The briefing on inflation to the Senate Standing Committee on Finance was postponed on Wednesday, as the committee outrightly rejected the viewpoint of Ministry of Finance that Ministry of Planning is the competent government department to give briefing on the subject.
During the committee proceedings, members of the committee were surprised to hear from additional secretary finance that the ministry cannot give briefing on inflation because Planning Ministry is the relevant department. "We do not have inflation expert at present available in the committee meeting," he said.
Senators Ayesha Raza Farooq and Sherry Rehman objected that the subject of inflation falls within the domain of Ministry of Finance. The Statistics Division may be responsible for maintaining the data of inflation, but it is the prime responsibility of Ministry of Finance to deal with the inflation issues in broader prospective.
Senator Mohsin Aziz said why the Ministry of Finance was saying that the inflation was the subject of Planning Division. He said IMF loans and conditionalities were a different subject and inflation was another subject. Senators Ayesha said that at present the inflation was touching the double digit and poor people were unable to fulfil basic food requirements.
On the issue of Islamic banking, the State Bank of Pakistan (SBP) will invite head of Shariah Advisory Committee to brief the Senate Standing Committee on Finance on the reasons behind profits of Islamic banking industry. Chairman of the committee Farooq H Naek said that Finance Minister Asad Umar must realise the importance of the Senate committee and brief the committee on IMF conditions and inflation in the next meeting.
The SBP officials informed the committee that the Islamic banking industry was playing a very important role in the development of the banking sector. Twenty-two institutions are providing Islamic banking services in the country with a network of 2,900 branches across the country. The demand of the Islamic banking has considerably increased in the country with a profit of Rs 24 billion.
The SBP officials said the different factors were responsible for increase in the profits of the Islamic banking industry, as its base was small as compared to conventional banking. Islamic banking industry is an evolving industry, which is moving towards consumer housing and finance. The overall profitability of the Islamic banking industry has been increased. There is an increased demand of financing in the Islamic banking industry.
Senator Mohsin Aziz asked the SBP officials whether or not the mark-up rates in Islamic banking industry have increased. Farooq H Naek asked the SBP to give a comparison of Islamic banking industry with the conventional banking sector. "There is a considerable increase in the profitability of the Islamic banking industry and we need a presentation on the said issue," he added.
Endorsing the proposal of the committee, the SBP officials said the SBP would give a presentation on the Islamic banking industry. The SBP will also invite head of Shariah Advisory Committee to come in the next meeting of the committee.
To a query, an official of Finance Ministry informed that the Finance Minister Asad Umar would be out of the country from April 21-29. The chairman of the committee directed the Finance Ministry and FBR to examine tax incentives and concessions to the tourism industry of the country.
Federal Board of Revenue (FBR) Chief Sales Tax Hamid Memon informed the committee that the tourism was a services related industry which fell within the domain of provincial revenue collecting agencies. "Tourism is a services activity which does not fall under the jurisdiction of the FBR," Hamid Memon said. The FBR chief sales tax explained that Balochistan Revenue Authority (BRA) was the competent authority to deal with the sales tax collection from coastal areas of Balochistan. Similarly, Sindh Revenue Board (SRB) is the relevant board to deal with the tourism industry in Sindh.
He said the exemption of federal excise duty (FED) was available on the domestic air tickets for flights to Balochistan coastal areas. There is no specific income tax related exemption to the tourism industry, but incentives are available to hotel, transportation and other industries relating to the tourism.
Senator Ayesha Raza Farooq said the holistic view should be taken for granting incentives to the tourism industry in the coastal areas of Balochistan.
The FBR member customs policy said the concessionary rate of customs duty of 3-5 percent was applicable for hotel industry in Gwadar and similarly concessionary rate of 11 percent customs duty was applicable on the pre-fabricated rooms for tourism industry.
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