Tareen discusses policy framework with leading businessmen

[Naveed Yaseen]

* Businessmen demand reduction in power rates, loosening monetary policy

LAHORE: Adviser to Prime Minister on Finance Shaukat Tareen spelt out the priorities of his government for the economic revival of the country saying that “the areas of core concern have been clearly marked.”

He was speaking at Lahore Chamber of Commerce and Industry on Monday.

Shaukat Tareen said that in the past the policies were made in isolation and without proper consultation of stakeholders but the present government would involve all the stakeholders in review process of policies to make them result-oriented.

He stressed the need for administrative reforms by saying that the administrative machinery is not as motivated as it should be. “Though it is a difficult job but the government has decided to upgrade the administration,” he said.

While calling for an integrated energy plan, the advisor said that electricity and gas rates for the all segments of society should be same as different tariff slabs are burdening various sectors. He called for reduction in both the development and non-development expenditures so that unsustainable fiscal deficit can be countered. Shaukat Tareen said that the present regime is determined to bring about economic turnaround after taking the business community and other stakeholders into confidence. He maintained that there is a solid base for robust growth and the government is taking appropriate steps for addressing the concerns of local and foreign investors. He said the government is working on an integrated plan for stabilising the macro-economic indicators, checking core inflation, bringing down fiscal deficit, improving revenue collection with simplification of tax collection system, promoting agriculture sector through a comprehensive package, putting in place an integrated energy plan, enhancing tax to GDP ratio, curtailing non-developmental expenditures, consolidation of the industry and strengthening of capital market.

Planning Commission: He further said that the Planning Commission is being strengthened so that effective planning in consultation with the stakeholders can be done. In the past, short-, mid- and long-term plans were made in isolation and hence the set objectives could not be achieved. “No coherent strategy was evolved for the betterment of industry in those plans,” he opined.

Poverty: Talking about poverty in the country, he said that poverty level has gone up from 12 percent to 20 percent since 2005. He said the present government is committed to address problems of people living below the poverty line by fulfilling their food requirements, apart from providing them proper health, education and other facilities. The government aims at providing targeted subsidies to the poor and the vulnerable to save them from the recent hike in utility rates and food inflation.

He mentioned that the private sector of India is efficient and we need to study the Indian model to strengthen our base.

Speaking on the occasion, the LCCI President Mohammad Ali Mian said that the industry has become uncompetitive and is experiencing closures due to 12 to 15 hours a day load-shedding; high cost of doing business; high cost of raw materials and energy; high cost of money due to excessively tight monetary policy and high banking spreads; unstable law and order situation as well as complex taxation system. He called for the need to make economic institutions vigilant and responsive to fast-changing global environment while providing all the facilitation to the business community for the revival of their confidence and investment activities.

He said that the objective of imposing 10 percent withholding tax under section 235 on electricity bills was meant to bring maximum number of business and individuals in the tax net. But unfortunately while imposing this withholding tax under section 235, the FBR ignored the fact and imposed this across the board on all manufactures who are discharging their tax liabilities.

He lamented that mark-up rates are rendering the industry uncompetitive and the aggressively tight monetary policy has failed to curtail both the inflation and inflationary expectations at the cost of growth across all sectors of the economy.

The Energy Crisis: LCCI president complained that the price of crude oil has come down from record high of $147 to around $60 but there has been no let up in the prices of electricity, oil and gas energy in Pakistan. “High cost of electricity is threatening hundreds of manufacturing units which are on the verge of closure and can cause massive unemployment,” he warned.

He suggested that a relief package be announced which should include loosening of the monetary policy for lowering mark-up rates. The government can also boost the economy by making an arrangement whereby mark-up and installments due on loans to the industry can be deferred for some time. He demanded that the industry should be allowed to buy furnace oil and diesel without paying upfront sales tax.

LCCI President, Mohammad Ali Mian, Senior Vice President Mian Muzaffar Ali, vice President Shafqat Saeed Piracha and former Presidents including Tariq Hameed, Mian Tajjamal Hussain, Iftikhar Ali Malik, Bashir A Buksh, Mian Misbahur Rehman and former Senior Vice President, Sohail Lashari and former Vice Presidents, Aftab ahmad Vohra and Mubasher Sheikh also spoke on the occasion. Provincial Finance Minister, Tanvir Ashraf Kaira was also present in the meeting, which continued for well over two hours.

http://www.dailytimes.com.pk/default.asp...2008_pg5_1