The debate over the merits and demerits of federal budget FY16 will continue till the next budget. However, so far economists believe that the budget is a mixed one. Those businesses that have gained benefits from the budget are declaring it investor friendly, while others are calling it anti-corporate budget.
It seems the Pakistani economy is in the middle of creating multiple emerging industries and the halal meat industry is one of them. Over the years, the governments knowingly or unknowingly stayed away from giving reasonable incentives to this emerging economic sector.
Nevertheless, for the emerging halal meat industry, federal budget FY16 has certainly brought blessings this year around. According to the budget document, the companies that set up halal meat production plants and obtain halal certification by Dec 31 2016 will be exempted from income tax for four years.
The global halal meat market stood at $300 billion in 2014. Pakistan, on the other hand, has exported 49.5 thousand tons of red meat from July to March, according to the Economic Survey of FY15. This export fetched $146 million for the economy, and 29 private sector slaughter houses participated in this export. This was a significant increase over meat exports of $81 million in 2009, but it is still peanuts in comparison to global halal meat market.
Meat industry sources have appreciated the income tax exemption but have urged the government to do more for this emerging sector. Halal industry wants the government to give concessions on machinery and equipment for making the production units more modern so that they could make inroads in the high-end market. They have also urged the government to take back the 17 percent sales tax on poultry and cattle feed.
No doubt the potential of halal meat exports from Pakistan is phenomenal, and the industry can easily surpass the current projection of 2 percent growth. The income tax holiday is a great idea for this emerging industry to establish itself firm on the ground; multiple new players are joining the sector, and some of them are from the major business empires of Pakistan. But it will be wrong for the industry to look towards the government for every single benefit. The infant industry argument doesn't mean exemption from all kinds of taxes. Thou must learn how to stand on thy four feet!