Episode Transcript
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Speaker 1 (00:03):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:08):
When Asad Ijaz Butt was growing up, he was ambitious.
He left his home country of Pakistan to attend college
in Canada. He graduated with honors and got a job
there as a management consultant. But in twenty fifteen, when
Asad was in his mid twenties, he made a decision
(00:29):
that surprised people close to him.
Speaker 1 (00:31):
I left everything.
Speaker 2 (00:33):
He gave up his job in Canada to move back
to Pakistan.
Speaker 3 (00:37):
I was one of the few young Pakistanis who had
a career in North America. A lot of Pakistanis found
it very surprising that somebody who was settled in a
country like Canada went back to work in Pakistan.
Speaker 2 (00:50):
When Asad got back to Pakistan, he got a job
in the government, working under two finance ministers. It was
considered a well paid and prestigious job inside Pakistan, and
Asad was glad to be able to do something that
felt like giving back.
Speaker 1 (01:08):
I had a passion to do something for my country,
for my people.
Speaker 2 (01:11):
For almost a decade later, that passion began to fade.
The prices of things Asad needed to live every day
were rising, and he started to feel like his salary
wasn't keeping up.
Speaker 3 (01:26):
My wife was earning in Pakistan. I was earning in Pakistan.
But yet I think over time, both of us are
salaries to lump together. Could not afford the higher rental prices,
the high fuel prices.
Speaker 2 (01:40):
Asad took on more work, one side gig after another.
Speaker 1 (01:44):
I had to do three jobs.
Speaker 3 (01:45):
At one point, I started feeling that my health was
badly effective because on a lot of these days I
was working more than fifteen hours a day and perhaps
more than eighty hours a week.
Speaker 2 (01:56):
But Asad still didn't feel it was enough to keep
up with his expenses, and he was starting to feel
like he needed to make a bigger change.
Speaker 3 (02:06):
You know, this feeling kept growing that I have to
put bread on my table.
Speaker 1 (02:12):
I was entering my thirties. I got married.
Speaker 3 (02:14):
Also, I had more responsibilities, and I had to take
the tough decision very painstakingly to come back to the
life I was living before twenty.
Speaker 2 (02:23):
Fifteen, Asat decided to look for opportunities outside of Pakistan.
He applied for scholarships to get a PhD, and he
got one in the US. He moved to Boston in
twenty twenty three. Assad is just one of a growing
number of Pakistanis who feel like life is getting harder
and harder inside the country.
Speaker 4 (02:43):
Pritures and taxes are going up in Pakistan and people
feel more trapped. Everyone is much more poorer.
Speaker 2 (02:49):
That's Bloomberg's Pakistan Bureau chief Fussy Mongy, who's based in Karachi.
Speaker 4 (02:55):
Last year, Pakistan recorded the highest outflow in seven years.
This is according to GRE data from United Nations. The
exodus was most pronounced among skilled and educated. In twenty
twenty three, the number of doctors, engineers, accountants and managers
who left Pakistan doubled to sixty thousand. That makes Pakistan
(03:15):
one of the top ten countries for immigration.
Speaker 2 (03:20):
Welcome to The Big Take Asia from Bloomberg News. I'm
Rebecca Cheung Wilkins. Every week we take you inside some
of the world's biggest and most powerful economies and the
market's tycoons and businesses that drive this ever shifting region.
Today on the show, one of the world's most populous
(03:41):
nations is facing a severe brain train. Why are so
many educated workers leaving and where are they going? And
what does this mean for Pakistan's already fragile economy. Migration
from Pakistan is not a new phenomenon, but Bloomberg's Fuzzy
Mongy told us that in twenty twenty two things started
(04:05):
to get really bad. More than eight hundred thousand people
left Pakistan that year.
Speaker 4 (04:10):
So it started about two years ago. Pakistan has been
going through its biggest economic storm in its history in
the past two three years, so a lot of people
lost a lot of hope. It became tougher to make
ends meet, so people started looking outside of Pakistan.
Speaker 2 (04:30):
One item that many households are struggling to afford is electricity.
Fuzzy says that for some people, their electricity bill is
almost as high as their rent. Let's just pause for
a second and imagine that your electricity bill being as
much as your rent, and that means people can hardly
save if at all.
Speaker 4 (04:51):
Electricity bill would be the biggest component of expenses. People
also go to the utility companies and be like, hey,
you know, we got this bill, can you like cut
it down into smaller installments so we can pay it
over six months or nine months. People are actually getting
loans from families and friends to make ends meet.
Speaker 2 (05:07):
Fasi says there are three main drivers behind these massive
price hikes. For things like electricity. The first one is
the rise in global commodity prices that has impacted everyone everywhere.
But on top of that number two, Pakistan has seen
its currency significantly devalued. It was the worst performing currency
(05:27):
in Asia last year. The Pakistani rupee has lost almost
half of its value in recent years, and that made
imported goods much more expensive. Adding to the pain is
a new tax Pakistan added last year.
Speaker 4 (05:42):
Pakistan imposed something called a luxury tax, So anything imported
from overseas has gotten an extra luxury tax. And I
can tell you from personal experience that Dorito's also falls
in that category. And Dorito's in Karachi now costs like
ginormously more than how much it costs in Dubai.
Speaker 2 (06:03):
I can't believe that de Rito's are a luxury active.
Speaker 4 (06:08):
I don't have the list in front of me. But
stuff like basics like chocolates and makeup, these things are
also added a luxury tax.
Speaker 2 (06:17):
All of this push Pakistan's inflation rate to a record
thirty eight percent last May, and it's remained the highest
in Asia since then. And on top of paying more
than ever for things they buy, some of the countries
more educated and highly skilled workers are also now paying
much more in taxes because they're considered some of the
country's highest earners. But Farsi says most people in Pakistan
(06:42):
don't make a lot of money to begin with.
Speaker 4 (06:45):
To be among the top twenty percent income owners in Pakistan,
you need to have a salary of sixty four thousand rupees,
which is only two hundred and thirty dollars a month.
The idea is that if someone is paying a tax
equal to what they'll pay in London or New York,
then why am I not enjoying the same infrastructure and benefits.
Speaker 2 (07:09):
With both inflation and taxes spiraling out of control, numerous
protests took place across the country and people started to
rush for the exit door.
Speaker 4 (07:24):
Anyone with a high degree who can move is moving,
and we're seeing people move in all sorts of ways.
People are going on visit visas to Middle East or
the US even for that matter, and just hunting for jobs.
Senior people in the financial industry. I know one of
them applied for a refugee status in the US.
Speaker 2 (07:45):
This kind of brain drain is bad for any country,
but it's especially troubling in Pakistan because it has already
been struggling financially. Pakistan just recently made a seven billion
dollar bailout deal with the International Monetary Fund and it
needs its highly educated and skilled workers to help pull
the country back out of its debt crisis. So what
(08:12):
can Pakistan do to stop this exodus of talent? And
with its top earners gone, will Pakistan be able to
avoid bankruptcy? That's after the break record numbers of Pakistanis,
(08:36):
including some of the highest earners in the country, are
leaving for other places, and Bloomberg's Fussy Mongy says the
reason they're leaving has a look to do with the
state of Pakistan's economy right now and where they see
it going in the future.
Speaker 4 (08:51):
Pakistan's economic growth on an average of trailing three years
is the lowest ever in its history right now, and
list and economists are not predicting Pakistan's economic growth to
go up anytime soon.
Speaker 2 (09:04):
On top of this slowing growth, the country is also
dealing with massive debt. Pakistan faces about twenty six billion
US dollars in loan repayments to partners like China, Saudi
Arabia and the UAE, and it's also gotten huge loans
from the IMF to help the country avoid a default.
Speaker 4 (09:23):
So the IMF is the lender of last resort. Pakistan
is one of the most frequent customers for the IMF.
The IMF classifies Pakistan's debt situation as borderline sustainable, so
it's working on a fine rope. Earlier this year, or
just a month or so ago, IMF approved a new
seven billion dollar bailout. This was the twenty fifth program
(09:46):
in Pakistan's history. And just to give some context as well,
so Pakistan ended another program from the IMF earlier this year,
and Pakistan has been going from one IMF program to theato.
Speaker 2 (10:00):
And while this latest IMF program may be giving a
lifeline to Pakistan, it's also a major driving force for
the country's substantial tax increases, the same tax increases that
working people in Pakistan are so upset about. In order
to meet the conditions set by the IMF for the deal,
(10:20):
Pakistan recently raised the total tax revenue target by forty percent,
the highest on record. This has created a challenge for
the country's leaders, who recognize the need to collect more revenue,
but also fear the increased taxes will lead to more
skilled and educated workers leaving the country. Ali Paves Malik,
(10:41):
the State Minister for Finance and Revenue, said, talent leaving
is something we must be cognizant of. Here's Bloomberg's fussy
Mangi again.
Speaker 4 (10:50):
They're aware of the fact that the taxes are high.
They say, whenever they can give a relief to the
income tax sector, they will give a relief. But it's
going to be a rough ride for the next few years.
It's going to be difficult. Economist say, it's going to
be difficult for the government to give that relief.
Speaker 2 (11:07):
Fuzzi. What happens if the government fails to stop more
Pakistani Is from leaving the country.
Speaker 4 (11:13):
Then we're going to have a talent issue in Pakistan.
A lot of companies are not finding the same quality
of people to replace the people who are leaving, so
it's creating a massive hole of talent.
Speaker 2 (11:26):
So where does Pakistan go from here? Will Pakistan be
able to navigate itself out of this economic crunch? Will
the seven billion dollar IMF bailout be its last? Fuzzy says,
there's no clear path forward.
Speaker 4 (11:42):
One thing to notice that the IMF program is a stabilizer,
it's not a booster. For your economy. It doesn't solve
the problems, the base problems of the economy. It can
tell you what needs to be done, it can lay
it out. In Pakistan, everyone says, everyone knows what the
problem is. It's about getting the job done, and unfortunately
(12:06):
we haven't been able to do the job for a
long time. We're seeing a very serious effort this time.
Whether we will be able to do it or not,
that is a question that remains, and we'll just need
to wait and see what happens.
Speaker 2 (12:16):
And as for Asad, who we hear from in the
beginning of the episode, he left Pakistan to pursue a
life in the US. He says, even though he's chosen
to leave his home country for now, he still holds
out hope that he could one day return.
Speaker 3 (12:30):
I think that option never goes out of the window,
and it will always stay on the cards. It's my country,
I love it, and it's a sad situation. But I
guess when I decided to jump the boat, I thought
about all these things. But constantly, your passion for the country,
your passion for meaningful change, it's constantly pitted against economic responsibility,
(12:53):
and at the end of the day, you have to
put your weight behind economic responsibility more than press or
emotionality for your country.
Speaker 2 (13:07):
This is The Big Take Asia from Bloomberg News. I'm
Rebecca Cheung Wilkins. This episode was produced by Young Young,
Naomi Ung and Jessica Beck. It was mixed by Alex
Segura and fact checked by Eddie dwe It was edited
by Caitlin Kenney, Aaron Edwards, and Kai Schultz. We'd like
(13:27):
to give special thanks to the Bloomberg Originals team. Naomi
Shavin is our senior producer, Elizabeth Ponso is our senior editor,
Nicole Beamstabor is our executive producer, and Sage Bauman is
Bloomberg's head of podcast Please follow and review The Big
Take Asia wherever you listen to podcasts. It really helps
(13:47):
new listeners find the show. See you next time.