Exporters, businessmen jubilant after government’s reforms package

ISLAMABAD: Exporters and businessmen on Thursday expressed optimism that the new tax incentives introduced in the mini-budget for industry, stock market and agricultural sector would lead to the revival of the economy and boost exports.
Finance Minister Asad Umar on Wednesday presented the third finance bill for the current fiscal year in the National Assembly of Pakistan, claiming it would boost investment, manufacturing and exports, and facilitate agricultural financing to promote economic activities in the country.
Reacting to the incentives introduced in the budget, Chairman Pakistan Apparel Forum, Javed Balwani, said that the liquidity problem of the export-oriented industry will be addressed if the government – as promised in the mini-budget —   issues them promissory notes as a refund for withholding tax amounting to around Rs200 billion.
“This is for the first time in a decade that a government has promised to clear all our outstanding dues in one go. This is going to be a major relief to the industry,” he told Arab News.
Balwani said the promissory notes and abolition of withholding tax on banking transactions would help revive the economy and boost exports. He also hailed the government for allocating separate electricity and gas tariffs for the industry.
Stockbrokers said the new incentives and reduction in different taxes would contribute toward ease of doing business.
“We accentuate that with this budget, the government has underpinned support for the domestic industry, incentivize export-oriented sectors to boost trade and improve ease of doing business in the country,” Head of Research Arif Habib Limited Samiullah Tariq told Arab News.
“Proposals put forth by the broker community have also been accepted and steps would now be put in place to improve sentiment and encourage volumes at the index,” he said.
“The removal of 0.02 percent advance tax on the sale and purchase of shares, collected from brokerages, will increase trading activities in the market,” he added.
Ahmed Hassan Moughal, President Islamabad Chamber of Commerce and Industry, said that the tax reduction on agricultural sectors and Small Medium Enterprises (SMEs) is expected to revolutionize the economy as both of them are considered to be the backbone of the financial system.
“Basically the government has introduced major reforms in the taxation system to fix the past anomalies, but it will take some time to see overall positive impact of all these measures on the industry and exports,” he told Arab News.
On Wednesday, the finance minister also announced that he would present the “Medium Term Economic Framework” in parliament next week to boost investment, manufacturing and agricultural produce in the country.
“We are committed to helping the deprived segment of the society and it is our constitutional responsibility to bridge the gap between the rich and the poor,” he said.
Umar said that his government had identified four variables to fix Pakistan’s ailing economy. These included: balancing government’s revenues and expenses; increasing exports that recently plummeted from 14 percent of the GDP to seven percent; encouraging foreign direct investment; and boosting national savings from 10.4 percent which, he added, were the lowest in the world.
To achieve all these targets, he announced plans to slash tax on SMEs and agricultural loans from 39 percent to 20 percent, abolish withholding tax on banking transactions for tax filers, and remove import duty on newsprint.
He said that duty on diesel engines for agricultural purposes was also decreased to five percent. Other than that, abolition of the Gas Infrastructure Development Cess on fertilizers would help reduce prices of urea for 200 rupees per bag.
Following the approval of the Finance Supplementary (second amendment) Bill 2019, non-tax filers will be able to purchase cars up to 1300cc, though the tax will be increased for them.
The minister announced plans to abolish super tax for non-banking companies and on bids for sports franchises until profitability, while withholding tax on trading in the stock exchange, he said, had also been abolished.