The PTI government is still in the process of comprehending the grave challenges the country's economy is confronted with but appears to be now better aligning itself to the ground realities, foremost of which is the revenue shortfall in all venues of revenue generation - be it the tax collection by FBR, taxes generated from industry and real estate, exports or investment - both domestic and foreign.
Of the recommendations made in the supplementary bill, five are related to income tax measures, one caters to sales tax, two to customs and one to federal excise duty - all aimed at encouraging investment and revenue generation.
The customs duty has been exempted on import of plant and machinery by greenfield industrial undertakings to provide them an additional inventive and the business income of greenfield industrial undertakings has been exempted for a period of five years. The bill also spares them from minimum tax on turnover, commencing from July 1 onwards.
Furthermore, advance tax on profit paid on Pakistan Banao Certificates, Sarmaya-e-Pakistan Ltd and Duty Drawback Bonds has been waived.
The government has also decided to establish Refund Settlement Company Ltd, a fully-owned entity of the Federal Board of Revenue (FBR), to issue proposed bonds to exporters and other businesses. In order to facilitate exporters and other businesses, outstanding sales tax refunds shall be liquidated through issuance of promissory notes or bonds by FBR.
Incentives have been proposed for banks on advancing loans for agriculture, low-cost housing and micro, small and medium enterprises.
The taxable income arising from additional advances for the tax years 2020-23 will be charged at the reduced rate of 20 percent. The bill also proposes a reduction in tax liability for inter-corporate dividends. It exempts such dividend derived by a company if it avails group relief according to its proportion of shareholding.
Earlier, the government had announced concessions on supply of gas and electricity to special economic zones being set up all over the country.
All the above said incentives are well thought-out and well meaning and should have fuelled the national economy. But, ironically all of this good is not mobilising the industry nor the investors. There appears to be a mysterious status quo. Is it on account of political uncertainty, fear of exposure to accountability to government regulators or frustration arising out of the incompetent, indifferent and corrupt government machinery? Perhaps it is a combination of all.
As rightly identified by PM Imran Khan in his address to the business leaders and foreign missions on 7 March 2019, the weak link in the government reform process is implementation.
Implementation comes from the government entities who are responsible to make things happen on ground. Over the last one decade the governance in all government entities like Securities Exchange Commission of Pakistan (SECP), Board of Investment (BoI), Export Promotion Authority and similar deteriorated significantly.
The government has brought some management change in SECP and BoI by placing competent Chief Executives, but the management below is still stuck in the past slow mode, frustrating the spirit and reforms which the new leadership would like to bring around.
Some of the organisations are still without CEOs. The Export Promotion Zone Authority, Karachi, is one such organisation which is without a CEO for one year. In these organisations financial scandals pop up from time to time.
There is need for a radical change management at least at the first line management to achieve meaningful implementation of the government agenda. It is a great challenge to the government to populate all the special economic zones.
Challenges are grave and the time is running out. The government should now focus on implementation - as rightly identified by the PM himself.
For this it needs to attract talent-based on merit and competence - a process not yet meaningfully commenced so far.
(The writer is former President of Overseas Investors Chamber of Commerce and Industry)