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AMJAD RAFI

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Amjad Rafi

By AMANULLAH BASHAR
Oct 18 - 24, 1999

Amjad Rafi, newly elected President of Karachi Chamber of Commerce and Industry (KCCI) for 1999-2000, has earned a prominent place among the business community on account of his active services for the promotion of national economy.

Amjad carries various distinctions to his credit like Member Executive Committee of SAARC Chamber of Commerce and Industry and Federation of Pakistan Chamber of Commerce and Industry (FPCCI) 1998-2000; Chairman of Pakistan- Turkish Business Council and Taxation Committee FPCCI.

Amjad won the prestigious position of the leader of KCCI at a time when the national economy was passing through the most difficult times.

Amjad believes that Pakistan cannot afford to rely on limited domestic capital alone. It should avail the opportunities to open new avenues by inflow of foreign private investment. This calls for immediate resolution of IPPs issue, which conveyed negative signals to the foreign investors.

PAGE : Would you like to identify areas where immediate remedial actions are needed to give an helping hand to the economy ?

Amjad : The foremost problem especially of Karachi is the law and order situation. The US Ambassador recently termed existence of satisfactory law and order situation as the sine qua non for successfully inviting foreign investors to establish business and industry. In this regard safety of investors, besides the security of investment could not be ignored.

To create an environment of certainty and make industry/investment feasible, the economic policies should be made consistent. Their stability should be ensured preferably for five years and allowed to be implemented so that meaningful results are achieved.

To meet the resource gap, the economic managers should realize that the development expenditures are not cut, as the country's capital stock is fast depleting and infrastructure facilities are quite limited. Instead of going for cut down in the development expenditure, steps for expanding the revenue base should be taken. The need of the hour is not taxing the industrial corporate sector again and again, the government should extend the purview of federal income tax to include all incomes irrespective of source, including agriculture the largest sector which accounts for 25 per cent of the GDP.

PAGE : How would you like to comment on the state of infrastructure which is one of the most important factors for investment in any country?

Amjad: There is an urgent need for expansion and strengthening infrastructure for industrialization on a priority basis. In the short run, the development projects can be concentrated on the existing industrial estates, where the industrial infrastructure is already in place by improving the provision of utilization.

PAGE: Would you like to comment on banking system and mark-up rate in Pakistan?

Amjad: High mark-up rates are partially responsible for discouraging investment and hence leading to sub-optimal growth. An analysis of a manufacturing company listed on Karachi Stock Exchange by R&ED Cell of KCCI reveals that share of mark-up in the total cost of manufacturing ranges between 4.2 per cent (pharmaceuticals) and 14 per cent (engineering). Reducing the burden of financial charges in the cost of production will make products more competitive. The lending rates can be reduced by narrowing the alarming wide-spread of over 8 per cent between average lending and deposit rates through curtailing overheads as well as efficient management by the banks.

PAGE: How Pakistan can expand its tax net ?

Amjad: The government in principle has agreed the adverse effects of the multiplicity of taxes and tax collecting agencies which is one of the major hurdles in the way of expanding the base of tax net in Pakistan. KCCI has already submitted a study to Provincial Government on Multiplicity of Taxes and tax collecting agencies. Setting up task forces, commissions or committees to seek their recommendations for resolving economic issues generally proved as delaying tactics on the part of decision makers. Once the problem is identified immediate steps needed to remove problems causing suffocation in the economy.

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There are many international as well as local organizations which have started or stepped up their catalytic role to promote foreign direct investment, encourage establishment of joint ventures, act as conduits for transfer of technology and through equity participation from their sources. Such organizations including IFC, MIGA, Asian Finance and Investment Corporation, Common Wealth Fund for technical co-operation, Islamic Development Bank, UNDP and UNIDO, the budding entrepreneurs in Pakistan, however, are unaware of their existence and potentialities.