The provincial government of Khyber Pakhtunkhwa has demanded special concessions to its industries on the account of conflict zones in income, sales and customs duty to attract local and foreign investments and revive economic activities in the province.
Talking to Business Recorder, Assistant Economic Advisor to Industries Department, Munir Gul confirmed the writing of a formal letter to federal government for seeking incentives for its industries.
He said that the Chief Minister Pervez Khattak in his meeting with Federal Minister for Finance, Ishaq Dar held in February 2015 has also taken up the matter of the granting of incentives for industrial sector.
The provincial government has demanded either 100% waiver or 50% of the existing rate for all industries, 50% exemption of sales tax for all industrial estates, full exemption from income tax including turn over tax and 50% concessions of the kibor on all bank loans.
The Assistant Economic Advisor to Industries Department said that Khyber Pakhtunkhwa is in the clutches of terrorism in different manifestation. The phenomena of terrorism on one hand, he said has abruptly changed the socio-economic and geo-political situation of the country and widened the fiscal deficit and halted economic growth of Khyber Pakhtunkhwa.
The most affected sector as result of terrorism activities in Khyber Pakhtunkhwa is industry and huge number of industrial units have either been shifted to Punjab or remained closed. This situation has resulted unemployment and reduction of government taxes.
The manufacturing sector in Khyber Pakhtunkhwa has been hard hit by frequent incidents of terrorism and has created an uncertain environment resulting into low level of economic growth. Small and medium size enterprises are a key area of manufacturing activity in Khyber Pakhtunkhwa.
In the wake of Afghan War 1980's the industrial sector of Khyber Pakhtunkhwa was severely affected. During 1989-90 to offset adverse impact of the war against terrorism, the federal government announced 8-year income holiday, exemption from sales for five years and exemption from customs duty on important machinery.
Besides, those exemptions, additional incentives were also provided to Gadoon Industrial Estate to eliminate poppy cultivation and create employment opportunities. The lucrative incentives extended to Gadoon Industrial Estate were included duty free import of raw material, 50% concession on electricity tariff and provision of loan at lower mark up.
These incentives of the federal government stimulated the pace of industrial development in Khyber Pakhtunkhwa resulting in the establishment of 397 industrial units with an investment of Rs 27.921 billion and direct employment opportunities for 14,284 workers in Hattar, Haripur and Gadoon Industrial Estate. But, unfortunately these incentives were prematurely withdrawn and industrialisation process suffered a setback.
The withdrawal of incentives by the federal government has virtually converted the industrial estates into graveyard. More than 700 units out of 2299 have so far been closed. Furthermore, moratorium on fresh gas connections to the industrial units and power load shedding has also resulted severe negative impact on Khyber Pakhtunkhwa's industrial sector.
He said that in light of such situation, Khyber Pakhtunkhwa deserves a sympathetic edge of revival of economic growth and to build up confidence of the investors, failing which the position would be further deteriorated.