Policies start responding
By AMANULLAH BASHAR
Jan-28 - Feb-03, 2002
The recovery of Pakistan's credit rating from C-Minus
to B-plus, growth in agriculture sector, stable foreign exchange
reserves, quantum jump in home remittances altogether giving indications
of the success of the policies adopted by the government for economic
revival of the country.
In order to capitalize the situation the government
has already launched a strategic policy to attract investment both from
domestic and foreign resources.
Experts feel that the capital market has also started
indicating an improved flow of foreign investment where according to an
estimate the foreign investment is estimated to Rs5 billion and more is
expected to pour in.
It is generally felt that the government's policy to
privatize public sector entities through public flotation may further
broaden the base for investment in Pakistan.
Recently the US investors have also shown interest to
invest in the small and medium enterprises, oil and gas, agriculture and
Trade delegation from Oklahoma State comprised of
department of commerce and representatives from a number of companies of
Oklahoma expressed their interest in value added food products, joint
education programs, IT, Software development, and retail of Pakistani
handicraft and other goods on the basis of joint venture. The visitors
feel that Pakistan is a place, which can offer tremendous facilities to
foreign investors, and Oklahoma State would like to open the door for
Actually it was a fact finding mission to explore
possibilities of cooperation between the two countries and to identify
projects which they can participate in strategic partnership in
Pakistan's industries is also on their agenda.
The present government has evolved investment
strategy giving emphasis on privatization, liberalization and
deregulation which has resulted in bringing the Pakistan at B-plus
international credit rating from C- minus.
The priority areas identify by the government to
attract foreign investment include Oil and Gas, agriculture, Information
technology and SMEs.
It is reassuring that the government has realized the
damages caused by the inconsistency in the policies in the past. Hence
the modalities have been prepared to formulate a setup through which
going back on these policies for ulterior of personal motives would not
be possible in future.
Currently 70 US companies are operating in Pakistan
to bring in 38.7 per cent of investment in the area of agriculture, oil
and gas, IT, telecommunication and SMEs.
Inflow of dollars through home remittances kept
growing as the total remittance reached $982 million during
The increase noticed during the first half of the
current financial year by more than 61 per cent compared to the
corresponding period of last year when $609 million were sent by
overseas Pakistanis. Financial experts feel that half-year remittance
has reached just close to a billion dollar and the full fiscal might see
the figure of $2 billion at the end of the financial year.
The rupee has also strengthened by 5 per cent since
September 11 and country's foreign exchange reserves also reached to a
record level of $4.8 billion. The enhanced rate of inflow is expected to
offset the losses of low inflow of dollars through export proceeds this
The government is actively working to reduce
irritants to make the investment climate even more conducive. Finance
Minister Shaukat Aziz said this while addressing the newly established
working group on investment promotion. Referring to various measures
taken by the government to make the investment climate friendly in
Pakistan he said that introducing of the tax reforms, equity in
taxation, broadening of the tax base, introducing of tax friendly regime
and anti-dumping laws are some of the steps enforced by the government.
The group would soon give recommendations on
identification of the under-invoicing of specific items and dumping of
imported goods, besides suggesting remedial measures for identification
of raw materials for the minimum customs duties.
The group would also look into the system of sales
tax refunds and identification of items for levy of sales tax at
enhanced rates; simplification in system of payment of duty drawback and
other areas identified by the working group including taxpayer
facilitation and access to tax officials.
The finance minister said that it was the
government's policy to introduce transparency in tax collection by
minimizing contact between the tax collectors and taxpayers. He exhorted
the group to prepare a report and action plan to help the government
increase interaction with the private sector and to make the
government's revenue collection mechanism more friendly and proactive.
He said that the government and private sector should work in unison to
act as an agent of change and a catalyst for making investment climate
The government has also claimed to have increased
refunds of sales tax and income tax by over 67 per cent during the first
six months of this financial year, while Rs37, billion have been
refunded as compared to 23.2 billion in the corresponding period of last