the city cen- fore firmer. On the other hand, there persists the
tre. That means whoever needs to be in the city “arcadian dream” amongst the aid community
centre will be able to get there more easily. who transfer their biases to aid programmes and
Car usage reduced from 55 to 27 per cent; would like to reverse rural-urban migration and
Cycling increasing from 22 to 30 per cent; indeed “modernisation”. This was also responsi-
Public transport usage increasing from 9 to 20 ble for the “urban bias” myth and it was used to
per cent; divert flows to the rural areas.
Walking increasing from 15 to 18 per cent.
In Eskisehir, Turkey, congestion was clogging the The combination has been hard to beat.
city center, and the central Porsuk River became

Page 28
 Interviews

es: that is unlike the tax deducted at the source or

that added to the end price of an item you buy at
the supermarket, you pay for property taxes di-
rectly, usually in lump sum payments. This creates
a clear line of accountability between the people
and the government. For example, we have exper-
imental evidence from the Democratic Republic of
Congo that property tax collection drives people

Shahrukh Wani
to demand accountable governance. I argue that
if we expand property taxation, this will lead to
people demanding better public service delivery.
This links to my second point that property taxa-
tion is a local tax, unlike most other forms of taxa-
tion. That is, it is spatially-bound so you can create
those lines of accountability between taxpayers
and providers of urban services clearly and at a
smaller spatial scale. This is even more impor-
tant considering how easy it is for rich people to
move capital between borders that makes taxing
it hard. The big thing missing for us is local ur-
ban governments that can both tax properties and
provide corresponding services to the taxpayers.
On its economic impact, we need to study the wel-
fare consequences and incidence of the tax based
on its exact design and where it is applied, but in
theory such a tax is economically less distortion-
ary. Here we need to make a distinction between
taxes on land and those that consider the improve-
ments on land too, like the structure of the house.
As land’s supply is fixed, a tax on it will not reduce
the land’s supply (which would be a bad thing to
Shahrukh Wani is associated with the Interna- do). This is a stark contrast from almost all forms
tional Growth Centre’s “Cities that work” Initia- of taxes that create some form of bad consequenc-
tive, Blavatnik School of Government, University es, usually by lowering supply. For example, you
of Oxford. tax people’s income, people might work less. Land
is instrumentally different so we can tax it with-
Q. How do you see increased property taxation out creating these bad consequences. A tax that
as a source of better public service delivery in also considers the construction on the land (that
Pakistan? If introduced, can it have a subse- is, the property as a whole) will create some bad
quent impact on economic activities? consequences: typically, by lowering investment
on properties. So ideally such a tax should give
A. It is important for us to recognize that increas- more weight to the value of the land, than on the
ing tax revenue - through any means - can pave for buildings on it - although the latter may be impor-
more delivery of public services, as tax revenue is tant to distribute wealth properly.
instrumental in determining state capacity to de-
liver public services. Of course, low tax revenue Q. You suggest the expansion of taxation juris-
isn’t the only constraint to better public services diction to independent/authorized urban gov-
and it also matters what kind of economic loss ernments. Given the lack of local government,
those taxes collect but low tax revenue is a con- and vertical disbursement of funds; how do
straint. Claiming otherwise is incorrect. you think Pakistan can use this as an instru-
What makes land and property taxes particularly ment to strengthen local governments?
important for service delivery is that they’re very
visible and spatially-bound. Let me expand on the A. It is a two-way relationship here. You need local
two. governments to actually make this tax work, and
First, they are a particularly visible form of tax- you need this tax for local governments to work.
The reason we need local governments is because,

Page 29
 as I said earlier, we need that link between the tax infections is mainly indoor density. That is, when
and the corresponding public services clearly. An a large number of people live together in close
added dimension here is that landlords are a pow- quarters. This is more prevalent in informal set-
erful lobby and there is going to be a very strong tlements where large numbers of people are con-
backlash if we expand this tax. To counter this we fined to small houses and there aren’t enough
need a coalition of beneficiaries of the people who open spaces between households. So it is impor-
will benefit from better public services. Reforms tant to exactly determine the type of density that
are hard to manage and without a clear reformist is most worrying in the spread of diseases. On the
coalition it won’t get done, or sustained. second, we need to recognize that density broadly
Then we also need this tax for local governments is a very good thing when there isn’t an infection.
to work. We see this tendency in many countries Density is good for productivity and it is good for
that local governments are set up half-heartedly, the environment.
usually they’re given mandates to provide servic- On managing density, of course, cities need to do
es but not the necessary fiscal powers to pay for that. All urban policy effectively exists in a two-
it (these are called ‘unfunded mandates’). Giving way tension between expanding the upsides of
them power to tax land and properties is a great density (like, allowing people to share ideas) and
way to make sure that they’re truly empowered downsides of density (contagion, crime, and con-
to provide public services. This also gives them gestion). For example, investing in a public trans-
a stake in the economic progress of their juris- port system is a great way to manage this tension:
diction: if the local economy does well, they get you help people connect with each other and
more tax revenue, so they are more incentivised firms, and decrease congestion. Many cities are
to make productivity-enhancing investments. able to do this well, others not so well.

Q. The financial management in Pakistani cit- Q. You recently suggested that there is a higher
ies is top to bottom, with minimum revenue rate of return on investments in the stock mar-
generation by cities? Do you think this model ket than property, can you elaborate on this?
is sustainable? Also, how can we deconstruct our fascination
with the rent-seeking property market?
A. Cities need two broad fundamentals for prop-
er financial management: first, they need to have A. So the suggestion was made by the State Bank
predictable expectations of how much money they of Pakistan comparing index-fund return and the
will get from national or provincial governments. return from Zameen.com’s database. There are
Even with lots of local taxes, this will remain a problems with that data but it does give a broad
major source of revenue (as it is everywhere). But indication that the rate of return on real estate is
these transfers shouldn’t be ad-hoc because cities significant. This isn’t an exception either: we have
need predictable and transparent fiscal transfers long-run data that shows that return on housing
to plan for and invest in large scale investments is significant across modern history, so we’re not
and also borrow money from the private market, an exception here.
if they’re legally allowed to do that in the first What is interesting to ask is the implications of
place. Second is that they need to complement such high-returns from real estate. Most funda-
that significantly with local taxes and user fees. mentally, it creates incentives for people and firms
Land and properties are the biggest source of lo- to invest in real estate, as a way for them to park
cal taxes while user fees can be charged where the and increase their wealth. It might be a self-fulfill-
government can easily exclude people from using ing prophecy: people invest in real estate expect-
a service, such as in the case of public buses. ing high-returns, the expectations also crowds-in
more investment and pushes up the value of real
Q. There is an emerging case for de-densifi- estate. Hence, delivering high-returns. The ques-
cation in wake of COVID. Can cities manage tion is then, is this a good thing? Is it coming at the
the densification and agglomeration, and still cost of investment in other sectors of the econo-
manage to provide better health facilities in my, perhaps that can increase our exports? We
health emergencies? need to think about these questions analytically
and produce some evidence to inform these dis-
A. Two things to ask when people talk about cussions. My big fear is that the current system ef-
de-densification: what kind of density do they fectively means that the real estate sector absorbs
mean? And, what is the cost of reducing densi- a lot of speculative investment that crowds-out
ty? On the first, what actually drives COVID19 people who want to buy land for housing.

Page 30
Webinars & Articles

Page 31
 Lahore’s Urban Dilemma
Providing low-cost and affordable housing options for lower income groups in the country is one of the
promises that were made by Prime Minister Imran Khan and his party during their election campaign.
Implementation plans for this have been set in motion with the establishment of Naya Pakistan Housing
Scheme. For a city like Lahore, Prime Minister’s vision is to provide 0.5 million housing units in the next
three years with particular emphasis on high-rise development such as flats and apartment buildings.
This construction activity is aimed at not only providing housing options but also in the meanwhile gen-
erating jobs, encouraging investment and leading to growth of the economy.

More recently, the Prime Minister’s coronavirus response package for the construction industry an-
nounced by the government is likely to incentivize investment in the industry. Having said that, tax
break, amnesties and subsidies are one only side of the situation, because the current rules & regula-
tions for building are too complex & contradictory and are a significant disincentive to investment in
the construction industry. In a city like Lahore, the glut of regulations is compounded by the fact that an
agency like Lahore Development Authority (LDA) only controls 20% of the city, with numerous other
agencies like TMA, LMC, PHATA & DHA having their own independent regulations and approval proce-
dures. Moreover, the different agencies are often seen pitted against each other in a play of regulatory
competition.

On the approval period front, it often takes too long for builders to get permissions and the process is
also expensive on top of being lengthy and seriously impedes ease-of-doing business. Furthermore, the
current Floor Area Ratio (FAR) & height restriction guidelines for building are too strict and don’t favor
the like of high-rise development that the Prime Minister and the Cabinet has envisioned.

The FAR & height restrictions along with other regulations have meant that in Lahore, like in most other
Pakistani cities, low-rise single-housing units and 4-floor commercial unites have become the building
standard, leaving the city with box like structures and causing shortage of much needed city space. This

Page 32
overall space shortage has meant land for public
and recreational use has begun to evaporate. If
• LDA represents only 20% of the city.
Government’s plans of providing pro-poor hous-
• 5 entities regulate Lahore with different
ing options and generating employment through
rules and without citizen participation
investment in the construction sector are to mate-
and representation
rialize there is an imminent need to relax building
• LDA is to be congratulated for this effort
laws and deregulate. A good starting point would
to follow cabinet instructions. Other en-
be to relax Floor Ratio Area (FAR) regulations by
tities regulating Lahore have not shown
a factor of at least 2 to go along with complete
any initiative yet.
removal of height restrictions to encourage high-
• Only the chief minister’s office can coor-
rise development. Most urban planners agree on
dinate these entities. We are thankful to
the superfluous nature of having height restric-
Salman Shah Adviser finance for taking
tion along with FAR regulations. Making FAR reg-
up this initiative.
ulations the singular yardstick to measure build-
• Coordination between these governing
ing density will bring simplicity to the regulations
arrangements that make city devel-
and encourage high-rise development.
opment difficult will have deep reper-
cussions for the city development and
The planning paradigm of Pakistani cities is: eventually, economic growth. We urge the
• Low rise (4-floor commercial areas) government to take up this issue of city
along wide roads fragmentation that slows our economic
• Single-family houses and growth as a matter of national security.
• A priority to cars: very-widening roads
with flyovers and high-speed lanes.
The result has been that the Single-Family This simplicity can then be complemented with
home has become the unit for the economic sky exposure guidelines so that environmentally
activity taking on all activities such as: irresponsible high-rise development can be kept
• Schools in check. In addition to the complex regulation
• Offices that impedes growth of the construction industry,
• Leisure space what is also visible is the lack of strategic urban
• Restaurants planning. Lahore’s urban sprawl for instance has
• Shops grown significantly over the past few decades be-
• Warehouses cause of low-rise building and an overemphasis
Hence it can be concluded that masterplans on tailoring city infrastructure to suit car-based
for cities within Pakistan have failed to mobility. There has been an exponential increase
recognize the variety of human needs or the in car and motorcycle ownership resulting in
growing population in cities. Instead, the congestion in the city, environmental loss and
preferred approach has been to force people decreasing standards of public transport. This
into tight fantasies of planning divorced from legacy of car-centric urban development is even
emerging needs, technologies, or changing visible on either side of the Lahore Metro, which
lifestyles. The result is that neighborhoods,
arguably is the most talked about public transport
needs, and requirements wage a constant
story in media’s and public’s consciousness.
battle against the poor planning standards
Despite the abundance of issues that restrict
that are set up.
proper urban development, constructive relax-
Courts have jumped into the game without
ation of regulations and alignment of regulatory
any idea of what the sociology or economy of
agencies can bring about positive changes to the
a city is. A developing country like Pakistan
city landscape in Lahore. This however would
is, therefore, wasting real resources with
mean not repeating the same mistakes of the past
businesses and livelihoods being destroyed
and not facilitating above all rent-seeking behav-
and transaction costs inordinately rising as
ior of regulatory agencies through complex laws.
courts and planners try to enforce unrealis-
tic and fantastic standards. This thoughtless Proponents of stringent height restrictions on
planning is detrimental to economic growth. building hold that if the rules were to be loosened,
it would lead to unabated high-rise development
as everyone would go to the maximum height-lev-
el of building. This fear is, however, unfounded as

Page 33
 there is no sensible indication that such a scenario will materialize. Market forces present mean that
high-rise building is an expensive process and only when greater risks of high-rise building are mini-
mized is then that builders will go for such development. This however can only happen when there are
minimal regulations.
One area where the government can intervene is to increase the capacity of organizations such as TEPA,
WASA, Sui Gas and LESCO so that they can provide their facilities in high-rise buildings effectively. An
integrated approach and inter-departmental coordination here is need of the day.
Another persistent issue reflected in the approach taken by the Naya Pakistan Housing Scheme is the
misplaced emphasis on development of housing schemes. Such an approach is detrimental when it
comes to incentivizing smaller builders who often construct for self-use. On top of that restrictions on
high-rise buildings on smaller plot sizes mean that small land-holders are institutionally discriminated
against. This both at a philosophical and practical level is contradictory to the pro-poor housing ap-
proach that the government claims to adopt. High-rise mix-use (both commercial & residential) building
should be a prerogative of all and not just the big private builders and institutions.
Lahore, the city Iqbal, the man who conceived the idea of Pakistan, is known historically for its gardens
and vibrant street bazars. It is now a victim of congestion and poor urban planning. Such poor planning
has occurred under the nose of institutions and rules that were designed to protect the city. The need
perhaps is to loosen the laws and give market the chance to play out its course. In doing so, we can also
encourage construction on all levels, decrease low-income housing shortage, create employment and
invigorate the local economy.

Authors: Nadeem Ul Haque, Madeeha Qureshi, Hafeez Ur Rehman Hadi & Fahd Zulfiqar

Summarised by: Raja Rafi Ullah

Page 34
Pakistan’s Urban Policy:
Turning Cities Into Slums
Murtaza Haider
If you have lived in a middle-class neighborhood in a large city in Pakistan, you probably grew up de-
prived of what urban living offers elsewhere: quality education, entertainment, hope, and opportunities.
What you know is chaos, congestion, religious zeal, violence, and a stifling sense of entrapment. No won-
der millions of Pakistani youth have one goal: “Pakistan se zinda bhaag”.

But this need not be the case. Cities in Pakistan could be transformed to become engines of econom-
ic growth. However, this would remain a dream as long as urban economic development stays on the
back-burner of Pakistan’s economic policymaking. For the nation’s economic fortunes to turn, urban
economic development has to be at the forefront of economic policymaking, which in the past has fo-
cused exclusively on agriculture and manufacturing, and more recently on remittances.

Pakistan’s economists, too, have ignored the subject of urban economic growth. Hundreds, if not thou-
sands, of academic papers have been generated that offer a tiny variation on the time-series models that
focus on the macroeconomics of Pakistan’s debt-ridden economy. That is why having one of the nation’s
preeminent economists, Dr Nadeem ul Haque, focus on urban economies is a rare but welcome event.
In a recent PIDE working paper, Dr. Haque makes a strong case for developing cities to their potential to
trigger economic growth. He identifies several shortcomings that have prevented urban economies from
reaching their potential in Pakistan.

Understanding Pakistan’s urban economy in its unique perspective

I would submit that similar shortcomings have been prevalent in North America and Europe, where
hundreds of bustling metropolises developed and thrived. It is, therefore, important to understand the
unique failures of policy and social order that have kept Pakistan’s urban centres in a state of despair.

Urban research is scarce everywhere, not just in Pakistan

Dr Haque laments the paucity of urban research in Pakistan. But this is also true for North America. The
celebrated economics departments in North American universities often boast little more than a token
urban economist. Departments with two urban-focused academics claim to offer an ‘urban’ specialisa-
tion!
Compare research in macroeconomics, which is be-
ing produced with industrial efficiency, to research
in urban economics, which is few and far between
in the West. Alternatively, compare the number of
books published with macroeconomics in their title
to those highlighting urban economics on the cover
page. Based on the sales volume, the bestselling urban
economics title on Amazon.com is ranked 187,207. In
comparison, the text on macroeconomics is ranked
much higher at 1,431.
The dominance of small builders is a common
trait too
Dr Haque highlights that unlike North America, where

Page 35
 large builders mass-produce housing, residential development is largely done by individual households
or small-sized developers in Pakistan. While it is true that large builders and land developers are un-
common in Pakistan, the housebuilding industry in North America is also dominated by a large number
of small builders.

Michael Buzzelli, who is currently a professor of Geography at the Western University, studied the struc-
ture of house-building firms in North America. Dr Buzzelli and I were contemporaries and focused on
the supply side of housing equation for our doctoral dissertations. Dr Buzzelli’s findings are quite reveal-
ing. His research showed that the house-building industry “continued to be the preserve of small firms,
when over 85 per cent of all builders constructed no more than 25 units each.” He further noted that
roughly one-third of small builders constructed just one house a year.

The other not so commonly known fact about large home-builders in North America is that they are con-
sidered large not because of their size, but because of the number of housing units they produce under
their brand. Essentially, large builders are agglomerates of a large number of small builders and trades
who are individually incorporated businesses that collaborate to produce a large number of housing
units under the same brand.

What we need is a better definition of the term ‘urban’

The other key limitation of urban policy making in Pakistan is how one may define ‘urban’. The govern-
ment uses arbitrary administrative boundaries to define what is urban and what is not. Some research-
ers have argued that Pakistan is more urban than what the official statistics show.
Dr. Haque quotes research which claims that almost 70 per cent of Pakistan is either urban or urbanis-
ing. This is rather exaggerated and it complicates further the task of reforming urban economies.
He quotes unpublished work from South Asia Institute at Harvard University that shows 39.7 percent of
Punjab’s population to be urban and an additional 33.2 percent urbanising. Almost 40 percent of Sindh’s
population is estimated to be urban with an additional 19.4 percent urbanising.

The devil, however, is in the detail

The report considers an area ‘urban’ if it has a gross population density of 500 persons per square kilo-
metre. The other criterion for being urban is a minimum population threshold of 100,000 or more in a
single place defined by the Census. The minimum gross population density for an urbanising area is set
at 250 persons per sq km. I am concerned that the density thresholds have been set too low. Take Lahore
for instance, where the population density in central areas, such as Ravi Town was recorded at 25,000
persons per sq km (based on the 1998 Census). The population density in Cantonment was recorded
at 5,800 persons per sq km. Even the sparsely populated Wagha Town reported a population density of
1,100 persons per sq km, which is more than twice the population density thresholds defined earlier.

One needs to acknowledge that what surrounds the haphazardly growing urban areas of Pakistan are
not urbanising areas, but Ruralopolises. These areas “underline the fusion of rural economic and social
systems with metropolitan spatial organisations. Ruralopolises are the sites of urbanisation through
implosion.”

Lack of local governance structures

Dr Haque rightly identifies the lack of institutions and governance structures that have contributed to
the sorry state of Pakistan’s urban centres. It is hard to imagine an urban governance structure in the
absence of urban or local governments and stable institutions that could enforce plans and prevent their
violations. A stronger constitutional cover is needed to protect the local governments from becoming
victims of provincial governments, which have repeatedly and deliberately defeated attempts to evolve
democratic governance at the municipal level. This also requires abolishing Cantonment Boards that
effectively disenfranchise citizens by denying them the right to run and lead their local governments.

More high-density developments are needed Also, his point about the lack of high-density mixed-use

Page 36
developments in urban Pakistan is spot on. Where are the tower cranes, he asks. He identifies the blind
adherence to the Garden City utopia that led to low-density residential neighbourhoods. As a result of
that, urban development policies institutionalised urban sprawl in Pakistan. The low-density develop-
ment contributed to converting excessive conversion of fertile agricultural land to low-density residen-
tial land uses. If housing were developed at high-density in mid- to high-rise developments, the land
conversion would have taken place at a much slower pace. However, urban governance mechanisms
have to be improved before any high-density development can be delivered in Pakistan.

Time for Pakistan’s powerful to look beyond their own interests

Urban land is the instrument of wealth creation in Pakistan. This fact is not lost on politicians, armed
forces personnel, and even members of the judiciary. Every powerful group in Pakistan has laid claims
on land all across Pakistan. Housing schemes have been developed for the benefit of the interest groups
who have acquired land at highly subsidised rates, developed housing, and flipped properties for astro-
nomical profits.
On the other hand, plumbers, machine operators, restaurant workers and millions like them lack the
institutional backing enjoyed by the others to acquire hundreds of hectares for the benefit of their com-
munity.

For equitable economic growth in Pakistan, access to state land for planned development has to happen
for all, and not just for the privileged few. Every first Friday of the month is the most important day for
financial markets in the United States. The government releases the non-farm payroll statistics for the
previous month. The number of jobs created in the past month influences the interest rates and the
larger economy. The federal government diligently reports the employment statistics every month in the
United States. When was the last time such numbers were reported on a regular interval for Pakistan?
Has the economy generated or lost jobs during the tenure of a government in Pakistan is a question of
prime importance, yet it is seldom raised by the electorate, and hence never answered.

If job creation were a real concern of the government, it would have focused on creating the right envi-
ronments for urban centres to become engines of economic growth and provide employment to the mil-
lions of youth who have come of age in the past few decades. But it is clear that they do not care enough.
At the same time, urban centres lack infrastructure for entertainment. Dr. Haque notes that the Defence
Housing Authority in Lahore has 26 mosques, one cinema, and a library. It should therefore come as no
surprise that the urban youth have embraced religious fanaticism in a place where entertainment is
scarce and religious institutions aplenty.

Published in Dawn on 8th April, 2015.

Page 37
Construction package:
Not a silver bullet!
Nadeem Khurshid

PTI’s incumbent government assumed office in for Vertical Cities’, was received with a mix of re-
July 2018 with many tall promises on their elec- sponses; builders/developers hail it as a silver
tion manifesto and obviously, the slogans must bullet to inflect the sinking economy overnight,
have attracted masses to bring them in power. once the capital and promised concessions are in
Among the promises, provision of 5 million hous- their hands. Economists and financial experts, be-
es and jobs stand prominent though PTI leader- ing wary of the black and grey monies coming in,
ship was not able to validate their construction attempt to prophesize FATF’s response in proxy.
policy foresight clearly for another 18 months. Urban planners and architects appear apprehen-
People were in wait to see advertisements for jobs sive of the lacking physical and car infrastructure
and dream houses- but the poor peoples’ SANTA essentially needed to construct high-rises.
didn’t arrive. All of us understand that no state
can provide such large-scale employment and Conservationists nuance to protect city heritage
housing without engaging the private sector, and
perhaps this is what policy circles have been try-
ing to convince the government for long.

The current package is not the first of its kind,

all past governments had such initiatives- start-
ing from the President Ghulam Muhammad’s era,
then Z. A. Bhutto’s regime followed with ‘Roti,
Kapra aur Makaan’ slogan. During Zia’s mar-
tial-law, his premier M. K. Junejo also launched
a program for the provision of 5-7 Marla houses.
PML (N) government first launched ‘Mera Ghar’ in
1992 and ‘Aashiana’ in 2010. Some other city level
community-based programs are documented as
success including the Orangi Pilot Project (OPP)
in Karachi in the early ’80s, ‘Khuda Ki Basti’ (KKB)
1985 in Hyderabad, Karachi, and Lahore, and Fais-
alabad Area Up-gradation Project (FAUP) in 1992.
Federal OPF, provincial housing authorities/foun-
dations, city development authorities, and private
sector hosing schemes developers also joined the
housing bandwagon in the ’70s. These programs
largely failed because of their poor and far-off lo-
cation (primarily utilizing state lands) except for
‘Mera Ghar’, and for their concentration over the
plot-based single unit housing model. And some-
how, all were executed as discrete projects with-
out a well-thought-out vision.

The package, a policy reflection of PM’s ‘Vision

against construction invasion. Tax experts fear that all the benefits will be privatized and the govern-
ment will get nothing. Social activists see the package as a ‘blessing in disguise’ and a rare opportunity
to provide every poor with a decent house. Bureaucrats argue that tenuous local consulting capacity
and nature of tall order projects necessitate the ‘import’ of foreign consultants. City managers stand
promising with their in-practice discretionary and restrictive zoning/building control tools which favor
suburban plot-making and allow construction of fewer high/mid-rise buildings only on selective sites.
Let’s attempt to resolve the responses; our cities are over-regulated and offer fewer opportunities for
businesses to thrive. Cities and the people need to understand that housing is not just a “MAKAAN”, it
has to be a complete eco-system of live-work-leisure interfaces. Cities need to have construction friendly
regulations that must facilitate creating walkable, mixed-use, and denser communities, not just the sub-
urban sprawl. Cities must revisit the regulations to facilitate mixed-use vertical construction to help ease
insidious dearth of decent business and living spaces.

Eminent economist Dr. Nadeem ul Haque has long been convincing cities to integrate denser living in-
side mixed use developments, with ample walking/cycling opportunities and basic living must be a flat/
apartment, not the suburban bungalows. Globally, city cores are considered ‘Wealth of Cities’- generat-
ing revenues to run economies the way ‘Manhattan’ hosts prime financial/business powerhouses in a
vertical setting. Our costliest city cores (both in terms of land price and rentals) are rundown and being
sub-optimally used-cities must attempt to regenerate them. Development along transit corridors is an-
other missed economic opportunity. Apparently, not too many people in our cities sleep under the sky.
Mostly urban workforce commute daily to cities
for work from their living in the city fringe. The
government estimates that 47% of the urban pop-
ulation lives in squatters meaning the issue is not
of quantity, this is about the poor quality of hous-
ing. And when quality urban housing remains
unaffordable even for working middle-class, how
the government will be able to provide each poor
with a house from public exchequer without en-
gaging the private sector? Any good housing mod-
el must work to prioritize the productive working
class. Only spillover revenues from profit-gener-
ating mixed-use business developments would
help create ample rental effect. housing for poor/
less-affording people as a trickle-down effect. Further, the need is to create a rental housing market,
not the essential plot/house ownerships. Around 10 million poor living in more than 4000 registered

Page 39
 slums/katchi abadis could be facilitated through augmentation of a minimal set of basic infrastructures
to improve living conditions and also by giving them ample livelihood opportunities in parallel, so they
are able to rise from a subsistence level. NGOs such as AKHUWAT can be practical partners to extend
micro-finance. KKB and OPP are exemplary community-based housing development models developed
by local brains, not foreign consultants. Mortgage financing has always been there, either by HBFC or
commercial financial institutions but for mortgages to work well, we need a stable and sustained job
market for both mortgage servicing and house maintenance.

Projects facilitated through the package are expected to help the economy grow in multiple ways; by
creating jobs, attracting investments, improving urban services, adding to housing rental stock, enabling
industries to thrive, and also offsetting grave environmental costs through the creation of denser mixed-
use communities.

This can be hoped that profits will not be privatized solely if authorities are able to devise well thought-
out implementation strategies to yield equal opportunities for city authorities, the private sector, and
the masses. The package is expected to help city authorities to generate use/utility based revenues,
create ample skilled/unskilled jobs, masses to have decent places for work-live-solace, consulting &
construction industry to rise technically, help real estate market to thrive and eventually to support the
crumbling economy.

Published in Business Recorder, 8th May, 2020.

Page 40
 PIDE Webinar Series

PIDE Webinar Series

I. Cities for humanity and development
Background
Pakistan has some of the largest cities in the world with currently Karachi having over 15 million
inhabitants, Lahore having about 12 million people, and about 20 cities in total having populations of
above a million. The rapid urbanization that the country has seen has also brought about its share of
issues with the current urban landscape dominated by a shortage of urban space; automobiles induced
congestion and uncontrolled urban sprawling due to policy emphasis on single-use family housing
units.
To increase awareness and create a dialogue on issues that affect the country’s cities, Pakistan Institute
of Development Economics (PIDE) recently organized a series of webinars entitled ‘Cities for Humanity
& Development’. The webinars brought together international experts, urban planners, and other relat-
ed professionals in discussing the issues that are faced by both cities in general and more specifically
by cities in Pakistan.

Questions:
How can effective and inclusive cities be planned?
How city development determines economic and social welfare?
How to control urban sprawl?
How to manage inclusive cities for all?
What is the relationship between automobiles and city planning?

Nadeem Ul Haque Anthony Venables John Thwaites

Vice Chancellor Professor of Economics Professional Fellow
PIDE Monash University University of Oxford

Page 41
 The first webinar of the series titled ‘COVID-19 and the Future of Cities’ was organized jointly by PIDE,
Monash University’s Center for Development Economics & Sustainability (CDES), and Monash Sustain-
able Development Institute (MSDI). The webinar panelists included Vice-Chancellor PIDE, Dr. Nadeem
Ul Haque, Oxford University Economist, Anthony Venables, and Professorial Fellow Monash University,
John Thwaites.

Given the backdrop of the COVID-19 pandemic, the panelists discussed how cities which have been
important drivers of economic growth in both developing and developed economies may be seen prob-
lematic given the dangers of close-proximity densely populated urban living during a pandemic.
The panelists agreed that even though the COVID-19 pandemic has created unprecedented conditions,
yet once the situation normalizes, cities are still going to be main drivers of economic growth due to
the infrastructure and the high productivity zones that they provide.
On the issue of how the pandemic has affected cities in developing countries where often social dis-
tancing is difficult, Dr. Nadeem Ul Haque stated that policymaking including urban policy has been
largely determined by foreign donor consultants in Pakistan, who have often benefited at the expense
of local researchers and policymakers.

The local capacity gap has been further highlighted during the current pandemic. While donor consult-
ants have a part to play, their involvement should not come at the expense of local practitioners and
researchers being sidelined. Well thought-out urban planning that keeps local realities in mind can
only come about through involvement of locally informed policymakers.

Page 42
 PIDE Webinar Series

II. Cities for humanity and development

Ken Greenberg
Urban Designer
Greenberg Consultants

In the second webinar of the series, PIDE invited Toronto-based Urban Designer, Ken Greenberg, who
has over four decades of experience in urban design across cities in North America and Europe. The we-
binar was moderated by Vice Chancellor PIDE, Dr. Nadeem Ul Haque.

Dr. Haque started the webinar by listing the issues that affect Pakistani cities. He mentioned that how
Pakistan has over the years followed the much-critiqued model of North American urban planning that
leads to congestion, sprawl, and car-based mobility.

Furthermore, he pointed out that the country has strict zoning laws that inhibit mix-use of land and has
led to a shortage of urban space, exclusion of the poor, and diminished growth of commercial business
activities.

Ken Greenberg mentioned that the relationship with “automobiles” and how it affects urban spaces is
not only peculiar to Pakistan but is rather a part of a much larger debate in the urban planning and de-
sign literature. This dependence on cars/automobiles not only leads to congestion and sprawl but also
carries health concerns for populations that do not walk as often as they should.

He further stated that the 20th century North American model of urban growth that Pakistan seems to
be following has largely been abandoned by recent urban designers in North America. According to him,
North America is “working through a major paradigm shift from a mid-20th century land-use segregat-
ed, auto-oriented configuration to a more sustainable, compact, mixed urban future.” More and more
young people in North American cities now prefer to live in walkable urban spaces.

The Toronto-based urban designer also mentioned that from his own experience, mix-use of urban space
i.e. simultaneous use for commercial, residential, and other purposes is a viable solution for curbing ur-
ban sprawl and creating less congested cities.

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PIDE Webinar Series

III. Cities for humanity

and development

Brent Toderian
Former Chief Urban Planner
City of Vancouver

For the third webinar of the series, PIDE invited North American Urban Planner and former Chief Urban
Planner for the City of Vancouver, Brent Toderian. This session was moderated by Vice Chancellor PIDE,
Dr. Nadeem Ul Haque.

Brent Toderian started by stating that although he has not visited Pakistan, having listened to the issues
that Pakistani cities are currently facing, he sees many parallels between Pakistani cities and the cities
that he has worked in both developed and developing countries.

He stressed the importance of creating cities

where people are not dependent on cars for mo-
bility. Furthermore, he went on to describe how
the need is for planners to create urban spaces
that include more “interactive streets” i.e. streets
on which people can walk and engage with busi-
nesses and other activities. These interactive
streets are important ingredients for creating
what he branded as “doing density better”.

The increased emphasis to create urban spaces of

high density can lead to planners often ignoring
that density in-itself is only a number.
The internal configuration of density is the key to
create urban spaces that are interactive, not-con-
gested and amenable to vibrant commercial and
residential activities.

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 PIDE Webinar Series

IV. Cities for humanity

and development

Leslie Woo
Chief Planning Officer
Metrolinx, Toronto, Canada

The fourth webinar in the series explored how cities could be planned so that they are made better
suited for humanity and development. At the outset, the session addressed a concern why the cities in
developing countries are devoid of addressing the humane needs of urban populations and planners
prefer gentrification.
Ms. Woo suggested that cities must opt for the agenda to bring humanity and development at the core of
city planning and that this precisely has been her struggle throughout her own career.
She emphasized that in order to plan cities for humanity, influencers and key stakeholders need to keep
all segments of population in mind given their respective heterogenic needs, characteristics and civic
requirements.
The cities must have civic
capacity to speak and cam-
paign for the cities to be more
inclusive. Cities should be
thought of as collections of ac-
tions and the culminations of
many decisions over the peri-
ods of time. In such a scenario,
strong commitment to cham-
pioning the city rights for the
entire population and not just
one segment is a fundamental
part of making inclusive cities
that are drivers of growth and
welfare.

Page 45
PIDE Webinar Series

V. Construction
The Pakistan Institute of Development Economics (PIDE) organized an online seminar on the recently
announced incentive package for the construction industry by Imran Khan, the Prime Minister of Paki-
stan. The keen attendance of more than 100 participants rightly indicated the importance of subject,
and thus, the package was discussed in detail. The representation from contractors, federal housing au-
thorities, LDA, architects, urban planners, and academic researchers made it a viable dialogue between
stakeholders.

Defining the construction industry, the panelists agreed on the broader definition of construc-
tion that recently assumed in media and policy circles. The construction industry, as per partici-
pants, must include the simultaneous planning of non-constructed amenities including having public
spaces.

Dr Noman Ahmad, an academic Urban planner from Karachi, noted that the package clearly lacked the
ideas about geographic spread as result of construction. He further warned against the auxiliary con-
centration in 10 large cities having more than 54% of urban population of country. Abdul Hafeez Sheikh
Pasha of Bismillah Group welcomed the announcement with careful anecdote that the package is a ‘time
bomb’, and most projects shall not be completed in the discounted time by 2022. He also emphasized
the need of installing loan packages by financial institutions for daily-wage workers of industry through
their contractors as custodians.

The Director General of Federal Government Housing authority Wasim Hayat Bajwa clarified that,
through its various initiatives, the Naya Pakistan Housing Authority is open to collaborations such as
to provide land for construction; get land from private partners for construction and building its own
projects.

The fixed taxation regime shall encourage the investors to invest in the construction industry with per

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 PIDE Webinar Series

square feet tax-surcharge and withholding taxes only for the large corporations or suppliers including
that of steel. However, the double tier taxation regime of provincial ticketing and federal taxation must
be addressed as to bring clarity to developers.

The participants however dismayed over the timeframe needed to get the necessary approvals and pre-
paredness of FBR to green-signal the investments.

With respect to the efficiency of the package, the participants raised the pertinent question of construc-
tion value chain; the extent to which the effects of this package be rippled into affiliate industries.
‘We’re in desperate need to deregulate the construction industry, along with reducing the number of
regulatory authorities which impeded ease-of-doing business.’ Said Dr Nadeem ul Haque, the Vice Chan-
cellor at PIDE. ‘There is obfuscation in the commercial usage of resident properties and vice-versa; and
needs to develop mixed use buildings to address
this undeserved dichotomy.’

Like most markets in Pakistan archaic regulations

have seldom been reviewed. PIDE has long main-
tained that we need to re-imagine our markets.
The construction industry is a very good example
of how what is a leading sector in other countries
has been killed by excessive regulation. PIDE has
also argued (and in 2011 PC accepted this argu-
ment in FEG) that the path to high sustainable
growth has to include a period of building in Pakistani cities. And this building has to be complex con-
struction within cities not sprawl.

To make this happen several ideas that we have examined and proposed are:

• Make cities cohesive and defined. The promise of local government eludes us. But even with local
government we have to ensure that cities have coherent jurisdictions ad even defined areas. Lahore
for example is divided into almost 5 overlapping jurisdictions (CHECK) and Karachi into 7 (CHECK).
Moreover, there are no defined city limits and mere plot making stretches cities in strange directions.

• Flat is the unit of living in large cities: Whereas in all large cities, the unit of living is a flat, in
most of our cities (except perhaps Karachi) planners are holding on to the notion of a sin-
gle-family home with a garden to be the norm. Surprisingly these planners remain unaware
that with city sizes running into millions the poor cannot be accommodated in such single-fam-
ily homes. It is for this reason that they developed a social housing program for the poor in
the rural areas around Lahore (Ashaina). The same mistake is now being made in the NPHA.

• Density gradients: Let city centers densify through development of flat living in high (10 or more
floors ) or midrise (less than 10 floors) buildings. And allow for mixed use there. Density gradually
reduces as distance form city centers.

• Deregulation of cities. It should be emphasized that contrary to popular belief the planner has
not tools to develop clarity on where and what to build. Worldwide people are moving away
from rigid planning of cities that is happening in Pakistan. More and more cities are now devel-
oping loose guidelines that allow markets to take decisions on usage, height and cityscape.

• Mobile cities with limited cars: the planners have for decades favored cars making poor mobility
almost impossible. If we want serious development and construction, our paradigm on how city
mobility has to change. The current paradigm of excluding the poor is based on the use of car and
the paradigm of the suburbia.

Page 47
The opportunity of
dead capital
Nadeem ul Haque

Economics has become a science of the loudmouth with numbers. Economists come on TV to show off
that they have numbers and predictions. They will invent all kind of estimates and terms that no one has
heard of to prove how erudite they are. But never will they submit themselves to peer review which is
the international yardstick of quality work.

Whenever I hear them speak, I worry that this is not the economics I learnt — and I worked with about
10 Nobel laureates. These speakers and commentators always talk macro numbers — fiscal and BOP
— and always discuss simple accounting numbers with great aplomb. For example, “we must increase
revenues because the government is losing money”? Never “why is government losing money like there
is no tomorrow.” Then someone will yell “we have money to repay and import bills that must be met, so
look for aid or borrowing.” Why did we borrow so much? Why are our import bills what they are? Why
is the government borrowing at a faster rate than the economy is growing? These questions are never
asked by our economists and therefore never debated.

Adam Smith, the father of economics authored the “Wealth of Nations” to initiate worldwide study of
economics. Since then understanding the forces of growth, development and income distribution have
been the most important areas of study in economics. Individual behavior — consumption, savings and
investment decisions –are studied to understand how they can be tweaked for increased welfare. At the
heart of economics is the quest for increasing human welfare through expanding opportunity for self-ac-
tualization through innovation, entrepreneurship and risk taking.

Is all government expenditure for public good?

Seldom will you hear our economists talk of the Smithian grand Quest of growth, development and wel-
fare. Led by international donors their quest is to malign Pakistan as a nation of tax cheats and a den
of corruption. Revenues must be increased without telling us what if anything will the government do
for us. They remain unaware that a large majority of Pakistanis are paying income tax on a withholding
basis on many transactions. It is well known that this tax withheld is never returned.

The mantra is government needs the revenue and it must be increased. My fellow economists think that
all revenues collected by government will be utilized productively for the welfare of the country. They
never review the waste in the government: the numerous houses made for officials; the real estate de-
velopments made to provide plots to favorites; the wasteful and needless road widening for the cars of
the rich; the expansion of sui gas pipelines even though we have run out of gas; whimsical projects that
MNAs are allowed to direct for vanity reasons; wasteful expenditures on the PM or CM directives that are
non-productive or too expensive; and ill thought out subsidies to the rich or political favorites.

The government is full of waste and no one wants to discuss this issue. Instead we are all ready to give it
more money through a bad tax policy. The government has no money or time for clever research to pro-
mote economic transactions. The government has lost more than 3 trillion rupees in energy over the last
10 years. Unthinkingly this government is signing sovereign guarantees without thought or planning to
build more and more energy. As a result, both the circular debt and energy cost are increasing to impose
a huge cost on the economy. Yet, my fellow economists think that a wasteful inefficient and thoughtless
government’s mistakes must be covered by more increased oppressive senseless taxation.

Where is growth and development?

Yet the biggest issue I take with my fellow economists is that they never focus on growth and productiv-
ity. At most there will be the usual plea for industrialization and export promotion, for both of which the
only instrument seems to be more subsidy in one form or another. For over 5 decades, these economists
have pushed the flawed strategy of promoting the government coddled industry and exports. Despite
a lackluster performance and a considerable subsidy as well as many tax concessions and much tariff
protection, industry grows sporadically and exports as a percentage of GDP remain virtually static. Yet
the mantra is maintained.

Economics in Pakistan has indeed become a set of mantras. They even go to the extent is saying, “we
know what is to be done.” “We have all the solutions.” Basically, what they are saying is no new re-
search is required. The old Mantras of more taxation for more subsidy to industry and exports is enough.
Mind you this has been firmly drilled into us through a series of large advocacy programs organized by
very expensive donor funding. Why do donors fund advocacy? Why do we allow expensive propaganda
against ourselves? I will never understand.

For the last 50 years or so, we have been running on these mantras with committees, task forces and
many, many donor consultants. Yet our long run growth seems to be declining as is our productivity.
Few new industrial sectors have opened up while the old industry remains largely uncompetitive and
cartelized if the competition commission is to be believed. The economy has grown thanks to the orphan
sector that economists don’t talk of — service or domestic commerce.

Einstein said that doing the same thing again and again and expect different results is insanity. Back then
there was no donor funding! But now failed policies are repeated without much rethinking and it is not
insanity. We merely call it “bad implementation.”

Our economists also have little to say about the mess that is the public sector. Another Mantra prevails
here “just privatize.” No matter that our previous thoughtless privatizations were not as successful as
we thought — badly priced, accusations of insider transactions, and some still not fully paid for. Is the
purpose of privatization merely to rid the government of a bad asset? Why would someone buy a fail-
ing asset? Can even government monopolies be privatized? Is a private monopoly better than a public
monopoly? Should privatization not improve the market and consumer welfare? Mantras don’t consider
these possibilities.

Think city-markets-governance

How I would like economists to think differently? In my book, “looking Back: How Pakistan became and
Asian Tiger in 2050” I have outlined a different approach. We must look at the economy as a complex
system in which humans interact individually or in groups to learn, innovate and transact for their col-
lective and individual welfare. Spatially much of this interaction happens in cities where markets, insti-
tutions and the mass of people are located. Much of this activity is guided by laws and regulations that
define markets both physical and virtual. Economic growth is driven by technology that people in cities
strive to develop to increase the exchange of goods and services in the market place. Discovery through
exchange lies at the heart of the human enterprise.

Conceptualizing the economy properly in this fashion immediately suggests that at the heart of the econ-
omy is the city and its markets and how they are governed. My fellow economists must ask themselves
if we have this nexus of city-market-governance configured for the requirements of the 21st century.

The answer is immediately obvious. We do not.

The Pakistani state can probably best be described as an attempt at the preservation of the colonial struc-
tures for continued ‘control and extraction’ now for the brown elite instead of the empire. Much of the legal

Page 49
 system, the judicial system and the executive and regulatory agencies continue to function as inherited. If
any innovation was made in these, it was to introduce politicization and corruption. The shortfalls of this
system are often measured in the Ease of Doing Business indicators of the World Bank. Sadly, these meas-
ures distract from the main point that: the need to modernize the state — reform it into the 21stcentury.

How can you expect the city and the market that is organized by a state that is not only stuck in past practices
but has also been distorted for personal gain to provide for the needs of progress and discovery? Our cities
lack modernity and hotly contested spaces for various mafias, one of which is officialdom that enriches it-
self through controlling city land. Similarly, the colonial state so used to ‘control and extraction’ gives huge
advantages to vested interests such as large industry and large landlords. Antiquated legal laws and judi-
cial systems make transactions and businesses extremely complicated to the cost of growth and welfare.

Is it possible to expect this state to deliver the kind of institutions, laws and governance system that
the 21stcentury requires? If not, how do we expect good things like exports and taxes to increase?

The colonial state chokes investment

This state imposes a huge regulatory burden on the economy which does not seem to concern my friends.
We estimated in the ‘Framework for Economic Growth’ that I developed in the Planning Commission
that this regulatory burden may be as high as 70% of GDP. It is clear that the economy is laboring under
the yoke of obsolete, unreformed and distorted colonial governance structure. Yet this issue is not of
central importance to the economist at large.

Frequently, commentator economists lament the lack of investment in the economy — the invest-
ment-GDP ratio remains at 15% of GDP whereas in India it is over 30% and in china it is 40%. Because
these numbers are pronounced upon without understanding the structure of the economy, analysts sel-
dom ask “where is the room for investment?” Dig deeper and you will find that the colonial enterprise is
holding back investment in more ways than one.

As shown in “looking Back: How Pakistan became and Asian Tiger in 2050” the state controls over 70%
of the market. With that big a footprint, market competition which is the premier driver of investment
is crowded out by the state. In addition, crony capitalism which has captured the colonial state is able to
erect barriers to entry in the form of SROs (selective tax exemptions), protective tariffs as well as excep-
tional access to inputs. In such an environment, investors correctly find limited opportunity.
As if this were not enough, the colonial state lacks specialized skills to manage the requirements of modern
public good provision. Complex areas like energy and water management, city design and development
and regulating markets are clearly of a lager era and far beyond the competence of the ‘control and extrac-
tion’ civil service. The accumulated losses resulting from the poor management of the economy has led to
repeated fiscal and balance of payments crises. IMF adjustment programs have frequently been requested
but with little success in managing a policy coherence for sustainable growth. This policy uncertainty which
once again arises from the lack of professional management of the economy, is a deterrent to investment.

Sprawls without commerce and investment space

Physically too space for investment has been severely restricted by the colonial hangover state. Modern
city development was never a part of the colonial enterprise. They wanted people to continue living in
old cities while the masters lived in enjoyer airy suburbs. Natives had no need for serious enterprise.
They would have small shops, limited schooling and limited space form modern activities. They needed
to be controlled and the only enterprise necessary was to extract for the welfare of empire.
The bureaucracy and the army took over the role of the colonial state and immediately occupied the colonial
habitations and proceeded to keep the colonial traditions alive. At first, they tried to keep everyone where
they were to maintain the divide between the brown sahib and the natives. With the relentless population
pressure, they had to reluctantly gave ground. They protected their colonial habitats which by then had be-
come the center of city and were interfering with commercial development as well as with city mobility plans.

Tight controls on building were kept preventing the development of organized density, commerce, lei-

Page 50
sure, and even education. For decades, city demand for space for commerce, storage and warehousing,
offices, education, leisure, mobility and many other functions increased. All these developments were
forced into the informal sector through encroachments or violations of poorly conceptualized colonial
zoning. Even today we are going through a cycle of litigation and demolishing encroachments which
arose because of poor city zoning that sought to prevent the natural growth of cities.
The poor, commerce and other constituencies counted for little in the colonial model. But the grow-
ing elite, of which the bureaucracy, army and the judiciary were now a part had to be accommo-
dated. Responding to this demand as well as the availability of the car, the colonial state allowed
for suburban development beyond the areas they had inherited from colonialism. As a result, Cit-
ies have expanded to giant unmanageable sprawls with the centers being occupied by elite man-
sions and clubs instead of mixed-use high-rise development as in other cities of the world.

Choked up engines of growth

Early development advice suited the colonial bureaucracies for it prioritized industrial growth which
policymakers conveniently put outside the city in industrial estates. They also derived further power
since the development policy advice of the time emphasized planning industrial development through
licenses, subsidies, cheap credit, protection etc. — all of which were dispensed by the colonial bureau-
cracy.

The country has remained beset with this early development model refusing to see fresh developments
in economics. Our PhD economists remain rooted in the past of the planning models vacillating between
prioritizing between agriculture and industry and looking for exports. Domestic commerce, services and
construction were deliberately repressed in an effort to develop what were thought to be leading sectors
— industry and agriculture.

In 1996, the Nobel prize was awarded to Robert Lucas and in 2018 to his student Paul Romer. Both of

Page 51
 them pointed to the engine of growth being the city, a place where people converge to exchange and
share ideas, goods, money, services, space and activities. Many thinkers have pointed to the importance
of the city in history as a crucible of innovation, entrepreneurship, knowledge and creativity. It has also
been shown empirically that cities are engines of growth are dense, walkable with mixed use, high rise
city centers. Unfortunately, our cities are sprawls with estates for colonial officials and polo grounds in
the middle. And sadly, this research has not reached our policy economists who sit on task forces.

Construction always leads development. Even today, markets are continuously watching leading indi-
cators many of which are based on construction activity. Go to any city in the world you will see tower
cranes everywhere, many of them. A rapidly growing economy like China has sites that look like forests
of tower cranes. Yet most Pakistani cities have hardly seen a tower crane. Look around you and you will
see no tower cranes.

As analyzed above, in Pakistan, the continuation of the colonial enterprise has preserved colonial estates
in the center of the city while also maintaining the colonial bias against enterprise in the middle of the
city. To preserve this model, the colonial bureaucracy which controls the city has archaic zoning and
building laws that are biased against density, walkability, mixed-use and high-rise. Is it any wonder that
the construction industry is not a growth industry in this environment? Can we expect to accelerate our
growth without a strong growth of construction based on real city development and not this colonial
sprawl development?

Unlocking Dead Capital

There is an opportunity for real and sustained growth acceleration and for huge improvements in wel-
fare if Prime Minister Imran Khan takes up the challenge of changing the city paradigm. He must uproot
the colonial centers that are located in busy downtowns and allow high-rise mixed-use construction.

In most cities, city center land for urban regeneration is hard to get. The colonial enterprise has kept this
precious capital inert for their private use and held back city development as well as employment and
growth possibilities. It is time maker this dead capital work for us.

There is tremendous opportunity that is possible. The key challenge is going to be how to do it right for
maximum public benefit. As an example, consider Lahore has more than 10,000 acres of prime commer-
cial land held by the public sector in various areas. We must use this land for maximum value creation
and employment gains. My tentative calculations show for only teh 5 GORs which represent about 4000
acres the following possibilities.

We can make about 35 buildings of high-rise mixed-use buildings like Centaurus leaving more than half
empty for greenery. Say, each cost say about $500 million

It should not be made a speculative play for trading. It should not be hijacked by qabza mafias. This land
represents a huge part of city wealth.

Total investment $ 17.5 billion

Employment in construction — 5000 per building and similar indirect
Total employment bang will be about 350,000–500,000 during construction
Each building will employ similar amounts or more when completed at an average height
of 35 floors, this will be 225 million square feet of construction for all uses.

Page 52
My suggestion would be for all cities to let City Wealth Funds which should own this land and have these
funds professionally managed. Professional managers can develop projects and sell these as public pri-
vate partnerships on a build own operate and transfer basis. This could be a way for city to earn maxi-
mum revenue over a longer period of time. The time-bound nature of these contracts would force quick
construction and returns.

Sadly, the Framework of Economic Growth (FEG) of the Planning Commission did present this approach
to developing growth acceleration to the cabinet and parliament in 2011 and 2012. Though the FEG was
approved, it was never implemented due to the opposition of the colonial bureaucracy to preserve its
estates. It will require a strong government to do this and good process to make this happen profession-
ally, protected from politics.

If we want to progress, we must truly end vestiges of colonialism and move into the 21stcentury.

Published 3rd December, 2018

Page 53
 Urban enigma: Becoming of
today’s Karachi
Hafeez Ur Rehman Hadi

When Saba Imtiaz wrote Karachi, You’re Killing me! she portrayed Karachi’s metropolitan life full of
paradoxes. While she pictured it through the vantage point of the reporter, Ayesha; the same was done
by Arif Hassan through his paper on trends of urbanization in Karachi. Hassan attempted to map out
juggling of urban planning in Karachi under scores of influences ranging from political, social, and na-
tional and international. However, my commentary, comments on corresponding inequality with lack of
inclusive planning concluding in planning failures, and simultaneous successes of informal projects of
land mafia—that is Katchi Abaadis or settlements.

The Odds with Karachi

Karachi has been plagued with issues of sorts, and yet serves as riveting economic hub; housing
major multinational corporations, economic institutions as well as I.I. Chundrigar Road is mailing
address to all public and private banks headquarters. Karachi has suffered political rifts, racial
profiling, unplanned and unwarranted migrations and classic cases of planning failures in settling citizens
peacefully.

Welcoming All—Karachi’s Migrant Population

Karachi has faced three major waves of migration: first, dating back to Partition when 600,000 migrants
moved in causing great increase in number of Urdu speaking as compared to Sindhi speaking. Second
wave came as Pakistan delved into cold war, and Pashtun Community from North West took refuge in
Karachi, and thirdly after the 2010-2011 floods when hundreds of thousands fled to Karachi as result
of hefty losses in their crops. The on-going migration process has put Karachi at awkward demographic
position in its own province of Sindh; as it owns more urban population than remaining Sindh altogeth-
er. As a result, population in Karachi exceeds 20 million with several million illegal migrants, while city
is unable to provide facilities pertaining to sanitation, gentrification and transport at large.

State Bailed out: Government and Neo-Liberal Agenda

Government’ attempts at formalizing settlements plans in 1958 (Karachi Resettlement Plan) failed be-
cause Satellite Town establishments were not coupled with timely installation of industrial estates as
promised. The plans were curtailed after only 10,000 houses were built, out of planned 200,000 initially.

Informal Institutions and Politics of Katchi Abaadis

Katchi Abaadis became informal settlements as government succumbed to mega challenges of urbani-
zation. Police, Middlemen and Government officials corroborated to establish settlements for migrants.

Page 54
As poorly managed as it could get, it provided land rights to residents of those settlements. Plans of re-
locating settlements to peripheries could not succeed in following plans of Karachi Master Plan 1975-85
and Development Plan of 2000; because both largely focused on densification and high-rise commercial
buildings that snubbed social and cultural life of families, and aggravated crimes and drug use.
As densification took best of Karachi’s metropolitan life, in a parallel world, elite started securing large
lands to have houses horizontally expanded in housing schemes. This widening gap in density corre-
sponds to increasing inequality in society, and how housing schemes and plan are elite-driven and for
elite. Large reason for government to bail-out on these settlements was of pursuing neo-liberal agenda
of Laissez Faire—Let the private sector do its magic through investment and be capital/market driven.

What lies ahead: Outlook for a Welfare Karachi

The key challenges and corresponding solutions certainly need more concerted efforts of not only gov-
ernments; but also, of private stake holders. As the dust has settled, peace is prevailing in Karachi, most
imminent challenge is smooth transition of informal sector to formal sector, and then focusing on pro-
viding services to everyone. Land reforms must be foremost agenda from hindsight, and inclusive—as
well as conclusive—policies of house building loans must be set in place in coordination with govern-
ment officials, planners and academic institutions. Instead of following liberal agenda to have transac-
tions-based economy, government must act to provide comprehensive solutions regarding regularizing
settlements, land registrations and urban planning. This shall make Karachi land equitable and efficient
at the same time.
Because:

When we build a city, we take our grandest dreams as well as our

deepest anxieties and set them in concrete for the next generation.
Steve Inskeep

Page 55
 Islamabad: Is it the city
of future?
Islamabad, the capital, was chalked out in hilly Potohari region of Northern Punjab by the Greek archi-
tect Doxiadis. What had to be the ‘city of future’ remains exclusionary, devoid of sufficient public utilities
and leisure spaces, and affordable housing. The PIDE Policy Viewpoint 16 has underscored the lacunae
in process of master-planning this city all along; questioning the very nature of planning then and now.
Recently, as the Supreme Court directed, the government has constituted another commission to review
the master plan and ‘regularize’ the ‘irregular’ construction.

The Grid Iron Pattern

Established in 1960s, the Islamabad was to be developed by CDA under MLR-82 which later promulgat-
ed Zoning Regulation 1992 dividing the city in 5 zones. The city was planned on the grid-iron patterns.
The city divided into 84 sectors, 5 sub-sectors of each sector: 4 for residential and 1 for commercial
purposes, largely called as Markaz.

As good as it seems to have a low-density city, the architect overlooked the need to include Commer-

Page 56
cial Business District (CBD) or any sectors for
poor. The lone CBD of Blue Area was ideated to
include the high-rise mixed-use buildings, but
CDA excused from ‘destroying the margalla view
for houses of nearby sectors’—as lame as it may
sound.
The Doxiadis’ plan of no good has left the city de-
void of any urban experience with scattered cen-
tres and unease furthered by the CDA. The sprawl
is evident, and CDA has greatly benefited from the
phenomenon. Despite the powers entrusted, the
CDA has not announced any residential sectors
since 1989. In turn, the urban sprawl has taken
a huge toll on urban experience of the Islamabad
with increased traffic, greater distance to cov-
er, the higher public service delivery costs, poor
office and commercial spaces, and diminishing
public spaces. The citizenry has, all along, been
deprived of any say in city matters.

Restrictive zoning laws have barred the city to

grow into a vibrant and urban experience, there-
fore, leading to sprawl and single-family houses.
As the interim report on Master Plan suggests,
there is a need of regenerating city centre with
changes in zoning rules.

The uniformity of all sectors, the exclusion of

poor from planned sectors has made Islamabad a
contrasting city to that of many developed cities.
The sprawl and sector planning have suppressed
the need and affordability of public transport. In
contrast, the New York has the zoning mechanism
with three zoning districts of residential, com-
mercial, and manufacturing with each dividing
into low, medium, and high-density areas to suit
the local needs. This endogeneity of need is sorely
missing in a masterplan that is iron-grid designed.
The planners have sinned more than its sins; and
that deepens the need to integrate some changes.
The Federal Commission Recommendations
Recommendation of the Federal Commission for
Review of Islamabad Master Plan (2019) contin-
ue to tread the same path that Doxiadis did. The
commission has proposed:
1. Amend the bye-laws to encourage high-rise building in Blue Area, Mauve Area, Class-III Shopping
Centers and I&T Centre.
2. Vertical Development in Zone 2 and Zone 5.
3. A ring road around Islamabad for better connectivity.
4. Widening of existing roads to cater to increasing traffic flow
5. Municipal tax to be collected from residents and businesses for public service deliveries,
6. Construction of f3 mass transit lines
7. Conversion of designated parking lots in Blue area into multi story parking areas on BPT/PPP basis
8. Regeneration of G6 sector,
These recommendations attest to the continuous oblivion that planners live in, and silos they think in.

Page 57
 Are Master Plans necessary?
- Master plans are relics of past. Cities need to grow and evolve organically through the needs and
mobility of its residents. While the ideas of zoning can help in keeping the irregularities under control,
these are also needed to be evolved with time.
- Master Plans are not forward looking, in fact, they inhibit the growth. The cap the high-rise, and are
antithetical to the idea of evolving and modernizing cities. This makes the cities static against the moving
needs of people.
- In countries like Pakistan, the master-planning is a play of clique, without input from public and
citizenry. The community involvement is non-existent.
- Masterplans delude the policymakers through the lens of economic development. This minimizes
the humanistic contribution to city development.
- Similarly, master plans direct the development of markets, instead of making the markets follow
their own path of development.

Cities are markets

Cities are engines of growth, as PIDE has reiterated time and again through its consistent work on cities
and growth. Cities are markets and they should grow as they must—freely. Cities that drive productivity
and growth are not made for cars, gentrification, or neatly addressing the needs of few. To achieve the
purpose, the cities are moving away from master plans to simple guidelines and rules that allow the
market and investors to determine the shape of city as it suits the community; and as the public service
delivery mechanisms are robust and efficient. Based on needs, the investors should build flats, malls,
leisure spaces, public spaces and vibrant experience of city.

City Wealth

Pakistani cities are poor and financially dependent on the federal or provincial governments to give
them money. This vertical flow of funds lead to crippled city management.
Cities often sit on goldmines that include real estate and public resources and can create wealth through
socioeconomic uplift of its people and regeneration of decaying urban areas, such as Singapore did. Re-
generating the neighborhoods in line with market demands can create new revenue streams for cities.

Authors: Lubna Hasan, Aqeel Chaudhry, Ayaz Ahmed and Hanzla Jalil
Reported by: Hafeez Ur Rehman Hadi

Page 58
No more master plans, Please!
Naveed Iftikhar and Samna Sadaf Khan

Cities facilitate human interaction. From a traditional perspective, master planning is the act of giving a
shape and foreseeing this interaction through spatial development plans, provision of amenities, hous-
ing, transport systems, community facilities and determining land use. However, human societies are
complex, and the future does not always pan out go as forecast or planned.
There was a time when most countries used to develop 5-year plans. Later, however, it was realised that
such were not very helpful in dynamic societies. Yet, the field of urban planning in Pakistan continues
to rely on the obsolete approach of master planning that is hindering prosperity and innovation in our
cities.

Pakistan inherited the practice of centralised top-down master plans from its colonial rulers who have
now progressed to contemporary approaches of neighbourhood planning, bottom-up initiatives and

democratising decision-making through public participation.

Pakistan, while adhering to the bygone paradigm of master planning, has lacked the institutional capac-
ity to focus on participatory and inclusive urban management. There is a lack of understanding in bu-
reaucratic and political leadership of Pakistan that urban planning should be undertaken as an exercise
rooted in public aspirations and supported by national and sub-national development perspectives.
Broadly speaking, there are three barriers to breaking away from the master planning paradigm. First,
the authoritarian political manifestos are not open to institutional changes; rather they produce an over-
dose of regulations to bring out any systematic change. Master planning has been an inside job where a
limited number of town planners, politicians and builders have the decisive role in the name of devel-
opment.

Page 59
 The projects are barely responsive to socio-eco-
nomic and environmental realities. Fiscal decen-
tralisation has not been realised to its full poten-
tial to enable localism. Hence, the first point of
argument is the rigid system created by the gov-
erning bodies to protect the interests of the rulers
and other powerful groups.

Second, town planners try to predict the future;

like astrologers, they often fail miserably. Moreo-
ver, lack of useful data makes the process even less
informed. By the time a resource- and time-con-
suming master plan is approved (many never get
the approval) it has already become obsolete.

Third, there is a failure to recognize alternative

planning approaches being discussed and prac-
ticed globally. From literature to policy to projects,
every example is out there as precedents that can
be used to our benefit. There has been a shift from
large-scale restrictive planning to guideline-based planning interventions to meet the urban challenges
of the cities. What stops us from bringing this change is the first barrier identified as the rigid system.
The power resides in the industry of master planners who have no empathy to engage local people in
the planning process. The voice of people - women, children, differently abled, minority, poor, entrepre-
neurs, street hawkers - remains unheard. Highway projects, for instance, are put forward yet there are
no answers to the challenges of mobility; percentage of income spent on transportation cost, choices of
transport, safety for women in travelling, etc.

Expansion of a city with housing societies is discussed yet there are no answers to the affordability
criteria, livelihood, provision of jobs and entrepreneurships to access adequate housing. Ironically, the
master plans never get implemented. Yet we continue to teach the same curriculum to civil servants
and engineers about developing master plans. All that is needed from our town planning authorities
and related government bodies is to understand the problems faced by the people and find up to date
solutions.

“The right approach is to develop a vision and broad guidelines for city management, followed by capac-
ity building at municipal level to carry out localised projects. Every civil servant and political leader can
contribute to area development.”

We need to realise that a country with a highest rate of urbanisation cannot afford to waste time by
sticking to unsuccessful approaches. Our cities face immediate urgencies, which need fast-paced regen-
erative responses. Population is increasing by the day and our resources are not getting any better.
Before we have met our challenges of services provision, affordable housing and economic opportuni-
ties, we have upcoming environmental challenges at hand with global emphasis on climate change and
sustainability. This is why a shift from traditional master planning to strategic vision planning is imper-
ative.

Planning literature has been identifying density, resiliency, multi-functional and walkable neighbour-
hood, cellular city and iso-benefit urbanism approaches as more responsive towards the contempo-
rary challenges. Moreover, literature has also discussed the change in the role of planner from the sole
originator to a mediator, an advocate and collaborator under strategic planning, collaborative planning,
co-production and just city. Why has our idea of urban planning and a planner been so reserved when
we are living in a globally connected world?

The urban understanding has evolved; hence going back to re-defining spatial models is not a sustain-
able approach. We need to delve into the definition of urban and the practice of urbanism as it is all

Page 60
 “Don’t be too hasty in trying to define the city; it is much too big, and there is every likelihood
that you will get it wrong,” - Georges Perec

around us. Of, course, we need to find solutions for the urban challenges but master plans are not the
solution. Tactical urbanism, for instance, is a low-cost guerilla approach to improving local neighbour-
hood and public spaces. It has a quick impact. Then there is the example of Paris’s 15-minute city pro-
posal, advocated by its mayor. It shows that the answers do not all come from a master plan.

Urban planning does not need to come from the government only; it can be a product of social inter-
ventions and public involvement. The urban development teams need to extend beyond town plan-
ners. City management is about people not about infrastructure. So we need economists, sociologists,
historians, anthropologists, public health professional, psychologists and other professionals to work
together to develop city visions instead of entrusting engineers to do it by themselves.

The right approach is to develop a vision and broad guidelines for city management, followed by ca-
pacity building at municipal level to carry out localised projects. Every civil servant and political leader
can contribute to area development with the support of an inter-disciplinary teams and local people.
People-centric urban management will lead to building trust between the citizens and local government
practice and improve the sense of ownership. In order for this change to occur, the key lies in urban gov-
ernance which needs to allow the changes to happen.

The following perspective by Christopher Rufo should enlighten us in this process:

“Life in a metropolis is simply too complex, too variable, and too ephemeral—it will evade even the
most careful planning. If we want better, more beautiful, cities, we must bring neighbours, developers,
employers, and governments into the conversation. Our cities must be built through cooperation, not
compulsion.”
Published in The News on 29th November, 2020

Page 61
 Mobility and social outlook
Hafeez Ur Rehman Hadi

The country has been in lockdown, the economic activity has plummeted, and it is advised to stay at
home in these testing times of COVID-19, as the second wave is taking a toll. Despite the clear govern-
ment orders, authoritative instructions and awareness campaigns, people are less-heeded to comply
with these. Away from the metropolitan hustle, there is a life that is less affected by the state orders
and does go on synonymous to as it was before, with less economic transactions assuredly.

This article was written in April to understand the people’s willingness to stay at home in
face of COVID. Much of the situation remains same.

However, the trickle-down effects of economic slowdown are creeping in and there is a visible
slowdown in community mobility in Pakistan. While the media reports indicate less affective
social-distancing abiding within peripheral areas, there is clear indication of low mobility seen
in urban areas and public spaces. Google mobility reports suggests a clear precipitous slow-
down in mobility with the help of surveilling mechanisms of geo-locating the people.

Google started reporting the mobility changes on the baseline media of the 5-week spanning
since January 3, 2020 to February 6, 2020. Based on these baseline medians, the google has
been updating the mobility reports regularly. As per the data, till March 26, 2020 there is a
significant decrease observable in the mobility within Pakistan.

Google has been using the location data in understanding how social distancing, or quarantine,

Page 62
has affected the movements of people; and in order to map the changes in patterns, Google has
been updating its reports.

Governments worldwide are partnering with the Google, and using Google Data, to keep peo-
ple at their homes, and in case of unusual gatherings and the rush, the local administration is
alerted to disperse the people.
In Pakistan the statistics show a decrease of 47 % in Retail and Recreation Mobility as com-
pared to baseline 5-week period of January to February 2020. The community movement to
Grocery and Pharmacy points reduced by 55%; the movement to parks by 45% and transit
stations came down by 62% because of shutting down major transit stations. The movement
to workplaces has come down by 42% within last 6 weeks.

In comparison with other countries, the movement in Pakistan, comparatively, has been
significantly more concluding the lesser degree of lockdown and loopholes in enforcing the
lockdown.

Page 63
 There is a strict enforcement of lockdown in Italy, as observable through statistics, after the
sudden explosion of deaths and number of Corona infected patients since mid-march. This
degree of rise in patients called for such extreme measures, and fear and panic looms in Italy.
The United States is having the greatest number of cases of Corona, and resorting only to a
partial shut-down hints as plausible cause.

With lesser percentage moving in and out of country, Pakistan still needs to have further accu-
rate measures to contain the COVID-19.

Other than the contingent availability of data and permissions allowed through the mobile set-
tings in individual phone sets, this data can be used as a guide for business decision making,
governmental decision making.
The governments can reach out to Google to understand and map out the high-mobility zones
and focus on averting COVID-19 spread in particular areas.
Businesses can understand the degree of lockdowns and decide on their supply chain matters.

Page 64
 Edward Dodson on
Rentier privilege
Pervez Tahir
Responding to my column on taxing property, Edward Dodson, director, School of Cooperative Individ-
ualism, sent one of his writings to “provide additional food for thought”. Indeed it does. A somewhat
abridged version follows.
Poverty exists in every country, with differences
in degree only. The fundamental cause of poverty
is a status quo which benefits in every society a
rent-seeking elite. What is “rent-seeking”? Noth-
ing more than the ability to claim what others
produce without producing anything in exchange.
The most fundamental source of gain from
rent-seeking is found in the system of property
law and taxation that exists wherever there exists
private property in nature, in the factor of produc-
tion to which political economists gave the term
“land”. What the classical political economists
agreed upon, generally, is that land (i.e. nature)
is the source of individual wealth but is rightfully
the birthright of all persons equally. Wealth must
be produced by labour with or without the use of
capital goods (i.e. of tools and technologies). As
population increases so does the need for and demand for what nature offers, including sites in towns
and cities on which to construct housing, businesses and engage in other activities. Thus, land will in-
crease in value. Every tract of land, every parcel of land has some potential annual rental value as deter-
mined by competitive forces. That value — “ground rent” or simply “rent” — arises because of aggregate
demand and not because of what any one holder of land does or does not do with land held. Rent is
society’s share of the total production of goods by all members of a community or society. The amount
of rent is determined by locational advantages attached to specific tracts or parcels of land.

Political economists going back to Cantillon, Turgot and Smith understood these relationships clearly
and urged societies to collect rent to pay for public goods and services. Writers such as Paine suggested
that a portion of the rent fund should be distributed to each member of a community in equal shares.
Had these writers been listened to, the world would be a very different place for all persons around the
planet. This was eventually explained in great deal by Henry George. The few economists today who
have come to embrace the analysis of the political economists have produced analyses that reveal the
consequences of the failure of government to raise needed revenue by the taxation of the rent of land
(and land-like assets, such as the broadcast spectrum). Landed interests have effectively avoided the
taxation of rent. They have managed to have gains on the sale of land treated more favourably than the
wages from labour, by having tax law categorise such gains as “capital gains”, even though there is no
such thing in the real world as a capital gain; capital goods depreciate over time down to zero.
Ending poverty requires that we end landed privilege. This was recognised by many thoughtful prom-
inent leaders, none of whom were able to get their governments to change the existing system. Tolstoy
tried in Czarist Russia, Sun Yat-sen in China. Churchill described the monopoly of land as “the mother of
all monopolies”. And yet, here in the early part of the 21st century, control over the planet is becoming
increasingly concentrated in the hands of a rent-seeking elite — individuals, corporations, cartels and
other institutions that hold large amounts of land idle. Only a fundamental change in the laws directing
how all governments — at all levels — raised public revenue will change the course of history.
Originally published on 4th December in The Express Tribune

Page 65
 The lesson of Anandi
Hafeez Ur Rehman Hadi

In a specially convened session, the nobility of the city—the municipality, with anger and fury, con-
demned how the ‘unholy’ women of the city were the reason of God’s wrath, source of youth’s poor per-
formance in education, the misguiding to the Ashrafiya women. Thus, the municipality convicted their
existence. In anticipation of making a city sinless and holy, it was announced to consecrate the sinning
women out of the city to a barren land where snakes and sparsity were in abundance.

As the dishonored women settled in desolation, there started an economic activity. Their advent was
coupled with the arrival of vendors—the paan frosh, the watering agent, imam masjid, the fruit-sellers.
Witnessing the contrary to what was anticipated, the ‘visitors’ to these women started pouring in from
the city. So much so, that members of nobility prolonged their delays to this previously barren land in
name of trade and other excuses. The municipality could do nothing but witness the flight of nobility and
capital to this newly developed town. Shortly, what in retrospect is a jiffy, there developed a city called
Anandi.

This short story by the eminent Urdu writer Ghulam Abbas not only suggests the societal bigotry, inhu-
mane and merciless attempt to ostracize women of a particular profession but it also tells a moving story
of how cities develop. The cities develop around economic activity. If there’s an economic activity, people
will gather around it to agglomerate.
In the case of Pakistan, it provides two counter-intuitive suggestions to ‘master-planners’: the cities
evolve as per the needs of people, and their activities. Secondly, cities can agglomerate without causing
unbearable congestion or sprawl for that matter.

Page 66
The Pakistan Paradox
Hafeez Ur Rehman Hadi

In his 2015 book, The Pakistan Paradox, Professor Christophe Jaffrelot talks about a paradox of insta-
bility and resilience in Pakistan. While he divulges the political story of creation, consolidation, and
setbacks Pakistan has faced, his list of paradoxes is not exhaustive.

Hence this snippet. If I have to title the story of urban development in Pakistan, I shall have to borrow
the title: The Pakistan Paradox.

• The cities are sprawling, yet there are huge congestion problems within cities because of rising
car-ownership,
• The people want the benefits of agglomeration, yet they want to stay in far-flung single-family house
units,
• The cities are growing horizontally without any centralized feasibility, but the development

Lahore’s OmniBus
Hafeez Ur Rehman Hadi
Lahore has not always been unfamiliar with public transport. Around the 1940s, the Lahore and Karachi
saw a surplus making ‘Lahore Omnibus Service’ (LOS) which was packed after a decade of its successful
operations and was one of the largest taxpayers. These double-decker buses assembled at Ferozepur
Depot with engines from the Bedford Chassis had made moving around the city very convenient and
had covered cities by breadth and width. The attempts by the government to seek loans from finan-
cially-too-good LOS had left the business model of LOS failed. Since then, Pakistan has seen uneven
attempts at public-transport with loss-making efforts and deficit financing.

Page 67
 HHI Index for Competition in Car
Industry of Pakistan
Hafeez Ur Rehman Hadi

Herfindahl-Hirschman Index or HHI is an index that measures the concentration of market players in
any industry. With the high competition and number of market players, it tends to reach 0; while in the
case of hegemonization it approaches its highest 10,000. The industries with HHI above 2000 are con-
sidered highly concentrated. The author calculated the HHI in the Car Industry of Pakistan with data of
market share from Pak Wheels and PAMA.

• HHI in Car Industry in Pakistan

• 1300cc above category: Toyota 4500 HHI
• 1000 cc Category: Suzuki 8500 HHI
• 880 cc Category: 650

Page 68
Why does the myth of rural
Pakistan persist?
Nadeem ul Haque

Why do Pakistani official circles still like to maintain Pakistan is a rural country? Every pronouncement
of government, at the cabinet table and even in donor dialog, this myth is maintained. Yet data shows
otherwise.
Reza Ali, an indigenous urban researcher has been studying this use for some time. For decades he has
argued that censuses are underestimating the extent of urbanization.

His most recent work using satellite imaging that about 70% of Pakistan is non-rural. He hesitated to
say that 70% was urban because despite showing concentration of population several areas lacked city
functionality.
He found large areas where density was at levels that were by international definitions accepted as ur-
ban. Yet he hedged and called them ‘urbanizing’ because he found that despite density they really were
satellites of some urban core.
The new category of “urbanizing’ that Ali used is
newly emerging suburbia. As we all know there
is a push for housing colonies and strip urbani-
zation along roads because of the repressed de-
mand for housing in cities. And demand for hous-
ing and urban space is growing and leading to a
rapid development of housing colonies spreading
cities far and wide.

Moreover, Ali is right the world has been confused

about suburbia for along time. Only recently has
it started waking up to how suburbia is a neth-
erworld between rural and city and perhaps nei-
ther. The negative consequences of suburban de-
velopment are now being spelt out.
But Ali’s research does show that Pakistan is largely an urban country and urbanizing at a rapid rate.
Although it is happening badly because of bureaucratic failure. But that is another story.
Agriculture production as a share of GDP is about 21%. It is often stated that agricultural employment is
40%. Yet various surveys show that half or more could be non-farm employment. If that is correct than
agricultural production employs about 20% of the labor force. What is more important is that agricul-
ture is a declining industry.

Why this pressure in official circles to keep Pakistan an agricultural country. USAID continues to charac-
terize Pakistan as an agricultural country and the economic growth component of its aid is based mainly
on agriculture.

Page 69
 When I was in charge of the Planning Commission, I told them many times that Pakistan was now largely
urban and that we wanted an urban based growth policy. The Pakistan Framework of Economic Growth
accepted by the NEC and Cabinet was an urban based growth strategy. The bureaucracy, EAD and USAID
however remain rural focused. Perhaps John Perkins (Confessions of an Economic Hitman) is right, US-
AID does not want Pakistan to develop. Maybe USAID wants to keep us as a farming hinterland!
We can’t even have a debate on this subject despite Ali’s work which is now about 5 years old and still
not recognized by donors.

DFID commissioned a study on urban areas by a young assistant professor at one of our prestigious
universities which cited no work of Ali or of any other urban researcher. The researcher told me donors
did not know any Pakistan work (such as at PIDE or Planning Commission) on urban areas and more
importantly they did not even want to recognize such work. Yet DIFD published the report. Why then
should the young researcher know more than what the donor contracted. So, we have the myth of rural
Pakistan.
I remember at an ECC meeting one minister made this very eloquent speech to counter the pro-market,
urban voices by saying in a nice modulated voice “Finance Minister, we can continue our conversation on
markets and policy, but one issue is settled we are a rural country and the poor farmers deserve subsidy”
Of course, if we are a rural country:
1. Agriculture incomes must not be taxed.
2. Subsidies must be given on inputs such as
“Agriculture production as a share of water, electricity and fertilizer.
GDP is about 21%. It is often stated that 3. Farm to market roads (mainly to havelis) of
agricultural employment is 40%. Yet influential must be made.
various surveys show that half or more 4. Support prices can be kept well above the
could be non-farm employment.” market.

I was also surprised at the number of bureaucrats

and politicians in meetings who professed to be
farmers and speak on behalf of agriculture, of course to increase some form of subsidy to agriculture. Re-
call the government has on occasion given agricultural land as a gift to senior officials, judges, generals.
These people and their children now in official positions maintain the myth of rural Pakistan.
I asked some bureaucrats why so many of them are farmers? The answer was that having a DMG job is
considerable advantage to farming. State resources can easily be used to help manage and even increase
some productivity. Timely and abundant supplies of water, seed, fertilizer, electricity are available to
those with political or bureaucratic muscle.

So, our policy continues to remain distorted because of the nexus of landlords and donors. Interestingly
local intellectuals like Ali even when they do great work remain invisible.

Published in Pakistan Today on 17th April, 2016

Page 70
Construction without real
estate development
Nadeem Khurshid and Nadeem Ul Haque

Construction is an important industry which although despite only accounting for 3% of the GDP direct-
ly in the economy through its linkages with other important industries holds great significance. Given
the strategic importance of the construction industry, it is often used by governments and policymakers
to spur investment in the economy and revive growth through a cascading effect in times of econom-
ic downturn. In the wake of the economic downturn that has afflicted Pakistan’s economy due to the
coronavirus pandemic, the incumbent government has introduced special reforms and concessions to
investors in the construction sector in the shape of a ‘Construction’. The ultimate aim of the government
is to revive growth in the economy by incentivizing private investment along with the public investment
in the construction sector, this in turn through construction industry’s linkages with other important
industries will generate economic activity, create jobs and lead to a revival of the economy.
In a recent PIDE working paper, the authors ar-
gued that although there are concrete examples
that can be cited from around the world where
governments have used investment in construc-
tion sector to spur economic growth, any such
growth can only happen if the right conditions
in the economy exist. For particular emphasis is
the need for well-established and functioning real
estate markets that go hand in hand with the con-
struction activity. The government aims through
using construction to stimulate the economy also
fulfill one of Prime Minister’s campaign promis-
es i.e. providing subsidized housing for the poor
in Pakistan. But as the authors point out in their
paper any attempt to provide housing at the monumental scale that was promised (5 million units) can
only be done through involving the private sector effectively and create well-functioning and affordable
housing real estate and housing markets.
Firstly, the authors point out the obvious that the government does not have the financial capacity to fi-
nance subsidized housing on the scale that is being mentioned. Furthermore, they point out that even in
relatively more developed economies; house ownership is restricted and by no means extensive within
the population. Most people in advanced economies too are reliant of real estate and lease-markets to
meet their housing needs. The fact of the reality is that the low-income group which comprises the larg-
est chunk of the population in the country will still be unable to access the housing market despite any
subsidized housing options that the government could provide given its own limitations. This section
of population would most probably continue to live in informal squatter settlements which are often
termed as ‘katchi abadis’. The typical housing markets would only be accessible to those that belong to
the high- and middle-income groups. Even for this part of the population, and particularly for the mid-

Page 71
 dle-income group, housing options are limited. The target of government policy should be to target this
middle-income group that when given the right options are able to mobilize resources and get access to
the housing and real estate markets.
But even here, as the authors point out there are serious impediments to increasing the reach of middle-in-
come groups to housing options given the extremely high real estate costs and the economic uncertainty
that these middle income
groups face at a micro-lev- Box: Some Mortgage Arithmetic
el with regards to stable
sources of income. If one
was to take the example of
trying to establish a
mortgage housing market
in the country, the pric-
es involved mean that
only the very rich can get
access to credit either
private or at publicly sub-
sidized rates to enable
them to access the expen-
sive housing options.

One way in which the very

high costs of housing units
can be reduced and hence
brought within reach of
the middle income group
is by prioritizing apart-
ment units over housing
units. This however will
require significant rethink
of urban planning poli-
cy that has been yet far
favored in Pakistani cities. The current model pri-
oritizes single unit horizontal housing units that
take up a lot of space and end up driving the cost
of housing space in the city along with contribut-
ing to uncontrolled urban sprawl. The need is to
prioritize high-rise development which includes
apartment buildings that can provide affordable
housing options. Height restrictions on building
need to be relaxed and the Floor-Area-Ratio reg-
ulations need to be relaxed to allow for high-rise
construction. Furthermore, the cumbersome zon-
ing laws need to be changed so that mixed use of
land i.e. for both residential and commercial pur-
poses is encouraged to a point that it becomes a
predominant reality.

Summarized by: Raja Rafi Ullah

Page 72
Spading the real estate
industry in Pakistan
Hafeez Ur Rehman Hadi

There is a commonly found motivation to invest in real-estate market in Pakistan. Rightly so, for the peer
assurance that the investment is risk free, yields greater return, and greater degree of informality. How-
ever, as researcher, the question in hindsight is
What is real estate industry in Pakistan? How does it fundamentally differ from the other real es-
tate markets worldwide? And above all, if this is a misnomer?
Real Estate is an important part of economic
activity and wealth creation, partly because hous- “REIT Scheme” means a REIT Scheme
ing is a basic need. Secondly, real estate is a huge as defined in the Real Estate Investment
investment attraction worldwide. However, the Trust Regulations 2015.
real estate in Pakistan differs significantly because Real Estate is not considered as "indus-
of excessive plot making, sprawl, filing system, and try" under the Income Tax Ordinance,
extravagant speculation. The webinar organised 2001. In 2020, they added a new pro-
by the Pakistan Institute of Development Eco- vision saying: from the 1st day of May,
nomics discussed the issues of industry in detail 2020, a person directly involved in the
with voicing of stakeholders. construction of buildings, roads, bridges
To begin with, there’s dearth of research in and other such structures or the devel-
this billion-dollar industry in Pakistan. There opment of land, to the extent and for the
does not exist any real estate research centre in purpose of import of plant and machin-
Pakistan nor does any university offers a ery to be utilized in such activity, subject
dedicated degree in the subject. The industry to such conditions as may be notified by
itself is highly fragmented. There are multiple the Board. -Ikram Ul Haq
institutions with regulating jurisdictions in cities
with no coordination, hence it is impossible to
evaluate the total size of market and trends. Cash
based Market

Sector or Industry?
The Income Tax Ordinance 2001 does not consider Real Estate as the ‘industry’. However, earlier this
year the 30 billion construction package and several tax exemptions to construction and housing sector
had underscored the importance of this industry. There is a huge gap between the DC value and real
market value. People use these as proxies to evade taxes, under-invoice in official documentation, hence,
poor performance in tax revenues.
The Real Estate Industry is further obstructing the competition through development of several kinds of
real estate developments. Authorities-led estate is high-risk and expensive but yield higher return and
quickly. Furthermore, there are cooperative housing societies, private housing societies, and various
government department societies. The return differential makes this industry even more complicated.

Page 73
 Realtors
The Realtors are the agents that facilitate the transactions in real estate or construction indus-
try. Without the strong centralized association, notwithstanding ABAD etc., these realtors are not
registered, regulated; hence contribute to asymmetric information. The panelists urged to have
some mechanism that could uniformly define the role of realtors and verify the trusted realtors.

House Financing or Mortgaging

The house-financing through commercial banks is almost non-existent. According to Adil Khan, Head of
Business Development at Zameen.com, out of 14,000 leads that were generated by the Zameen.com in
previous year only 1 person was disbursed with house financing loans of 5.8 million Pkr. This market is
highly cash based with little or no traces of transactions.
In Pakistan, usually the housing finance is offered by the commercial banks at the rates incremental to
the policy rate. Since, the SBP policy rates were as high as the 13.75; the housing finance can be ration-
alised at the rates above than these. To start with, housing finance shouldn’t be offered by commercial
banks, and at best, could be done by subsidiaries with dedicated housing finance portfolio.
The idea of mortgaging is novel to the citizenry, and people are averse to it. The only house building finance
commission has been performing poorly and has failed to simulate any significant contribution in industry.

Multiple Transactions
The process of doing business in Pakistan is heavily wedded with multiple time-taking trans-
actions. These transactions, needed approvals and NOCs are the impediments in process of do-
ing business in any sector particularly real estate. According to panelists, there are score of
transactions and NOCs required to do business in the sector. Any transaction starts with token
money, then there are multiple No Objection Certificates required to construct anything on a plot.

Permission Economy
The country is running a permission economy with highly-regulated processes to run businesses. Along
with more than 20 certificates and several taxes including CVT, Stamp duty, advanced taxes etc. There
are further permissions required if the land comes under the jurisdiction of special authorities such as
Défense Housing Authority or Cantonment Boards etc. These supervisory bodies have their own char-
ters with varying demands that make the business/construction more cumbersome.
Because of these complications, the cases registered in National Accountability Bureau are
largely about the land grabbing, non-compliance, or based on the regulatory complications.

Have we Digitized?
The government of Punjab has made strides in digitising the patwar
system (the land registration, transfer etc. system) with help of Punjab Arif Hasan recent-
Information Technology Board and other departments. Another effort, ly highlighted in an
amongst others, was the Land Record Management and Information article published in
System (LRMIS). The government of Punjab appointed several Land Re- ’Dawn’: “The serious-
cord Officers as well as Additional Directors; however the accounts in ness of the housing
the webinar mentioned that the digitisation efforts have been poor, and issue in Pakistan can
‘patwar system is still alive.’ Supporting this claim, a panellist mentioned be judged from the
that out of his 80 acres of land, a naala claimed 2 acres. It was the Pat- fact that conserva-
wari, who marked 2 acres extra on his ‘naqsha’ to compensate those 2 tive estimates put
acres of land. the housing backlog
The shift is coming—FAR values and purchasing power is decreasing; it at nine million units
means the real estate industry shall have more competition and lesser which is increasing at
revenue yields. 300,000 units annu-
The government is heavily subsidizing the real-estate industry without ally because of unmet
understanding the needs of buyer side. As Shabbar Zaidi, former Chair- demand. 62 percent
man of FBR suggested, the demand of household is from the poor house- of this demand is for
hold while the real-estate investment is a play between upper middle lower income groups”.
class to yield returns and benefit from rented economy; or a tool to whit-
en their ill-earned money.
This is a summary of the webinar organized by the Pakistan Institute of Development Economics on Real Estate Industry.

Page 74
Supplement

Page 75
 Making exports a policy priority:
nothing mercantilist about it
Gonzalo J. Varela
Exports are crucial for Pakistan’s development, yet, they have been stagnant for too long. In-
creasing them should be a policy priority. This column presents three arguments in praise of exports
and suggests avenues for boosting them. Exports bring foreign exchange into the economy, essential to
finance well-needed imports, and to reduce macroeconomic risks. They also create good quality jobs,
pulling labor out of low-productivity informal activities. And, importantly, exports are associated with
productivity gains through increased scale and increased exposure to sophisticated global clients. To
boost exports, the Government of Pakistan needs to make exporting more profitable than selling do-
mestically by adjusting its tariff policy and modernizing its export and investment promotion initiatives.

A little background…
Pakistan’s exports have stagnated since the turn of the century. Despite the rapid recovery from
the COVID19 shock – exports of October and November 2020 are roughly on par with those of 2019 – a
long-term examination of export performance reveals stagnation. In 1990, the export market share of
Pakistani firms stood at 0.19%. By 2019, it had fallen by almost 40% to 0.12%. The combination of three
elements seem to be behind this trend. First, little capacity to attract FDI, crucial to take advantage of the
powerful export platforms that GVCs have become during the last two decades. Second, an overvalued
exchange rate during much of the 2010s that made exporting more difficult. Third, a tariff policy that
rewards domestic sales rather than exporting seem to be behind this trend. Indeed, the country is today
more inward looking than it was at the turn of the century.

Concerns about inward orientation are not mercantilist in nature. Mercantilism, a common eco-
nomic theory in Europe during the 16th to the 18th century, associates an economy’s wealth with the ac-
cumulation of precious metals (or hard currency, in modern times). Within this framework, then, trade
surpluses are inherently good, because they allow countries to accumulate wealth. As a result, a nation
can only grow wealthier at the expense of another one (someone must run a trade deficit for you to run a
trade surplus). What follows is protectionist policies that curb imports, and a collapse of trade (because
countries retaliate!). But this column is not promoting mercantilism in the least. Instead, this column
argues that it is increased productivity, leading to more and better jobs, and then to greater welfare of
people that is at the base of a country’s wealth, not a positive trade balance. Indeed, exports are not good
per se. That is, there is in principle nothing ‘honorable’ about exports. They are just a means to an end.
As put by Krugman “what a country gains from trade is the ability to import things it wants. Exports are
not an objective in and of themselves: the need to export is a burden that a country must bear because
its import suppliers are crass enough to demand payment”. It so happens that they are a pretty useful
‘burden’ to bear, for three reasons: macro stability, job creation, and productivity. That’s why, from a
purely instrumental point of view, exports should be a policy priority.

Boosting exports for macro stability…

Stagnating exports in Pakistan led to systematic current account deficits (CADs) over the past
two decades, increased macro instability, and therefore heightened perceived risk of future

Page 76
lower growth. High effective rates of protection for domestic industries, coupled with an overvalued exchange
rate during much of the 2010s contributed to underwhelming export performance. With relatively fast import
growth, the trade deficit led to persistent CADs, despite high remittances. Accumulated CADs added to the stock
of net foreign liabilities (NFL), that now stand at about 40% of GDP. These generate a stream of debt servicing and
amortization payments that falls on future generations. Accumulated NFLs, in turn, lead directly to future current
account deficits through larger income outflows. They increase the perception of country risk, driving interest
payments up and compromising macro stability.

Figure 1: Pakistan’s trade and current account imbalances and net foreign assets since the turn of the century

Source: IMF-IFS, Ministry of Finance, Pakistan Bureau of Statistics and World Bank

Boosting exports for job creation…

Exports can be a powerful engine for the creation of good quality jobs. Increased export competitiveness has
substantial potential to create quality jobs. This is crucial for Pakistan, a country in which almost three out of four
jobs outside agriculture are in the informal sector, which operates at low productivity levels, and therefore offers
relatively low wages to its workers. Increasing export activity helps pull workers away from the low-productivi-
ty/low-wages informal sector, into the higher productivity/high-wages formal sector. Indeed, formal job creation
in Pakistan has been a challenge in Pakistan recently, as formal firms struggle to grow large as they grow old. In
fact, a young, formal firm in Pakistan, with less than 10 years in operations is about the same size as a firm with
20-25 years in operations (Figure 2). Data for comparable labor abundant countries specialized in labor intensive
industries, such as Ethiopia or the Philippines shows that every additional one million US dollar exports, between
64 to 41 jobs are created directly and an additional 40 are created indirectly (Figure 3). This means that if Paki-
stan’s exports had grown at the same rate as Vietnam’s during the last fifteen years, Pakistani exporters would
have created an additional 6 million direct jobs in the sector – about one-fourth of the 23.6 million additional
workers that entered the labor force during that period.
Figure 2: Plant Size by Age in the Cross Section Figure 3: Direct and indirect jobs per $1 million exports

Source: Mexico, India and USA data come from Hsieh and Klenow Source: Autor’s calculations based on the Jobs Content of Exports
(2014), data for Pakistan comes from Lovo and Varela (2020) Toolkit (World Bank).
Boosting exports for productivity growth…

Underwhelming export performance has resulted in sluggish productivity growth, crucial for sustaina-
ble economic growth in the long term. To be sure, low export performance is both cause and consequence of
productivity stagnation. Successful integration into the global marketplace through exporting requires a mini-
mum threshold of productivity of firms. At the same time, as firms export systematically, their productivity in-
creases through more exposure to competition, and knowledge transfers (there is ‘learning by exporting’). An
example of this bidirectional relationship between productivity and exporting is the fact that Pakistani exporters
are on average more productive than non-exporting, comparable firms, and their productivity grows as they
export more systematically (Figure 4). Yet, Pakistani firms have not taken advantage of this productivity-en-
hancing platform that exporting activity offers. They have not done so, in part, because high effective rates of
protection for domestic industries make the domestic market much cozier than distant and highly competitive
export markets. Essentially, high effective rates of protection have made exporting relatively unprofitable when
compared to selling domestically, virtually shutting down a great escalator for productivity growth: exporting.

the additional job creation is estimated at 6 million. During that period, data from Pakistan’s Labor Force Surveys suggest 23.6 million new workers were added
to the labor force.
Atkin et al (2017) provide the most direct evidence on productivity gains through exporting. They randomly provide opportunities to export to Egyptian rug
manufacturers. By focusing on a narrow industry, they can measure productivity more convincingly than previous researchers. They find that several years after
the initial export opportunity, firms that received the opportunity (treated firms) have higher quality-adjusted productivity. Treated firms produce higher qual-
ity rugs but do not take any longer to manufacture them. The authors document productivity improvements that come in part from knowledge flows between
foreign buyers, local intermediaries, and the producers (exporters).

Boosting exports, but how? Figure 4: Productivity and exporting in Pakistan

Increasing exports will require making exporting

more profitable than selling domestically. A reasonable
question to ask is: if exports are great, then why don’t Paki-
stani profit maximizing firms export more? The answer is
because economic policies have made exporting a less prof-
itable activity than focusing on the domestic market. How
to change that? There are three areas in which reforms
could greatly impact export performance in Pakistan by
increasing its relative profitability: import tariff reforms,
export promotion, and investment promotion reforms.
First, the combination of high tariffs on final goods and
relatively lower tariffs on intermediates and raw materi-
als, make effective protection of domestic industries high.
This means these firms will choose the market in which
they are protected (the domestic one) relative to the one in
which they are not (the global one). They will sell domes-
tically rather than exporting. The high import duties act
implicitly as an export duty – they make domestic markets
much more attractive than export markets. Second, export
promotion in the form of direct support to exporting firms Source: Lovo and Varela (2020).
should place more importance on new exporters than old, be linked to performance targets, and be subject to rig-
orous impact evaluation. This way, support can focus on what interventions that are proven, rather than assumed,
to be impactful in reducing exporting costs for firms. Third, investment promotion with focus on attracting effi-
ciency-seeking foreign direct investment will be instrumental in helping Pakistani firms leverage the powerful
platform that GVCs are for export growth.
Pakistan Institute of Development
Economics (PIDE),
P.O. Box. 1091, Islamabad,
44000, Pakistan.
Tel: +92-51-9248051
Fax: +92-51-9248065