Biggest challenge fixing cash bleeding energy sector: Asad

ISLAMABAD: Federal Minister for Planning, Development and Special Initiatives Asad Umar has said that the biggest challenge for the government was fixing the cash bleeding energy sector and the government had finalised a roadmap for bringing reforms.

“The whole electricity sector from generation to transmission and distribution has been strangulated by the Government of Pakistan and the main reforms are doing away from clutches of GoP and to introduce market driven private sector-owned reforms,” Federal Minister Asad Umar said while addressing the 13th All Pakistan Chambers President Conference (APCPC), organized by the Rawalpindi Chambers of Commerce and Industries (RCCI) in collaboration with the Jang Media Group here on Thursday.

On this day-long conference, Adviser to PM on Commerce Abdul Razak Dawood, Minister of State for Institutional Reforms Dr Ishrat Hussain, Minister for Railways Azam Swati and Governor State Bank of Pakistan Dr Raza Baqir spoke.

Minister for Planning Asad Umar said that the Joint Cooperation Committee (JCC), under the China Pakistan Economic Corridor (CPEC), would be held soon and the major agenda items for granting approval to Mainline (ML-1) for up-gradation of rail line were much awaited. “China imports over $2 trillion on per annum basis and it is a challenge as well as opportunity for the private sector to establish linkages and become part of the supply chain of Chinese companies,” he added.

He said that Chinese President Xi Jin Ping would be visiting Pakistan during the current year, so it was the right time when the industrial cooperation with the help of private sector must ensure the right kind of synergies.

Governor State Bank of Pakistan Dr Raza Baqir threw light on the measures taken by the SBP for providing relief to industrial sector during COVID-19 pandemic and said that the SBP, through a stimulus package, provided Rs1.9 trillion in the shape of different schemes, equivalent to 4.6 percent of GDP in order to ward off the negative effects of coronavirus. The interest rate reduction by 625 basis points to bring it down from 13.25 percent to 7 percent helped different sectors to reduce expenditures to the tune of Rs470 billion, the governor SBP said and added that the principal amount of loans deferred was to the tune of Rs660 billion. The SBP, he said, introduced loan rescheduling scheme, thus, Rs227 billion loans were rescheduled in the aftermath of COVID-19 pandemic. He said that the SBP’s Rozgar Scheme for giving assistance to those private sector firms that did not layoff their workforce was introduced and so far Rs240 billion had been disbursed. Some 80 percent firms that availed the Rozgar Scheme belonged to SMEs and corporate firms while 90 percent firms on account of loan deferment were SMEs. He said that Temporary Refinance Scheme (TERF) was introduced and had so far approved Rs332 billion. The total stimulus package introduced by the SBP stood at Rs1,924 billion or 4.6 percent of GDP. The governor SBP made clear that the central bank gave confidence that the policy rate would remain unchanged in near future. He said that the SBP had hiked the policy rate up to 13.25 percent because of massive trade and current account deficits. The current account deficit had ballooned to $19 billion but now the economic fundamentals had changed and there was no possibility in near future for bringing any major change in monetary stance. He said that the SBP introduced the Roshan Digital Account scheme and so far 75,000 to 80,000 non-resident Pakistanis had opened their accounts and deposited $380 million into it. The government's Naya Pakistan Certificate and on dollar saving certificate, there will be profit rate of 5.5 to 7 percent while on rupee certificates, the offered rate stood at 11 percent.

There are other schemes for providing loans at cheap rates like the finance scheme which can provide Rs25 million to Rs200 million loans. There is a special scheme for women entrepreneurs for providing loans up to Rs5 million at 5 percent rate. Adviser to PM on Commerce Abdul Razak Dawood said that the government would increase tariff rationalization from 40 percent to 70 percent in upcoming budget in order to reduce the cost of doing business in Pakistan. He said that the market access up to Central Asian Republics (CARs) would be ensured through Afghanistan. He said that he would be visiting Uzbekistan on Friday (today) and then Afghanistan’s delegation would join him, so a tripartite meeting would be held to boost the regional trade. He said that the Afghan Transit Trade (ATT) agreement would be signed soon but there was a complaint that Pakistan wanted to have a right to put restrictions on imports because these goods coming in the guise of ATT were smuggled back into Pakistan.

Afghanistan wants free trucking movement on which Pakistan did not have any objections, he said and added that Pakistani trucks should also be allowed for movement up to CARs. He said that both EU and USA pointed out limited range of exportable goods being exported from Pakistan, so there was a need for diversification of goods. The Export Council, he said, will be established to boost up exports. He said that he was not satisfied with the efforts undertaken by the government in the last two years, so he believed that in the remaining three years of incumbent regime, more measures should be taken to boost up exports. He said that Pakistan had turned into a trading hub instead of manufacturing base, so now efforts would be made to increase exports. He hoped that the economic activities would pick up in the coming years and in spite of challenges, there would be improvement in coming years.

Minister of State for Institutional Reforms Dr Ishrat Hussain said that there were more than 70 withholding taxes and there were many having no justification. He said the government would abolish 20 withholding taxes in the coming budget.