Positive and favourable measures taken for business growth

Positive and favourable measures taken for business growth

Interview with M Shariq Vohra – President Karachi Chamber of Commerce & Industry

Profile: CEO Shazil Group of Companies

Representation in Public Sector Bodies/Government Corporations

Member:

Sectoral Advisory Committee, Environment Climate Change & Coastal Development Department, Government of Sindh

Provincial Steering Committee, Services, General Administration & Coordination Department, Government of Sindh

Karachi Metropolitan Corporation (KMC)

Sindh Solid Waste Management Board, Government of Sindh

Industrial Liaison Committee, Industries & Commerce Department, Government of Sindh

Coordination Committee, Labour & Human Resources Department, Government of Sindh

National Centre for Dispute Resolution (NCDR)

NICVD National Institute of Cardiovascular Diseases

Federal Tax Ombudsman Secretariat

Special Economic Zone Authority (SEZA)

Steering Committee of Pakistan Regulatory Modernization Initiative (PRMI)

Complaint Resolution Committee FBR

Convener — FPCCI Central Standing Committee on Waste Management & Recycling

Advisory Committee South — Federal Tax Ombudsman Secretariat

Member Board of Governors Universities/Educational Institutions:

Hamdard University

Iqra University

Ziauddin University

Greenwich University

Sir Syed University of Engineering & Technology

Institute of Business Administration (IBA)

Institute of Business Management (IoBM)

PAF Karachi Institute of Economics & Technology (PAF-KIET)

Indus University

ILMA University

Preston University

Newports Institute of Communications & Economics

DHA Suffa University

Commecs Educational Trust

National Vocational & Technical Education Commission

Khadim Ali Shah Bukhari (KASB) Institute of Information Technology

Pakistan Institute of Tourism and Hotel Management

Karachi Medical & Dental College

Sohail University

Social & Business Activities:

Convener – FPCCI Central Standing Committee on Waste Management & Recycling

Senior Vice Chairman – Polymers Waste Importers & Recyclers

EC Member – FPCCI

Chairman – Export Subcommittee, KCCI-2008-09

Chairman – Community Education & Technology Centre (Free School at Gadap for the under privilege)

Member Executive Committee – Chiniot Sheikh Society

Member Managing Committee – Karachi Club

Member Executive Committee – Pakistan Billiards & Snooker Association

PAGE: Could you tell us about the budget proposals sent by the KCCI and have they been incorporated in the budget?

Shariq Vohra: KCCI is pleased with Federal Budget FY22 as the government has accepted 50-60% budgetary proposals put forward by the business community. It is a good thing that the IT sector has been proposed to be treated as a zero-rating sector. Other export sectors must also be included in the zero-rating regime. The list of withholding tax has also been reduced by 40% which is quite positive for the business growth. Yet some of the important proposals sent by Karachi Chamber are still pending to be incorporated like withdrawal of CNIC condition, revival of SRO 1125 in its true spirit, and reducing sales tax rate to a single digit, etc.

PAGE: What kind of performance could we witness in the industry in the wake of the Federal Budget?

Shariq Vohra: After a period of downturn due to the Covid-19 pandemic, Pakistan’s industries have started to show signs of growth. Large scale manufacturing industries posted a growth of 12.84% in the ten months of the current fiscal year FY22. It is expected that this trend will continue into the next fiscal year, which will greatly benefit the economy of Pakistan, particularly through a boost in exports. There is, however, a possibility that as the export industries from around the world start to reopen after a Covid-19 lockdown period, exports from Pakistan may suffer. Still, the federal budget FY22 can be termed as a growth budget wherein some decent measures such as reduced duties on various raw materials have been introduced, which will surely help the industrial sector starting in the short term. Moreover, 12 withholding taxes have being withdrawn particularly that from banking transactions. A special tax regime for SMEs has been proposed while an amount of PKR 12 billion has been allocated to provide interest free loans to the SME sector, which is very encouraging. Hence, the industrial outlook at this point in time looks positive.

PAGE: Could you tell us about the infrastructure in the industrial areas of Karachi and measures taken in the Federal Budget?

Shariq Vohra: The infrastructure in industrial areas is in a state of shambles due to the negligence to the infrastructure needs of the largest city of Pakistan which is Karachi. The poor condition of the biggest city sends negative vibes to foreign investors. SEZ’s are still facing red-tapism and delays in getting activated due to slackness and paucity of funds. There are issues of power shortages and dearth of facilities in industrial areas. The issues get compounded multiple times in the monsoon season as the whole of Karachi including industrial areas are submerged in rain and sewage water. An amount of the PKR 25.4 billion has been allocated for the Karachi Transformation Plan, which is a project worth PKR 739 billion including a federal PSDP component of PKR 98 billion. The much hyped Karachi Transformation plan seems like a mirage as we are still unclear as to how and where these funds will be utilized and how they will bring about a change in the life of people of Karachi.

PAGE: Kindly share your perspective about the taxation and its impact on the performance of the industry:

Shariq Vohra: The budget has been favorable for many sectors where auto sector is a big winner as with decline in sales tax prices of up to 850cc cars will see a decline by PKR 100,000-200,000. Furthermore, electric car prices will go down and their sales are expected to increase. Heavy commercial vehicle prices are also expected to go down following the removal of VAT which can enable businesses to invest in the up gradation of their transport fleets. Similarly it is good step of the government that turnover threshold has been increased for cottage industry. It is a positive move by the government that the rate of tax for SMEs has been reduced substantially from the general rate. SMEs have also been provided the option to pay tax on net income or turnover basis which will give them flexibility and improve ease of doing business. Women entrepreneurs are also facilitated by providing than relief of 25% on income tax liability.

Cotton shortfall faced by the country last year was a major bottleneck to exports. The removal of custom duties on cotton thread and related tariff headings is a positive step towards providing a short term solution to this bottleneck. Similarly reducing CD on flat rolled HRC and alloy and stainless steel products will help textile industry in reducing their capital investment expenditures and allow them to increase their capacity in light of increased textile exports. Tariffs and duty reduction on inputs for value-added textiles is a positive move. Minimum tax is a regressive tax and its removal on SEZ’s is the first step to ultimately remove minimum tax altogether from the taxation system. However, adding duties on LED lights, hides and leather, edible oil, dairy, juices and other budding industries will increase cost of doing business for them and will have negative repercussions on the economy.

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