Tax harmonization, policy consistency vital for investments, business environment: Experts
ISLAMABAD ( Web News )
Tax harmonization in Khyber Pakhtunkhwa is crucial to prevent misuse of government’s tax incentives and support for sustainable development of indigenous businesses, said Dr. Vaqar Ahmed, Joint Executive Director, Sustainable Development Policy Institute (SDPI) while speaking at public-private dialogue on “Business Regulatory Environment in Newly Merged Districts, Khyber Pakhtunkhwa” organized by SDPI at local hotel today.
He said that the newly merged districts of FATA offer immense economic and trade potential and have dynamic agricultural value chains which must be harnessed. He stressed that the government of Khyber Pakhtunkhwa must conduct sector diagnostics particularly in businesses working in the sectors of agriculture, trade, transport and warehousing to scale them up from micro to small and medium stage.
Member Provincial Assembly of Khyber Pakhtunkhwa, Syed Ghazi Ghazan Jamal stressed on improving uptake of renewable energy by domestic and commercial consumers. He said that billions of rupees are being spent on expanding distribution networks and grid systems to support businesses which can be avoided by promoting renewables. He stressed on small renewable power projects and reducing financial burden for provision of power to citizens through grid electricity.
Dr. Sebastian Paust, Counsellor/Head of Development Cooperation, Embassy of the Federal Republic of Germany expressed that German cooperation has keen interest in building the capacity of technical training institutes in Pakistan. He said that Pakistan should review confidence building measures among German investors due to business regulatory inconsistencies.
Mr. Adnan Jalil Executive Member, Peshawar Chamber of Small Traders and Industries said prime responsibility of the government is to provide 3.5% NFC share to ex-Fata districts to ensure continuity of development. He suggested that future policies must be formulated in consultation with the provincial business community to ensure policy homogeneity and standardized growth. He further said that this will encourage local entrepreneurs and businesses to invest rather than taking the route of CSR activities. He also encouraged the government to expand horizons from Afghanistan and increase cooperation with Central Asian states.
Sohail Jan from SMEDA informed that SMEDA has dispersed the assistance through US-Aid projects in the newly merged districts for supporting businesses. He pointed out a financing gap by informing that in response to 40,000 applications received, SMEDA has only managed to disperse $ 3 million in grants. He pointed out that these districts are confronted with internet connectivity challenges, lack adequate micro-financing network, and insufficient banking infrastructure which create obstacles in strengthening the business environment.
Nazish Afraz, Program Economist, SEED suggested weeding out inappropriate regulations which negatively impact growth of sectors. She suggested targeted fiscal and financial incentives to address activities with spill-over impacts keeping in mind interest of investors and market dynamics and further stressed on policy continuity for strengthening the business environment.
Haider Asfandyar, informed that Gulf states have expressed keen interest in investing in KP particularly in cottage and agri-based and food processing industries while Italian investors are eager in investing in marble cutting. He suggested harnessing this opportunity by connecting these areas with SEZs in urban centres to enhance their export capacity. He further said there is much potential in these districts in terms of logistics and can be used as trade corridors. He also suggested redistribution of revenue collected from these districts to encourage investments, formalization and create an overall positive environment.
Fazal Karim, Deputy Collector, Khyber Pakhtunkhwa Revenue Authority – KPRA recommended against extension of tax exemptions granted in these districts to create a level playing field for businesses and to counter the dominance of non-local business entities. He further said that uniform taxes will encourage formalization and documentation of businesses and their transactions.
Mujahid Saleem Farooqi, Project Management Specialist, Economic Growth, USAID expressed that lack of government ownership in implementation of policy recommendations is leading to donor fatigue, and financial exhaustion which can negatively impact donor support. He called upon federal and provincial governments to ensure implementation of policies and incentivizing formalization of businesses in these districts which will enhance the share of the province in national GDP.
Sana Khan, from Planning and Development Department Khyber Pakhtunkhwa informed that master plans for these districts are under deliberation and will improve the business environment of the areas. She suggested creating awareness among locals on the potential positive impacts of land-use interventions in terms of economic and employment development in the areas.