KARACHI: Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb on Saturday said macroeconomic indicators of the country are moving in positive direction with declining inflation, improving balance of payment, rupee stability, and strengthening foreign exchange reserves.
While talking to reporters during his visit to Overseas Investors Chamber of Commerce and Industry (OICCI), the minister said that inflows of remittances of overseas Pakistani workers are expected to increase to all time highest level of $35 billion during the current fiscal year of 2024-25, 16 percent up from $30.3 billion received in the last fiscal year of 2023-24.
The Finance Minister highlighted the government’s strong commitment to driving economic stability and fostering growth.
He said Pakistan is well-positioned to attract increased foreign direct investment, particularly in export-oriented sectors. By working together, the Government of Pakistan and OICCI can showcase the remarkable success stories and expertise of OICCI members, creating a compelling case for new foreign investors to choose Pakistan as their destination, he said.
He said the government is focusing to invite foreign direct investment in export-led projects to increase country’s export to control foreign trade deficit and sustainable economic growth.
The minister said that the government’s role is to provide assistance and support to private sector to grow businesses in the country. The high losses of state-owned entities are huge burden on national exchequer and government wants to control these losses through privatization of the loss making entities. He pointed out that the government has sustained losses of over Rs 6 trillion during last 10 years, which are 50 percent of the country’s total tax collection target.
He said that the foreign companies operating in Pakistan are now freely sending their profits and dividends abroad as there is no restriction from Ministry of Finance or State Bank of Pakistan. These foreign companies had sent $2.2 billion as their profits and dividends during the current fiscal year, he added.
SBP Governor Jameel Ahmed highlighted the various ways the SBP has been transparently working with OICCI address the concerns for foreign investors, especially the dividend remittances, to boost investor confidence.
OICCI President Yousaf Hussain underscored the Chamber’s significant contribution to Pakistan’s economy. He said OICCI members have invested $22.6 billion over the past decade, exceeding the country’s total FDI of $19 billion, and contribute one-third of Pakistan’s tax revenue. “We commend the Finance Minister’s efforts to stabilize the economy, which is vital for creating a favourable investment climate,” he said.
He emphasized for a collaborative approach between OICCI and the Government to attract FDI, shape Pakistan’s favourable narrative and build up exports.
He also highlighted the Chamber’s broader impact, including the introduction of cutting-edge technologies, development of human capital, adoption of global best practices, and facilitating Pakistan’s integration into international markets and products.
OICCI Secretary General M Abdul Aleem expressed gratitude to the Finance Minister and appreciated the Finance Minister’s efforts in resolving key issues, including the disallowance of sales and promotion expenses for royalty-paying entities and the withdrawal of the CFO affidavit requirement for sales tax returns. These steps are crucial for restoring investor confidence and ensuring a fair business environment, he said.
The Finance Minister was apprised of significant challenges to FDI, including policy unpredictability, an escalating tax burden on formal sector, and increasing regulatory complexities. A major concern highlighted was the outstanding tax refunds of OICCI members, exceeding Rs. 100 billion, which are impacting operations. Additionally, the reclassification of petroleum products as tax-exempt was identified as a risk to the Brownfield Refining Policy, potentially jeopardizing $6 billion in investments. Issues such as delays in FBR approvals and the imposition of a super tax were also underscored as critical obstacles for foreign investors.
To address these concerns, OICCI proposed the establishment of an independent authority, separate from the Federal Board of Revenue (FBR) and reporting directly to the Ministry of Finance. This authority, comprising professionals, private sector experts, and data specialists, would focus on identifying and curbing tax evasion to enhance revenue collection, allowing the FBR to concentrate on implementing policies set by the new body.
Copyright Business Recorder, 2024
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