LAHORE/KARACHI - The overwhelming majority of business community in Lahore and Karachi has flayed the federal budget for the financial year 2015-16. Karachi Chamber of Commerce and Industry termed the finance minister’s budget speech as the only manipulation of numbers and said that this budget is neither people friendly nor businessman friendly. Lahore-based businessmen termed the budget as import-oriented, with some complaining that the government has taken no solid measure for industrialization. The budget is a political statement of a political government without much visionary reflection of where Pakistan should be heading, they said.
Lahore-based importers lauded the government measures to facilitate import-oriented businesses whereas the exporters are unhappy as no incentives were announced for them in the budget for the financial year 2015-16.
FPCCI Chairman Mian Idrees declared the federal budget as a difficult one, saying that the incentives given to the export sector are a welcome step and might help in accelerating exports from Pakistan. He said that like the previous governments, this one too has refrained from bringing big fishes into the tax net or even taking measures to prevent major tax evasions. He said that government, instead of scrapping Benazir Income Support Scheme, has not only extended it but increased its allocations which could be utilized in some productive schemes such as microfinance to the poor instead of turning them into beggars.
KCCI representatives said that likewise the previous budgets, this budget has also disappointed them and was an attempt to impose extra taxes on people. “Common man had been over burdened through raising the net of FED and sales tax as it has been done in case of mobile phones - being used by common man - where the duty had been doubled,” they said. They said that in order to get extra revenue of Rs 500 billion, the government has once again impounded the people and business community into extra taxes.
The KCCI representatives said that likewise Khyber Pakhtunkhwa, Karachi should also be declared as calamity-hit and its industries should also be given relief in the budget.
Former President of KCCI Siraj Qasim Teli said that the budget had given tax exemptions to the new industries, however it had neglected the old industries. KCCI President Iftikhar Vohra said that those who are giving taxes had been over burdened in this budget.
In Lahore, PRGMEA central chairman Ijaz Khokhar and vice chairman Malik Naseer said that finance minister himself admitted that exports are constantly falling but instead of taking some positive steps to control decline he announced 50 per cent raise in sales tax on yarn and processing sector from 2 per cent to 3 per cent. It will directly impact on value-added sector, as liquidity of SMEs in apparel sector will further be piled up by 50pc more, causing further decline in exports.
He said that government has already failed to improve growth rate of textile sector under the European Union’s GSP Plus status because of lack of planning.
He said that no proper marketing plan was prepared to get the benefit of GSP Plus. Govt allocated just Rs6 billion for export promotion while the industry was expecting at least Rs50 billion for making new market strategies, holding exhibitions abroad to attract buyers. “We failed to make any plan at the early stage.
LCCI former vice president Kashif Anwar said that measures have been taken to increase exports but it will not be feasible till the input costs like electricity and gas will be decreased. He said that Rs. 31 billion for water projects is not enough. Kashif said that cut in mark up on loans for exporters would encourage the export-oriented industry and it would also put positive impact on the exports. He said that Rs185 billion for road and infrastructure would help economic development of the country.
LCCI Standing Committee on KBD chairman Abdul Basit said that allocation of Rs.52 billion for Dasu Hydro power project, Rs.11 billion for Neelum Jhelum and Rs. 21 billion for Diamir Bhasha dam would ensure early completion of these projects but he expressed disappoint over no allocation for Kalabagh Dam.
The former chairman of PPA criticized 5 pc sales tax on poultry feed, besides increasing import duty to 15pc on soybean meal which is the raw material and not produced in Pakistan.
The Institution of Engineers Pakistan Lahore Centre Chairman Captain (r) Syed Khalid Sajjad blasted the authorities for not keeping its focus on resolving the energy crisis and allocating funds for the construction of Kalabagh Dam in upcoming budget 2015-16.
“At least 15 per cent of the total budget should have been allocated for hydel power projects.”
Opposing the huge allocation for PSDP in past budgets, he said that the money should go to power sector as constructing mega dams, including KBD is a must for revival of economy.
LCCI president Ijaz Mumtaz termed federal budget 2015-16 good and balanced in existing circumstances. He said that Federal Finance Minister Ishaq Dar deserves appreciation for accepting a number of LCCI demands.
APAT general secretary Naeem Mir said that withdrawal of FBR powers to exempt business from duties/taxes through SRO and loan on zero mark-up for solar tube-wells was a longstanding demand of traders. However, he demanded the government also take such steps to make the SBP independent so that ratio of borrowing could be curtailed. He said that 11 percent increase in defence budget was need of the hour.
Naeem Mir questioned claims of the government regarding reduction in unemployment, improvement in per capita income and improved energy situation. He said that government could not initiate any notable energy project in the outgoing fiscal therefore claim of improved electricity supply is questionable.
APBF founding chairman Syed Nabeel Hashmi said that its a good attempt to cover the inefficiency of the tax collection machinery.
The finance minister probably seems to understand that there is only the textile industry in this country, he lamented. Special incentive package is good for them but nothing seems to be adding value for them also. The government should not forget the other industrial sectors of Pakistan.
AKD Group chairman Aqeel Karim Dhedhi said that budget outlay is quite complicated and it seems that government would have to depend on external resources than the internal ones in order to meet the budgetary allocations.
He said that the budget presents initially a confusing picture if compared to the Economic Survey announced on Thursday. Broadening of the tax net seems to be a low priority whilst emphasis continues to be on indirect taxes, he added. He said that from the market's point, the budget announcement was largely negative.
In Karachi, chairman of All Pakistan Fruits and Vegetables Exporters, Importers and Merchants Association Waheed Ahmed applauded the federal government for announcing pro-agriculture announcements in the budget and said that raising loans to Rs 600 billion for the sector, lowering of duty from 17 percent to seven percent on import and manufacturing of agri-related equipments, and bringing the total tax net on agriculture down to nine percent from 28 to 43 percent.
President Lasbela Chamber of Commerce and Industry, Yakoob H Karim, while appreciating the decision to reduce export refinance rate to 4.5 per cent, said that it’s a good sign for exporters following reduction of 1.5 per cent on export financing. But he regretted that no other relief has been given to the industrial sector that is suffering badly due to poor infrastructure and massive cost of doing business. He said that finance minister has committed to release all stuck up claims of refunds against sales tax and other levies by August 30 is also a good decision but should be implemented in letter and spirit. He said that export sector has been left in the lurch by imposing GIDC.
The Chairman, Pakistan Tanners Association (SZ) Hamid A Zahoor said that not exempting the export sector from GIDC would be a big blow to the export oriented industry as exporters were already suffering due to increased overheads and un-competitiveness in the international market. He said that finance minister at least should fulfill his commitment this year to release refund claims.