Draconian laws remain hard and mental torture to business and industrial community
Interview with Mr. Muffasar Atta Malik – President, Karachi Chamber of Commerce and Industry
PAGE: Tell me something about yourself please:
Muffasar Atta Malik: I started my student life from an Army run school in Sialkot and after graduating from Murray College Sialkot got admitted in Nishtar Medical College Multan in 1982 to fulfill the desire of my parents. But Allah SWT had some other role carved for me and in a surprise move, I had to leave my professional studies and join my family business in Karachi as per my father’s wish. So I started my business career in 1982 at the age of 19 years and in 1988, I started my very own business. During the last 36 years, I have been involved in several fields including Photographics, Textiles, Pipe Mills, Leasing, Real Estate Development, Private Security Services, Trading and Solar Technology.
In 2008, I joined Businessmen Group (BMG) and became Managing Committee Member in 2012. I was chosen to head Law & Order Sub-committee in my first year and was tasked to perform as Senior Vice President Karachi Chamber of Commerce and Industry (KCCI) in 2013. I became President of KCCI, the premier and largest Chamber of the country as I was elected unopposed last year in the month of October to lead the esteemed Chamber for a period of one year, which is a challenging task but if you’ll take a good look at my life, I always love to take challenges and am ready to take more.
PAGE: Kindly tell us about the proposals sent by KCCI regarding the forthcoming budget for the next fiscal year?
Muffasar Atta Malik: This is the second consecutive year, when KCCI has refrained from submitting budget proposals. Previously, KCCI has been submitting the budget proposals, however, the genuine demands of the Business and Industrial community were never taken into consideration and the consequences are evident from the economic situation of the country where exports and foreign exchange reserves are declining.
The economy has not been able to attract the much needed investment due the unfriendly business environment. KCCI demands that proposals of the Tax Reforms Commission (TRC), which were compiled after detailed deliberations, be incorporated in letter and spirit. We urge the government to withdraw the draconian provisions and laws giving immense discretionary powers to the officers of Inland Revenue and field formations. This has been causing serious hardship, loss of productivity and mental torture to the business and industrial community. These laws have kept a large number of potential tax-payers out of the tax regime. In fact these laws are a deterrent to broadening of tax-base and resulted in promoting the culture of tax-evasion.
PAGE: Your comments on good news for the business community in the next fiscal year budget:
Muffasar Atta Malik: The business community will welcome any business and investment friendly measure announced in the budget. The removal of regulatory duty from several raw materials and essential items will be a good approach. We want to see measures leading to lowering of cost of doing business and conducive business environment.
PAGE: Do you think the budget would be expansionary which might pose problems for the next government?
Muffasar Atta Malik: Since this is the last budget before the elections, it is unlikely that adverse measures will be announced. However, we may see some measures to bring the non-filers in to the tax net which will be a favorable measure lest it does not add any further responsibility like that of withholding tax agent on the business community.
PAGE: How would you comment on the current state of the economy of Pakistan?
Muffasar Atta Malik: Pakistan has experienced some respite in its economic situation in the recent years, which were the outcome of low rate of inflation, decline in interest rates and 12 years lowest budget deficit. However, the balance of payments situation has seriously deteriorated with increasing imports, low exports and investment leading to record high current account deficit and sliding foreign exchange reserves. Elevated cost of doing business is a major challenge that the government is currently facing. Besides energy crisis; low tax-to-GDP ratio, lack of tax reforms, shrinking exports, rising imports and ballooning current account deficit are the other emerging challenges being faced by the government which call for urgent action.
Similarly, the repayment of the gigantic debt accumulated in the past many years should be a great cause of concern, as no well thought strategy has been formulated as yet to cater such mammoth pile of debt. To have a sustainable economic prosperity, it is important to further strengthen public finances and external buffers and improve public financial management.
PAGE: How could Pakistan get rid of trade deficit, current account deficit and ever increasing imports?
Muffasar Atta Malik: The shrinking exports have much to do with low diversified export pattern. More than half of Pakistani products are sent to just two markets i.e. EU and US which imports 31% and 17% respectively. Similarly, products that are being exported to these regions are quite narrow based where textile items make up 60%. In that too, Pakistan’s textile exports has shrunk to mere 1.8% from earlier 2.2% in the world exports. The reason is that Pakistan exports its ‘cotton’, the raw material for textile industry, to its textile competitors Bangladesh, China and Vietnam, which then after adding value to it, is exported to the world markets. The remittances have always been a lifesaving drug for the economy, eventually helping in reducing poverty, improving the living standards of the recipient families, preventing balance of payment crises, building foreign exchange reserves and provided stability in exchange rates, but it appears to be in short supply in the near term owing to job cuts in the Middle East and overall economic slowdown in the EU.
Policy makers should take into account that it is very likely that remittances will not be able to cushion the current account and boost the country’s forex reserves to the extent that it has been doing in the past. The solution lies in creating conducive business environment with ease of doing business to attract new businesses enabling them to manufacture exportable surplus at competitive rates. This would also reduce the country’s reliance on imported products.