ISLAMABAD POLICY EXCHANGE
23, Feb 2023
PRIME organized the “Islamabad Policy Exchange”, an in-camera discussion between academic, governance, political, and private sector specialists aimed at sharing and reviewing economic policy reforms and providing feedback to the Government of Pakistan. The discussion revolved around new Urban Policy by the KP government and the IT sector regulations. The participants unanimously agreed that the efficiency in the provision of public service delivery and facilitation of businesses require easing of regulations, digitization of processes and formulation of long-term policies to enable entrepreneurs/ investors to reap the benefits of incentives provided by the government and contribute to economic prosperity.
URBAN POLICY IN PAKISTAN AND KP GOVERNMENT AS CASE STUDY
The KP Urban Policy 2030 is designed with the vision to provide direction and a roadmap for creating inclusive opportunities for individuals, businesses, and communities in urban centers, and facilitate the better use of land, real estate development, provision of municipal services and tourism.
The real estate representatives highlighted the problems faced by them in getting requisite approvals for starting projects as the land records are not completely digitized, lack of clarity on segregation between residential and commercial land, myriad steps of documentation, and a complex bureaucratic system. The digitization of processes and easing of regulations are inevitable for higher economic activity. They also suggested separating Building Control Authority (BCA) and Development Authority (DA) for better urban planning, and easing regulations on the inflow of IT proceeds.
IT SECTOR REGULATORY FRAMEWORK: CHALLENGES AND STATUS OF REFORMS
The representatives of the IT services sector, freelancers in particular, highlighted that short-term policies contribute to uncertainty. The restriction of the retention of 35 percent of proceeds is not sufficient and diminishes the incentive to bring 100 percent of proceeds into the country. Resultantly, a significant proportion of the foreign exchange earned is kept outside the country. Moreover, the application of a tax
differently for filers and for non-filers does not encourage the documentation of businesses as they are exposed to higher government scrutiny.
In contrast, the representatives from the government acknowledged the problems arising from short-term policies. However, the documentation of the economy and becoming a part of the taxation system are matters of national interest and obligations of citizens. The participants were informed about the steps taken by the government to facilitate freelancers in terms of opening foreign currency accounts, low tax
rates and ease in the registration of businesses, and more will be announced in the coming budget. The representatives of the government also highlighted that insinuation regarding frequent and undue audits by the FBR is not completely based on reality.