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Friday, 06 April, 2012
coMMent
Let the budget dogfight begin… Market g
10 committees comprising business persons formed to make recommendations for upcoming budget ISLAMABAD
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STAFF REPORT
HE government on thursday constituted ten committees comprising of leading business persons and officials to make suggestions for solving energy crisis, promoting regional trade, protection for iPRs, much needed financial sector reforms and tariff rationalization and addressing various tax related issues in the upcoming budget for the next fiscal year. Finance Minister Dr. abdul Hafeez shaikh chaired a meeting of the Business Persons Council. the meeting reviewed the current state of economy, the role of the private sector and enhancement of economic reforms in the country. the council decided to form 10 committees to give recommendations on their respective areas and to present precise report within two weeks. the first committee including secretary Economic affairs Division will work on broadening of tax base. second committee including Governor state Bank of Pakistan will work on financial sector reforms. third committee including Deputy Chairmen Planning Commission will work on tariff rationalization. Fourth committee including secretary Commerce will work on regional trade. Fifth committee including secretary industries will work on incentives for investment. sixth committee including secretary Finance will work on expenditure management. seventh committee including secretary investment will work on intellectual property rights. Eighth committee including Chairman FBR will work on refund acceleration of taxes and other FBR related issues. the ninth committee also including Chairman FBR will work on tax relief package for Fata and Balochistan. While the tenth committee including secretary Water and Power, secretary Petroleum and Deputy Chairmen Planning Commission from will work on energy crisis. Business persons highlighted their concerns and gave proposals for the coming budget. the discussion circled around
Give power generation the biggest share of the budget pie: PIAF LAHORE STAFF REPORT
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akistan industrial & traders association Front (PiaF) has called for allocation of maximum funds in the upcoming budget to overcome shortage of electricity. in its budget proposals, the PiaF Chairman Engr. sohail Lashari said that the country’s economic revival is only possible if the government takes private sector on board in budget-making exercise. He said that energy is the only sector that has taken the entire trade and economy hostage therefore the budget should be focused on energy-related projects. the PiaF chairman also urged the government to give special package to all the industrial estates in the country so that He could be able to establish their own power houses. He said that the government would have to allocate funds for revival of public sector enterprises (PsEs) that are presently eating up much of the budgeted money. the increase the exports, the PiaF leaders proposed cut in duties on raw materials for export-oriented industry while the appointment of commercial attaches in foreign countries should be linked to promotion of Pakistani merchandise in global market. He said that high markup needs to be brought down to single digit as it would increase industrial productivity on the one hand while help increase local investment in the country. the banking spread that has crossed the figure of seven per cent should also be narrowed down in the larger interests of trade and industry. as the country at the moment is facing a number of external and internal pressures, the PiaF leaders reasons for reducing external financing, FBR related issues especially concerns over sRO-191, energy and gas crisis impact on industrial sector, import and export related matters, tariff and interest rate and intellectual property rights issues. On a question regarding increasing debt burden, secretary EaD clarified that debt could never be seen in nominal way. Debt is dealt in the context of GDP. the perception of increasing debt burden was not true, as rather ratio of debt to GDP has decreased. the minister informed the council about the overall economic performance, estimating growth rate of 3.8 percent, which would be highest in last three years despite many challenges. He
suggested to the government to curtail all non-productive expenditures to the minimum level so that the funds could be utilized for the betterment of people. He said that the government should also announce austerity drive in the budget and all government functionaries entitled to use official vehicles should be directed to use small vehicles and their fuel consumption limit should also be fixed. as this would help save precious foreign exchange. Over law and order situation, the PiaF leaders said that there is a dire need to allocate special funds to strengthen intelligence network in the country as the previous happenings have proved that police alone can not handle any untoward incident. the PiaF Chairman also urged the government to evolve both shortterm and long term policies to overcome the shortage of electricity. in this regard, he local businessmen could be asked to make investment in power sector jointly or individually. as a large number of industrial units have stopped their operations while many are on the way to closure. He said that uninterrupted supply of electricity to the industry would not only increase industrial production but it would also arrest the fast galloping unemployment graph. He said that the government should also announce work on kalabagh Dam which had been politicized for nothing as it would not only expedite economic activity but would also ensure cheapest electricity on completion. the PiaF Chairman said that there is a dire need to promote research culture in the country as despite having all the resources the country is lagging far behind in every sector only because on non-availability of required information.
said difficult decision taken in tax reform enabled to achieve 25 percent increase in tax revenue. Massive funds were distributed among the poor through Benazir income support Program. the budget for Balochistan was doubled. talking about the challenges, he said the government faced inherited a complex energy crisis and reduction in external financing. He said that the country was in transition phase with new public financing arrangements between center and provinces. the matter of tax refund was also discussed. Finance Minister and Chairman FBR assured business community that their refunds would be given immediately. FBR will energize the process to issue re-
funding amount at the earliest. a ceremony is expected to be held within three weeks to distribute the refunding checks to the people. the council also concluded to hold an intensive meeting before the announcement of budget, in which delegates from various chambers and associations will participate. President Federation of Pakistan Chamber of Commerce and industry, senator Haji Ghulam ali, member karachi Chambers of Commerce and industry siraj Qasim taili, member Lahore Chambers of Commerce and industry irfan Qaisar shaikh, member saaRC Chambers of Commerce and industry tariq saeed and other leading business persons participated in the meeting.
mechanism
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t’s interesting that very few apologists for the previous regime repeat the mantra of some years ago, that bullish sentiment in the ksE – at the time the best performing asian market – is an adequate indicator of economic growth. Yet even if today’s ground reality betrays a hollowness in the assertion, there is usually some level of coupling between national income trajectory and stock market mechanism. But ours is a strange story. the economy is near collapse, deficits are out of control, tax revenue is minimal and export earnings are dropping due to crippling energy shortage, yet the ksE is on steroids, breaching barrier after barrier with some technical analysts even predicting a rise all the way to 18,000. are they really in their right minds? Best not get ahead of ourselves. true, the market has displayed tremendous, unexpected resilience. and while the latest surge owes to a multiplication of factors like bid in the international commodities market, rising regional cement demand, improving Pak-Us ties, etc, the point might not be far when all-round euphoria actually becomes a precursor to collapse. it’s somewhat like the old real-estatebubble warning – take profits and exit when everyone including the taxi driver tells you to buy property. in the stock market, it’s a good idea to leave when stocks with fundamentally no life start testing upper limits in day trading. and that, unfortunately, has begun. Perhaps now, or soon enough, is just the right time for market regulators to make sure a re-run of the ’05 and ’06 collapses is not in the offing. it’d be a shame if the recent roller coaster turns out just another despicable, deliberate act of manipulation, of bad guys entering, bidding up the market, inviting all and sundry, and leaving after whitening a lot of black money. a lot of middle class wannabes have been burnt this way before. it should not happen again.