By Commerce Reporter
LAHORE — Special Assistant to the Prime Minister for Industries and Production Haroon Akhtar Khan has said that the government has completely removed Super Tax on export businesses, while the rate of Super Tax on non-export businesses earning profits of more than Rs500 million has been reduced from 10 percent to 8 percent. He said the government was taking several steps to promote industrialisation, revive sick industrial units, reduce the cost of doing business and provide easier financing to the private sector.
He said new policies were being prepared for Battery Energy Storage Systems, solar panels, mobile phone manufacturing, electric vehicles, agricultural machinery, fertiliser, automobiles and other sectors. The aim was to promote local manufacturing and reduce dependence on imports.
He said a new Auto Policy was also in its final stages, which would include special incentives for electric two-, three- and four-wheel vehicles.
He was speaking to the business community at the Lahore Chamber of Commerce and Industry. LCCI President Faheem ur Rehman Saigol welcomed the Special Assistant to the Prime Minister.
Senior Vice President LCCI Tanveer Ahmad Sheikh, former LCCI and FPCCI President Mian Anjum Nisar, former LCCI President Tahir Javed Malik, former Senior Vice President Engineer Khalid Usman, Federal Secretary Industries Saif Anjum, SMEDA Chief Executive Officer Nadia Jahangir, and Executive Committee members Irfan Qureshi, Nadeem Ansari, Muhammad Iftikhar, Mohsin Bashir, Ali Imran, Firdous Nisar, Imran Saleemi and Rana Shouban Akhtar were also present.
LCCI President Faheem ur Rehman Saigol said that Pakistan’s economy had shown some encouraging signs recently. He said the improvement in Pakistan’s credit rating by Moody’s, increase in remittances, improvement in foreign exchange reserves and positive performance of the stock market were encouraging developments.
He said that with better economic decisions and continuity of policies, investment, industrial production, exports and employment could be increased.
Faheem Ur Rehman Saigol said the business community had high expectations from the new Industrial Policy. He said measures to limit unnecessary enforcement powers, including the freezing of bank accounts, could play an important role in restoring business confidence.
He said the biggest challenge facing Pakistan’s economy was the high cost of power and doing business. High cost of power, high borrowing costs and the overall tax burden were making Pakistani industry uncompetitive compared with other countries in the region.
He warned that without timely action, Pakistan could face continued de-industrialisation instead of industrialisation.
Giving an example, he said the owner of a major industrial unit had recently closed his textile mill, where around 2,000 people were employed, and had shifted to real estate and construction. He said the closure of one factory did not affect only its 2,000 workers but also thousands of families and businesses linked to it.
The LCCI President urged the government to make industrial electricity tariffs regionally competitive, improve the competitiveness of the tax system and remove the tax difference between commercial importers and local industry to encourage domestic manufacturing.
He said thousands of industrial units had been operating for many years around Lahore but were repeatedly facing notices for relocation and closure. If relocation was necessary, the government should provide alternative sites and a clear policy.
He said establishing an industry required generations of hard work and investment, while closing a factory was easy but rebuilding it was extremely difficult.
Faheem Ur Rehman Saigol said Pakistan had enormous potential and had demonstrated its capabilities in several sectors despite limited resources. He said continuity of policies, economic stability and timely resolution of business problems could put Pakistan on the right path to development.
Haroon Akhtar Khan thanked LCCI President Faheem Ur Rehman Saigol and said that although he had met him several times before, this was his first visit to LCCI after Mr. Saigol became President. He also appreciated the presence of former office-bearers, including Mian Anjum Nisar and Tahir Javed Malik.
Haroon Akhtar Khan said the new Industrial Policy had been prepared with the approval of the Prime Minister. It included measures for the revival of sick industrial units, protection of businesses from unnecessary harassment, easier financing and speedy resolution of business disputes. Effective systems for commercial courts, bankruptcy and restructuring of businesses were also being introduced.
He said political differences were separate from business matters and economic issues should be kept above politics. The private sector was the backbone of Pakistan’s economy, and the government’s responsibility was to provide direction and facilities while the private sector had to play the leading role in taking the economy forward.
Haroon Akhtar Khan said economic and political stability were essential for development. He said countries such as China, Vietnam and Indonesia had achieved growth through a stable environment, industrialisation and strong private-sector participation.
He said Pakistan’s importance at the international level had increased and recent diplomatic successes had improved the country’s image. The government was giving special importance to economic diplomacy and creating opportunities for business-to-business linkages and joint ventures with different countries.
He said the Prime Minister himself had a business and industrial background and therefore understood the problems of industrialists. The government’s clear vision was to establish new industries, increase manufacturing, keep factories operational and strengthen the economy through private-sector leadership.
Haroon Akhtar Khan said macroeconomic stability had resulted in a significant decline in inflation, while the policy rate, which had reached 22 percent at one stage, had now come down to around 11.5 percent. The government was also working to further reduce electricity prices and make industry regionally competitive.
He said 6,400 acres of land belonging to Pakistan Steel Mills had been converted to a land-lease model. Under this model, investors would not have to pay a large amount upfront and could obtain land for 30 years by paying an annual fee. The lease could be renewed for another 30 years.
He said the government was also moving ahead with the privatisation of airports and electricity distribution companies, with several companies showing interest in the process.
He said policies were being prepared for gems and jewellery, meat exports, automobiles, electric vehicles, battery energy storage, solar panels, mobile phone manufacturing, fertiliser and agricultural machinery.
Haroon Akhtar Khan said the Prime Minister was paying special attention to small and medium-sized enterprises. SMEDA had been made more active, while steps were being taken to promote women’s entrepreneurship, microfinance and access to bank financing for small businesses.
He said special desks had been established at SMEDA and the Ministry of Foreign Affairs to help small and medium-sized businesses obtain visas for participation in international exhibitions. He urged the business community to contact SMEDA for the resolution of their problems.
He said around 600 joint projects between Pakistan and China were under consideration, with around 32 percent of these projects already moving towards implementation. The government was regularly monitoring these projects to ensure that agreements were translated into practical results.
He said cooperation with China in the pharmaceutical sector was also increasing. Agreements were being signed with international companies for the local production of vaccines and insulin in Pakistan, which would help increase the domestic production of essential medicines.
Haroon Akhtar Khan said more than 64 meetings had been held with chambers, trade organisations, industrialists, foreign investors and other stakeholders during the preparation of the new Industrial Policy so that the problems of different sectors could be included in the policy.
He said the new Industrial Policy would provide sick industrial units with an opportunity to restart operations if they had closed because of high electricity prices, expensive financing or high taxes. Businesses would be given opportunities to recover and become viable again through restructuring.
He said protection of businesses from unnecessary harassment was another important part of the new Industrial Policy. Relevant institutions would retain the authority to investigate fraud and violations of the law, but legitimate businesses would not be allowed to be unnecessarily disrupted.
Haroon Akhtar Khan said providing financing to the private sector was a major government priority. Instead of banks investing heavily in government securities, they should provide easier and cheaper financing to businesses. A private equity and venture capital policy was also being prepared for this purpose.
He said new sources of long-term financing were being introduced for industries so that industrialists would not have to depend only on short-term bank loans.
He said a commercial court system was also being introduced for the speedy resolution of business disputes. Business experts and judges would work together to ensure that commercial cases were resolved quickly.
