KARACHI/LAHORE/RAWALPINDI - Zamir Sheikh, salman abduhu and iSRAR AHMAD - The business community of Karachi, Lahore and Rawalpindi has expressed disappointment over the federal budget 2012-13, announced by Finance Minister Dr Hafeez Sheikh on Friday.
Business and industrial community of Karachi said that the budget was neither people-friendly nor business-friendly.
Siraj Kassim Teli, Chairman Business Group, commenting on the budget termed it as a drama budget which is being presented every year. This budget has once again failed to fulfil the promises that government had made four years ago for providing relief to the general public by reducing and containing price hike and lowering income tax rate. He said the government in this budget has ignored demands of the business community for reducing GST ratio to single digit. There was no relief in the price hike and no spread in the tax net which will overburden those who were already paying taxes honestly and regularly.
Zafar Motiwala, former MD Karachi Stock Exchange while commenting on the budget dubbed the financial document as election budget which may provide some relief to government servants/employees but will not benefit those employed in the private sector because private sector has not been given relief and incentives as demanded.
A leading industrialist and former President Karachi Chamber of Commerce and Industry (KCCI) Majyed Aziz termed federal budget 2012-13 as Babu Budget like any other budget presented every year.
In his comments, he said it would have been better had the government reduced Federal Excise Duty (FED) on cement which would have helped in energising the construction industry and generated jobs for skilled and unskilled labours. The GDP growth which recorded at 3.5 percent should be increased to 5 percent. Instead of giving subsidy on tube wells, the government should pay attention to find alternate sources including solar energy and government should set up funds for solar energy sector.
He appreciated the steps of the government for raising income tax exemption amount to Rs300,000 and suggested that taxation slabs should be rationalised. Issue of IPP circular debt should be resolved.
Cost of energy production could be reduced by diversifying energy source to coal which is cheaper and universally recognised as environment friendly, he suggested. A separate fund could be set up for import of coal which is cheaper and private sector should be involved in it.
Former President KCCI Anjum Nisar said that it is a deficit budget and government would continue to print currency notes which will increase inflation and would make heavier the yoke of price hike for the common man. Printing more currency would adversely affect the rupee parity against dollar which will be more expensive. He said no relief was given to textile sector or to the general public.
Muhammad Javed Bilwani, Chairman Pakistan Hosiery Manufacturer Association said that once again the promise has been made to address rampant energy crisis but there was hardly any mention in the budget document about how it would be done and neither any fund has been set aside to fulfil this promise. The budget document carries no detail about remedies and relief to be given to textile industry and how to address the electricity issue.
He said the Finance Minister has made a bold statement for achieving export target in two months which seems impossible. The speech of finance minister was more like a political speech than a budget speech and it has not addressed the outstanding demands of the business community on excise duty and sales tax.
Younus Bashir, Acting President KCCI said that financial document was incomplete because it has not spoken in details about sales tax. GST was not brought to singe digit as was demanded by the business community. It was imperative for the government to lower the interest rate.
The budget deficit is growing and there is no strategy to control and lower deficit. If there is no gas, power and water, then how the industries would run and in turn there would be no generation of employment opportunities. The government should have given a budget that would have helped in running business smoothly and brought more revenue in tax net but no such thing has been done in this budget.
The export target could not be achieved if issues of gas, electricity and water shortages were not resolved on war footing.
The Union of Small and Medium Enterprises (UNISAME) termed the budget a mediocre budget without much substance and a mere effort to balance income and expenditure with insignificant relief to the underprivileged sector of the economy.
President UNISAME Zulfikar Thaver said the SME sector expected a budget giving incentives for investment to resolve unemployment issue, the reduction of inflation and making life easy for the common man.
However he said we fully appreciate enhancement of tax exemption limit to Rs 400,000, the reduction of 0.5pc in turnover tax, the reduction of custom duties on raw materials for medicines, increase in salaries of government servants by 20pc and rationalisation of federal excise duty, sales tax and custom duties on some items.
President All Pakistan Motors Dealers Association H.M Shehzad said that by not removing regularity duty on reconditioned cars, the government has not served the automobile sector.
Meanwhile, in Lahore, the business community, particularly manufacturers, showed their disappointment on federal budget 2012-13, as no comprehensive plan for promotion of industry was announced while no source of financing or funding was disclosed to control the deficit. “No measures were announced to broaden the tax net and it seemed that the existing taxpayers would be targeted to meet the revenue target,” financial experts and industrial bodies’ representatives stated.
The manufacturers said that they were expecting government would allocate a huge amount for the resolution of energy crisis or some comprehensive plan would be presented to end the circular debt, engulfing the whole economy of country.
Pakistan Readymade Garments Manufacturers & Exporters Association (PRGMEA) former chairman Ijaz Khokhar said that industry was expecting an announcement regarding building of new dams but no such announcement was made. Neither any new hydel power project was announced nor any measure was discussed for exploitation of huge coal reserves, he added.
All Pakistan Cement Manufacturers Association chairman Aizaz Mansoor Sheikh while talking to The Nation also showed his disappointment over the federal budget, as most of expectations and demands of the sector was not fulfilled. He said that last year, govt introduced a scheme whereby FED was reduced from Rs700 per ton to Rs500 per ton and eventually has to be phased out till the end of June 2014. Thus, as per plan, FED is likely to be reduced to Rs250 per ton in FY13 but was cut only by Rs100 per ton, which cannot be considered a relief for the industry. Proposals of reduction of 20pc duty on rubber scrap (used in tyre derived fuel technology) was not fulfilled completely as only 10 per cent duty was cut, which will impact very nominal, he added.
The Business Forum of Punjab Chairman Syed Nabeel Hashmi termed the budget as a mediocre budget without much substance and a mere effort to balance income and expenditure with insignificant relief to underprivileged sector of the economy.
Whilst commenting on budget from auto industry point of view, Nabeel Hashmi, who is also chairman of PAAPAM, stated that ‘we are happy to see Rs10 billion allocated for export promotion activities. We hope that now substantial amount shall be allocated to the Engineering and auto sector.
All Pakistan Textile Mills Association central chairman Mohsin Aziz said that under the circumstances it is not very bad budget but industry was expecting more with a view to improve economy growth but government presented no solid plan in this regard.
He said that the Finance Minister Dr Hafeez Sheikh deserves appreciation for accepting a number of our demands including cut in turnover tax, allocation of Rs.10 billion for Export Development Fund (EDF), raise in tax exemption ceiling from 350,000 to 400,000, increase in limit of cash withdrawal and cut in withholding tax on commercial importers.
All Pakistan Anjuman-e-Tajiran General Secretary Naeem Mir said that it was expected that FM would do some out of box thinking and bring about significant changes to give jump start to the economy but FM just deemed it fit to simply balance the budget without brainstorming to accelerate economy.
He said that no policy was announced for loss-making public sector enterprises that are eating up huge amount annually.
LCCI SVP Kashif Younus Mehar called the federal budget as a political jugglery, as no relief was given to manufacturers, announcing incentives for the commercial importers. He flayed the raise in power tariff for steel re-rolling mills from Rs6 to Rs8, resulting into extra burden of millions of rupees. He said business community was expecting budget to give incentives for investment to resolve unemployment issue, the reduction of inflation and making life easy for the common man. He said the industry is disappointed that an economist like Dr Hafeez Shaikh is expected to bring about dynamic changes to stimulate the economy.
Pakistan Poultry Association former chairman Abdul Basit said that the country is importing items which can be manufactured in Pakistan and FM should have given incentives for the manufacture of import substitution items, facilities for setting up alternate energy systems, encouragement for agri based industries and increasing exports of non traditional items,
It was also expected that as an economist he would envisage measures for the appreciation of the Pakistani rupee, industrialisation, green revolution and announced schemes for the promotion and development of the economy.
LCCI President Irfan Qaiser Sheikh said that cut in withholding tax on commercial importers and cut in tax on exports would give much needed boost to businesses.
He said that for creation of one lakh new jobs the government would have to provide an enabling atmosphere to the private sector that is the engine of growth. He said that abolition of duty on 28 pharmaceutical industry items is a good step.
Meanwhile, terming federal budget for fiscal 2012-13 anti-poor and game of words, Rawalpindi Chamber of Commerce and Industry (RCCI) President Jawed Akhtar Bhatti said that government did not provide any incentive and relief to the country’s ailing trade and industry.
Bhatti said this in his reaction after budget speech of Federal Finance Minister Dr Hafeez Sheikh, while talking to media in Chamber here on Friday.
He said that country was facing severe energy crisis but no concrete measures were announced to overcome crisis.
He said that government has allocated Rs183 billion to solve the energy crisis, then how the government would solve the major issue of circular debt. He said government was claiming that inflation rate was only 10 percent but in fact it is around 18 to 19 per cent. Javed Akhtar Bhatti said that there was no sign of relief for industries and to solve their issues, whereas government has allocated Rs70 billion for Benazir Income Support Programme (BISP).
“The government should start new projects and generate jobs rather giving them money,” he said.
RCCI President said that there were some good announcements for business community like introduction of Tax Payer Card and reduction of tax on money transfer, reduction of custom duty on 28 raw materials of pharmaceuticals and cement.