KARACHI, June 11: The business leaders have termed the budget 2008-09 Awam Dost, and said it focuses on poor and fixed income groups, besides giving due attention to agriculture sector for ensuring improved supply of essential commodities to people and raw material to industry and export sectors.

Trade and business leaders made these comments immediately after the announcement of the federal budget 2008-09 in the National Assembly on Wednesday. However, business leaders were of the opinion that the exact impact of the proposed measures could only be known on getting details of budget documents.

There was a general consensus among business leaders that manufacturing sector did not get the desired relief and instead it was burdened with higher GST by one per cent which would add to their cost of production.

Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Tanveer Ahmed Shiekh was of the opinion that the government tried its level best to provide some relief to the poor and fixed income groups in the little fiscal space available in the new budget.

He lauded the measures taken to discourage import of luxury goods by increasing customs duty on 350 such items, including vehicles and food items, which are also locally available.

Mr Tanveer said it would help reduce trade gap as well as the current account deficit.

However, divergent feelings were expressed on the proposed measures to bring withholding tax at import stage at par between industrial and commercial importers at two per cent.

Former chairman of SITE Association Ikhtiar Baig said that it would further enhance manufacturing cost of the industry which was paying one per cent withholding tax on import of raw material.

However, Amjad Rafi, former president of Karachi Chamber of Commerce and Industry (KCCI), said that by reducing withholding tax from five per cent to two per cent on import of raw material made by commercial importers, a lot of corruption would be eliminated because with a big margin of four per cent the industry used to sell raw material in the open market.

Mr Baig said that it was on FPCCI recommendations that the government had taken such measures where rural economy and agriculture sector would be given due importance and these steps would help bring economy back on track.

Zubair Tufail, Vice President of FPCCI, said that measures to give relief to poor and fixed income groups was the need of the hour as they had been passing through a miserable life and no household could even meet its kitchen expenses with a monthly income of Rs6,000.

He, however, was highly critical of the move to increase General Sales Tax rate from current 15 to 16 per cent and said it would not only further increase prices of essential goods, but would also enhance manufacturing cost of industry which was expecting some relief package.

Undoubtedly, Mr Tufail said the increase in GST rate would bring a lot of revenue to the national exchequer but equally it would further burden consumers as well as industry.

Engineer M A Jabbar, former vice president of the FPCCI, said that Pakistan is recognized as manufacturer and exporter of textiles and clothing, but by neglecting agriculture, this sector had also suffered.

He said by marginalizing farm sector, its growth came down to 1.5 per cent against a target of 4.5 per cent.

Consequently, he said the country had to import around four million cotton bales this year to meet the spinning industry’s demand and this drained out over one billion dollars.

Similarly, Mr Jabbar said today we have to import wheat to meet our domestic needs which used huge amount of foreign exchange.

The agriculture sector, he said had been given due attention in the new budget. He expressed the hope that the sector which contributes up to 20 per cent to GDP and engages around 50 per cent of workforce of the country, would help revive the sinking economy of the country.

Due importance given in these proposals for rural development, which also include dairy farming, fishing and other natural potentials, would greatly help improve the lot of rural population.

He said Pakistan stands fourth largest milk producer in the world but still we are importing huge amount of milk and milk products.

Raees Tar Mohammad, President, Commodity Dealers Association, said that the increase of one per cent in GST rate would increase prices of essential commodities, like ghee, oil, sugar. He said the budget proposals are not as per people’s aspirations.

He further said that higher GST would further deepen crisis as a new wave of price-hike would trigger, resulting in more hardships to common man. He, however, appreciated the move to bring withholding tax at import stage at par for both commercial and industrial importers at two per cent.

Trade and industry also lauded the freezing of purchase of new vehicles and other equipment by government departments. They also lauded the cut in expenses of prime minister’s house, national assembly and senate.

However, business and industry leaders strongly felt that manufacturing sector should have been given incentives, particularly textile which was facing a lot of hardship in world market.