ISLAMABAD: Pakistan’s Foreign Office said on Thursday Indian Prime Minister Narendra Modi’s most recent remarks “weaponizing” the waters of the Indus river were against international norms and exposed the “stark contrast” between India’s conduct in the region and its declared global ambitions.

Modi on Tuesday upped the rhetoric in a standoff over water access triggered by a deadly attack in Indian-administered Kashmir in April in which 26 tourists were killed. New Delhi said Islamabad was behind the attack — a charge it denies — and announced a raft of punitive measures including unilaterally suspending the 1960 Indus Waters Treaty. 

Any move to stop Pakistan accessing the water would have a devastating impact. The Indus treaty, negotiated by the World Bank in 1960, guarantees water for 80 percent of Pakistan’s farms from three rivers that flow from India.

The nuclear-armed neighbors have already clashed in their worst military fighting in nearly three decades before agreeing to a ceasefire on May 10.

“His [Modi] references to weaponizing water, a shared, treaty-bound resource, reflect a troubling departure from international norms and a stark contrast between India’s conduct in the region and its declared global ambitions,” the foreign office said in a statement. 

“Pakistan urges India to return to the core principles of international order including respect for sovereign rights of others and its treaty obligations, as well as restraint in both language and action.”

The foreign office said such “jingoism” by Modi would undermine long-term peace and stability. 

“India’s youth, often the first casualty of chauvinistic nationalism, would do well to reject the politics of fear and instead work toward a future defined by dignity, reason, and regional cooperation.” 

Modi on Tuesday amplified the resolve to use water from the Indus river system for India, saying provisions of the “badly negotiated” Indus Waters Treaty were prejudicial to the interests of the country and did not even let it use the waters earmarked for it. 

Calling out “decades of silence” over the treaty, he said it had left Indian-administered Kashmir’s dams clogged and crippled. 

Pakistan’s Attorney General, Mansoor Usman Awan, said earlier this month India had written to Pakistan in recent weeks citing population growth and clean energy needs as reasons to modify the treaty. But he said any discussions would have to take place under the terms of the treaty.

Islamabad maintains the treaty is legally binding and no party can unilaterally suspend it, Awan said.

“As far as Pakistan is concerned, the treaty is very much operational, functional, and anything which India does, it does at its own cost and peril as far as the building of any hydroelectric power projects are concerned,” Awan told Reuters.

India and Pakistan have shared a troubled relationship since they were carved out of British India in 1947, and have fought three wars, two of them over the Himalayan region of Kashmir, which they both claim in full but rule in part.

India accuses Islamabad of backing separatists in Kashmir, a claim it denies, in turn accusing New Delhi of backing separatist and other insurgents in Pakistan. 

KARACHI: The flight of capital from Pakistan to the UAE, Saudi Arabia, the UK and other investor-friendly nations could rise to $30 billion in the next five years if the government failed to rationalize taxes on the construction industry in the FY26 budget next month, builders and developers said this week.

The outflow of capital from Pakistan is driven by factors like high transaction taxes, economic uncertainty, and the perception of a more favorable tax environment and higher returns in international markets. This trend is particularly pronounced in the UAE, where Pakistani investors have made significant investments in real estate. 

Pakistan’s tax policy on real estate has been criticized for being high compared to regional and international benchmarks while countries like the UAE offer lower tax rates and more attractive returns on real estate investments. Political and economic instability in Pakistan have also discouraged investment and led to capital flight as investors seek safer, more stable markets. 

Pakistan’s construction industry, with its 10 million skilled and unskilled employees, is the second biggest employer after agriculture but its contribution to the gross domestic product has declined more than six percent to 2.6 percent in the last four years.

“Unfortunately, due to the prevailing economic conditions in Pakistan, a lot of builders and developers have already transferred their money out of Pakistan and are constructing projects in UAE, Saudi Arabia and other countries,” Mohammad Hassan Bakhshi, chairman Association of Builders and Developers of Pakistan (ABAD), told Arab News in an interview in Karachi.

In Pakistan, housing is a heavily-taxed industry, with taxes ranging from as much as 40 percent property transfer tax to 60 percent levy on builders and developers earning more than Rs 150 billion ($532 million).

These taxes are “too high,” the ABAD chairman said, suggesting that the property transfer tax be reduced to five or six percent.

By 2022, Pakistanis had invested $12 billion in the UAE, which was expected to increase to $25 billion this year and $30 billion by 2030, said Bakhshi, citing data from the Federal Board of Revenue, the state tax collector.

“Big builders and developers of Pakistan have already shifted or are in process of shifting their capital, their investment,” and entrepreneurship skills to Saudi Arabia, Dubai, the US and UK, the ABAD chief added. 

Pakistan’s construction industry has Rs 90 trillion ($319 billion) cash capitalization, 10 times bigger than Pakistan Stock Exchange’s Rs 10 trillion ($35 billion). The size of Pakistan’s total budget for FY26 is expected to be Rs 17 trillion, according to local media reports.

“OPTIMISTIC”

Pakistan, the world’s fifth most populous nation, is facing a 12 million housing shortage that industry stakeholders say can be turned into an opportunity by the government to create economic activity and spur growth.

Arshad Mehmood Awan, an Islamabad-based real estate professional and CEO of Homy Properties, said the government could reduce the shortage of residential units by launching affordable housing projects and making bank loans accessible online in the new budget.

“Regarding housing finance, we are expecting the government to devise a strategy, a plan that would enable the common man to easily avail housing finance from banks,” Awan told Arab News.

Arif Habib, the chairman of Arif Habib Group, said he was “optimistic” about the new budget, saying premier Shehbaz Sharif had formed a task force to develop proposals for the housing market.

The government, he said, had decided to withdraw excise duty and was considering reducing some advanced taxes as well.

“Then the most important aspect of this real estate market is the mortgage financing availability,” Habib told Arab News in an interview, saying the government’s task force was recommending proposals to encourage mortgage financing given that inflation had eased to a record low.

“In the past, because of the high inflation, people didn’t have enough disposable income to buy real estate,” Habib said. 

“But now I believe, with the positive sentiment in the country, the Pakistani diaspora would also be attracted to the Pakistani market because they prefer to buy houses here for their families and for their future. So I believe after the budget, this [real estate] sector will also be active.”

More than half of the 10 million overseas Pakistanis who are expected to remit a record $38 billion this year wanted to invest in the country’s real estate sector, ABAD’s Bakhshi added.