The Multan Chamber of Commerce & Industry (MCCI) has bitterly criticised the national budget for 2009-10, desrcibing it as pessimistic, and said that rehabilitation of the sinking textile industry was totally neglected and no bailout package was given for its revival.
Rreplacement of petroleum development levy with carbon surcharge, withdrawal of subsidy on electricity, increase in withholding tax on imports, and no relief in mark-up rate was provided, it said. The speakers appealed to the parliament to reject these proposals and not to make them part of this budget which would ruin the industry.
The 'post-budget' seminar was chaired by MCCI President Anis Ahmed. Tanvir Ahmed, ex-president of FPCCI, and Jalaluddin Roomi, a former Punjab minister for industries were chief guests. The speakers said that the 2009-10 budget had disappointed them, as no proper step had been taken to reinvigorate the declining industry.
High mark-up rate, electricity and gas tariff and shortage of power supply had badly crippled the business and industrial activities in the country and the business community was expecting remedial measures to remove these problems, but the budget had dented all such hopes.
Anis Ahmed said that imposition of carbon tax on POL products and CNG would further dampen the industrial growth. He said the budget illustrated no planning at governmental level as it suggested no solutions to the deteriorating condition of textile industry. He said that Shaukat Tarin had made high claims to announce incentives for textile industry before the budget session but did not fulfil his words.
He said that the budget had failed to address anything regarding industrialisation; how to enhance exports; how to increase foreign exchange reserves and how to create employment opportunities in the country. He said that the revised tax revenue, which had been increased by Rs 350 billion, seemed like a difficult task to achieve, especially keeping the current local situation in mind.
He further stated that the increase in withholding tax for imports is also likely to create an adverse impact on the goods being brought into the country as they would be more expensive now. He also voiced concern over the reduction in GDP to tax ratio, which had been 9.6 percent earlier.
The MCCI chief criticised FBR's move to create a post of Director-General (Intelligence and Investigation). He said it was an anti-business step as it would provide bureaucracy an easy tool for further harassing the businessmen, and called upon the government to take business community fully on board before taking such measures.
He also termed as unwise the government's decision to make it mandatory for all persons to file their income tax returns who own immovable property with a land area having 500 sq yards, flat having covered area 2000 sq ft or own a motor vehicle having engine capacity of 1000 cc or more, and added that these limits should be raised to 1000 sq metre, 4000 sq ft and 2000 cc respectively to save ordinary income earning people from further trouble.
He also called the budget 'unfriendly for the common man', saying that 2 percent increase in withholding tax on imports of commercial products would increase inflation drastically.
Former president of FPCCI, Tanvir Ahmed said that the government has announced to constitute a fund of Rs 40 billion for export promotion, but the government would contribute only Rs 10 billion. He questioned who will provide the rest of Rs 30 billion for the fund.
The high rate of mark-up, depreciated rupee value and end of cross subsidies on electricity and gas would further add to the cost of doing business and would result in closing down of more industries, he added. He termed the federal budget for 2009-10 as disappointing, and termed it 'a game of juggling numbers'.
He said that the State Minister for Finance & Revenue did not explain in her budget speech as to how the government was going to revive the industrial sector, particularly textile industry, which contributes 67 percent to the country's total exports.
Tanvir said that Prime Minister Yousuf Raza Gilani and the Advisor to PM Shaukat Tarin had made a number of commitments to bail out the textile industry, but Khar announced nothing as such. About three million people are employed by the textile industry and another three million indirectly, but the state minister said nothing for the revival of the sector, he further said.
Moreover, the imposition of new taxes on import of raw materials and withdrawal of cross subsidies on electricity and gas would make the industry further incompetent in the region, particularly with competitors like China and Bangladesh.
He said that doubling of withholding tax (WHT) from two to four percent on import of raw materials for the whole industry would play havoc. He said that the budget seemed to pulverise the business community to generate more revenue rather than providing relief in taxes to spur business activities and broaden the tax net.
He said the budget totally ignored the textile industry. He said the withdrawal of R&D support and creation of proposed Rs 40 billion export investment support fund would not help the industry, and stressed on the government to provide direct support to the industry instead of subjecting it to bureaucratic approaches.
Roomi hailed the new scheme for small and medium enterprises sector and allocation of Rs 10 billion fund for credit guarantees to support the SME sector. The fund will be financed by the government and the private sector in the ratio of 50:50 over the next two years.
Commenting on the federal budget for 2009-10, he said that the government should ensure execution and pace of development on this scheme because such schemes could not prove fruitful due to red-tapism.
He said that the government should increase credit facility for small and medium enterprises (SMEs) from Rs 10 billion to Rs 200 billion for significant industrial growth next year as SMEs are backbone of economy and engine of growth all over the world."If the government wants to turn this year's 7.7 percent negative growth of large scale manufacturing industrial sector into positive growth next year, then it should strengthen the cash and equity-starved SMEs with increased credit allocations.
He said that southern Punjab is a hub of dairy & livestock development and the government should focus on this area to achieve the objective. He said that the government should spend maximum funds out of total allocated amount of Rs 2586.353 million besides promoting the aquaculture.
Roomi said that the government should pay proper attention to the export of Halal meat to Muslim states and European countries. He said that for the first time the government had allocated Rs 300 million for livestock production and development and Rs 300 million for milk collection, processing and dairy production. He suggested that the government should establish a meat processing and export centre in Multan to utilise the dairy farms and animals of Cholistan, Thal and other areas.
Muhammad Anees, Senior Vice Chairman of Aptma Punjab Chapter, said that cost of production would further go high by 25 to 30 percent with the withdrawal of subsidy on electricity. He suggested that the government should defer the withdrawal of subsidy on electricity, gas and levy of carbon surcharge for a year.
The seminar was also addressed by Muhammad Younas, Muhammad Azam, Muhammad Younas, Advocate, former president of Tax Bar Association, Talat Javed, Ali Ahmed, Zahid Hussain Gardezi, Anwar Salim, Muhammad Usman, Aurangzeb Alamgir, Aziz Ahmed and Idrees Ahmed.
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