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January 22, 2020

Governance is a big issue: Dr Ishrat Hussain

Top Story

January 22, 2020

ISLAMABAD: Adviser to PM on Institutional Reforms Dr Ishrat Hussain on Tuesday said there is a problem of governance in the country due to which institutions are on the decline.

Dr Ishrat Hussain said no work is carried out in police stations without money or reference and the condition of schools and hospitals is poor. There are 22,000 officers in the federal government including scientists, doctors, engineers, economists, accountants and others who did not have progression system, while 6,000 to 7,000 from DMG and other selected groups are getting training and promotions under a defined system.

“The government would end this discrimination,” the adviser said while addressing the All Pakistan Chambers Presidents Conclave organised by the Islamabad Chamber of Commerce and Industry (ICCI) in collaboration with the Jang Group here at local hotel.

Dr Ishrat Hussain said the government is bringing e-governance system in the country, while the prime minister wants restructuring and automation of the Federal Board of Revenue (FBR). The FBR Chairman, Shabbar Zaidi, while speaking on the occasion termed the existing taxation system as “extortionist” and unworkable and said that the FBR was collecting 90 percent taxes in shape of withholding taxes and deduction at source while only 5 to 10 percent was coming through voluntary compliance.

Shabbar Zaidi said the existing system is heading towards failure instead of bringing any success. He also disclosed that the total wholesale and retail traders were contributing Rs9 billion all over the county from organised sector of this sector. He said that Sundar Industrial Estate, as it was not exempted from registration of Sales Tax, was contributing ‘very negligible’ amount into the national kitty.

“This voluntary tax system has failed and such system cannot run on sustained basis. Secondly, the FBR is collecting 45 percent on imports. The FBR cannot be fixed with sacking and transfers of officers but it will have to be automated to minimise human interaction,” he said.

Shabbar Zaidi said that out of Rs3,850 billion, the FBR had collected Rs70 to 80 billion as advance taxes. He said the FBR has so far collected Rs2,085 billion in first half (July-Dec) of the current fiscal year and they were confident that it was the true picture on account of actual tax collection as much as possible. He also disclosed without mentioning name of the country and stated that the FBR was facing one major problem on Customs side as there was still difference of $1.7 billion in bilateral trade figure that found that under-invoicing was still continuing that once stood in the range of $6 billion per annum.

The FBR chairman said that it was not possible for any human to check 8,000 containers on daily basis so the solution was installation of latest scanners. “We need to place automation as there is no other solution,” he added.

Shabbar Zaidi said that there were four major sectors contributing into the country’s GDP growth and economy including manufacturing, agriculture, services and retail trade and wholesale. He said there should have been 25 percent burden on each of these four sectors, but in Pakistan this burden was only borne by manufacturing sector by contributing 70 percent into the national kitty. This tax burden, he said, was resulting into de-industrialisation.

Ideally, he said that the tax burden should have distributed equally on four major contributors of the GDP growth in shape of taxes. He said the government was partner of 25 percent in shape of collection of taxes from the private businesses. He said that solution lies in automation as the FBR would make efforts to slash down number of audits.

“We need faceless FBR that is required to be converted into Friendly Board of Revenue,” he added.

He said that there were parking lots of black money and untaxed and grey money was parked into real estate. “There should be ownership of chambers of commerce and industries and there must be demand of the business community to automate the FBR,” he maintained.

Jamil Ahmed, Deputy Governor State Bank of Pakistan (SBP), said that the balance of payment position continued to improve with sharp decline in imports and the current account deficit slashed down to $2.2 billion in first half of the current fiscal against $8 billion in the same period of the last fiscal year. The forward liabilities, he said, also reduced massively as it stood at $8.2 billion few months back which are now reduced to $4 billion after witnessing improved foreign inflows. The foreign exchange reserves also jumped up from $7 billion to $11.5 billion after entering into IMF programme, he added.

He said the inflation would start receding in coming months of the current fiscal year. He said there were special schemes for exporters and SMEs sectors and the businessmen must come forward to avail long-term financing and exporters’ schemes. He said that foreign inflows were pouring to the tune of $2.2 billion so far and helping the country reduce forward liabilities. It’s also helping to broaden the investors’ base, he maintained.

President Dr Arif Alvi said that business community was playing key role in the economic development of the country, but was presently facing high interest rate.

He said that due to positive measures of the government, interest rate and inflation would hopefully start coming down from February 2020. He said the current economic difficulties were the result of past wrongs and FATF issue, but added that things would start improving soon as the government was working hard for this purpose. He said the improved purchasing power of people led to better growth of business activities and reducing inflation was the key focus on the government.

President Alvi said the FATF issue should not be used for political objectives. “The FATF issues should not be politicised as Prime Minister Imran Khan also talked with US President Donald Trump on this issue,” Arif Alvi said.

Arif Alvi said that China achieved better economic growth by providing easy financing to SMEs, and added that current government was focusing on providing easy access to finance SMEs. He said that population-wise, Pakistan was the sixth largest country in the world making it a potential market for investors due to which investors of Japan and many other countries were taking keen interest in Pakistan. He said that chambers of commerce should encourage maximum women entrepreneurs so that they could play more effective role in economic development of country. He lauded the initiative of ICCI for organising APCPC 2020 and said that such events should continue as they promote dialogue between government and private sector.

In his welcome remarks, Muhammad Ahmed Waheed, President Islamabad Chamber of Commerce and Industry (ICCI), said the purpose of organising APCPC 2020 was to bring the leadership of entire business community at one platform to discuss their major issues and give consensus proposals to the government for redress of highlighted issues. He stressed that government should give due consideration to the proposals and recommendations that would come out of APCPC 2020.

Ahmed Waheed said the business community of entire country wanted to support the government in its efforts for reviving economy. He urged that government should formulate economic policies in consultation with business leaders of the country.

Minister for Planning and Development Asad Umar said the government did not have fiscal space so they are finding out ways and means to come up with public private partnership (PPP).