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FreePakistan Newsletter [June, 2019]
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CONTENTS:
Elite capture
By Dr Pervez Tahir
World Intellectual Property Rights Day 2019
By Muhammad Siddique
Pro-Market / Anti-Market
Quote of the Month:
But let me offer you my definition of social justice: I keep what I earn and you keep what you earn. Do you disagree? Well then tell me how much of what I earn belongs to you - and why? (Walter E. Williams)
Free Pakistan, a monthly newsletter exists for the promotion of limited government, rule of law, protection of property rights, market economy, individual freedom, and private initiative. Its vision is a free, responsible and prosperous Pakistan; for only such a Pakistan can contribute positively to the creation of a free and prosperous world.
The Newsletter is an affiliate of Alternate Solutions Institute http://asinstitute.org - the first free market think tank of Pakistan.
The Alternate Solutions Institute is a registered, non-profit, non-political, non-governmental, educational and research organization. Its mission is to promote a limited responsible government in Pakistan under the rule of law protecting life, liberty, and property of all of its individual citizens without any discrimination.
The University of Pennsylvania Global Go To Think Tank Index (GTTTI) Report 2018 declared Alternate Solutions Institute Pakistan as 26th top think tank in Southeast Asia and the Pacific region and 59th top think tank with the most significant impact on public policy in the world.
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[The writer is a senior economist. This article first appeared in The Express Tribune on June 2019.]
The pre-budget seminar season has begun early. The SDPI and the FES brought together key economic ministers, economists and parliamentarians in Islamabad. The main takeaway was the elite capture of the state. Mercifully, the seminar was held on the 2nd of April, otherwise the whole affair would have been deemed as a figment of all-foolsâ imagination! No. It was for real. Hafiz Pasha fired the first salvo. His latest book has a chapter full of counter-capture ammunition. Before him in 2011, Ishrat Husain had given similar warnings in his book Pakistan: The Economy of an Elitist State. Fifty years of development had benefited a small class of the elite. Who is in here? The World Bank, no more happy about Papanekâs 'Gentlemen at Work' in the 1960s, identified four groups in [email protected] report. At its launch last month, Ishrat Hussain re-asserted that neutralisation of the elite was necessary for a transition to real reform. Speaking at the same event, Finance Minister Asad Umar agreed that the economy was a victim of elite capture. Buoyed by Hafiz Pashaâs discourse, the Finance Minister went further, as reported by Shahbaz Rana in this newspaper: 'The central issue for Pakistanâs economy is the state capture by the elite⦠I also feel the heat of the elite capture due to the onslaught launched by the civil-military bureaucracy against a particular decision.' Come budget, he promised to review most of the tax exemptions enjoyed by the elite. The budget documents would not just outline revenues and expenditures but also the quantum of tax expenditures, the technical name for the gains captured by the elite.
Hafiz Pasha adds to the World Bank count commercial banks, urban real estate developers and parliamentarians. Last year, the PTI governmentâs spokesperson on economy blamed the Charter of Democracy signed in 2006 for laying the foundation for the elite capture! His guestimate was of a thousand families out of the 30 million Pakistani families, just about the number of MNAs and MPAs who captured most of the state resources. An important omission in these counts are the emerging conglomerates of business/private universities/media houses.
Tax expenditures are, however, not the only route to elite capture. Public expenditure, especially on development, is as important. The elites influence development process to force their own priorities and appropriate public resources for private gain. Such captures fall under the definition of corruption. The areas of moulding public policies and regulatory framework to the advantage of the elites were not covered either in the seminar. Research indicates that community-based development and decentralisation of power and authority are also prone to elite capture. A study in India shows how elite capture takes place at the lowest tier of rural local government.
Short of a revolution, how do societies deal with the elite capture? Counter-elite or capture-elite approaches are said to be too disruptive. A flexible combination of counter-elite and co-opt-elite approaches may deal with excessive rents, but runs the risk of gradual re-capture by the elite. Academically, it is not established whether elite capture is the result of government failure, market failure or both. But it is well-understood that elite capture is the main reason of vast disparities in income distribution. It would be interesting to watch how the next budget deals with these dilemmas. Might I say that the return of wealth and inheritance taxes and the end of a significant amount of tax expenditures will be enough of a leap forward.
[The writer is a former Collector of Customs. This article first appeared in Business Recorder on 26 April, 2019.]
Every year, April 26, is celebrated as World Intellectual Property Rights Day by member States of World Intellectual Property Organization (WIPO), including Pakistan, in order to learn about the role that Intellectual Property (IP) rights play in encouraging innovation and creativity. The theme for this year - Reach for Gold : IP and Sports â takes a closer look inside the world of sports and explores how innovation, creativity and the IP rights that encourage and protect them, support the development of sport and its enjoyment around the world.
The main purpose of IP rights is to encourage more innovation and creativity by making sure those inventors and creators get a fair reward for their work and can earn a living from it and to protect the goodwill that is vested in brands. IP rights allow right-holders to stop other people from copying or using their IP without their permission which means that right-holders are able to charge a price for using IP. Thus the prospects of an economic reward encourage people and businesses to invest in developing innovations, creations and branded products. In the sports industry, the key players are manufacturers of sports equipment, organizers of sports events, sports federations, athletes, teams, broadcasters and other media platforms, who require protection of their IP rights.
Sports have become a multi-billion dollars global industry which generates investment in facilities and employees millions of people around the world. Business relationships built on IP rights help to secure the economic value of sports which, in turn, stimulate growth of the industry by enabling sports organizations to finance such events. The sports industry and businesses use patents and designs to foster development of new sports technologies, materials and equipment to help improve athletic performance and engage fans worldwide. Similarly, trademarks and branding maximize commercial revenue from sponsorship, merchandising and licensing agreements. In turn, these revenues offset the cost of organizing world class events, such as Olympic Games and World Cup series, etc., and ensure that the value and integrity of these events are safeguarded. This yearâs campaign is thus an opportunity to celebrate our sporting heroes and all the people around the world who are innovating behind the scenes to boost sportâs performance and its global appeal.
Pakistan joined World Intellectual Property Organization in 1977 and the theme of the year is very pertinent for us as we have a flourishing sports goods industry, which has acquired an imperative place in international trade and supplying sports goods to almost every country of the world, directly or indirectly, which receive worldwide recognition because of their superb quality. The product range includes soccer balls, volleyballs, rugby balls, beach balls, cricket balls, hockey balls, tennis balls, shuttlecocks, nets, sports gloves of all kinds, hockey sticks, cricket bats, baseball bats, protective guards, pads, judo-karate suits and all other kinds of sportswear. These products are made for worldâs renowned brands which enhance the credibility of Sialkot as an internationally-acknowledged quality manufacturing and exporting centre.
Sialkot has also become famous for supplying finest quality footballs for all mega events for a long time. When millions of football lovers cheered on their favorite teams in 2018 FIFA World Cup, held in Russia last summer, Pakistanis had a special reason to rejoice (because of its footballs) although Pakistanâs football team did not participate in this mega event.
Pakistan exported sports goods worth $332.516 million during last financial year which were higher by 7.38% from the previous fiscal year. These quality sports goods have kept Pakistanâs identity upfront. Around 400,000 plus people are engaged directly or indirectly with export businesses. It enables trade and industry to flourish and create employment which reduces poverty. However, counterfeiting and piracy have a negative impact on this industry as well, which pose a major threat to innovation and economic growth, both at local and global levels. Such malpractices also facilitate an underground economy that deprives government of revenues for vital public services and exposing consumers to dangerous products. Therefore, government efforts to strengthen IP enforcement regime be considered as investment that pays tangible dividends to economic development.
The theme of World IP Day â 2019, is, therefore, very pertinent for Pakistan, as we have a thriving sports industry, which requires protection of its IP rights. It is, therefore, recommended that a comprehensive national level strategy document be prepared by IPO Pakistan for sports goods industry and its allied stakeholders for protection of their IP rights. This document should have a holistic approach including law enforcement agencies like Police and Customs. Assistance in this regard may also be sought from WIPO to disseminate cognizance about international agreements and their implications on sports goods industry. Similarly, there is an urgent need of creating awareness on the subject for which both public and private sector should play their role for conducting an effective campaign on electronic and print media, with the help of renowned Olympians and other popular sports celebrities of Pakistan.
âMANY UNITS CLOSED IN HATTAR OVER HARASSMENT BY OFFICIALSâ
[Dawn 27 April, 2019]
HARIPUR: Harassment of industrialists at the hands of officials of different departments and the governmentâs âunfriendlyâ policies have led to closure of many units in the Hattar Industrial Estate. This concern was expressed by Haji Attaur Rehman, president of Haripur Chamber of Commerce & Industry (HCCI), while speaking at a function attended by industrialists, traders and mediapersons here on Friday.
He said operational industry had a crucial role to play both in offering livelihood sources to thousands of people besides creating new jobs and lending support to the national economy. He said harassment of industrialists at the hands of different departments like FBR, SNGPL, Pesco, EPA, SDA, labour department, and poor infrastructure were scaring the investors away.
SUPREME COURT RESTORES ALL TAXES ON MOBILE PHONE TOP-UPS
[The Nation 25 April, 2019]
ISLAMABAD - The Supreme Court on Wednesday withdrew the interim order passed by former chief justice Mian Saqib Nisar and restored all taxes on crediting the card by cellular network subscribers. The order stated that all the interim orders for suspension of taxes are withdrawn and all taxes shall remain intact. The top court further observed that it shall not interfere into tax and revenue related matters in this case.
The suo moto notice was taken by former chief justice Nisar on May 3, 2018, on the grounds that the matter involved public interest. The ex-CJP later on June 11 last year had suspended the deduction of taxes.
However, Justice Ahsan remarked that deduction of taxes from those not falling within the definition of taxpayer is violation of fundamental rights. He inquired the Attorney General for Pakistan Anwar Mansoor Khan regarding instructions from Prime Minister on the matter of Advance Tax. AGP replied he could not meet with the premier but the Income Tax Ordinance is clear on Advance Tax. He contended that whether a person is filer or non filer he is liable to pay tax under the Ordinance.
NRPS FACING DIFFICULTIES IN OPERATING BANK ACCOUNTS
[Business Recorder 25 April, 2019]
KARACHI: Non-Resident Pakistanis (NRPs) are facing issues for operating bank accounts in Pakistan due to limited banking services. Sources in banking sector told Business Recorder on Wednesday that banks are receiving a lot of complaints from NRPs that present regulations/conditions for NRP accounts are discouraging overseas Pakistanis to open bank accounts and remit funds to Pakistan.
They informed that as per Chapter 8 of Foreign Exchange (FE) Manual there are some major restrictions on NRP accounts which are not applicable on accounts opened by Pakistani nationals. NRPs are also reluctant to open and operate accounts in Pakistan due to these restrictions.
As regulations, banks are allowed to issue ATM cards as well as supplementary ATM cards to the individual non-resident rupee account holders, however, the withdrawals through ATM cards is only allowed in Pakistan. In this case, this ATM is useless outside Pakistan and NRPs are even unable to use their own money outside the country. Therefore, NRPs are hesitating to open and send money to Pakistan to their bank accounts, industry sources said.
Secondly, transactions through Internet Banking are blocked for NRPs customers and they can only view their account balance, while all other resident Pakistani nationals can enjoy all the funds transfer and bill payment facilities via Internet and Mobile Banking. In addition, for every transaction that NRPs do in their account, exceptions of a few, banks are required to submit Form A-7.
They have suggested State Bank of Pakistan (SBP) that these anomalies or restrictions should be addressed immediately so banks can treat NRPs with the respect and like any other Pakistani. Sources said that NRPs are motivated to open accounts in Pakistan and use them freely like any other account holders, however due to these restrictions many NRPs are hesitating in opening NRP accounts.
LHC TAKES AWAY SUO MOTU POWERS OF FBR
[Dawn 25 April, 2019]
LAHORE: The Lahore High Court (LHC) on Wednesday set aside the suo motu powers of the Federal Board of Revenue (FBR) to collect sales tax from the business community without registering them under the Sales Tax Act 1990 and Sales Tax Rules 2006. A two-member bench comprising Justice Sajid Mahmood Sethi and Justice Muzammal Akhtar Shabir announced the verdict upholding the judgment of a tax tribunal of LHC on the petitions moved by SK Steels Mills and others.
The court barred the FBR from collecting sales tax from the business community and ordered to register the business community as taxpayers to collect sales tax under Section 3 of the Sale Tax Act 1990.
Representing the business community, Advocate Ajmal Khan argued that the businesses were fighting for justice against FBRâs suo motu powers for the last nine years. He said the authority was collecting sales tax from the business community without registration. The FBR approaches without giving any notice of recovery to the businesses in order to achieve its tax collection targets, he added.
The counsel said FBR was harassing the business community which was already paying huge taxes and duties to the government.
The court directed the FBR to first register a businessperson and then apply Section 3 of the Sales Tax Act. It further termed collection of tax from unregistered members of the business community as unlawful.
PAKISTAN COURIER, LOGISTICS REGULATORY AUTHORITY BILL APPROVED
[Business Recorder 23 April, 2019]
ISLAMABAD: The Senate Standing Committee on Postal Services on Monday approved âThe Pakistan Courier and Logistics Regulatory Authority Bill, 2018â to bring all private courier and logistic companies under a regulatory setup.
Representatives of the Ministry of Postal Services, Law Division and Post Office supported the bill and termed it a much needed legislation. After this becomes an Act, all private courier and logistic companies as well as Pakistan Post will come under a regulatory setup. The bill after passage from the Senate will be referred to the National Assembly.
INCREASE IN MPSâ DISCRETIONARY FUND PROPOSED
[The News International 23 April, 2019]
ISLAMABAD: Amid the possibility of entering into IMF arrangement and reduction in overall allocation for development budget, the PTI-led government is considering slashing allocation for development of formerly called Fata, its security enhancement and Prime Ministerâs Youth Programmes by over 50 percent through development outlay in the upcoming budget 2019-20.
However, the government is considering allocating Rs24 billion for controversial discretionary programme for parliamentarians under the title of SDGs programme in the next financial year. Although, the government had earmarked same amount of Rs24 billion for this controversial programme to please parliamentarians but so far no amount could be utilised.
NON-RESIDENT PAKISTANIS CAN OPEN AND MAINTAIN FOREX ACCOUNT: SBP
[Business Recorder 23 April, 2019]
KARACHI: The State Bank of Pakistan (SBP) has said that non-resident Pakistanis are allowed to open and maintain foreign currency accounts despite being not appeared in the Federal Board of Revenueâs Active Taxpayers List (ATL). The SBP, through a circular, has invited attention of Authorized Dealers to the second proviso of sub-section (4) of the Section (5) of the Protection of Economic Reforms Act (PERA), 1992 which, inter alia, says 'provided that no cash shall be deposited in an account of a citizen of Pakistan resident in Pakistan, unless the account holder is a filer as defined in the income Tax Ordinance, 2001 (XLIX of 2001).'
The circular said that it has come to the SBP notice that some Authorized Dealers are not allowing non-residents to open and maintain foreign currency accounts on the pretext that they are not appearing as 'filer' in the Active Taxpayerâs List of the FBR. However, it is evident from the Proviso of sub-section (4) of the Section (5) of the Protection of Economic Reforms Act (PERA), 1992, that the instructions, contained therein, are not applicable to non-residents, it added.
Youth Conference
Alternate Solutions Institute is pleased to announce its 5-day 11th Residential Course, from 17th July to 21nd July 2019, at Khanaspur, Ayubia.
The course aims to create awareness among Pakistani youth about the bases of a prosperous and responsible society. The initiative aims to understand the complexities faced by the country and citizens on economic, political, social and legal fronts.
Participants of the Course discuss poverty, entrepreneurship; philosophy of rights; protection of person and property; protection of property rights: physical property rights and intellectual property rights; the rule of law and economic freedom.
The successful candidates will be informed through emails, they are required to deposit registration fee of Rs.5000/- with the institute. Transportation, food, lodging and course materials will be provided free of cost to the participants.
Age limit: 35 Years
Apply at
https://docs.google.com/forms/d/e/1FAIpQLSfcamAXI9r6jjBclBQbEoR7_zXTlhpg-4FhJGdGgoxmokusJA/viewform?usp=pp_url
Email your CV and recent photograph at info@asinstitute.org
Whatsapp, Text Message & Call : 03366334343
[FreePakistan Newsletter, among other things, is a compilation of views and news taken from the national newspapersâ online editions. It is not possible to mention the source of every piece of news or view made use of herein; but as a matter of policy, where possible the source is mentioned with due thanks. However, no opinion expressed here should necessarily be taken as reflecting the view of FreePakistan Newsletter and the Alternate Solutions Institute.]
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