‘Hurdles discouraging entrepreneurial spirit’

LAHORE: Pakistan is not producing true entrepreneurs because the government hurdles and corrupt values have destroyed the entrepreneurial spirit, experts said on Monday.
The Pakistani entrepreneurs have lost to under invoiced imports in trade and to under reporters and under filers in manufacturing.
Entrepreneurs around the world do not need huge resources as they create value through innovative value addition in products and services.
“Knowledge and ideas are their wealth, what they need is a level playing field in a society where swindling and deceit is not easy,” the experts added.
United States produces the largest number of entrepreneurs where every citizen enjoys level playing field in the business. There are no tax exemptions or SROs that benefit a particular group or an individual. Above all the unethical business practices that help businesses evade taxes is not possible in that society.
“Many entrepreneurs find opportunities in worst economic scenarios but they operate mostly in transparent and less corrupt societies,” said Almas Hyder, a leading packaging manufacturer.
They use mind and research to come up with a business proposal that appeals to the consumers and have better chances of success.
In Pakistan, “we erroneously think that anyone that successfully accumulates huge wealth is an entrepreneur.”
However, the wealth accumulated from smuggling, under invoicing or wrong declaration of imported goods is in fact illegal and these fraud practices also dampen the entrepreneurial spirit.
He said an entrepreneur could not compete with smugglers or those avoiding government levies on import. “We do not have policy makers that apply their mind to formulating policies.”
The import duties were reduced drastically to curb smuggling and under invoicing.
However, the incidence of sales tax was increased substantially that provided the same incentive to the unscrupulous elements. Under invoicing bars the genuine trading and to bring in a quality product, an entrepreneur will have to join the system and become partner in the fraud.
M I Khurram, another successful entrepreneur, said the domestic market has been taken away from the domestic producers because of under invoicing, as the domestic producers pay 17 percent sales tax on full value and importers pay only 10 percent value that they officially declare at customs.
“Even at the domestic level, those that join hands with the right contacts under report production and save sales tax.” This practice, he added, was not a norm when he entered the market in 80s. “At that time under invoicing or under reporting was very rare.”
He said those indulging in these practices used to earn hefty profits. Now, under reporting and under invoicing has become a norm.
He said since majority of businesses indulge in illegal practices, they compete with each other as fiercely as they could while under invoicing imports and under reporting production.
The corrupt mafia that gets its share on each under invoiced import or under reported production is the main beneficiary of these malpractices.
These practices have made it impossible for new entrepreneurs to enter into production. “The new entrepreneurs sporadically make their mark in Pakistan in the field of knowledge economy where transparency and openness is at a better level than in other business fields,” Khurram added.