Miftah dangles tax breaks before MNCs that give him export plan

Published May 20, 2022
Finance Minister Miftah Ismail meet members of the business community on Thursday. —APP
Finance Minister Miftah Ismail meet members of the business community on Thursday. —APP

Finance Minister Miftah Ismail on Friday asked foreign multinational companies (MNCs) that operate in Pakistan to present him a plan on exports, promising to provide them "tax breaks".

In a tweet today, he thanked MNCs for paying large amounts in taxes, providing employment and bringing technology in the country.

"However, I request all of them to present to me a plan to export out of Pakistan also. I will give them tax breaks for that," he said.

His tweet comes after the government instituted bans on imports of non-essential luxury items to reduce the exorbitant import bill. Pakistan has been dealing with a perennial deficit of the current account and lately, depleting foreign exchange reserves driven by the fuel subsidy.

In that regard, Ismail shared that the current account deficit for April came in at $623 million, "less than half the average" for the first nine months of the fiscal year. He described the development as a "very good sign for external stability".

"With positive IMF talks underway, we expect a turnaround in the economic situation very soon," he added.

The minister's tweet about offering tax breaks to foreign firms followed a meeting with the chief executive and vice chairman of the Indus Motor Company, which state-run APP reported took place yesterday.

The minister said that the government was committed to provide a "conducive and friendly environment" to investors and businesses for the growth of economic activity and enhancement of exports.

Miftah assured them that the upcoming budget would be business friendly and contribute to the promotion of exports and businesses in the economy, a statement issued by the Ministry of Finance said.

"The government is cognisant of the issues of the business community and hurdles in the expansion of business activities in the country," he added.

The government's emphasis on increasing exports comes after it decided to impose a ban on the import of non-essential luxury items under an "emergency economic plan". The banned items include automobiles, mobile phones, home appliances, meat, fruits, crockery, sauces, dog and cat food, furniture, and confectionaries among others.

Yesterday, Information Minister Marriyum Aurangzeb announced that the decision was taken to "save the country's precious foreign exchange".

"These items are those which are not in use of the general public," she said, emphasising that it was "an emergency situation" and Pakistanis would have to make sacrifices under the economic plan.

The impact of these bans would be around $6 billion, Aurangzeb pointed out.

She said that import orders where the letter of credit had already been opened or where payment had been made would be processed but no newer ones would be entertained.

"We will have to reduce our dependency on imports," she stressed, adding that the government was now focusing on exports. The minister said that under the government's economic plan, local industries would prosper while employment opportunities would also arise.

Economic crisis

Today, the US dollar continued its climb against the rupee, trading at Rs200.50 in interbank trading this morning.

The persistent decline in the rupee's value since last Tuesday has been largely attributed to the country's rising import bill, widening current account deficit and depleting foreign exchange reserves of the State Bank of Pakistan.

In April, imports increased by 72pc, leaving no room for the government to improve its external balance, and the foreign exchange reserves of the SBP further declined by $145 million to $10.16 billion during the week ended on May 13.

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