Elusive stability

Published September 7, 2015
Finance Minister Mohamnmad Ishaq Dar chairing a meeting on tax issues in Islamabad on September 3.
Finance Minister Mohamnmad Ishaq Dar chairing a meeting on tax issues in Islamabad on September 3.

AS the private sector’s discontent over government policies starts to spill onto the streets of Lahore and Karachi, Pakistan appears to be inching towards another full-blown crisis with unfathomable consequences.

The situation, many businessmen believe, can be salvaged if Prime Minister Nawaz Sharif’s team acts quickly and decisively to break out of its isolation and win back the disgruntled business community.

“The prime minister has invited representatives of the business community to Islamabad later this week to discuss viable options to prop up investment, production and exports,” a business leader told Dawn.

“It is hard not to be sceptic, as such exercises in the past did not yield results. The focus of the government’s policies — i.e. basically raising money by hook or crook — did not change,” he said.


The federal budget 2015-16 has proven to be an albatross around the neck of the government — former KCCI president Majyd Aziz


Privatisation Commission Chairman Mohammad Zubair was confident that the government would sail through the current difficult patch. “Our opponents are free to wish what they want; the Nawaz government will not only complete its current tenure but we also hope to return to power on the strength of our performance in the 2018 elections,” he mocked the doomsayers who felt that the democratic process was being put at risk because of faulty policies.

“We know the kind of stress the business community is enduring and are open to ideas to resolve all legitimate issues amicably. Yes, the pace of decision-making is slow and needs to be fastened,” he conceded.

“We will not let tax evaders keep the economy hostage. It would be unfair to the law-abiding taxpayers. Besides, the economy can’t afford freeloaders,” he said, reacting to the strike calls by traders.

Over the past two weeks, farmers, milk merchants, oil tanker owners and freight forwarders etc have all registered their protest. The traders have given multiple strike calls. And the textile sector, which had deferred its protest campaign on the government’s assurance last month, is said to be disenchanted over the delay and is said to be charting its strategy to again mount pressure on the government.

“Each sector has its own set of demands. But the overarching issues are the same: a harsh taxation regime; lack of support for stressed businesses; delay in disbursement of tax refunds; and arbitrary economic policy changes that ignore businesses’ input,” said a former minister and a leading businessman from Punjab.

Most business leaders reached for comments in Sindh and Punjab over the evolving scenario were anxious. The big business and multinational executives were comparatively soft towards the government, though they resented the attitude of the economic team leader.

The second tier of businesses and those associated with the service industry were harshly critical but stopped short of giving a verdict against the democratic order.

“The stocks are tumbling; the rupee is weakening; the exports are falling; and profit margins in manufacturing are being squeezed. The terrorist threat still looms; the quality of governance is in the pits; corruption is rampant; and a possible confrontation between the two major parties poses a threat of further fragmentation in a society that is divided along all conceivable dimensions. Yes, we have every reason to feel depressed,” said a former FPCCI president.

FPCCI President Mian Muhammad Adrees was out of the country, and the body’s acting president Abdur Rahim Janoo adopted a diplomatic tone.

“Yes, we are worried and upset and hope for something tangible to transpire from our meeting with the prime minister later this week. The situation is alarming and warrants measures on a war footing. Pakistan and Viet­nam were at about the same level in terms of exports 20 years back. Today, Viet­n­­am’s exports are at $200bn, whereas we have been struggling in the $20-25bn range for the last five years,” Janoo said.

Karachi Chamber of Commerce and Industry’s former president Majyd Aziz saw a method in the madness and thought that the strikes and protests were carefully orchestrated. “The federal budget 2015-16 has proven to be an albatross around the neck of the government. The taxes imposed have irked too many sectors,” he said.

“The attitude of the inefficient Federal Bureau of Revenue and the spin-doctoring by the economic team is multiplying the discontent.” He advised the government “to come out of its self-congratulatory mode and adopt a pragmatic approach. It would be lame to squeeze the private sector for more taxes”.

Writing on tax policy in his blog, Dr Nad­eem ul Haq referred to the “arbitrary taxes on energy, internet, school fees, cars, houses, consumption, mobile phones, bank transactions, airplane tickets, the list just keeps growing. Yet the SROs [and] subsidies to outmoded industries that have not been modernised in decades continue to be finan­ced by these arbitrary taxes. Similarly, the untaxed perks and plots to the henchmen of power grow at taxpayer expense too”.

“The positive remarks of donors splashed in the media fail to impress the people and the business community. For them, the distress is intensifying with diving disposable income/investible resources and the rising cost of utilities. For how long can it go on like this? The government must stop testing the limits,” an irate exporter concluded.

Published in Dawn, Economic & Business, September 7th, 2015

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