KARACHI: The Karachi Chamber of Commerce and Industry (KCCI), in a letter to Prime Minister Imran Khan, has demanded a special incentive package for all sectors of industry and Small and Medium Enterprises (SMEs).

President KCCI Agha Shahab in the letter appreciated the Special Incentive Package for Construction Industry announced on April 3, 2020, which has been widely welcomed by the Business Community, particularly those associated with the Construction Industry.

However, the benefits of concessions granted to one or two specific sectors will neither reach the majority of trade and industry nor provide relief to common man. In the present extra-ordinary circumstances, it is necessary to provide across the board incentive package for investment in all sectors of trade and industry, and the SMEs which have a major contribution to GDP and Tax revenues.

It is a well-known fact that the black economy in Pakistan is twice the size of documented economy and due to the present coercive tax regime and laws, a very large amount of capital is blocked in idle investments.

In view of the prevailing global economic crisis and its negative impact on Pakistan, it is essential to release the blocked capital and encourage investments into productive economic activities such as industry and trade.

“We, therefore, propose to formulate an across the board incentive package encompassing all sectors of economy, and recommend the following measures:

  1. No questions to be asked for all investments in capital goods, raw materials, premises, acquisition of land and building for industry up to 30th June 2022.
  2. Reduction in rates of GST from 17 percent to 9 percent.
  3. Reduction of WHT on all supplies by manufacturers and traders from current 4.5 percent to 2 percent.
  4. Reduction in policy rate to 7 percent in line with other countries to stimulate the economy.
  5. Remove anomaly in rates of WHT on import of raw materials by industry and commercial importers and apply flat rate of 2 percent on both, to support the SMEs.
  6. Refinance the deferred import bills which are due for payment through banks at 5 percent mark-up.

Many other countries have taken initiatives to support their economies and announced incentive packages worth trillions of dollars to bail out the businesses which are going to suffer due to recession triggered by COVID-19 pandemic. Even the Bangladeshi government has announced an across the board relief package of $8.6 billion which includes significant support to SMEs.

It is therefore high time that the government of Pakistan should consider out of box solutions to stimulate the economy so as to minimize the impact of a global recession and prevent massive unemployment in Pakistan.

Moreover, KCCI in a separate letter to Advisor on Finance Abdul Hafeez Shaikh urged to remove the condition of CNIC copy on supplies.

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