Documentation can boost economic growth to 8pc: PBC

KARACHI: The country’s economy can achieve seven to eight percent annual growth if all the stakeholders join the government’s initiative of documenting the informal sectors, said a business policy advocacy platform. 

The Pakistan Business Council (PBC), representing a number of largest private sector businesses, urged the finance minister to hold the line on documenting the economy and stay the course of pursuing the untaxed sectors.

The PBC, in a statement, said the decline in international commodity prices and improving law and order conditions offer a golden opportunity. Atif Aslam Bajwa, chairman at PBC urged the government to ensure the early ratification of ‘Benami Transaction Bill’ through the parliament. 

“Benami transactions have over the years created serious distortions in various sectors of the economy, including banking,” Bajwa said. “For Pakistani banks and financial sector companies to develop global competencies, a transparent environment is a pre requisite.”

PBC Vice Chairman Ali Tabba said the government is more receptive to the steps that need to be taken in the near- to medium-term to make Pakistan an export house of South Asia.

Chief executive officer Ehsan Malik at PBC, however, said some issues in the Finance Act 2016 need to be resolved. “We believe the government merits full support in the effort to document the economy and broaden the tax base,” he said. “The policies should encourage capital formation and promote scale to achieve sustainable employment and exports.” 

Ali Habib, ex-chairman of PBC urged the finance minister to reconsider his decision of a reduced rate of tax on banking transactions for non filers. He said the tax should be restored to 0.6 percent.

“By creating a distinction between filers and non   filers, the minister sent a clear signal to the undocumented sector that it is time for them to come into the formal sector,” Habib said. Arif Habib, director of PBC urged the minister to take measures for curbing the speculation in the real estate sector. 

Habib supported the efforts of documenting the sector to prevent the inflows of untaxed funds. “A vibrant real estate sector is about construction on plots, not about land speculation,” he said. “Pakistan faces a brain drain each year as professionals, feeling they can never own a decent property in Pakistan due to speculation, leave the country in search of better opportunities; their departure is severely impacting competitiveness of the country.” 

Sikander Mustafa Khan, ex-chairman of PBC hailed the agriculture package. “Pakistan’s rural economy had been looking for such a package for the last few years and it is hoped that it will now be implemented to the benefit of all in the country,” he said.

Syed Yawar Ali, director of PBC also welcomed the efforts being made to improve the competitiveness of the agricultural sector. “The support earmarked in the last budget for the agriculture sector will inject new life into the rural economy,” he said. 

Abdul Razak Dawood, the founder chairman of the PBC said companies need an environment for the 21st instead of the 20th century.

“The development of capital markets for funding investment is imperative as is a fiscal environment that supports capital accumulation and consolidation,” Dawood said. “A vibrant capital market will provide a safer avenue for long-term savings of individuals and reduce the cost of borrowing for corporates.”