The business community has termed political instability, worsening law and order situation, duplication of agencies, multiple taxation and high cost of investment as main hindrances in growth of industrial sector. This was the outcome of a four-hour-long discussion in a workshop on Industrial Policy 2004-05 held here on Thursday aimed at consulting the business community on various problems relating to the sector.
Industries Minister Jehangir Tareen chaired the workshop, which was also attended by Adviser to the Prime Minister on Finance Dr Salman Shah, State Bank of Pakistan (SBP) Governor Dr Ishrat Husain, Minister of State for Finance Umar Ayub Khan and former commerce minister Abdul Razak Dawood.
The draft Industrial Policy would be ready in a couple of months in consultation with the government and private sector.
The State Bank governor, while clarifying some points asked the business community to launch joint ventures with China and Japan, which according to him, would be more beneficial for both the countries.
He said some public sector banks have been privatised but they did not change their mindset towards the Small and Medium Enterprises (SMEs), adding that a few privatised banks were giving attention to this sector.
Shahid Kardar in his presentation highlighted that unless the issues of law and order situation and political instability are resolved lowering cost of doing business to a reasonable extent, the growth in industrial sector could not be witnessed.
He said that in Pakistan legal and regulatory framework is very week and needs to be strengthened. He said laws are promulgated but not implemented in time and lack of inter-ministerial co-ordination is also a major factor in implementing the decisions.
He said that in Pakistan income tax is 35 percent and the general sales tax (GST) is 15 percent, which are very high and customs duties also need to be further rationalised.
Razak Dawood said that the Central Board of Revenue (CBR) is currently over-burdened as it is a revenue collection department and at the same time is a policy making body.
He said there is a need to move the policy making out of the CBR.
Industries Minister Jehangir Tareen agreed to the point and assured to accommodate this suggestion in the Industrial Policy.
Dr Salman Shah assured the participants, particularly from the private sector that the vision of CBR would be changed and in this regard we are following the tax policy of Ireland.
Kardar also said that 27 labour laws are outdated and complex which need to be updated and simplified. He said if Pakistan follows the labour laws of the developed countries, particularly in textile industry, then textile industry can save about $3 billion.
The participants urged the government not to simplify the tax procedures but to go for new procedures as simplified procedures are commonly observed as more complex ones.
PIDE Chief Dr Kamal Ahmad stressed for non-protection policy for any industry for level playing field. He said engineering and chemical industry has a lot of potential to grow, but all these need a level playing field with regard to fiscal incentives.
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