The Lahore Chamber of Commerce and Industry Wednesday outlined key priorities for budget 2012-13 calling for an immediate government attention on a number of challenges facing the economy. Irfan Qaiser Sheikh, President LCCI, urged the government to focus on investing in energy solutions and enforcement of law and order while lowering of tariffs on smuggling prone items, increasing the share of direct taxes in revenue and lowering the slab of indirect taxes in the forthcoming budget to achieve key economic targets set for the year 2012-13.
In order to tackle energy shortages, the LCCI president said, the government would have to allocate maximum funds for construction of dams/water reservoirs, tapping of Thar Coal, completion of Iran-Pakistan gas pipeline and establishment of LNG terminals. The LCCI President said that sufficient funds should be allocated in the forthcoming budget for Dasu power project, Diamer Bhasha dam, Munda dam, Gomal Zam, Satpara power project and Kurram Tungi dam. He said that at least Rs. 200 billion or 10 per cent of the total budget should be allocated for hydel power projects. Irfan Qaiser Sheikh said that the country’s reliance on costly thermal power is jacking up the cost of production and import bill. The country needs an urgent shift in its energy-mix in favor of hydel power and local fuels. He said that the 175 billion tons of Thar coal reserves with a price tag of $ 13 trillion in the international market are enough to provide 100,000 MW of electricity for 100 years. Uninterrupted and affordable power supplies can turn Pakistan into an economic powerhouse.
The LCCI President also hoped that the government would earmark funds for the early completion of Iran-Pakistan gas pipeline and LNG terminals to keep the industrial wheel running especially in Punjab that has borne the brunt of recent suspension of gas supplies to industry in the country. On the poor the state of law and order, the LCCI president said that it is hurting Pakistan’s potential as a highly attractive investment destination. Foreign and local investors are lacking confidence to operate in Pakistan. He said that a number of textile-related industrial units had already shifted their operation to other countries. Therefore the budget must be focused on improving law and order situation. Rising risk perception about investing into Pakistan is hitting hard the Foreign Direct Investment (FDI) that fell sharply in recent months and needs to be tackled through a comprehensive policy approach by involving Chambers of Commerce in the country. Irfan Qaiser Sheikh said that the bad law and order situation was one of the major factors keeping the foreign investors away.
The LCCI President feared that the fall in Foreign Direct Investment was likely to affect adversely the country’s economic growth. Irfan Qaiser Sheikh said that all the developed countries accord special importance to economic issues and the challenges. But in Pakistan the situation is the other way round and the economy is on the bottom of government’s to-do list. The LCCI President said that a number of sectors in Pakistan including infrastructure development, coal, energy, agriculture, livestock, textiles and pharmaceutical offer lucrative investment opportunities to foreign investors but unfortunately due to absence required funding for a proper and well tailored marketing strategy these opportunities are unattended even today. It may be mentioned here that Pakistan’s investment rate was only 13.4 per cent at end of last fiscal year, which was the lowest since FY74. The low saving rate, coupled with wary foreign investors led to record low investment rate in the country.
The State Bank had already reported in its annual report that Pakistan had fared poorly when compared to its neighbours in South Asia, because of domestic and global factors. Irfan Qaiser Sheikh also urged the government to cut the rate of duties on all smuggling-prone items in order to check smuggling of plastic moulding compound, electronics, Chemicals, fabrics and tyres and tubes. He said that direct taxes need to be increased by imposing/enforcing taxes on income or all incomes should be taxed either they are derived from manufacturing, trading, services, imports or exports. He said that hospitals, Clinics, Restaurants, Bakeries, Wedding lawns, Travel Agents etc should be brought into the tax net.
The LCCI President also suggested that the Sales tax slab should immediately be curtailed to 10 per cent from existing 16 per cent in order to reduce inflationary pressures or simply to check inflation.
