TRADE AND BUSINESSMEN'S REACTION
In present circumstances, it is realistic and balanced
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 circumstances.
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 in Pakistan.
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 sector.
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 competition.
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 provinces.