LAHORE – Salman abdudu - The business community, while outlining key priorities for budget 2012-13, has called for allocation of at least Rs200 billion or 10 percent of total budget for hydel power projects per annum.

Deploring the fact that federal governments, for the last 10 years, have not earmarked even a penny for the construction of dams, they said that sufficient funds should be allocated in the forthcoming budget for Dasu power project, Diamer Bhasha dam, Munda dam, Gomal Zam, Satpara power project and Kurram Tungi dam.

In order to tackle energy shortages, they said, government would have to allocate maximum funds for the construction of dams/water reservoirs, tapping of Thar Coal, completion of Iran-Pakistan gas pipeline and establishment of LNG terminals.

The Lahore Chamber of Commerce and Industry outlined key priorities for budget 2012-13 calling for an immediate government attention on a number of challenges facing economy.

Irfan Qaiser Sheikh, President LCCI, urged the government to focus on investing in energy solutions and enforcement of law and order while lowering of tariffs on smuggling prone items, increasing share of direct taxes in revenue and lowering slab of indirect taxes in the forthcoming budget to achieve key economic targets set for year 2012-13.

Irfan Qaiser Sheikh said that country’s reliance on costly thermal power is jacking up cost of production and import bill. The country needs an urgent shift in its energy-mix in favour of hydel power and local fuels. He said that 175 billion tons of Thar coal reserves with a price tag of $13 trillion in the international market, are enough to provide 100,000 MW of electricity for 100 years. Uninterrupted and affordable power supplies can turn Pakistan into an economic powerhouse.

The LCCI President also hoped that the government would earmark funds for the early completion of Iran-Pakistan gas pipeline and LNG terminals to keep the industrial wheel running especially in Punjab that has borne the brunt of recent suspension of gas supplies to industry in the country.

On poor state of law and order, the LCCI president said that it is hurting Pakistan’s potential as a highly attractive investment destination. Foreign and local investors are lacking confidence to operate in Pakistan. He said that a number of textile-related industrial units had already shifted their operation to other countries. Therefore the budget must be focused on improving law and order situation. Rising risk perception about investing into Pakistan is hitting hard the Foreign Direct Investment (FDI) that fell sharply in recent months and needs to be tackled through a comprehensive policy approach by involving Chambers of Commerce in the country.

Irfan Qaiser said that bad law and order situation was one of the major factors keeping foreign investors away.

The LCCI President feared that the fall in Foreign Direct Investment was likely to affect adversely country’s economic growth.

He said that all developed countries accord special importance to economic issues. But in Pakistan, situation is other way round and economy is on the bottom of government’s to-do list.

The LCCI President said that a number of sectors in Pakistan including infrastructure development, coal, energy, agriculture, livestock, textiles and pharmaceutical offer lucrative investment opportunities to foreign investors but unfortunately due to absence required funding for a proper and well tailored marketing strategy these opportunities are unattended even today.

It may be mentioned here that Pakistan’s investment rate was only 13.4 percent at end of last fiscal year, which was lowest since FY74. The low saving rate, coupled with wary foreign investors led to record low investment rate in the country.

The State Bank had already reported in its annual report that Pakistan had fared poorly when compared to its neighbours in South Asia, because of domestic and global factors.

Irfan also urged the government to cut rate of duties on all smuggling-prone items in order to check smuggling of plastic moulding compound, electronics, chemicals, fabrics and tyres and tubes.

He said that direct taxes need to be increased by imposing taxes on income or all incomes should be taxed either they are derived from manufacturing, trading, services, imports or exports. He said that hospitals, clinics, restaurants, bakeries, wedding lawns, travel agents etc should be brought into tax net.