LAHORE, Nov 16 (APP): Federal Finance Minister Ishaq Dar on Saturday warned the speculators to refrain from speculations in the forex market or be ready to face the music for causing huge loss to economy for their petty gains. Speaking at the Lahore Chamber of Commerce and Industry, he said a handful people had taken the whole economy hostage, who would not be allowed to play at the cost of the country. The minister assured the businessmen that there would be no witch-hunting by the Federal Board of Revenue (FBR) to broaden the tax net. Article 165A was meant for tax evaders only, but no case had been registered against anybody, he added.
He said increasing the tax ratio to 15 per cent of the GDP (Gross Domestic Product) was the first goal of the government which could be achieved only by registering new taxpayers.
He said the government was hopeful of complete economic revival in next five years. Despite adverse conditions the economy has showed robust growth in the first quarter of current fiscal year, he added.
The Finance Minister mentioned that foreign direct investment increased by 83 per cent, portfolio investment jumped by 101 per cent and the large scale manufacturing grew by 8.5 per cent, while the negative trends in growth had been stopped. The country was now moving forward.
He said the rating agencies had acknowledged Pakistan’s performance and upgraded its rating as well.
Ishaq Dar spoke at length on all issues being faced by the economy and the measures being taken to overcome them. He said that a three-year well tailored economic revival plan had already been put in motion that would yield positive results.
He said that economy, energy and extremism (3Es) were the serious challenges and the government was utilizing all its energies to resolve them. He said that newly imposed taxes were a result of the caretaker government’s commitment with the IMF (International Monetary Fund). He, however, added that the government was focused on narrowing down the foreign account and budget deficit.
The minister called upon all the religious and political parties to suppots the government in its efforts for elimination of terrorism and extremism, and revival of economic activities in the country.
He apprised the business community that after grant of GSP Plus (Generalised System of Preferences) to Pakistan, the foreign investors had showed their keen interest to make $ 1.3 billion investment in the textile sector alone.
After having the GSP Plus status by the European Union, he said, the Pakistani exports would be increased by $ 2 billion.
On the issue of shortage of energy, the minister said that the government was striving to ensure supply of cheaper energy to the masses and for the purpose, it had launched medium and short term plans. He said that work on Neelum-Jehlum, Diamir-Basha and Dasu dams were well on track and their completion would help end power shortage in next three years.
He said the government was also working on civil nuclear technology and wind energy projects. He said that the government was determined to add 8500 MW of electricity into national grid by 2016.
The minister announced setting up two committees comprising former LCCI president Mian Muhammad Ashraf, Sheikh Muhmmad Asif, Mian Anjum Nisar, Iftikhar Ali Malik and FBR Chairman Tariq Bajwa to look into the issues of steel industry, under invoicing, smuggling and sales tax refunds. He assured that the decisions taken by the committee would be implemented in letter and spirit.
About the transporters strike, the minister said that he would visit Karachi and hoped that in a day or two, the goods transporters would be back to business. About the public sector enterprises, he said that a mechanism had been devised to revamp these entities on modern lines through partial privatization but in this process the respective employees would be given full protection.
He said the public debt should be up to 60 per cent of the GDP.
Pakistan had to pay Rs 3,000 billion since 1947 to June 30 1999, but its volume increased to Rs 6,500 billion during the next eight years, which further moved up to Rs 14,000 billion during the last government.
The goverment, he said, had made a three-year economic roadmap to double the GDP growth rate to six per cent. Since 50 per cent of the country’s population was living below the poverty line, the government had decided to bring the tax to GDP ratio up to 13 per cent in three years and 15 per cent in next five years, besides reducing the government’s borrowing from 63.5 per cent to 60 per cent of the GDP.
LCCI Acting President Mina Tariq Misbah, Vice President Kashif Anwar, former Presidents Mian Muhammad Ashraf, Mian Anjum Nisar, Mian Misbahur Rehman, Iftikhar Ali Malik, Bashir A Baksh, Sheikh Muhammad Asif, Shahid Hassan Sheikh, Mohammad Ali Mian, Irfan Qaiser Sheikh, Mian Muzaffar Ali also spoke in the occasion. Federal Board of Revenue (FBR) Chairman Tariq Bajwa and Deputy Governor State Bank of Pakistan were also present.
On the issue of energy, Federal Finance Minister Ishaq Dar said 10 coal-fired projects of 660 MW each had been planned at Gaddani and it had been expected that these would be completed by the private sector, while another 1000 MW would be generated through wind resource.
In his welcome adderess, the LCCI Acting President Mian Tariq Misbah said the business community fully understood the economic conditions inherited by the government.
When PML-N government took over the charge, there were severe challenges faced by economy including power outages, low economic growth, circular debt, falling investment, huge fiscal deficits, inflation, unprecedented floods, terrorism and worst law and order situation.
These factors resulted in flight of capital from Pakistan that shaved off annual GDP growth by two percent and halted the way of further industrialization in the country, he said.
The GDP growth had stuck at a level, which was half of the level of Pakistan’s long term trend potential of about 6.5 percent per annum, he maintained.
He said the LCCI highly appreciated the government for taking corrective measures to address the prevailing issues including law and order situation in Karachi, circular debt, initiating plans to restructure public sector enterprises and reduction in duration of load shedding.
“We also congratulate your government for attaining GSP plus status from the EU commission, as it will enable Pakistan’s textile exports to get doubled in next four years and create one million new employment opportunities.”
Mian Tariq Misbah said Pakistan had lowest tax to GDP ratio in the region and supported the government initiatives to broaden the tax net, instead of squeezing the people who were already in the tax net. For that purpose, the tax machinery had to find ways to add more assessees in the tax net.
He said the industrial sector contains 20.9 percent of GDP contributing two-thirds in the tax revenue whereas agriculture sector accounts for 21.4 percent of the GDP, but its share in the state revenue was less than one percent and service sector with a share of 57 percent was contributing much below its potential.
“We are of the opinion that every sector of economy should contribute in the national exchequer proportionate to their respective incomes,” he added.
He said that markets were flooded with smuggled items covering all sectors and products causing loss of billions of rupees to the national exchequer.
“We are of the view that by using latest techniques like tracking of containers at highways entry and exit points, instead of appointing monitoring staff at factories and manufacturing concerns, would help collect billions of rupees as custom duty and other taxes.”
He expressed the need for reducing customs duty on smuggling prone items to encourage legal imports. It would not only increase government revenue due to enhanced import, but also address the issue of competitiveness on the part of commercial importers. The smuggling prone items might be identified in consultation with trade and industry, he added.
Mian Tariq was of the view that imports against TT (telephonic transaction) were increasing due to misuse of the facility, which needed to be discouraged and legal framework for this purpose should be introduced.
Courtesy Associated Press of Pakistan