Govt working to incentivize investment

January 15, 2019

The PTI government is going to present another finance bill or mini budget on January 23. According to Finance Minister Asad Umar the government desires to improve the ease of doing business in the country and incentivize investments. None can deny the importance of the private sector in the country’s economy. No matter how patriotic a person is, he will only invest to a certain extent if the terms aren’t right. The situation before the PTI government came into power was such that it was difficult to invest in the country. Taxes and electricity prices were barriers to investment and the way tax was being charged was creating problems for investors. PTI is the first political party to include ease of business improvement in its election manifesto. Previously there was very little investment in Pakistan, just consumption. No investments or savings, meant our imports were capital financed. The PTI government is not trying to incentivize consumption, especially imported consumption, it wants to control it. On the other hand, it is working to incentivize investment and wishes savings and investments are increased. Generally, the government’s duty is to bring in a policy that benefits everyone, especially the underprivileged. All the decisions made by the PTI government in the last five months have been in line with this duty. Taking into account the changes in the electricity tariffs, gas and taxes among measures taken by the government to benefit the underprivileged, we are hopeful that the upcoming finance bill will not impose any new taxes and will be focused on ensuring ease of doing business and incentivizing savings, which will subsequently translate into investments. Everyone is saying the mini-budget will be a bomb for the masses, but the government has assured there will be no new taxes. In this age, the wheel of economy is set in motion by the private sector instead of governments. The way previous governments dealt the economy made things worse in the country. It is a good news that the powers of the Federal Board of Revenue (FBR) will be withdrawn to disallow it to issue overnight regulatory duties through statutory regulatory orders (SROs) and changes in taxation policies will be subjected to parliamentary approval. It is regrettable that Pakistan’s saving rate is lowest in the world, which ultimately means there is no money for investment. Happily, the PTI government is working to change this pattern by incentivizing investments, and discouraging extravagant consumptions. Regional trade, of course, is the backbone of economic development in any country and South East Asia is an example of how regional trade can help overcome poverty. Unfortunately, the worsening relationship with India is a barrier to this and New Delhi is to blame for this.

 

Taxes and electricity prices were barriers to investment and the way tax was being charged was creating problems for investors.