ISLAMABAD, May 11: The government wants to help revive private sector investment in the country but has no plans to offer new fiscal incentives in the budget for 2007-08 as was being anticipated by various business and trade bodies.
Informed sources said on Friday that while the government was considering offering an "improved environment" for further deregulation, liberalisation and privatisation during the next financial year, it was not contemplating any proposal to extend new fiscal incentives to the private sector.
The government, they said, had already provided a host of tax concessions and incentives to the private sector which unfortunately remained shy and failed to make a considerable investment in the domestic economy.
The new budget would deal with the issues of high prices of utilities and removing various kinds of bottlenecks, red-tape and unnecessary administrative measurers.
"But one should not expect fiscal incentives for promoting private investment during the next financial year," a source said.
State Minister for Finance Omar Ayub when contacted told Dawn that the government had already provided necessary support to the private investors to increase their investment in the country.
In this regard, he referred to private sector credit which was a record high in recent years and said the credit demand of the market was being adequately met by the central bank.
He said the private sector needed to improve its competitiveness rather than banking on the government which had already gone far away to oblige the investors in terms of offering them increased credit and the level playing field.
"The private sector should improve its management structure," he said, adding the companies needed to delegate more powers to their boards so as to ensure professionalism and transparency.
Mr Omar Ayub said that multi-national companies always looked towards Pakistan's private sector for establishing partnership. But when they did not find improved management structure in the local companies, they hesitated to have joint ventures with them.He said those multi-nationals which did not have the problem of cash flows, they have readily been investing in the country without any hesitation.
"But those multi-nationals who do not have much resources look for cooperation with local companies," he said, adding that unless boards of the companies were not fully empowered, foreign investors would remain shy to have collaboration with the private sector.
The boards of directors of the companies should not get themselves involved in micro management and this is how they could have greater collaboration with foreign investors, he believed.
Secretary, Statistic Division, Asad Illahi, when contacted, said that there was a huge need for increasing private sector investment. But he also did not believe that the private sector needed to be given new fiscal incentives and that it should first improve its infrastructure and have business data to be comparable with international companies.
"The board of the companies are family controlled and need to be professionally controlled," he said.
He pointed out that transparency and professionalism should be improved along with ensuring competitiveness of the private sector.
He said that the statistics division had adopted a pro-active strategy to make the organisation more effective and efficient aimed at promoting professionalism in the country.
