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Fears grow in Pakistan tax amnesty for real estate could open ‘doors of corruption’ 

A Pakistani man holds his smartphone while driving, as he listens to a speech of Pakistani Prime Minister Imran Khan, in Rawalpindi on Aug. 19, 2018. The prime minister has announced a reform agenda vowing a war on corruption and uplifting the social sector. (AFP/File)
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Updated 01 August 2020
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Fears grow in Pakistan tax amnesty for real estate could open ‘doors of corruption’ 

  • Past governments have also forgiven tax cheats but been unsuccessful in ‘whitening’ significant amounts of illegal wealth
  • Black money is estimated to be as large as 56% of Pakistan’s $278 billion economy
Updated 01 August 2020
KHURSHID AHMED   

KARACHI: A tax amnesty scheme by the Pakistan government that bars authorities from questioning investors, builders and buyers about their sources of income if they put cash in the real estate sector might be “opening the doors of corruption,” observers said this week. 

In April, Pakistan announced new incentives for the real estate sector, and Prime Minister Imran Khan’s flagship five million Naya Pakistan Housing Program (NPHP), in the hopes a construction boom would help boost the country’s fragile economy that has contracted by 0.4% for the first time in 68 years. 

At the center of the scheme is allowing people to invest their illegal wealth, or black money, in the construction sector without having to disclose the source of income. Illegal wealth in Pakistan is estimated to be as large as 56% of the $278 billion economy, according to Bloomberg.

The housing ministry says Pakistan, a country of over 220 million people, currently has a shortage of 11 million homes — expected to grow to 13 million by 2025, as per figures by property website Zameen.com.

“When we have to achieve tax collection targets we need documentation of the economy,” Zaigham Mahmood Rizvi, chairman of the Naya Pakistan Housing Program task force, told Arab News this week. “The money that is out of the system, when it will be brought into the system, its sources will not be asked, meaning no tax will be imposed.”

“The amount that might be collected through taxes on such money will not be as much as collected through the investment in construction activities both directly and indirectly and the money that will come in the system will remain white; that can’t be black,” Rizvi added.

“That is a positive move,” he said. Some observers believe otherwise. Through this scheme, said Khurram Husain, business editor at the major Pakistani newspaper Dawn, “the government is opening doors of corruption, not closing.”

“Those who have parked black money out of the system, they don’t see any benefit of whitening,” Husain said. “They don’t get the desired returns in the formal economy that they draw in the black economy.”

While people could earn returns of up to 40-100% “through rackets and illegal activities,” he said, “in the formal economy if you earn 11% return you are lucky.”

Rizvi, who denied the new scheme would boost corruption, said tax breaks were not the only incentive being offered. Other major incentives include bank financing to developers of Naya Pakistan Housing Program projects at five and seven percent and regulatory approval for projects within 45 days. 

“Huge incentives have been given to investors for investing, including financing as low as five percent,” Rizvi said.

“The structure of the scheme is good,” said Dr. Vaqar Ahmed at Pakistan’s Sustainable Development Policy Institute (SDPI). “To support budgets, economy and jobs in COVID-19 times, many countries are introducing these kinds of schemes.”

However, he said the timing of the scheme might not be ideal given the coronavirus pandemic.

“If you want to attract savings of common citizens into the construction sector then probably the timing is not right because due to coronavirus their savings are already depressed, people want cash savings,” Ahmed said.

But builders and developers say the new incentives will reduce the demand-supply gap in the housing sector and help rationalize the cost of housing in the country.

“It is the game of supply and demand and if the supply is increased the prices will automatically come down,” said Muhammad Hassan Bakshi, a member of the Naya Pakistan Housing Program task force and a former chairman of the Association of Builders and Developers of Pakistan.

He said it currently took 2.5 years to get approval for projects from regulatory bodies, which was one of the major reasons for high costs of housing.

“But now the timeline of the projects has been shortened,” Bakshi said. “You have to complete at least grey structure by September 2022 if the project was approved in September this year.”

He added: “Now if you have purchased a plot and you will be bound to start construction that will create thousands of jobs and economic activity. Substantial progress on ground will be visible in next three months.”

In another major development, Pakistan’s central bank has also set mandatory targets for banks to increase housing and construction financing to at least five percent of private sector credit by December 2021. The State Bank has also instructed banks to present a concrete action plan in this regard within 15 working days.

Pakistan now also plans to set up a Real Estate Regulatory Authority, though stakeholders fear it will just add to the already thick layer of regulatory bureaucracy.

“At present we have to take approvals from almost 18 different government agencies,” Bakshi said. “Our concern is that it should not be the 19th agency, instead it should replace the other 18 agencies and operate as a one window facility.”

But Rizvi, the task force head, said things would improve for the real estate industry in the near future.

“Substantial progress has been made as a majority of the [housing] projects are at the advanced stage mostly in Punjab, Khyber Pakhtunkhwa (KP) and Balochistan,” he said, adding: “By the end of the year more projects will materialize.”

Topics: Tax amnesty Pakistan

Pakistan stock market registers second highest single-day gain on ‘easing political noise’

Updated 23 December 2024
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Pakistan stock market registers second highest single-day gain on ‘easing political noise’

  • The benchmark KSE-100 index surged by 4,411 points, or 4.3 percent, to close at 113,924 points on Monday, according to stock traders
  • The development came as Pakistan’s government holds talks with ex-PM Imran Khan’s PTI opposition party to address political polarization
Updated 23 December 2024
KASHIF IMRAN

ISLAMABAD: The Pakistan Stock Exchange (PSX) began the week on a strong note and gained more than 4,000 points on Monday, stock analysts said, attributing the rally to “easing political noise” and upbeat economic indicators.
The benchmark KSE-100 index surged by 4,411 points, or 4.3 percent, to close at 113,924 points on Monday, according to stock traders. The market saw the trading of 424,809,788 shares and registered the second highest single-day gain from Friday’s close of 109,513 points.
Stock analysts said upbeat economic indicators on surging exports, remittances and foreign exchange reserves as well as the government’s talks with the opposition Pakistani Tehreek-e-Insaf (PTI) party played a catalyst role in the rally.
“Stocks’ bullish record led by scrips across the board as investor weigh falling lending rates after fall in government bond yield and easing political noise,” Ahsan Mehanti, chief executive officer of Arif Habib Commodities, told Arab News.
Mehanti’s comments came hours after the Pakistani government held a first round of talks with jailed former prime minister Imran Khan’s PTI party to address political polarization in the country.
Pakistan has remained gripped by political unrest and uncertainty since Khan’s ouster from power through a parliamentary no-confidence vote in April 2022, which has also exacerbated Pakistan’s economic hardships.
However, Pakistan’s economic indicators have improved and the stock market has surged significantly, reaching a historic high of 117,039 points this month. Though the market shed around 9,000 points last week, but it recovered on Friday by registering a sharp increase of more than 3,000 points.
Pakistan’s central bank this month cut its key interest rate by 200 basis points to 13 percent, marking the fifth straight reduction since June. The country’s annual consumer inflation also slowed to 4.9 percent in November, lower than the government’s forecast and the lowest in nearly six years. This was down from 38 percent last year.
Data released by the Pakistan Bureau of Statistics also supports positive investor sentiment as the trade deficit narrowed by 7.39 percent during the first five months (July-November) of the current fiscal year, standing at $8.651 billion, compared to $9.341 billion during the same period last year.
Exports rose by 12.57 percent to hit $13.69 billion, while imports increased by 3.90 percent to $22.342 billion during this period. November’s trade deficit narrowed even further, dropping by 18.60 percent year-on-year to $1.589 billion compared to $1.952 billion in November 2023.
Pakistan recorded an increase of 29.1 percent year on year in workers remittances, which amounted to $2.9 billion in November, according to the central bank data. The inflows rose by 33.6 percent to $14.8 billion from July till November, compared to $11.1 billion received during the same period last year.

Topics: Pakistan Stock Exchange Pakistan Stock Exchange (PSX) Stock Market

PM hails Pakistan for ‘unstoppable, unbeatable’ performance in South Africa ODI series

Updated 23 December 2024
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PM hails Pakistan for ‘unstoppable, unbeatable’ performance in South Africa ODI series

  • Green Shirts thrashed South Africa 3-0 after losing Twenty20 series 2-0
  • Pakistan will now play three Tests against South Africa later this month
Updated 23 December 2024
Arab News Pakistan

ISLAMABAD: Prime Minister Shehbaz Sharif on Monday praised the Pakistan cricket team for winning a three-match One Day International (ODI) series against South Africa, describing their performance as “unstoppable and unbeatable.”

The Green Shirts completed a series clean sweep over South Africa in the third ODI at the Wanderers Stadium on Sunday, with rising star Saim Ayub smashing his second century of the series and his third from five innings.

The left-handed opening batsman made a sparkling 101 off 94 balls in a Pakistan total of 308 for nine. Heinrich Klaasen thrashed 81 off 43 balls for South Africa, but the hosts were beaten by 36 runs chasing an adjusted target of 308 because of rain.

“Unstoppable and unbeatable!” Sharif remarked in a post on X. “Congratulations to Team Pakistan on an outstanding 3-0 ODI series victory against South Africa.”

The prime minister also praised the Pakistan Cricket Board chairman for the team’s performance.

“Well done, boys! Your determination, skill, and teamwork under the leadership of the PCB Chairman Syed Mohsin Raza Naqvi have made the entire nation proud,” he said.

“Keep raising the green flag high!“

South Africa won the T20I series 2-0 after the third match was washed out on Dec. 14. The ODI series win comes ahead of the upcoming International Cricket Council (ICC) Champions Trophy, which Pakistan will hosting in February and March 2025.

Pakistan will also play three Tests against South Africa later this month.

Topics: Pakistan v South Africa Cricket South Africa ODI series Pakistan Shehbaz Sharif Arab News Pakistan

Government, Imran Khan party hold first round of formal talks, next session on Jan. 2

Updated 12 min 17 sec ago
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Government, Imran Khan party hold first round of formal talks, next session on Jan. 2

  • Negotiations began after Khan threatened civil disobedience, seeking the release of political prisoners
  • There are growing concerns among PTI that Khan may face military trial for 2023 riots involving followers
Updated 12 min 17 sec ago
Hasaan Ali Khan

ISLAMABAD: The government and the opposition Pakistan Tehreek-e-Insaf (PTI) party of former Prime Minister Imran Khan held the first round of formal negotiations on Monday in a bid to ease prolonged political tensions, with the PTI asked to present its demands in writing at the next session on Jan. 2.

Khan’s ouster in a parliamentary vote of no-confidence in 2022 has plunged the country into long-term political crisis, particularly since the PTI founder was jailed in August last year on corruption and other charges and remains behind bars. His party and supporters regularly hold protests calling for his release, with many of the demonstrations turning violent, including one last month in which the government says four troops were killed and the PTI says 12 of its supporters died. 

Khan has previously rejected talks with the government, saying his party would only talk to the ‘real powerbrokers’ in Pakistan, the all-powerful army, but earlier this month he set up a negotiating committee of top party leaders to open dialogue with the government for the fulfilment of two demands: the release of political prisoners and the establishment of judicial commissions to investigate protests on May 9 last year and Nov. 26 this year, which the government says involved his party supporters, accusing them of attacking military installations and government buildings. 

The talks open as Khan has threatened a civil dissidence movement and amid growing concerns he may face trial by a military court for allegedly inciting attacks on sensitive security installations during the May 9 protests.

“Since some members of the opposition could not join the talks today, we have decided to hold the next meeting on Jan. 2,” National Assembly Speaker Ayaz Sadiq, who was chairing the meeting, said at the end of the first round of negotiations. “The opposition will also present a charter of demands in the meeting.”

Representative of the government coalition attend the committee meeting in Islamabad, Pakistan, on December 23, 2024. (@NAofPakistan/X)

He said the talks were held in a “cordial” environment, calling them vital to end “political polarization” in the country.

Senator Irfan Siddiqui, also from the government side, said both sides agreed parliament was the appropriate forum to resolve political differences and emphasized that the negotiation process should continue.

Asad Qaiser (left), member of former Prime Minister Imran Khan's Pakistan Tehreek-e-Insaf party, speaks during the committee meeting in Islamabad, Pakistan, on December 23, 2024. (@NAofPakistan/X)

Speaking to the media after the talks, Khan’s close aide, Asad Qaiser, said the PTI team had asked the government to release all political prisoners, including the former prime minister, and form a judicial commission chaired by senior Supreme Court judges to probe the May 9 and Nov. 26 protests.

“We should be allowed to hold a meeting with Imran Khan,” Qaiser said. “He is our leader. We will move forward with his instructions.”

He said the government had said it would arrange the meeting but it was not clear when.

The negotiations came days after Pakistan’s military announced prison sentences for 25 people involved in the May 9 protests, which PTI has demanded be investigated. The PTI has also repeatedly said it fears the government and military will try Khan in army courts for the May 9 violence. He is already being tried for the violence in a civilian court.

Topics: Pakistan Imran Khan PTI Asad Qaiser Ayaz Sadiq Arab News Pakistan

Ancient winter festival in Pakistan’s Chitral concludes with rituals, traditional dance

Updated 23 December 2024
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Ancient winter festival in Pakistan’s Chitral concludes with rituals, traditional dance

  • Chawmos festival is celebrated in December by the Kalash people, who are numbered around 4,000
  • Festival marks welcoming of new year, celebrated with dance, animal sacrifice, singing and feasting
Updated 23 December 2024
REHMAT MEHSUD

PESHAWAR: A religious winter festival celebrated by the Kalash people in the northwestern Pakistani district of Chitral has concluded after featuring rituals, traditional dance and other festivities for two weeks, provincial tourism authority said on Monday.

The Kalash are a group of about 4,000 people, possibly Pakistan’s smallest minority, who live in the mountains of the Hindu Kush, where they practice an ancient polytheistic faith.

They come together each year in December to celebrate the two-week Chawmos festival after the community finishes fieldwork and stores cheese, fruit, vegetables and grains for the year.

The festival features various rituals, animal sacrifice, dance, songs and feasting, preserving the Kalash culture and attracting a number of tourists to Pakistan’s Khyber Pakhtunkhwa.

“The religious Chawmos festival of the ancient Kalash Valley has concluded,” Mohammad Saad, a spokesperson for the KP Tourism Authority, said in a statement.

“The festival continued from Dec. 8 in the three valleys of Bumburet, Birir and Rumbur.”

The picture shared by the Khyber Pakhtunkhwa Culture and Tourism Authority on December 23, 2024, shows men wearing animal masks participate in the two-week Chawmos festival in the northwestern Pakistani district of Chitral. (kptourism/Facebook)

The Kalash community’s religion incorporates animiztic traditions of worshipping nature as well as a pantheon of gods, and its people live mainly in the three Kalash valleys of Bumburet, Birir and Rumbur.

The Chawmos festival is celebrated to welcome the new year, with the Kalash people indulging in religious practices and distributing vegetables and fruit among each other, according to the official.

The picture shared by the Khyber Pakhtunkhwa Culture and Tourism Authority on December 23, 2024, shows a man applying henna at the Chawmos festival in the northwestern Pakistani district of Chitral. (kptourism/Facebook)

The festival was attended by a large number of domestic and foreign tourists who were fully facilitated by the provincial tourism authority.

The picture shared by the Khyber Pakhtunkhwa Culture and Tourism Authority on December 23, 2024, shows Kalash tribespeople and tourists participate in the two-week Chawmos festival in the northwestern Pakistani district of Chitral. (kptourism/Facebook)

 

Topics: Pakistan chitral kalash valley

Pakistan defense minister blames judiciary for delayed verdicts in May 9 cases

Updated 23 December 2024
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Pakistan defense minister blames judiciary for delayed verdicts in May 9 cases

  • National problems require decisions at the earliest, says Khawaja Asif while talking to media in London
  • Protests erupted in several Pakistani cities on May 9, 2023, over ex-PM Imran Khan’s arrest in a graft case
Updated 23 December 2024
Hasaan Ali Khan

ISLAMABAD: Pakistan’s Defense Minister Khawaja Asif on Sunday blamed the judiciary for delaying verdicts in the May 9, 2023, cases, which have so far led to the conviction of 25 supporters of former Prime Minister Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) party for attacking government buildings and military properties last year.

On Dec. 21, the Pakistan Army sentenced 25 people for participating in the violent protests that erupted in several Pakistani cities following Khan’s brief detention on corruption charges, resulting in damage to major military facilities and martyrs’ monuments in the country.

However, several suspects are also facing legal charges in anti-terrorism courts, with the military hoping for early verdicts in their cases, according to a statement announcing the sentencing of the 25 individuals, which described the rioting as “politically provoked violence.”

The PTI has denied any involvement in the violence, describing the May 9 incident as a “false flag” operation aimed at crushing the party.

“The judiciary created the biggest hurdle in this [the conviction of May 9 suspects] while this thing was allowed to linger for one and a half years,” Asif said while speaking to the media in London, the city he is currently visiting.

Describing the May 9 protests as a national problem, he said all the cases related to it required verdicts at the earliest.

The conviction of the 25 individuals followed a ruling by a seven-member Constitutional Bench of the Supreme Court of Pakistan on Dec. 13, allowing military courts to share their verdicts. Prior to that, the court had unanimously declared last year that prosecuting civilians in military courts violated the Constitution.

Khan’s PTI party rejected the military’s announcement, with opposition leader Omar Ayub Khan saying they were “against the principles of justice.”

The sentencing of the 25 individuals also raises concerns about Khan, who faces charges of inciting attacks against the armed forces and may potentially be tried in a military court.

Earlier, Asif had regretted the delay in announcing the verdicts, saying that it “raised the morale of the accused and their facilitators.”

“Right now, only the workers, who were used [to generate violence], have been punished under the law,” he had said. “This will not end until the ones, who planned this terrible day, are not brought before the law.”

Topics: Pakistan May 9 protests Khawaja Asif military courts Arab News Pakistan

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