KARACHI, July 27: Federal Finance Minister, Shaukat Aziz, on Saturday said the increasing foreign reserves of the country have direct positive bearing on the common man.
Addressing the office bearers and members of the SITE Association of Trade and Industry here, he said without present level of foreign reserves, the dollar exchange rate would have gone over Rs75, pushing the inflation up out of proportion vis-a-vis price spiral.
He said the economic situation has improved a lot due to restoration of the confidence of the investors. It is not the government but the private sector, which made huge investments in textile sector last year. The enhanced activity of manufacturing sector reflected the recovery of the economy, he added.
Shaukat Aziz was optimistic about further improvement in the economic conditions, especially when the debt servicing element, reflected in the tariff of Independent Power Plants (IPPs), will end after 2004. He said the water shortage has subsided, which will help in generating cheaper power this year, bringing cost of production down.
The operation of the Ghazi Brotha’s 1400 mw hydel power generation facility by June next will also leave a soothing effect on the economy, he maintained.
Responding to a query about smuggling, the finance minister said, the only effective way to curb this menace was to reduce duties on smuggling prone items. “We are already moving in this direction,” he claimed adding that lowering of duty on TV assembly, made smuggling of TV sets non-feasible.
The federal minister informed them that a Chinese firm is installing TV manufacturing plant in Lahore, which will eliminate the chances of smuggling of this item while the TV production has already multiplied in the country after lowering the duty rate.
About the income tax system, he said the new income tax law is simple and clear. It does not need the tax payer to contact the tax officials once return is submitted and receipt is issued. However, tax advisers were against the new law as it has reduced their role of advisory, he added.
Talking about the customs, Shaukat Aziz said the intelligence section of the customs will be replaced with the CBR vigilance wing to monitor the market activity, so that the duty structures could be adjusted according to supply of goods in the market. This will help discourage the smuggling, he hoped.
He said the factor of in-put cost was the same for all non-oil producing countries. However, he said the services sector after privatization, will be in the hands of the private sector, which can improve its efficiency.
“We are offering banks to the private sector to run them successfully, lower the interest rates and ensure good support to the business activity”, Shaukat said.
The Finance Minister said the Government was quite sensitive to check the dumping but want to prepare its industry to become competitive at global level to survive after 2004.
Responding to a question on Employees Old-age Benefit Institute (EOBI), he said the law will be approved within six weeks, which will give a two years time to the industries. After two years, the EOBI charges will be declared in returns under self assessment scheme, keeping the EOBI officials away from the factories, he explained.
Chairman of SITE Arshad Vohra, former Chairman Zikraya Usman and Zubair Motiwala also spoke on this occasion.—APP