Open and participatory budget making is imperative for good governance and economic development, yet by comparing with international standards our budget making needs professional experts. Budget making is more or less an exclusive affair of the executives.
The budget making team is not accessible to the civil society, media, and technocratic groups. Government does not consult people, industrialists, organisations, except to some ostensible extent with Chambers of Commerce and other big trade associations.
Those are mostly dominated by trade classes and mostly the aspects of industrial promotion matters related to lower segments of economy are ignored, particularly all the required parameters for the micro industrial developments are on negative myths.
FBR regularly convenes meetings with tax officials, but has never held any meetings with such associations or consultant who working for economic development and poverty alleviation in the country.
For a self-sustainable economic development throughout the world priority is being given to micro industries. According to the industrial pyramid, in every economy there are only few large enterprises followed by medium enterprises and on the bottom there is a very large number of micro and small-scale enterprises.
Social partnership, human resources, technical skills are our economic drivers and they can be called as economic clusters. In the last six years our development in these sectors are not rapid as a result of which we lost our share very badly.
Our exports of cottage industry handicrafts decreased 78 percent whereas global export of these commodities increased from 187 billion dollars to 235 billion dollars per year, China exporting 71 billion dollars products, India 3 billion dollars and our exports are only a few million dollars.
The adverse results are due to lack of coordination among provinces, our financial system, banking system, economic policies all are controlled by Federal Ministers and the task of small industries development is given to provinces those are not involved in the policy framework at any level.
Micro industries typically make a large contribution to manufacturing by generating employment for thousands of peoples. Presently there is no state organisation which could help boost, develop, micro industries culture in Pakistan.
Activities of Smeda are not result oriented for minor industries. Indian government diverted highest priority to micro industries to develop social sector and for achieving fruitful results. At present Bill for the Development of Micro Industries 2002 and Micro Small Medium Enterprise Development Act 2006 are playing strategic role in the policy framework for these industries particularly the Federal Ministry of Micro Industries Development's role is torch bearer for other developing countries.
Ministry of Engineering, Ministry of Commerce, and Ministry of Finance are key players for policy framework in our country and in our annual economic survey report we cannot find any detail on the development of micro industrial sector.
If we look at the reforms of FBR no doubt this department achieved remarkable results under the Chairmanship of Mr Abdullah Yousaf who worked with objectivity for a transparent tax culture in Pakistan. In the taxation history of our country his enthusiastic working proved FBR as a partner of industrial growth.
Our Customs department deserves appreciation for good working to bring competitiveness in industrial manufacturing scenario allowing the import of industrial raw materials even at zero rate. But unfortunately due to market mechanism benefits could not reach the buyer class.
We feel proud FBR provided speedy environment for doing good business through TARIP, INTRA, ECTTO, ACCESS facilitations. Those are well appreciated by World Bank, IMF and other financial sectors, for progressive working. It is anticipated due attention for micro industrial sector will be given by FBR in the near future.
The culture of cottage industries has now diverted towards micro industries in the era of globalisation. For the protection, growth, development, of this sector there is no mapping which could help our policy makers for positive working and due to this short-sightedness every year after budget announcement so many cases of anomaly arise.
In Pakistan sewing machine industry is borne to micro fitness and can be called as most deprived industrial sector of the country. According to the Bureau of Statistics data, production of sewing machine in the informal sector as well as non-informal decreased: 1995-2002-2003 84000, 61000, 36000, 28000, 27000, 24000, 31000.
Last year Officers of Engineering Development Board conducted a countrywide survey of sewing machine industry and compiled a detailed report of this sector which illustrates, majority of work places are lanes and mohallas, use of vintage type outdated machines, lowest investment cost, week management, are technology high old, cost of utilities, lack of long term visionary policy by state departments, lack of product design, poor research and development, totally non competitive in competition with China, lack of new investment.
Not a single unit got minor or other banking facility. High cost of raw material, rollback of industrial development under WTO regime, in danger of collapse with invasion of cheaper Chinese machines and parts. All these show the adverse position of this sector.
In the budget 2007-2008 sales tax @15% on the import of sewing machines was lifted and import duty on sewing machine in CKD position was fixed @5%. Assembly of sewing machine is a zero technology job. By hand tools machine can be assembled easily.
This phenomena made the local industry entirely non-competitive. Under 5% tariff protection edge they are not in a position to compete with Chinese sewing machines and parts.
Tiny home-based units are purchasing their raw material from open market and they are financially not linked with sales tax input/output procedure. It is more interesting there is 15% sales tax on the manufacturing of sewing machine parts those are 100 percent made by artisan mistri where value of part made by them range from Rs 10 to 20 approximately.
Rapid technical change, shrinking economic distance, new forms of industrial organisation, tighter links between national value chains and widespread policy liberalisation are needed.
Competition arises with great intensity and we have to compete the situation with use of new technologies and organisational methods and link up to global value chains. The experience of the Tigers of Asia indicates that coherent and carefully crafted policies can accelerate shifts in competitiveness and promote entry into very complex and high technology.
UNO, OECD, EEC, EU, Economic agenda recommends that Ministries of Finance in developing countries should be encouraged to establish an / incentive and tax analysis' unit to develop the analytical capacity, organised arrangements and institutional procedures necessary within the Ministry of Finance to conduct a professional review on tax policies, including international comparisons and each incentive and tax analysis unit should develop a standardised set of analytical skills.
Sewing machine micro industry needs sympathetic attention of FBR high officials for smooth policies to check and control under invoicing persisting in the import of sewing machine and parts. There is no association of tiny sewing machine parts makers or assemblers in the country who could represent their grievances in higher state departments, apart from the mistri engaged in sewing machine part making.
They are afraid to contact with any department saying they will tax them heavily. This hindrance was common years before, but new tax reforms cleared the position but still small artisans, although they pay income tax but are still afraid with state offices.
Micro Industries Development Resource Center Pakistan worked a lot for the development of micro sewing machine industry in collaboration with Engineering Development Board.
It should be appreciated if a Committee by FBR is formed comprising Engineering Development Board Officials to rectify the grievances faced by this sector, particularly the issue of imposing 15% regulatory duty on CKD import of sewing machines which was decided by ECC on 29th August 2007 and control of manipulation in the imports of sewing machine and parts.
The working of FBR for smooth playing field to micro industries will correct the situation where the common man thinks that policies are biased in favour of big industries, elites of society because they own representation in policy formation whereas others feel constraints in judicious formation of coherent approach for masses.
Self-sustaining economic growth based on strong international compositeness, innovation, productivity, and flexibility of resource make a full employment of economy that provides a decent standards of living and quality of life for all citizens, elimination of poverty, and provision of adequate opportunities for young people. Constituting an alternative to emigration are basic needs. We cannot develop without social equity, social justice, social cohesion, and personal security, transparent and participatory governance.
Comments
Comments are closed.