Withdrawal of KP relief package will cause economic instability

The proposed withdrawal of fiscal relief package will cause economic instability and unrest after hardly accelerating business activities in militancy hit Khyber Pakhtunkhwa (PK) and FATA.
The relief package should be extended for further period of two to three year to support premature post-war affected economy in the war-ravaged region, which is imperative for long-term sustainability and economic recovery of the province, said experts.
Though the package had given some sort of relief to the business community hit by militancy and terrorism, but if the federal government would take it back in premature position, it could be harmful to economic uplift and industrial development, said Mohammad Ashaq, economic analyst and industrialist, in a talk with Business Recorder. He said the post-war and floods era needs reliance for long term to regain and re-track economic sector, as the floods and militancy had adversely affected the economy of the province. He expressed need for extending the special relief to business community, but it should be consistent and durable. He said that the KP and FATA would need further two to three years to gain economic and business momentum.
Ashaq said that inconsistency in economic policy is a major factor behind financial and industrial downfall in the country. He stressed the need of fulfilling all commitments and obligations to address economic loopholes and other irritants in the country.
He said the commercial and trade targets would be hampered after taking back the facility, and added that business community is not in a position to afford additional burden in the present scenario. He said that the provincial government had demanded extension of the Prime Minister special relief package till 2015. He said that the government has no tangible and viable economic policy to support terrorism-affected economy of the country.
Ashaq said that the entrepreneurs and traders had jacked up dwindling economy after restoring bid of normalcy and calm in the province. He, however, added that the process would not sustain for long time in the wake of taking back facilities in terms of sales tax exemptions, concessions, and federal excise duty (FED) by the federal government. The targets and goals that have been set could not be achieve following putting additional burden on insurgency-hit business community of the province, he observed. The business community would further push in vague position in wake of burden of more liabilities and tax surcharges, he added.
About economic drawback during insurgency and deteriorating security in the province, he said the labour force had sharply declined from 79,000 to 56,000 during period of 2001-2008. Similarly, he said, the fresh wave of terrorism in 2009 had shrunk the figure at 24,000.
Ashaq said that Prime Minister Yousuf Raza Gilani had disapproved the proposal of Federal Board Revenue (FBR) to withdraw fiscal relief package.
He called for extending of the package till 2015 to further support insurgency and militancy hit economy of the province.
He urged the federal government to resist from taking such kind of anti-economic steps and called for extending relief package till 2015, otherwise the process of reactivation of economy could be stopped in KP and FATA.
The provincial government has not yet received any such intimation whether the federal government is going to withdraw fiscal relief package to KP and FATA, said Saeed Ahmad, KP Finance Secretary.
He, however, added that the province would take up the issue with federal government to extend the package, particularly in conflict hit areas.
The KP had conveyed its concerns over withdrawal of the package to Finance Ministry (MoF), Federal Board of Revenue (FBR), and Planning Commission (PC) and asked them to extend the duty exemptions/concessions till 2015.