Interview with Mr Ahmed Owais Thanvi — Managing Director Kings Group of Builders, Developers & Contractors
PAGE: Kindly tell me about yourself and your organization:
Ahmed Owais Thanvi: I am a forerunner in making remote lands valuable by constructing high quality houses/high-rise buildings there. I am an innovator and entrepreneur with 12 years’ of experience in business leadership, expert in all aspects of business formation, operation, raising finance and management. I have the optimism and risk-taking ability, which include initiation of construction of high-rise buildings in the areas of Karachi where constructing high-rise buildings was not feasible because of lack of appropriate labor and rental machinery, thereby transforming inexpensive land into a huge business income venture, simultaneously producing places for living and business purposes. I have the distinction of being the pioneer in establishing real estate sector as a “formal industry” in Pakistan. I construct high quality houses/high-rise buildings at the rate of approximately 1000 property units per year in Karachi. To date we as an organization have constructed and delivered thousands of livable units and have thousands of satisfied customers living in those units. Kings Group provides high quality services to its valued clients, across all sectors and has set a strong benchmark for the industry. Based in Karachi, Kings Group provides a comprehensive range of services to a wide range of clients.
PAGE: What are your views on Federal Budget 2021-22 and how is the Federal Budget 2021-22 going to help the construction activities?
Ahmed Owais Thanvi: The Government of Pakistan announced relief for real estate and construction industries in the Budget for the year 2021-22. The government in this budget has reduced taxes and allocated funds for giving a boost to construction and allied industries. It is an attempt to revive the economic growth in the country and it will create job opportunities.
The government announced relief for the following:
- The FED on cement has been reduced from Rs2 per kg to Rs1.75 per kg.
- Reducing rates on capital gains emanating from disposal of immovable property.
- Rate of capital gains tax (CGT) on the sale of property will be reduced by 25% each year.
- Provided a subsidy of Rs30-billion to the Naya Pakistan Housing Authority to provide houses at lower prices to the people falling in the low-income category.
- Rs650 billion development budget would help increase the growth rate and generate jobs and encourage the construction sector.
PAGE: What kind of performance could we witness in the construction industry of Karachi in the wake of the Federal Budget 2021-22?
Ahmed Owais Thanvi: Promotion of construction as an industry was the hallmark of this announcement. The incentive package along with an amnesty has also been well appreciated by the Pakistani business community. The amnesty scheme was introduced for the construction sector and people were allowed to invest in the real-estate sector without disclosing the source of income. It attracted a good number of builders and contractors, who started investing in this sector, and generated healthy competitive economic activity. The Government has extended the facility, that’s really an appreciable step in the right direction.
PAGE: Could you tell us about the input cost of the construction activities and the measures taken in the Federal Budget 2021-22?
Ahmed Owais Thanvi: The amnesty scheme for the construction industry was the outcome of the adverse impact of the coronavirus outbreak and Pakistan benefitted from the concessions given by the IMF. Such concessions were observed in the form of reduction in interest rates by the State Bank of Pakistan from 13.25 percent to 7.00 percent, as well as the present construction-sector incentives. These concessions, in fact, generated a lot of economic activity in the form of job creation, export promotion and improvement in large-scale manufacturing. In a way, Pakistan withstood the bad impact of the Covid-19 pandemic and tackled it in a far better way than most of the countries of the world including our neighbors. At least the job market was stabilized due to this incentive package and the poor started earning something during the horrific corona days. The economy is an integrated model. According to some of the estimates, there are almost forty different industries benefiting only from the construction sector. Right from cement, steel and machinery, to labor, capital and banks – all are beneficiaries of such industrial economic activity. It has given a lot to the poor of this country, who are the real asset of this nation, and the prime minister has rightly realized their woes in the prevailing situation of the worst kind of pandemic.
PAGE: Kindly share your perspective about the taxation and its impact on the performance of the construction industry:
Ahmed Owais Thanvi: There will be no tax on the income emanating from the immovable property if the buyer sells it after four years from the date of purchase. The maximum duration for availing tax exemption is being reduced to four years from eight years. The government will not ask the source of income spent on construction (by builders and developers). The fixed tax on sale by the builders and up to 90% reduction in taxes on the purchase of home by the low-income people will continue in year 2021. So far it looks good and healthy, which will surely stabilize the construction industry and will Insha Allah improve its growth.