TRADE AND BUSINESSMEN'S REACTION
In present circumstances, it is realistic and
By AMANULLAH BASHAR
June 25 - July 01, 2001
The business community has generally described the
budget 2001-2002 as "realistic and balanced" in the face of
the depressed economy which is swamped by the huge debt.
Finance Minister Shaukat Aziz was not in a position
to offer to more what he has presented to the nation in the given
Zubair Motiwala, President Karachi Chamber of
Commerce and Industry (KCC) while commenting on the federal budget has
urged the federal minister to review the decision of imposing 5 per
cent duty on plant, machinery and equipment not manufactured locally.
He said that this contradicts the declared policy of allowing zero
rated import of machinery for export oriented industry and would erode
the competitiveness of this sector.
He said that upward revision in the Sales Tax to 20
per cent from 15 per cent on 200 items of raw material might create
problems for trade and industry.
The target of Rs457 billion in federal taxes is too
ambitious. He said that tax collection in the outgoing fiscal year had
remained off the mark of Rs435 billion. He urged the government to
enforce the positive measures proposed in the budget without which it
would be simply a visionary plan.
On the extension of self assessment scheme for all
categories, he said that its procedure and modus operandi be framed in
such a manner which must conform to the spirit of the concept of self
assessment. The exemption in the tax limit could provide relief to the
relatively low-income group.
He, however, welcomed the cut in import duty from
35 per cent to 30 per cent and particularly the reduction in duty on
raw materials and chemicals of textiles, soap, tires, tubes, housing
and engineering industries and on those items prone to smuggling.
On the provision of allowing foreign remittances
without subjecting them to any sort of taxation, the KCCI chief said
this incentive would have a salutary impact on the cash-flow situation
KCCI Chief said that India has given many-sided
incentive to the textile sector including a proposed investment of $15
billion under BMR scheme for its up-gradation. The imposition of
import duty along with the reduction in rebate, duty drawbacks as high
as 70 to 80 per cent would indeed have a stiffling effect on the
growth of exports from Pakistan. The government should discuss in
threadbare before any revision in the quantum of rebate/duty drawbacks
with the business representatives, he urged.
The federal budget has not addressed the textile
industry, which is the backbone of the economy and constitutes major
chunk in the exports.
The textile sector including the value added sector
expressed surprize that in more than two hours' speech the Finance
Minister ignored the most needed and the real base of the industrial
Abid Farooq, Chairman All Pakistan Textile Mills
Association says that he was failed to understand that why the most
important sector was not addressed by the minister in his two hour
long speech only one minute was given to it.
The textile sector, which constitutes over 60 per
cent of the exports, did not find incentives in the budget. The growth
of the textile sector is essential for the growth of the economy. The
budget proposes duty reduction on synthetics yarns that are not being
manufactured locally, such as viscose yarn, from 15 per cent to 10 per
cent respectively. The budget also proposes to cut the duty on certain
expansive chemicals such as sodium alginate from 25 to 10 per cent and
dyes from 25 per cent to 20 per cent, these steps may not be
sufficient to boost the industry, APTMA feels.
Shaikh Javaid, Chairman Export Processing Zones
Investors' Council (EPZIC) says that budget 2000-2001 is fairly
acceptable to trade and industry under the prevailing political and
economic conditions of the country. However, the ever-reducing import
duties are likely to hit the industrial activities, as the local
industry has not attained the position so far to face the global
Commenting on expenditures proposal for Balochistan,
Shaikh Javaid said he is the staunch supporter of speedy development
of Balochistan and has time and again urged the government to
immediately release the funds earmarked for the province so that the
developments in that province are not disturbed.
Shaikh Javaid, known for his passion towards early
development of coastal areas in Balochistan appreciated the measures
proposed in the budget for the development of Mekran coast,
construction of deep-water port and roads in the periphery of
forthcoming port and Saindak projects.
Shaikh Javaid, who also chairs the Export
Processing and Free Zones Committee of the Federation of Pakistan
Chambers of Commerce and Industry urged the government to lay a
Railway Track from Karachi to Guwadar which he feels would play a much
greater role in promoting social and economic harmony between the two
port cities of Pakistan.
Shaikh Javaid feels that the economic potential of
the highly rich province of Balochistan could only be realized by
development of all sorts of transportation facilities between the two