INTERVIEW WITH ARIF HABIB, CHAIRMAN ARIF HABIB CORPORATION LIMITED

KHALIL AHMED
(feedback@pgeconomist.com)
July 4 - 10, 20
11

PAGE: TELL US SOMETHING ABOUT YOURSELF.?

ARIF HABIB: I am the Chairman of Arif Habib Corporation Limited, a holding Company of Pak Arab Fertilizers Limited, Fatima Fertilizers Limited, Aisha Steel Mills Limited, Al-Abbas Cement Limited, Arif Habib Limited, Arif Habib Investments Limited, Sweetwater Dairies and Sachal Windpower Limited. I am also the Chairman of Memon Medical Institute Hospital, Thatta Cement Company Limited and former Chairman of the Karachi Stock Exchange and Central Depository Company of Pakistan Limited. I am the Founding Member and Former Chairman of the Central Depository Company of Pakistan Limited. I served as member of the Privatization Commission, Board of Investment, Tariff Reforms Commission and Securities & Exchange Ordinance Review Committee. Over the years, I have been nominated on the Board of Directors of a number of companies by the Government of Pakistan and have remained member of the Board of OGDC. I have participated in a number of professional advancement courses including on Development of Securities Market organized by the SEC, USA at Washington, D.C. in 1992. I have also visited over a dozen of stock exchanges in different countries for exchange of views. On the social services front, I am a significant participant of welfare activities of different organizations. To quote a few, I am one of the trustees of Fatmid Foundation and Memon Health & Education Foundation and Director of Pakistan Centre for Philanthropy and Karachi Education Initiative.

PAGE: WHAT ARE YOUR COMMENTS ON THE FEDERAL BUDGET 2011-12?

ARIF HABIB: Budget 2011-12 has been prepared with no significant additional taxes as some measures for revenue generation were already announced in March 2011 like doing away with the zero rating of sales tax, continuity of these measures will generate additional resources for the budget. Reliance has been put on improving the tax of existing taxes collection in order to achieve the additional revenue target. Fiscal deficit has been targeted at four per cent of GDP. Inflation is targeted to bring down to single digit. If the government is able to achieve these targets it will create fiscal space for the government, contain inflation and attract investment in the economy creating jobs opportunities for the people.

PAGE: WHAT DOES THIS BUDGET HOLD FOR THE LOW-INCOME GROUP?

ARIF HABIB: The Budget 2011-12 has made provisions for targeted subsidies to the poor. Containment of inflation through financial discipline and attracting more and more investment creating job opportunities are tools for alleviating poverty. I hope targeted subsidies would reach to the deserving people and promised financial discipline shall be adhered to.

PAGE: HOW COULD INFLATIONARY PRESSURES BE EASED?

ARIF HABIB: To my mind, most of the inflation is imported means it triggers because of the rising international prices of commodities. It is therefore very difficult to contain it but this can be made bearable by increasing the income of the people. This is possible by attracting more and more investment in the country. In order to achieve this and to contain inflation due to overspending of the government there is a need to control fiscal deficit. This will bring down the interest rates in the country encouraging more investment in the economy of Pakistan.

PAGE: WHAT KIND OF EFFORTS ARE REQUIRED BY THE GOVERNMENT OF PAKISTAN TO ACHIEVE THE TARGETED GDP GROWTH AND REVENUE TARGET?

ARIF HABIB: Presently, Pakistan is faced with high fiscal deficit, high interest rate regime, energy shortages, lower investments, and serious security issue. These are linked with each other and are impacting the GDP growth pace. Though, Pakistan has seen incremental cash flow due to higher exports by US$5 billion and higher remittances by US$2 billion. Foreign portfolio investment has also been positive but unfortunately this money has not gone into new investment. In order to achieve the higher GDP growth and revenue collection, Pakistan needs to fully utilize existing capacities of industry and agriculture by bringing down the interest rates, better management of energy supply, adhering to financial discipline and above all controlling the law and order problem.

PAGE: YOUR VIEWS ABOUT REDUCTION IN SUBSIDIES AND REMOVAL OF A FEW TAXES IN THE FEDERAL BUDGET.?

ARIF HABIB: Federal Budget 2011-12 proposes to lower the subsidies compared to that spent in year 2010-11. I hope this will be implemented in letter and spirit. Reducing the number of taxes by phasing out the excise duty is a welcome move and I hope that efforts will be made to bring down the income tax and sales tax and yet collect higher amount of taxes by improving tax collection efficiency.