KARACHI, June 12: The trade and industry have termed the budget 2004-05 "investment and growth-oriented". The business community is of the view that it will help cut the cost of doing business in Pakistan.
"Reduction in power rates, cut in customs duties on raw material and capital goods will improve our competitiveness in the world market," observed the trade and industry.
While hailing the budget proposals presented by Finance Minister Shaukat Aziz on Saturday, the businessmen, however, called upon the government to improve law and order situation without which objectives of a "growth and investment-oriented" budget could not be achieved.
Former FPCCI chairman S.M. Muneer says: "The business community is ready to make the most of this remarkably good budget but that requires an immediate improvement in the law and order situation."
Talking to Dawn he also demanded that the rate of sales tax be reduced from 15 to 10 per cent to make the budget more investment and business-friendly. "If the sales tax rate is reduced I am sure it will not impact adversely on revenue collection. It will rather increase it," he remarked.
Mr Muneer has appreciated the budgetary measures taken to promote agricultural and industrial sectors with particular emphasis on small and medium enterprises and housing and construction sectors.
He said the increase in annual development spending, particularly in education and health sectors would make a dent in poverty and improve the quality of life. He also hailed the announcement that Pakistan would graduate from the IMF programme by the end of this year.
"The business community has helped the country reach this stage by increasing exports and industrial production," he said.
Pakistan Commodity Traders Association Chairman Raees Ashraf Tarmohammad also appreciated the removal of three per cent further sales tax levied on suppliers of goods to unregistered firms and individuals.
Mr Raees said that by reducing duties on many goods such as tea, betel nut, etc., will help check smuggling. "Duty cuts on tea from 20 per cent to 10 per cent and on betel nut from 25 per cent to 5 per cent will also generate revenue for the government."
He says annual import of betel nut stands at Rs1 billion, and if the entire quantity is imported through official channels it will generate more revenue. Similarly, all spices will also be imported through official channels after cutting the duty, ranging from 10, 15 and 20 per cent, to five per cent only.
All Pakistan Textile Mills Association Chairman Waqar Mannoo said the abolition of sales tax on ginned cotton would resolve the issue of refund. He said it would also help get rid of menace of 'flying invoices'.
Mr Mannoo said that Aptma's demand for allowing input cost on diesel used by the industry on generators was met. And a reduction of sales tax from 20 per cent to 15 per cent is yet another major move, he added.
"The revival of sick units under the SBP BPRD circular and exempting them from income tax will help the industry stay in business." Mr Mannoo was highly appreciative of the finance minister's proposal to remove the condition of 15 per cent payment before filing an appeal.
Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) Chairman Tahir Aziz said the budget proposals were aimed at cutting business cost that would help the textile industry meet the challenges of WTO's free-market regime.
"By fixing a single refund instalment, exporters will benefit a lot because in the past there were two instalments that blocked exporters' funds and wasted a lot of time."
Mr Aziz said the exemption of commercial importers of capital goods from six per cent duty would help investors and industrialists get plant and machinery from the local market at the same rate.
He said that concessions and relief measures provided in the budget would help generate more revenue because once the industry came in full production it would give more revenue to the national exchequer.
Pakistan Leather Garments Manufacturers and Exporters Association (PLGMEA) Chairman Fawad Ijaz said the removal of sales tax on raw skins and hides would help tanning and leather goods manufacturers to grow and enhance exports.
He said the reduction of sales tax from 20 per cent to 15 per cent on chemicals would help boost exports of leather goods. Mr Ijaz said the removal of certification condition for installation of duty-free plant and machinery would not only save time of the business community, but would also check corruption.
"The move to check under-invoicing by confiscating the goods if not paid higher cost by up to 20 per cent will help the government generate more revenue and check leakages at the customs stage.
Cut in cost of activation charges of cell phones from Rs2,000 to Rs1,000 will enhance the use of mobile phones and generate more revenue for the government.