Nabbing thieves is two-edged sword: Asad

ISLAMABAD: Federal Minister for Finance said on Thursday that nabbing the corrupt and thieves is two-edged sword as many in other countries are asking as to when the looters of public wealth are to be put behind the bars.

Ruling out possibility of any further tax amnesty scheme, Federal Minister for Finance and Revenues Asad Umar said on Thursday that the government obtained data of about 1,52,000 resourceful Pakistanis owning assets abroad after operationalisation of Organization of Economic Cooperation and Development (OECD) agreement from different 27 countries.

He also said that the government decided establishment of specialised unit in FBR for dealing with high net worth individuals who owned properties in Dubai and named in Panama and other leaks but they never bothered to declare anything here in Pakistan.

He made it clear that no amnesty scheme was under consideration. Talking about “Pakistan’s Economy: Challenges and Way Forward” in breakfast with Jang arranged by Jang Media Group here at local hotel, Minister for Finance Asad Umar said that Saudi Arabia was bringing the biggest ever foreign direct investment in Pakistan and they were waiting for the approval of the cabinet.

After the ceremony, he told The News that the Saudi Arabia was bringing $5 to $6 billion investment for establishment of refinery in Gwadar and the cabinet was expected to grant approval next week.

During the session, when asked about efforts to broaden the tax net, Asad Umar replied that the government separated policy and administration in FBR and brought major changes at the highest levels. He said that the government brought changes in law and made available the data of banks to the FBR. Imran Khan possessed credibility and data analysts available at different parts of the world were willing to come to assist the government and it shared data with them and so far sent out 3001 notices to those owning properties and became high net worth individuals. “I am not fond of sending someone behind the bars and we only want to get due share in taxes,” he added.

He alleged that Nawaz Sharif violated constitution when he stated that he had never allowed movement in exchange rate. “It’s not sign of male chauvinism of keeping exchange rate stable artificially because it’s domain of the central bank that takes decision on the basis of economic variables,” he maintained.

The economic decision making, he said, should be done with mind not on the wish of heart and cited examples that for dispensation of justice it is the domain of the courts so specialised institutions are meant to take decisions on economic matters.

The minister said that without fixing economic fundamentals it would be mere a slogan that it would be the last programme of the IMF. He said that Pakistan had secured 12 programmes in last 30 years and without changing fundamentals it would be hard to avoid seeking IMF loans again and again.

“The country adopted consumption led imported finance model that demonstrated that the economy was captured by the elite as consumption contributed 93 percent in growth,” said the minister and added that the investments and savings were not fuelling growth. He cited example of family spending whereby parents invested for giving education to their kids and said that without savings and investment, the country could not grow. The defined logic showed that without total factor productivity (TFP), he said, the country could not achieve 6 percent growth with meager investment to GDP ratio standing in the range of 14 to 15 percent. This pseudo economics, he said, could not sustain long and the country would have to bring a paradigm shift from pursuing consumption led growth to domestic revenue mobilisation.

He said that the productivity achieved by China stood at 67 percent and India 27 percent in last 16 years from 2002 to 2018 whereby Pakistan’s productivity stood at 16 percent up to 2008 but it nosedived to negative 16 percent so productivity in last 16 years remained zero.

“The party is over,” he said, if the country continued incurring massive gaps on account of fiscal deficit and current account deficits. He said that the running out of deficits were done just at ending years of completing 5 years tenure and the incoming government left with no other option but to knock at the door of the IMF.

“We will have to pass through adjustments for bringing down the budget deficit and current account deficit,” he said that there would be winners and losers of these adjustments on fiscal and external fronts. The reform process undertaken for adjustments will yield dividends after sometime but its lost would start incurring today, he said and added that the influential and rich would start raising its voice on pain of this adjustment on fiscal and external accounts.

“Mentally we should be ready for short term pains,” said the minister but made it clear that the fruit of patience would be sweet.

“If you increase interest rate, those companies which have nominal profitability, will have to feel the crunch. Same is, if you keep the overvalued exchange rate, you would increase import of consumption items.”

To a question regarding non implementation of government decision of $6.5/mmbtu to zero rated industries, the minister replied the government revisited its decision so new prices would be made effective from October 16. The Punjab industries have submitted their bills at the rate of $6.5/mmbtu and finance ministry would submit the amount to SNGPL. “We are much focused on export sectors. The natural gas would be available to the sector at $6.5/mmbtu and electricity at 7.5 cent/unit. We have already released the refunds of Rs8.7 billion and have asked the ministry to release Rs6.5 billion more. We have to strengthen your liquidity position,” he said and added, “This is the beginning, after that we would carry structural reforms in exports and we would set with the industrial associations on it and would discuss it in detail.”

On reduced tariff for industry, the minister said the Nepra held public hearing which had already done and now its notification would be done by the government.

On the question Arif Jewa of ABAD, the minister asked them to send specific proposals for bringing retail outlets into tax net. On housing sector, he said that the government was formulating different strategies for different segments of the society and in the first phase the public sector employees would be getting housing units. He said that the government was going to provide Rs5 billion as seed money for housing sector.

To another query about NFC, the minister said that the resource distribution formula under NFC was irreversible as under the Constitution the share of provinces could not be slashed. He said that the Centre got bankrupt after meeting requirements of defence and debt servicing in the aftermath of getting its share under the NFC arrangement.

He said that the 18th Constitutional Amendment was good but the provinces must take care of responsibilities after increasing fiscal shares. He said that the federal government could not provide support price of Rs180 per 40 kg for agriculture crops.

When asked about performance of SBP governor and others, the minister replied that he did not care about political affiliations of bureaucrats as he wanted to ensure delivery. “I will judge them on the basis of performance only,” he added.

To another query regarding government’s campaign against corruption and its negative impact on perception of investors, the minister said that it was challenging situation for the PTI-led government to strike a balance as the most educated and influential class always complained about over emphasis of Imran Khan on corruption while common man of this country even met in Makkah, Madina or any other city only inquired about apprehending the thieves and corrupts.

Ali Moeen Nawazish of Jang Group said that they followed the tradition of their media group arranged to connect leadership with the masses.