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
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
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
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.
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.