Aftermath Post Incentive Package.

The Prime Minister has recently announced an ambitious incentives package for the development sector, including a hard and fast tax regime for builders and developers, elimination of withholding taxes, reduced tax on low cost housing projects, and more. But the important game changer is that the ‘no-questions-asked policy’ for any funds invested within the construction sector. This amnesty scheme is probably going to usher in a big volume of undeclared wealth into the formal economy and will potentially be even more successful than the previous amnesty schemes. this is often because there’s a general consensus that the country wouldn’t be during a position to supply any longer such schemes within the future. Even this one may be a godsend and an exception made within the wake of the coronavirus pandemic. Although it’s not clear how the Financial Action Task Force (FATF) would react to the present measure, it might be safe to assume that it might adopt a relaxed criteria for scrutiny in these difficult times. Furthermore, the important estate sector has been stagnant for too long, due to FATF-induced tightened regulatory environment and increase in valuation of land . Moreover, given the adverse economic situation within the recent past, even other avenues of domestic investment are dehydration . Therefore, investors are likely to leap on to the present opportunity to whiten their money.

Infrastructure development is closely related to economic process , and even within the West, policymakers are making a case for pumping in money for infrastructure to stimulate growth. However, the incentives package alone might not be the last word solution to urge Pakistan out of the present depression or maybe to make a construction boom.

Also Read: Rs 1.5bn Tax Relief Announced by Govt. Of Baluchistan

First and foremost, the development industry must adapt to the continued Covid-19 crisis and find how to work under the threat of infection. the development industry is susceptible to high contamination risks being a labour-intensive sector and thus needs special safety measures and protocols to work . the united kingdom government, as an example , has come up with new site operating procedures under the Covid-19 threat. an identical approach is additionally needed here.
Secondly, most of the measures introduced by the govt are for the availability side. Without adequate demand these aren’t getting to work, especially within the wake of slowed-down economic activity. Demand for low-cost housing are going to be especially low, despite the very fact that the govt has introduced a Rs30 billion subsidy for low-income homebuyers. the govt must ensure availability of sufficient credit for mortgages at reduced rates to tap into a wider market.

Lastly, the govt should specialise in a broader infrastructure development agenda, instead of only narrowing it right down to traditional housing or commercial projects. Why not enable vertical growth of cities and stop urban sprawl? Why not usher in health, ICT or logistics infrastructure into this package, that there’s getting to be substantial demand? Why not recalibrate the general public investment portfolio and initiate a structure programme to make jobs for the unemployed?

The Prime Minister has been criticised by many due to his hesitation to enforce a blanket lockdown, thanks to economic concerns. An initial lockdown was indeed required to flatten the curve and enable the govt and therefore the private sector to seek out new ways to work under the shadow of the coronavirus. But this lockdown cannot continue for long and can need to be lifted in bits and pieces within the coming weeks. Lives are more important than economic well-being but to not the extent where we find yourself losing more lives thanks to poverty. As soon as we adapt to the ‘new normal’ of working within the Covid-19 world, subsequent challenge would be to kickstart the economy which is when the development package is probably going to assist .