Year long relief for building industry

ISLAMABAD: Fulfilling a major demand of the construction industry on the eve of the New Year, Prime Minister Imran Khan Thursday granted one-year extension in date for the fixed tax regime, till Dec 31, 2021, to boost economic activity and create employment opportunities.

He made the announcement after chairing a review meeting on progress in the construction sector here and termed the extension a New Year gift for the construction sector. The PM believed that the sector was the key to offsetting the impact of coronavirus pandemic on the national economy.

Announcing the package, the premier said that small houses would be subsidised and the bank would not charge more than 5 and 7 percent interest on 5- and 10-marla houses for the next five years. He said that the exemption period had also been extended till June 30, 2021 for those who invest in the construction sector to disclose the sources of income, while the projects that were to be completed by Sept 30, 2023 had also been extended by one year.

“We have extended this till March 31, 2023, with the exception that the buyer had to declare his income at the time of purchase of the property. When we announced the package for the construction industry, they could not get the most out of it because of the coronavirus, so they demanded an extension,” he said.

“I am much pleased to announce that the Federal Board of Revenue (FBR) has approved Rs186 billion projects under the concessions we have given in the construction sector. There are Rs116 billion worth of projects in the form of drafts also,” he explained.

He said that the process of approval of Rs136 billion projects was under way in Punjab. “We believe that the economic activity that will be generated from Punjab, will be about Rs1500 billion that will create 2.5 lakh jobs in Punjab,” he noted. The prime minister pointed out that similar projects had been started in other places including Khyber-Pakhtunkhwa, Balochistan and Karachi while “our biggest achievement in terms of low-value houses for the salaried class was that the foreclosure law was passed. It was unfortunately passed very late which delayed our plans. “But now it has been approved and passed by the court and thanks to this, for the first time in Pakistan, banks are financing even in low-value houses.”

He said that banks had promised the government and the State Bank of Pakistan (SBP) that Rs378 billion had been set aside for construction activities by Dec 2021. The PM added that the government had decided to give a subsidy of Rs30 billion to low-cost houses, i.e. out of the first one lakh houses to be built, a grant of Rs3 lakh per house would be given to reduce their expenditure. And the money they used to spend on rent would go towards paying house instalments and the initial 300,000 houses would get a subsidy of Rs3 lakh per house.

The PM emphasised that the Automated Approval Regime (AAR) was a great achievement and he commended the Capital Development Authority (CDA), Lahore Development Authority (LDA) and said they had done a lot of work on automated system, which had the advantage that the work which used to take months and years would be done now in a few weeks due to automated method.

He said that new master plans of cities needed to be formulated to stop their spread as agricultural lands were declining and as a result we are facing a big problem of food security in the times to come. The PM said that the new master plans of our cities are being developed and land records are being digitalised, as the issues are full of land dispute cases. Therefore, by August 2021, the land records of three major cities – Karachi, Lahore and Islamabad – would be digitalised, which would end the land issues.

Imran Khan said, “It is important to compile digital data of all government lands because our capital is dead, government agencies are in deficit and they are paying debts and interest, but they have billions of rupees in land. And they can't be used because the land records are not good.”

The PM said he was happy that record cement sales had been made and the sale of cement means that the construction process in Pakistan had accelerated. He continued that like in the rest of the world, Pakistan also suffered a lot from coronavirus, especially in the services sector, but with the opening up of the construction industry, Pakistan was able to overcome the crisis in a better way.

He said, “This is the first government since the 1960s that has decided to develop its industry, which will open up employment and economic opportunities in our country and we will be able to repay our loans while providing employment to our young population.

“We will fully support the construction industry and that is why we have extended this exemption to them while also removing the obstacles in the construction industry”. Meanwhile, Prime Minister Imran Khan approved an online agro-dashboard, developed by the National Security Division, which will monitor food prices and availability at the national, provincial and district levels.

Dashboards will not only play a key role in avoiding any crisis with the help of certified decimals, but will also be very effective in preventing hoarding and profiteering. He gave the approval while starting a series of weekly review meetings of the priority sectors.

The prime minister gave clear instructions that all possible measures should be taken to curb the rise in prices of items like flour, sugar and pulses, which are very important for a poor family.

In addition, he emphasised that steps should be taken to increase exports and find local alternatives to imports so as to increase the current account surplus and not put pressure on foreign exchange reserves.

The meeting was attended by Special Assistant Dr Moeed Yusuf, secretaries of the ministries concerned and senior officials.

In addition, the chief secretaries of the four provinces attended the meeting via video link.

At the behest of the prime minister, they have been given priority status in the areas of food security, agriculture, electricity, manpower, foreign investment, privatisation, information technology and exports to implement major reforms in six sectors that have been neglected in the past, including economic outreach to focus on.

In this regard, from now on, there will be weekly review meetings, chaired by the PM in which he himself would oversee the immediate resolution of issues in these areas.

The PM will be briefed separately on the progress of these meetings with special focus on each sector. Mehtab Haider adds: Meanwhile, Federal Board of Revenue (FBR) has issued a clarification regarding extension in Prime Minister’s Construction Package.

The FBR has stated that last date for seeking immunity by builders and developers from probing their source of funds and availing fixed tax regime has been extended from 31st of December 2020 to 30th of June 2021. Similarly, the last date for builders and developers who want to avail fixed tax regime has been extended from 31st of December 2020 to 31st of December 2021. FBR has further clarified that last date for completion of projects has been extended from 30th of September 2022 to 30th of September 2023 and last date for buyers of housing units and plots has been extended from 30th of September 2022 to 30th of March 2023.