HAVING exhausted all other sources to raise funds — urging overseas Pakistanis to contribute $1000; facing an ice-cold attitude from ‘friendly countries’ towards a bailout loan and selling some low-value moveable assets (cars and buffaloes) — the government has had to swallow a bitter pill and return to the International Monetary Fund (IMF).
Anxious to quickly deliver on its promise of bringing back the “looted wealth” of the country, the PTI government appears to be jeopardising itself.
Most analysts agree that in putting up a list of people who own assets abroad without first determining their legitimacy was a blow on investment confidence, while Prime Minister Imran Khan, in a series of tweets last Friday, once again urged Pakistanis abroad to invest in the country.
But the two major pre-requisites for inflow of Foreign Direct Investment (FDI) are an investor’s faith in the safety of his funds and a stable return. So far both are lacking.
A week ago, members of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) could be heard grumbling at a meeting that businessmen were being harassed by the Federal Board of Revenue (FBR) and the Federal Investigation Agency (FIA), who were asking them to provide details of properties they owned.
Anxious to quickly deliver on its promise of bringing back the “looted wealth” of the country, the PTI government appears to be jeopardising itself
The Federation’s Senior Vice President Syed Mazhar Ali Nasir complained that despite properties having been declared under the amnesty scheme announced by the government in 2017-18, business persons were receiving letters from government agencies. He recalled that those opting for the scheme had been assured that the ‘source’ of purchase of property would not be asked.
The Ministry of Finance was said to be sour over the failure of the tax amnesty scheme declared on April 10 by the previous government which, according to a July 12 report of the ministry, had evoked a ‘poor response’ from offshore investors.
In September, FBR Chairman Muhammad Jahanzeb Khan told the Supreme Court that it had issued notices to individuals possessing 225 properties in the UK; while Mr Shabbar Zaidi, senior partner at the accountancy firm A.F. Ferguson & Co, placed a report before the court that revealed properties owned by Pakistanis worth $150 billion in the UAE alone.
The apex court was also told by the revenue board that the FIA had taken cognisance of 2,750 undisclosed properties of Pakistani nationals held in the UAE in different names and inquiries were under way. Mr Zaidi informed the court that wealth was transferred outside Pakistan via two channels: “hawala and banking routes”, the later referring to money moved abroad by showing it as (tax-free) agricultural income.
Earlier, the accountancy firm had revealed the break-up of $150bn held by Pakistanis abroad as follows: investment in foreign real estate $40bn; deposits in foreign banks $40bn; stocks held in Pakistani companies $20bn and other assets including manufacturing concerns $50bn.
Mr Zaidi, talking to this reporter last Thursday vehemently brushed off suggestions that the probe of wealth stashed abroad was causing discontent among the business class. “If it is, so be it,” he said.
A major property dealer thought that business persons were perturbed over the list of 3,550 individuals, released on Oct 4, who were identified as owning properties in Dubai.
The 64-page list contained names of the owners of properties, addresses, mobile telephone numbers, landline numbers, email addresses, project names, property names and nationality. The last column carried the word Pakistani for those property-holders who held a Pakistani passport.
But real estate dealers said that the list could not be considered authentic as it was not issued by the Dubai government.
Mr Majyd Aziz, president Employers Federation of Pakistan insisted that ‘dissemination of foreign property holders, if declared under the amnesty scheme, should be strictly banned’.
He said that the uneasiness (of the business community) increased after the list of Pakistani origin owners of Dubai properties went viral on WhatsApp. “This so called freedom of information mechanism used by government agencies was not appreciated in the true sense,” he argued.
Many other stalwarts of the community and analysts concurred. “Every individual has a right to privacy, while the system should identify only those who have amassed assets through illegal means,” opined a textile mill owner.
Another person in a different trade pointed out the social and business ramifications on the persons named in the list, particularly if they had acquired property through official channels while fully complying with legal procedure.
In an already precarious economic position, the government needs to try persuasion and confidence building measures if it wishes to attract further investment, instead of continuing down the path it seems to have chosen of alienating what investors do remain in the country.
Published in Dawn, The Business and Finance Weekly, October 15th, 2018