Lahore: President of Pakistan Asif Ali Zardari has said that role of business community is crucial for the progress and prosperity of the country and they should help the government to achieve the economic goals. He said that our Government is taking long-term, mid-term and short term measures to bring the economy back on rail.
He was speaking at the Annual Goodwill Dinner in honor of Foreign Ambassadors in Pakistan. The Prime Minister of Pakistan Yousaf Raza Gilani was the guest of honor.
The LCCI President Irfan Qaiser Sheikh, Senior Vice President Kashif Younis Meher and Vice President Saeeda Nazar also addressed the most high-level gathering while the LCCI former presidents Mian Mohammad Ashraf, Mian Anjum Nisar, Shahid Hassan Sheikh, Mian Misbahur Rehman, Iftikhar Ali Malik, Sheikh Mohammad Asif, Mian Shafqat Ali, Senator Zafar Iqbal Chaudhry, Convener Standing Committee on Diplomatic, Foreign Missions Mian Tariq Rehman and former EC member Mohammad Haroon were prominent amongst the others. As many as 50 ambassadors and diplomats and Federal ministers graced the prestigious function of the LCCI.
The President of Pakistan while highlighting the contribution of the Industrialists pointed out that Pakistan’s entrepreneurs ensured the economic viability of the state that inherited negligible industrial base at the time of independence. He said that the accelerated growth has been achieved with the cooperation of business community.
The government is availing the assistance of private sector under public-private ventures. He appreciated the Lahore Chamber of Commerce and Industry, particularly, the LCCI President Irfan Qaiser Sheikh, Senior Vice President Kashif Younis Meher and Vice President Saeeda Nazar for having constant liaison with foreign ambassadors and giving them update on economic situation.
Speaking on the occasion, the LCCI President Irfan Qaiser Sheikh appreciated the efforts of government in war on terror and in maintaining the law and order in the country.
He said that the economy of Pakistan is suffering from the fatigue of the war on terrorism. He said that Pakistan has lost more than thirty four thousand lives while its economy has taken a hit of around 70 billion dollars.
He said that Pakistan should be granted maximum market access on favorable terms so our businesses can create jobs and opportunities for people to be hopeful. While seeking the help of diplomats, the LCCI President said that Pakistan wants trade, not aid.
Irfan Qaiser Sheikh said that mutual trade could be enhanced by exchanging trade delegations and organizing fairs and exhibitions. For that matter, visa regime needs to be liberalized for the bona fide businessmen in order for them travel frequently.
He said that business community believes in economic and trade diplomacy. Though granting the MFN status to India was a step in right direction opening trade with India should not be at the expense of industry in Pakistan. We can compete with Indian businesses if we have a level playing field. Our cost of doing business and production is much higher when compared with India or with other regional economies for that matter.
He said that industry is facing a growing energy crisis especially in Punjab. Our Indian counterparts have better and cheaper supply of energy. Businesses in large cities of Punjab such as Lahore and Faisalabad got gas supplies for only 180 days last year.
We got gas supply for only 35 days since December 25, 2011. Whereas there is no gas load management program for the industry in Karachi. Similarly the electricity load shedding in Lahore and Punjab has gone up to 10 hours a day, there is no load shedding of electricity for industry in Karachi.
The energy crisis is one of the key reasons behind low economic growth in Pakistan. We cannot overcome this energy crisis without depending on indigenous resources. Our energy mix is heavily dependent on oil and gas, accounting for almost 80% of primary energy supplies. We spent around 12 billion dollars on imports of oil last year. Whereas, our local energy potential is based on water, coal and alternative resources such as solar and wind. We can also harness responsible nuclear technology for meeting our future energy needs.
He said that Potentially, we have the wherewithal to grow at around 7%. We have rich resource base, young population and vocational advantages. We are situated in a high growth region. Neighboring India and China have seen economic growth over 7% and 10% respectively for the last two decades. Similarly, Bangladesh and Sri Lanka too have done well in expanding their economies.
But it seems that we are unable to grow according to our potential. This is simply because of the persistence of complex, long-standing and multi-dimensional policy, institutional and infrastructure bottlenecks.
The LCCI President said that the Federal Budget 2012-13 is being prepared. This provides an opportunity to enhance facilitation for the private sector. I would make a few submissions with regards to the forthcoming federal budget which can boost the confidence of our business community.
First of all, a lot of work is required to widen the tax net. The approach should be one of taxing all incomes from all legitimate economic activities in all sectors of the economy. Increasing the tax rate or burdening the existing tax payers does not improve revenue performance of the economy.
Second, we still need to work hard to make our taxation system business friendly. Compliance with the tax code should be simplified, efficient and low cost. A few easy measures can go a long way in making our tax code business friendly. For instance, tackling delays in tax refunds can free a substantial amount of working capital that will really help improve business operations.
The simplification of advance tax collection regime concerning imports and sales in line with the best regional and international practices will facilitate businesses. The complete withdrawal of the SRO 191 requiring mandatory submission of CNIC on sales which is highly impractical and not implantable in any case will also help avoid serious disruptions to businesses.
Third, we also need to improve macroeconomic management in order to have some impact on lowering markup rate. The benchmark policy rate in Pakistan has stagnated at 12% as a result of which we are paying mark up of 16% and above.
The banking spreads stand at around 8%, one of the highest in the world needs to be brought down to the level prevalent in the region. In contrast, interest rates in the region are much lower standing at around 8% in India, 6.56% in China, 7.75% in Bangladesh and 7.75% in Sri Lanka.
The LCCI President apprised the foreign diplomats that Pakistan’s strategic location has no match. It is not only the principal gateway to the energy rich Central Asian Republics but also shares common borders with the two economic giants China and India.
It is bound to become the trade and energy corridor to these countries in the near future. This strategic advantage alone makes Pakistan a marketplace teeming with possibilities. Our current investment policies have been tailor made to suit investor needs.
Pakistan provides the shortest access to the sea for landlocked countries of Central Asia as well as the Western China. To facilitate linkages we are developing a third port at Gwadar close to the Gulf.
We are engaged in large-scale construction of roads and plan to have a rail network as well that would serve to link up the adjoining regions, especially Central Asia. We also plan to develop oil and gas -pipe lines and electricity grids, which could satisfy our growing energy needs and become energy corridors for China and India. These multilateral forums provide Pakistan a large regional footprint, with opportunities for mutually beneficial cooperation as well as engagement towards regional peace and development.
For more information, contact:
Lahore Chamber of Commerce and Industry (LCCI)
Lahore -54000, Pakistan
Tel: +9242 111 222 499
Fax: +92 42 636 8854