As Pakistan marks Independence Day, the Islamic republic is taking another important step in its efforts to devolve power to the grassroots. Today, councillors elected through local polls will be assuming their administrative responsibilities. This completes another phase in the process of building democracy and heralds the beginning of the next stage of political and institutional reforms that will pave the way for general elections next year. These initiatives are in keeping with the task undertaken by President Pervez Musharraf in 1999, and he has affirmed that the process will continue. On the day he took the oath of office as president, he said: 'Let there be no doubt that there is a change in our intentions for the future.' He reiterated his determination to place the national interest first and ensure the 'continuity and sustainability of all the reforms and the restructuring.' So far, the dismantling of political fiefdoms and the reconstruction of state institutions has resulted in significant economic gains. Multilateral agencies have responded favourably. Last month, the World Bank noted that Pakistan has undertaken a comprehensive economic reform programme. 'The pattern of growing corruption and deterioration of key public institutions has been arrested, and rapid progress is being made. This is a clear break from the past.' The International Monetary Fund (IMF) announced a US$131 million disbursement, while also cautioning about major challenges in terms of foreign exchange reserves, governance and restructuring of public enterprises. According to Pakistan's Consul-General in Hong Kong, Azmat Ali Ranjha, the political restructuring along with judicial reforms, translate into long-term economic well-being. While there are some underlying weaknesses, there has been a 'modest recovery in growth', he points out. Some indicators are heartening. 'There has been a significant increase in exports, with the total value surpassing the US$9 billion mark for the first time in the country's history,' Mr Azmat said. This is despite dwindling demand in major markets, particularly the United States, and the rupee's depreciation against the US dollar by about 20 per cent. Rice exports have reached record levels in 2000-01 and similarly other primary commodities have made significant gains. Mr Azmat says initiatives have been outlined to achieve product and market diversification. Simultaneously, efforts are being intensified to enter secondary markets. 'Exports to China have increased substantially. The value of exports to the mainland, Macau and Hong Kong collectively exceeded US$800 million from July 2000 to June 2001.' Mr Azmat says the aim is to achieve a US$10 billion target in exports and to further tap the potential of sectors such as fisheries, fruit and vegetables, gems and jewellery, and engineering products. As part of the export drive, the idea of setting up warehouses in overseas markets including Hong Kong is being explored. This is expected to help speed up supplies of goods to market. Pakistan's services exports are also being promoted. A major effort is being made to attract foreign direct investment (FDI). Investment flows have fallen 76.2 per cent to US$35.3 million from US$148.3 million in the July to September 00 period. The biggest slice of FDI came from the US, and UK according to the State Bank of Pakistan. Despite the slow inflow of FDI, Mr Azmat says Pakistan's abundant natural resources, skilled labour, and access to regional markets, offer investors numerous possibilities, and these are made even more attractive by liberal policies which allow repatriation of capital, profits and dividends. There are investment opportunities in industry, services, infrastructure and agro-farming. On the tourism front, Pakistan International Airlines, manager for Hong Kong and Macau, Ali Tahir Qasim, says 'modest success has been achieved in promoting tourism in Hong Kong, Macau, China and Taiwan. He said, the national carrier's cargo services, esepecially outbound cargo, 'has been extremely encouraging'. As reforms take hold, many overseas companies are beginning to revise their opinion of the country and, Mr Azmat says the results of 'systematic and steady political and economic transformation will become evident in the near future'.