The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has recommended a 'One-time Amnesty Scheme' aimed at utilisation of hidden liquid assets in the mainstream of the economy to stop the flight of capital from Pakistan.
It will help accelerate the economic growth, said outgoing president of FPCCI, Abdul Rauf Alam, in the president's Economic Review 2016. He also pointed out that several developing countries had introduced amnesty scheme during last three years to create informational efficiency in financial markets and growth of economy. He said that the objective of the proposed 'One-time Amnesty Scheme,' is not to provide a shelter to corrupt practices but to bring the frozen or isolated liquid assets into mainstream of economy for its utilisation to provide funds for the growth of national economy, construction of badly-required infrastructure, provide employment opportunities at large scale.
"It is estimated that the national exchequer will earn additional revenue of Rs 37 billion by acting upon this proposed scheme that will help enhance the size of national economy," he said referring to the world-wide examples that such schemes were successfully implemented in different parts of the world and had become the source of boosting for their economies. Hence, the FPCCI's outgoing president suggested that a one-time amnesty scheme should be introduced subject to certain conditions. The salient features of FPCCI recommended scheme are as follows:
1- Scheme will not be applicable for those assets and transactions which are currently in litigation process.
2- A minimum 0.5% tax will be levied on those assets to be willingly made public before 31st March, 2017. However, such declared assets/money should be invested or utilised for the following purposes:
a) Investment in knowledge-based hi-tech industry, research and development projects, engineering industry and auto industries.
b) Investment in CPEC-related economic zones.
c) Any investment in Gwadar city.
d) Investment to acquire strategic shares of multinational hi-tech and IT-related companies;
e) Investment in any project in all over Pakistan subject to provision/generation of minimum 50 additional employments through recognised employment exchanges or human resource management companies.
f) If the assets are invested in the modes of Islamic Financing/formation of new Modaraba Management Companies (as defined by Modaraba Ordinance 1984) and the objective of modaraba management company is to invest in the project to reduce the poverty or to improve the health and educational standards or to achieve those targets of Millennium Development Goals (MDGs) which have been described by the Government of Pakistan.
g) Investment in the modes of Islamic Financing for participation in those infrastructure development-related projects which are commercially viable. It is expected that Islamic modes of financing will be applied as a substitute of Development Financial Institutions (DFIs) and their contribution in the economic development will be significantly improved.
h) The money may be utilised or paid to the charitable institutions.
i) Investment in establishing warehouses of Pakistani products abroad.
3- All declared assets under this scheme other than 'aforesaid purposed will be exempted from tax investigation if these assets will be declared before 31st March, 2017, and 2% tax will be imposed on their declared value, according to the proposed amnesty scheme.
He said that it was observed that outflow of capital from Pakistan reported by the United Nations Conference on Trade and Development (UNCTAD) was US $164 million from January 2010 to December 2012 which was raised by 100% during the last three years.
He said that the figures reflected the official statistics of outflow of capital only whereas unofficial outflow of capital was much higher than these recorded statistics.
"The increasing outflow of capital from Pakistan may surpass the inflow of Foreign Direct Investment (FDI) and in this situation Pakistan will become a country where net flow of FDIs will be negative," he said, adding that this situation would be dangerous for the economy where trade deficit was growing and workers remittances were declining. Obviously, hyperinflation and extreme poverty would be the ultimate consequences of this situation. He proposed that the outflow of the capital from Pakistan must be stopped to avoid that drastic situation.
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