Tax harmonization in Khyber-Pakhtunkhwa is crucial to prevent misuse of the government’s tax incentives and support for sustainable development of indigenous businesses, said Dr. Vaqar Ahmed, Joint Executive Director, of the Sustainable Development Policy Institute.
Dr. Ahmad was speaking at a public-private dialogue on “Business Regulatory Environment in newly merged districts, Khyber-Pakhtunkhwa” organized here by SDPI. Dr. Ahmad said that the newly merged districts of FATA offer immense economic and trade potential and have dynamic agricultural value chains which must be harnessed. He stressed that the KP government must conduct sector diagnostics, particularly in businesses working in the sectors of agriculture, trade, transport, and warehousing to scale them up from micro to small and medium stages.
MPA Syed Ghazi Ghazan Jamal stressed improving the uptake of renewable energy by domestic and commercial consumers. He said that billions of rupees are being spent on expanding distribution networks and grid systems to support businesses which can be avoided by promoting renewables. He stressed small renewable power projects and reducing the financial burden for the provision of power to citizens through grid electricity.
Dr. Sebastian Paust, Counsellor, Embassy of Germany, observed that his country had a keen interest in building the capacity of technical training institutes in Pakistan. He said that Pakistan should review confidence-building measures among German investors due to business regulatory inconsistencies.
Adnan Jalil Executive Member, of the Peshawar Chamber of Small Traders and Industries, said that the government should provide a 3.5% NFC share to ex-Fata districts to ensure continuity of development. He suggested that future policies must be formulated in consultation with the provincial business community to ensure policy homogeneity and standardized growth.
Sohail Jan from SMEDA informed that SMEDA dispersed the assistance through US-Aid projects in the newly merged districts for supporting businesses. He pointed out that in response to 40,000 applications received, SMEDA managed to disperse $ 3 million in grants. He opined that these districts are confronted with internet connectivity challenges, a lack of adequate micro-financing networks, and insufficient banking infrastructure which create obstacles to strengthening the business environment.
Nazish Afraz, Programme Economist, SEED, suggested weeding out inappropriate regulations which negatively impact the growth of sectors. She suggested targeted fiscal and financial incentives to address activities with spill-over impacts keeping in mind the interests of investors and market dynamics and further stressed policy continuity for strengthening the business environment.
Haider Asfandyar informed that Gulf states expressed keen interest in investing in KP particularly in cottage and agri-based and food processing industries while Italian investors are eager in investing in marble cutting.
Fazal Karim, Deputy Collector, KP Revenue Authority recommended against the extension of tax exemptions granted in these districts to create a level playing field for businesses and to counter the dominance of non-local business entities. He further said that uniform taxes will encourage the formalization and documentation of businesses and their transactions.
Mujahid Saleem Farooqi from USAID said that lack of government ownership in the implementation of policy recommendations is leading to donor fatigue and financial exhaustion which can negatively impact donor support. Sana Khan from Planning and Development Department, KP, informed us that master plans for these districts are under deliberation and will improve the business environment of the areas.