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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 telecom sectors.

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 Pakistan's products.

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 July-December 2001.

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 year.

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 enviable.

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 year.