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Sunday July 14, 2024

No questions asked

By Editorial Board
March 03, 2022

Prime Minister Imran Khan has been a strong proponent of anti-corruption for at least 20 years. Whenever a previous government announced an amnesty scheme for investors, he was fairly critical as such schemes encouraged black money circulating in the economy to be whitewashed and accepted as kosher. But here we are, with the PTI government announcing yet another industrial ‘amnesty’ package’, terming it a significant step for the industrialisation of Pakistan. The new scheme allows investors to put their money into new industries without having to answer any questions about the source of their income. That means absolutely no questions asked if the money was legally earned or siphoned off from somewhere or even if it has been smuggled into the country. The PM’s announcement on March 1 came in quick succession to his earlier speech in which he announced some populist measures. There is no denying the fact that investors need incentives for industrialisation and the country’s economy cannot forever depend on its agriculture sector. The government should also keep in mind that its ostensible focus on accountability does not go in consonance with such leeway offered to investors whereby they are exempt from any accountability on their past earnings.

The money that is allowed for investment must have a transparent trail of its sources. We have seen that the PTI-led government has been targeting its opponents for imaginary or real corruption; and the FIA and NAB have been overactive in their zeal to pursue supposedly ‘ill-gotten’ money if it belongs to anyone in opposition to the PTI. Legalisation of any sort of wealth without any questions is a mockery of law and encourages further impunity. A focus on industrialisation must not overlook the implications of such whitening of black money. Essentially, Pakistan needs incentives for export-oriented industries. In the past we have seen that many ‘investors’ take full advantage of such amnesty to legalise their black money and set up mock industries or indulge in sham businesses. After getting approval of their industries, they appear to be least interested in running those units. Many of them end up declaring their industries as running in loss and divert their money to the real-estate sector.

This has been going on for long and under the current government has resulted in high speculations of property prices. The same applies to the five-year tax holiday. While the government is imposing more taxes on middle- and lower-income segments, the rich are given a free hand. The government is rendering investors immune from disclosing the source of their money upon payment of just five percent tax on the total amount. If you compare this with the sales tax that regular citizens are paying on commodities, you are likely to get a rude shock. The government is about to promulgate yet another presidential ordinance – its favourite mode of legislation – and by doing so hopes to incentivise capital investment into various industrial sectors. What the government really needs to do is to provide the required infrastructure and offer affordable power to industries. It also needs to cut the bureaucratic tape and facilitate a safe and secure environment for investors. Just by granting amnesties, no major industrialisation has taken place in the country – so there is little rationale for the legalisation of black money like this.