ISLAMABAD: Special Assistant to the Prime Minister, Haroon Akhtar Khan has stressed the need for documentation of the agricultural sector which is much more important than generating revenue from farmers.
Haroon Akhtar Khan participated in the Pakistan Business Council’s Dialogue on the Economy session where he shared key insights on Pakistan’s economic outlook.
He said that the seriousness of the provincial governments in documentation of agricultural sector is evident from the fact that even “agriculture documentation form” is not available in the markets”. The agriculture sector must be documented”, he said.
The government needs to see why multinational companies are leaving Pakistan, Haroon Akhtar said.
He regretted that the documented sectors and existing taxpayers are subjected to higher taxes.
He appreciated the role of elite class in attracting new investment and creating job opportunities in the country.
After 18th Amendment, social security is a provincial subject but the federal government is paying the amount of social security, he said.
He said that the investment to GDP ratio needs to be increased.
He emphasised that before seeking foreign investment, Pakistan must first focus on strengthening domestic investment. Highlighting the need for rapid economic progress, he said that accelerating growth is crucial for generating employment opportunities.
Haroon Akhtar Khan stated that no country can attain prosperity without industrial development, underscoring industry as the backbone of economic advancement. He pointed out that the pace of exports should surpass imports; otherwise, the trade deficit continues to expand, exerting pressure on the economy. To enhance exports, he stressed the importance of promoting manufacturing and local production, adding that producing essential materials such as steel within the country is vital to boost export potential.
Commending the Federal Board of Revenue (FBR), he noted that the institution has delivered outstanding performance in implementing reforms. He reiterated that Pakistan possesses the ability to grow using its own capabilities and national strength. Haroon Akhtar Khan further revealed that a tax package as part of the upcoming Industrial policy will be presented to the IMF. He concluded by stating that the forthcoming reform initiatives are aimed at achieving long-term and sustainable economic development.
He said that the newly introduced National Industrial Policy is a comprehensive roadmap designed to promote sustainable industrial expansion, export-led growth, innovation, and inclusive development with a review to optimize revenue generation.
For long-term industrialization (2025–2030), the government is working to create a pro-industry tax regime, including:
• Gradual reduction of super tax, with immediate relief for exporters, manufacturers and SMEs.
• Withdrawal of transaction-based minimum tax regimes, moving toward the Normal Tax Regime (NTR) as the only option for industrial producers and exporters.
• Narrowing the Withholding Tax (WHT) scope to reduce liquidity constraints for industries.
• Abolishing Alternative Minimum Tax,(ACT)
These reforms aim to shift from high-rate taxation to a broadened tax base, supporting compliance, competitiveness, and investment.
To make industry more competitive and promote reinvestment, the government needs to reduce sales tax rates, particularly for capital-intensive sectors where Pakistan has natural advantages.
Sales tax needs to be rationalized to eliminate the advantage currently enjoyed by informal businesses, ensuring a more level playing field.
A structured plan for gradual withdrawal of super tax to be formulated:
• All Exporters to be exempted in the first year.
• Manufacturers earning below PKR 500 million to receive exemption in the first year.
• Sector-wise phased withdrawal:
O Year 1: Textile, food, leather, pharma, paper & steel.
O Year 2: Chemical, mobile manufacturing, electronics.
O Year 3: Automobile & FMCG sectors.
This carefully sequenced reduction will stimulate domestic production, exports, and capacity expansion.
Export industries face liquidity issues due to excessive withholding taxes, which often result in refunds rather than net revenue.
To resolve this, industries with export-linked turnover can be exempted from multiple withholding taxes including those related to imports (Sec 148), utilities (235A), telecom services (236), immovable property (236C), and certain international payments (236Y).
This reform will significantly improve cash liquidity and enhance the export sector’s global competitiveness.
To attract capital-intensive manufacturing, the government needs to consider exemptions from sales tax on the import of capital goods, based on fiscal space during budgeting cycles.
These exemptions can be provided sector-by-sector for industries with high economic potential especially for technology, engineering, and value-added manufacturing.
This will reduce the cost of setting up advanced facilities and encourage long-term investment.
The Industrial Policy includes a Revival & Debt Resolution Framework to rehabilitate sick industrial units. Efforts are underway to facilitate restructuring in collaboration with the SECP, State Bank, and financial institutions.
Simultaneously, small and medium enterprises (SMEs) will receive easier access to credit, technology support, and capacity building, reinforcing their role as engines of job creation and export diversification.
A modern bankruptcy and insolvency law is being introduced to create a fair, transparent, and risk-friendly business environment. Instead of punishing failure, the new system will enable business turnaround and capital recycling.
This will foster investor confidence, especially in high-risk and high-return sectors.
The government also guarantees protection of local and foreign investments, with full repatriation of capital and profits according to international norms.
Duty-free access to raw materials, simplified tariff structure, and efficient regulatory mechanisms will support rapid industrial and export growth.
Pakistan aims to evolve into a regional manufacturing and export hub. This will be achieved by progressively:
• Reducing customs duties on industrial inputs,
• Eliminating additional and regulatory levies, and
• Simplifying tariffs into fewer slabs.
These measures will lower the cost of doing business, promote import substitution, and boost exports, helping to narrow the trade deficit and drive sustainable industrial growth.
The government has launched an ambitious Regulatory Modernization Program in collaboration with the Board of Investment (BOI). This includes amendments to the Companies Act to simplify business registration, digitize processes, and reduce documentation.
New measures will build a transparent, least-regulated, and innovation-friendly environment supporting swift decision-making and fair competition. Incentives are being restructured to attract long-term foreign direct investment, positioning Pakistan as a reliable and rewarding destination for global investors, he added.
Copyright Business Recorder, 2025