June 4 - 10, 20

By and large, the representatives of trade and industry in Karachi looked positively at the budget 2013 that may be helpful for growth. The trade community in Punjab seems quite disturbed, as they find no impetus to help the stressed economy in coming out of the woods.

The relief measures announced in the budget have a tinge of forthcoming general elections as they are geared towards increase in salaries and pensions of civil government servants by 20 per cent, exempting income up to Rs400,000 per annum-it was Rs350,000 earlier-, incidence of higher tax slabs on incremental rather than full amount, and targeted subsidies with a higher Rs60 billion allocation towards Benazir Income Support Program vs. Rs50billion last year

The traders at the Karachi stock exchange (KSE) express hopes that the bourses in Pakistan may bounce back as a result of incentives offered especially the incentives on equity investments combined with CGT on property trading, 10 per cent if sold within a year and five per cent if sold b/w 1-2 years, should also help. However, the 10 per cent withholding tax (WHT) on margin financing not being deemed final is a minor setback. It is however general perception among the brokerage houses that next monetary policy, which is due in mid-June, will set a clear direction for the investors in early June in the light of the incentives given in the budget

Zafar Moti, Director KSE and chief of a leading brokerage house was of the opinion that from capital market perspective, the budget is quite helpful to strengthen KSE-100 index. Giving his initial reaction on the budget, he said that the inclusion of capital gains tax (CGT) relief package was announced via a Presidential Order on April 24, 2012 as part of Finance Bill. Given 120-day life of a Presidential Order apparently positive from capital market point of view, it needs to be vetted by parliament to exist beyond August 2012.

Prominent business community leaders including Siraj Kassam Teli, Younus Muhammad Bashir, Acting President KCCI, Zubair Motiwala, Qaiser Ahmed Shaikh, Zafar Moti, Haroon Agar, Anjum Nisar, A. Q. Khalil and others in their initial remarks said: "Overall the budget is good and will support business and services sector". However, they added it seems an election budget and needs to be substantiated with major steps to address energy crisis, food inflation and deteriorating law and order situation across the country.

Qaisar Ahmed Shaikh, former President KCCI, and a prominent business leader said that reduction in withholding tax and relief to salaried class in tax slab would certainly provide relief to the grass root level while a 20 per cent increase in salaries and pension can be taken as much needed relief to salaried people.

Although the income tax relief and other incentives like increase in pension and salaries would help winning a soft corner among the masses, unless the basic issues like shortage of power and gas and abnormal increase in power tariffs and petroleum prices are resolved, the ruling party would not be able to gain people's support at a massive scale.

However, the much sought after relief in energy prices was not visible as well as development surcharge on petroleum products need to be eliminated to bring down the energy prices. A large majority of the business people were of the opinion that they would be able to give comprehensive comments on the budget after seeing the detailed budget proposals in a couple of days.

The automobile industry was attaching high hopes with the budget especially on the issues of import of used cars and import duty rationale between completely built units (CBUs) and the completely knocked down (CKD). However, the budget was silent on these issues perturbing the minds of the investors in the automobile industry. However, the announcement of 25 per cent duty relief on hybrid cars may give a feeling to the existing auto investors to look into possibilities for shifting from manufacturing of the conventional vehicles to hybrid technology in view of ever-increasing fuel prices.


Pakistan industrial and traders associations in Punjab while reacting over the budget 2013 remarked that the budget would hardly be doing any favor to the country's ailing economy, as the government did not give any substantive plan to overcome electricity crisis.

Engineer Sohail Lashari said that by not allocating funds for Kalabagh dam, the government has given a clear message to the masses that they are least interested in ensuring cheaper electricity to the trade and industry. The prevailing rate of unemployment and closure of industrial units because of unavailability of electricity have become order of the day in the resource-rich country. Instead of looking at the half empty glass, the policy makers are looking at the half fill but they are unaware of the fact the half fill glass would soon be empty if the hydel potential of the country is not tapped.

The business community was expecting an announcement on new dams but no such announcement was made though the country is facing unprecedented energy crisis because of lack of dams for generation of cheap and sufficient electricity. Neither any new hydel project was announced, nor any measures for exploitation of huge coal reserves in the country were proposed in the document.

The budget outlay is envisaged at Rs3.2 trillion with an estimated deficit of Rs1.19 trillion consolidated Rs1.1trillion or 4.7 per cent of GDP. The total revenue growth target is an ambitious at 27 per cent on yearly basis.


Funding targets contain the usual uncertain elements including Eurobond $500 million, Privatization $800 million, coalition support fund $0.5 billion/$1.6 billion in fiscal year 2012-13 and provincial surplus Rs80billion vs. Rs91billion last year. The development spending target will remain under scrutiny with total public sector development program (PSDP) outlay of Rs873 billion up 19 per cent year on year basis, especially provinces share of Rs513 billion up 19 per cent.