ISLAMABAD: The Overseas Investors Chamber of Commerce and Industry (OICCI) has submitted proposals to the government to reduce fiscal deficit of GDP to 5 percent or less and resolve issues which are disincentivising local and foreign investors.
In a letter to Muhammad Aurangzeb, the newly appointed Finance Minister, Abdul Aleem, CE/Secretary General OICCI appreciated some bold decision taken recently by the outgoing interim government, adding that many of these transformative efforts need to be further improved.
The OICCI has submitted the following measures to reduce the fiscal deficit substantially to 5 percent or less of the GDP: (i) controlling SOE losses, roughly Rs 01 trillion annually, by kick-starting privatization and reforms in few selected strategic cases; (ii) boosting the tax to GDP ratio to healthy double digits in the next few years, as already achieved by other regional economies. The number of taxpayers to be increased from 3 percent currently to minimum double digits.
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This will require a strong commitment and visible action from the authorities facilitated by use of technology, including AI tools, towards broadening the tax base to all sectors of economy and alleviating the extra burden on the existing organized sectors;(iii) massively simplify Ease of Doing Business especially in the area of taxation regime as well as reducing the regulatory burden;(iv) taking measures to reduce the government footprint and critically scrutinizing the ongoing development projects; and (v) ensuring predictable, consistent and transparent policy and its transparent implementation.
The OICCI further urged visibly reducing the number of regulatory bodies in line with other similar economies. Overall Pakistan appears to be an over-regulated economy, which discourages initiative and investment by local and international investors/entre-preneurs.
Other proposals are: (i) digitization of government operations and service delivery mechanism. This will bring efficiency and reduce compliance and governance costs; (ii) investment in human capital by focusing on education, skill development of the youth and encouraging women joining the workforce; and (iii) streamlining of tax anomalies (such as Super Tax on top of high rate of corporate tax, piling up of tax refunds, minimum tax on regulated/low margin industries, higher rate of tax on salaries, etc) and other operational issues (such as continuing remittances challenges, unsatisfactory coordination of federal and provincial authorities, etc) that are disincentivising local and foreign investors.
As the first port of call for foreign investors seeking a neutral view on opportunities in Pakistan, the OICCI has since 2023 been actively working with McKinsey & Company, the international management consultancy firm, to offer valuable global insights to benefit Pakistan’s investment ecosystem. The results of OICCI and McKinsey report for few selected sectors will be duly shared with Finance Minister and the GoP once finalized, Secretary General OICCI added.
Abdul Aleem also extended an invitation to the Finance Minister to visit OICCI for an interactive session with some of the leading foreign investors in the country, adding that such dialogue will be instrumental in shaping policies that promote a conducive environment for investment and drive sustainable development.
The OICCI further noted its interest in its letter in Finance Minister’s recent statement about the key challenges to the economy and expressed confidence that given support by relevant stakeholders and Finance Minister’s determination, the GoP will be able to steer the economy to a path of growth and prosperity.
The OICCI is the largest chamber of commerce in Pakistan in terms of economic contribution with about one third of the total tax revenue coming from these 210 foreign investors who have also in the past ten years invested an additional US$ 22 billion in the country, beside transferring technical and managerial best practices.
Copyright Business Recorder, 2024
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