Pakistan heading towards deep economic recession: LCCI president
Govt should correct its course within the upcoming one and a half month or so: Almas Hyder
M J Hayat
LAHORE: Pakistan would be heading toward an utmost type of economic recession within the next one and a half month or so if the government does not correct its course and recovery from that anticipated recession will not be easier. Irrational and unreasonable duty taxes on the raw material should immediately be removed. Filer and non-filers terms are ambiguous and vague and they should be made simpler by turning into taxpayers or non-taxpayers.
The high rate of interest should be reduced to a reasonable level as it is impeding the potential investment in the country.
These views were expressed by the Lahore Chamber of Commerce and Industry President Almas Hyder while talking to Daily The Business at the Perl Continental Hotel Lahore the other day.
“Massive layoffs have been seen recently in the industrial sector while a cut in salaries is another factor that has reduced the purchasing power of the people at large. This phenomenon has made the cash flow stagnant. Money in circulation has jammed thereby impeding the economic activities,” he said, adding that people are scared of investing even their legitimate earnings.
“Those few who have money are not finding the prevailing condition suitable and investment friendly instead they are mulling shifting their money in other countries,” he pointed out
Talking about the concept of tax filer and non-tax filer, he said that this is another business discouraging factor that anyone who is non- tax filer cannot buy sell properties and any other valuable like vehicles including car etc.
The filer and non-filer terminology are the two confusing elements as most of the literate people are also puzzle and perplex, Almas Hyder noted, adding that they should be simply taxpayers and non-taxpayers.
“If someone is liable to pay tax he must be served notices when he or she does not pay taxes,” he explained, further adding that when you disallow buying and selling by the non-filers, you are restricting the cash flow putting a ceiling on business activities.
When asked whether the government functionaries are incompetent or lacking abilities that they are running the economy in such the objectionable ways, he, however, kept mum, laughing meaningfully.
When asked whether he convinced with the hearsay that the government in the upcoming budget on January 23, is going to reintroduce the tax reforms which were undertaken in 2007 when the Pakistani economy made
headways he was of the view that it may be that the government adopt some of the good points of the reforms, however, he would not go for believing that the government is going to fully reintroduce the reforms.
“The government would be rectifying the last budget shortcomings to recover the losses occurred in the results and nobody should live in the fool’s paradise that the government is going to present budget to introduce the relief measures.
“If they want to take relief measures they can do that without introducing the budget”, he stated, quoting the example of the PMLN government when Finance Minister Ishaq Dar imposed customs duty on everything to meet the deficit.
He said that Dar was not redistricted to the 2 percent customs duty he imposed regulatory duty on the raw-material in the name luxury goods to recover or compensate the deficit. This exercise on the part of the government resulted in increasing the cost of raw-material up to 92 percent thereby costing the end product for Rs 192 per unit, he stated, disclosing that the irrational taxing made Pakistani products non-competitive in the international market.
The very scheme was one of the main reasons for the de-industrialization in Pakistan, he believed, saying further that after the imposition of such the anti-business measures by the governments after government it is said that Pakistani industrialist is incompetent which is sheer injustice, he said, demeaning the level playing field for the Pakistani trade and industry from the government.
Shedding the light on the economic prosperity of united India he quoted a few excerpts from the book Inglorious Empire by an Indian Parliamentarian and author Shashi Tahroor and said that when the Britons occupied India was carrying 27 percent of the GDP of the world.
“They destroyed the local textile industry by imposing 60 percent taxes on the raw-material and exempted the exports. The indigenous raw cotton was being exported to England and they made ways for the finish
products with the same cotton in to India. Local Industry was shut down in the results and imported items demand escalated.
“The very strategy of the Briton made India to post 3 percent GDP which was once 27 percent of the world GDP,” the LCCI president went on saying, adding that exactly the is happening with the Pakistani economy.
In answer to a question about the upcoming mini budget whether the mini-budget is being presented to give relief to the people or make arrangements to recover the shortfalls in the revenue collection, he was of the view that budget by definition means to strike a balance between the income and expenditures.
“If they want to give relief budget presentation is not mandatory.
Wishes are not horses that we can ride. We should not be living in the fool’s paradise by hoping relief measure by the government in the mini budget,” he expressed.
Answering a question about the relief measure by the government for the industrialist, especially for the textile millers he said these are the announcements and promises which are seldom fulfilled.
While giving a strict warning, he said that presently the government need to correct its course and if it does not do that we will have to face the worst type of economic recession and getting out of that would
not be so easy.
When asked what according are steps the government should take for the course correction he suggested that firstly the cash flow needs to be made smoother without impediments.
The cash flow can be made smoother by allowing the people to use their money freely. When the money will change hands cash flow will tend to improve, he said adding that in the second place filer and non-filers
are ambiguous terms that should be made simpler by calling them taxpayers or non-taxpayers. Anyone who is liable to pay taxes is not paying; he or she should face the legal proceedings.
Thirdly, irrational and unreasonable duty taxes on the raw material should immediately be removed, he said, adding further all the refunds should be released which normally the businessmen seldom demands for
the fear of opening of the audit whether they are right or wrong.
High rate of interest is impeding the potential investment in the country which should also be reduced to reasonable level so that the investors could come and invest in besides local industry and business
would also be able to avail cheaper money for the new business activities, Almas Hyder concluded.