Although the current budget is termed populist and benefits a number of sectors, it does not fare particularly well for the capital markets in general. A significant measure taken in the budget is increasing the maximum taxable holding period for capital gains on shares from four to five years. According to market analysts, this will result in a likely dip in trading volumes as the holding-period increase essentially means stock owners have to wait more to avoid amplified taxation on capital gains.
The performance of the social sector in Pakistan has always been below par. But the saddest tale comes from the area of healthcare, which has deteriorated much more than most Pakistanis can grasp. The quality of public healthcare presents a dismal picture in the country. Due to the negligence of successive governments, lack of investment and rising poverty over the last few decades, public health services have seen a downturn, and the decline is still in progress. The key issue is that the government spending in the healthcare sector is not only small, but the growth in annual spending is decreasing every year.
Ishaq Dar in his budget speech said exports were falling due to global commodity prices. He said the same in his speech last year. Perhaps one could credit the government for introducing a strategic trade framework 2015-18 and a textile policy 2014-19 (Rs6 billion budgeted for the coming fiscal each) within the last two years, which together hoped to increase exports, but exports have been falling, and more so because of the short sightedness of these policies and the repetitive nature of past mistakes than anything else.
Despite the fact that the export sector has been focused in the budget, the fact of the matter is that to some extent there is disconnect between the ministry of commerce and finance ministry. The justification of the above statement comes from the fact that the budget has failed to provide any incentives for the horticulture and halal meat industry. To broaden trade, the recently announced Strategic Trade Policy Framework 2015-18 has tabled a short-term strategy to focus on four key products (meat, horticulture, jewellery and Basmati rice).According to this plan, the focus markets for these exports are Afghanistan, China, European Union, and Iran.
According to the Federal Budget 2016-17 released yesterday the government would be providing some encouraging incentives to promote the use of renewable energy sources. It also provides relief on specific products to promote energy efficiency and reduced energy usage. Specifically concessions have been granted on the customs duty on local manufacturing of light-emitting diode (LED) lights with the duty on imports of parts of LED lights reduced from 20 to 5 percent.
With Ramazan almost here, readers would recall when this column wrote about an impending ghee shortage in Punjab (Read: "Punjab's ghee crisis," published April 21, 2016). BR Research spoke to the Pakistan Vanaspati Manufacturers Association (PVMA) to get an update on the situation.