Overseas Pakistanis pin hopes on mini budget
Pakistan Finance Minister Asad Umar may also announce details of Overseas Pakistanis Savings Certificates during his budget speech on Wednesday.
Dubai - Pakistan FM Asad Umar is set to introduce an economic reform package this week.
By Muzaffar Rizvi
Published: Mon 21 Jan 2019, 7:24 PM
Pakistan Finance Minister Asad Umar is set to introduce an economic reform package in his second mini-budget speech this week to put the economy back on track after securing over $14 billion in financial assistance from the UAE, Saudi Arabia and China.
Umar will unveil tax reforms, incentives to the stock market and announce new initiatives to ensure the ease of doing business in Pakistan. He is also expected to launch Pakistani diaspora bonds to raise $3 billion of funds through overseas Pakistanis to meet the country's financing requirements of up to $27 billion in financial year 2018-19.
"The government is expected to rationalise some taxes for taxpayers, bring down income tax limits and increase import tariff on luxury items to bring down the current account deficit to $12 billion by June," sources told Khaleej Times on Sunday.
Elaborating, they said the government will highlight investment opportunities and take steps to ensure the ease of doing business in the country. It may roll back income tax relief given to the salaried class by the previous government by reducing limits to Rs0.6-Rs0.8 million from Rs1.2 million to cover up revenue shortfalls, they said.
For overseas Pakistanis, who are based in the Gulf region, the government is also finalising an investment scheme to generate up to $1-$1.5 billion per annum, according to sources.
"The finance minister may announce details of Overseas Pakistanis Savings Certificates during his budget speech on Wednesday," they said, adding that these certificates will be available in foreign currency and the Pakistani rupee for a tenor of three and five years with monthly profit.
Umar has recently rejected the impression that mini budget would be loaded with new taxes and said the revised finance bill will be focusing on the ease of doing business and steps to improve trade and industrialisation.
"The government will remove tax anomalies in the mini budget and changes in tax policy will be made after approval from parliament," he said at a meeting with industrialists at the Karachi Chamber of Commerce and Industry.
Muzzammil Aslam, former CEO of EFG-Hermes Pakistan, said tax reforms will be part of broader economic reforms to be announced by the finance minister during his speech.
"The government may announce rationalisation of Super Tax, withdraw withholding tax for regular taxpayers, reduce capital gains tax and cut taxes on dividend to revive the stock market and stabilise the economy," he said, adding that an incentive package to the textile industry is also expected.
"The government will have to reform the taxation system by reducing its dependence on indirect taxes and avoid increasing burden on existing taxpayers. There is no other solution but to increase the tax base and revolutionise the tax system through meaningful reforms," he added.
Ahmed Shaikhani, managing director at Shaikhani Group, was of the view that the forthcoming mini budget will be incorporating 'some adjustments and corrections' for the International Monetary Fund and World Bank.
"I don't expect any relief to the common man and incentive packages to overseas Pakistanis," he said.
Muhammad Iqbal Dawood, president of the Pakistan Business Council in Dubai, said the government is expected to come out with a concrete policy on imports and tariffs.
"We are expecting relief for the local industry and the common man as there is no room to increase the tax burden on existing tax payers," he said.
"If the government is serious to stabilise the economy, it has to assure no currency devaluation for two to three years to build the confidence of local entrepreneurs," he added.
Dr Hadi Shahid, managing director of Alliott Chartered Accountants, said ease of doing business is the need of the hour to put the economy on the right track.
"The government will have to introduce encouraging business policies to meet various economic targets such as revenue, trade, imports and exports. Without clear policies on reduction of imports and preference is given to local industry, economic stability is not possible," he said.
To a question, he said overseas Pakistanis pin high hopes on the Imran Khan-led government and they expect some meaningful relief for them.
"Overseas Pakistanis have been neglected for some time. They are expecting that the finance minister will announce incentives for investments and reduction of documentation for overseas Pakistanis," he added.
Basir Mahmood, a Dubai-based banker, said the government should further simplify the procedure of sending remittances through official channels.
"With about 30 per cent depreciation of the rupee last year, exports are just up 5.4 per cent in the first half of 2018-19 while remittances climb, on average, 10 per cent," he said, adding that the government should award better rates and facilities to overseas Pakistanis.
Fahad Zuberi, a Sharjah resident, also echoed similar views and requested the government to allocate a special quota for overseas Pakistanis in housing schemes across the country.
"Building a house is everyone's dream, but with rising inflation and high cost of construction it is very difficult to own a house in Pakistan. The government should award plots and incentives on construction materials so overseas Pakistanis can realise their dreams," he added.