Huddle in Q Block over shape of industry bailout

Updated April 02, 2020

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ISLAMABAD: Finance Adviser Abdul Hafeez Shaikh is chairing a meeting through videoconferencing with representatives of the business community on Wednesday.
ISLAMABAD: Finance Adviser Abdul Hafeez Shaikh is chairing a meeting through videoconferencing with representatives of the business community on Wednesday.

ISLAMABAD: The business community on Wednesday asked the government to encourage the State Bank of Pakistan to purchase assets and goods of depressed industries and further reduce the discount rate besides speedy clearance of tax refunds to address liquidity challenges and help mitigate adverse impact of Covid-19 pandemic.

At a meeting with a ministerial team, the leading businessmen also advised the government to allow courier services and online businesses to resume their activities and extend maximum support to small and medium enterprises (SMEs) to pass through challenging times.

Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh chaired the meeting via video link with the business community. Adviser to PM on Commerce and Industry, Abdul Razzak Dawood also attended.

Informed sources said that representatives of big industries maintain that they could sustain their workforce for 2-3 months but the government would have to step in to protect workers if the prevailing conditions persist longer. They suggested that many central banks including China and the US were buying assets, shares and goods of companies facing challenging times which could be a win-win for both the industry and the State Bank in the longer run.

The textile industry sought government support them and demanded revival of erstwhile zero-rated regime or at least 70pc of input tax refunds upfront. The export sector also highlighted anticipated losses due to shortage of dollars and reported they did not have more than one month of liquidity and asked the government to bear at least 30-40pc of their wage bill.

A section of the participants also told the government that recent rate cut by the central bank was extremely insufficient and devaluation of currency was equally unhelpful unless the government had a firm hand on foreign exchange control. They also suggested deferment of their loans and interest payments for 6-12 months instead of 3 months announced by the government.

One of the leading businessmen told Dr Shaikh that their sales had come to a grinding halt, creating serious liquidity crisis which could be significantly improved if utility bills overcharged to them were refunded by utility companies. He also demanded effective government intervention to facilitate transportation of ready goods against export orders.

Dr Shaikh wanted the business leaders to suggest how to make best use of Rs200 billion support for factory workers and daily wagers and Rs100bn for SMEs and agriculture. It was noted that protection of SMEs workers was the biggest challenge given its larger part in informal areas including hotels, restaurants, transport and retail businesses.

Some participants suggested the provision of relief package to voluntary registration of their businesses and workers as well as use of income tax data of those enterprises to reach out to daily wagers. It was also noted that offices of the district administrations and EOBI could also be helpful but fiduciary concerns would have to be addressed. Some participants also advised the government to facilitate them through subsidised bank loans by the State Bank based on a threshold of turnover or the number of employees.

The business community shared the current situation of their businesses and highlighted that daily wagers and SME sector was the worst hit due to the ongoing crisis.

The participants deliberated upon a feasible plan to distribute the amount earmarked in the Prime Minister’s relief package for the daily wagers and laborers (Rs200bn) to support them in the scenario of lesser business activities in the country.

The finance adviser directed that the mechanism for distribution of monetary assistance should ensure transparency and simplicity of procedures which poor daily wagers may get relief without any complication.

The business representatives requested for speedier refunds for providing them enough liquidity to manage their activities.

The adviser directed FBR Chairperson Nausheen Javed to expedite the process of refunds so that the business community is provided with maximum relief and promised disbursement of Rs100bn refunds immediately.

The meeting was attended by Dr Waqar Massod Khan, Ali Jameel, Mian M. Mansha, Shahid Hussain, Shahzad Saleem, Bashir Ali Muhammad, Ali Habib, Aurangzeb, Tariq Saigol, Almas Hyder, Shahid Soorty, Fawad Anwer, Saqib Sherazi and Tariq Habib. Senior officials of ministries of finance and commerce and the FBR were also present.

Published in Dawn, April 2nd, 2020