Businessmen term incentives ‘far too low’ than expectations

KARACHI: The businessmen said on Saturday that the incentives announced in the Budget 2015/16 are “far too low” than what was expected from the government.
Mian Muhammad Adrees, president of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), in a post-budget conference at the Federation House, said there are both positive, as well as negative aspects of the budget.
“Complete documents of the budget are yet to arrive, which will clear the mist of the implementation process,” he said.
Around 20 percent proposals of the FPCCI have been incorporated in the budget, while two committees headed by the Pakistan Business Council chairman and the FPCCI president have been formed to discuss other proposals of the industry, he said.
Earlier, the FPCCI had presented 69 tax proposals, of which 12 were fully accepted and 10 were partially accepted. The remaining 47 proposals relate to broadening the tax base and ease of doing business.
He said that the federation had recommended zero-rated sales tax on textile and four other export-oriented sectors, as those sectors struggled a lot for returns, but the recommendation was not considered in the budget.
An amount of Rs64 billion have been earmarked for marketing and exports, but it would be useless if the industry fails to exist, he said. “This money is only useful if the factories survive,” he added.
Industries are starving for water and gas in Karachi, while there is 50 percent shortage of energy in factories of Punjab. “Under these circumstances, it remains doubtful, if industries will be able to meet the target,” Adrees said.
The incentives for agriculture sector and construction industry are commendable, as 42 industries are related with the construction business and there is a gap of around 0.8 million to 0.9 million houses in the country.
But he said the capital market has been further burdened with taxes. “The market should be strengthened, otherwise the money will fly off to other countries instead,” he added.
The government is encouraging informers in the industries to point out income of industrialists. Such trend will only create unrest and lack of interest in the industrialists, he said.
The industrialist should be allowed to generate power through captive power plants and supply to their neighbouring industries, as government has already failed to provide electricity to the industries.
Abdul Rahim Janoo, senior vice president FPCCI and a leader of Rice Exporters Association of Pakistan (REAP), said he would have praised the budget but, “there is no benefit for rice exporters.”
“Only rice millers were given incentive in the shape of withdrawal of income tax for one year,” he said, adding that such rice millers earn very little amount on rice processing, so they are either paying very little tax or no tax at all. Such withdrawal will not have any positive impact over exports, he said.
On the other hand, President Lasbela Chamber of Commerce and Industry (LCCI), Yakoob H Karim while appreciating the decision to reduce Export Refinance rate to 4.5 percent, termed it as a good sign for exporters following reduction of 1.5 percent on export financing.
But, he said, no other relief has been provided to the industrial sector, which is suffering badly due to poor infrastructure and massive cost of business.
Businessmen also remain suspicious of tax returns of around Rs110 billion refunds, which have been announced by the finance minister to be paid by the end of August 2015. It is a good decision, but should be implemented in letter and Spirit, Karim said.
The Chairman, Pakistan Tanners Association (South Zone) Hamid A Zahoor said imposition of Gas Infrastructure Development Cess (GIDC) on export sector would be a big blow to the export oriented industry as exporters are already suffering due to increased overheads and un-competitiveness in the international market.
The chairman further asked the finance minister to at least fulfill his commitment to release refund claims this year.