The real estate developers have started turning their investments to other countries since the government announced new rules for the revaluation of properties across the country. The capital flight is already going on due to unfavourable business conditions in the country, pushing businessmen and investors to look for other options. The dust of Panama leaks has still not settled down when news of Bahamas offshore companies has startled everyone. At least 150 Pakistani investors are found to be involved in the business. On another note, the new rules introduced by Finance Minister Ishaq Dar in the federal budget has adversely affected the real estate sector where business deals have almost come to a grinding halt. It is difficult to understand what prompted the government to revise the collector rates of properties in several cities, expecting the property buyers and sellers to pay withholding tax on revised rates. The government will not achieve any monetary gains in the step, but has ruined the business. Adding insult to injury is the requirement to reveal source of income and payment of capital gains tax. This again is an attempt to discourage investment in the country and push for capital flight.
The result of the government move came as disaster for the real estate sector. According to safe estimate, only around 2,000 investors are left in the field out of 20,000 before the announcement of the budget. According to the World Bank, in a country, the real estate value accounts for almost half and three-quarters of the national wealth. At least 40 industries are associated with the housing projects which is part of the real estate sector. The State Bank and the Securities and Exchange Commission of Pakistan have decided to constitute a committee to ensure effective regulation of the real estate sector as well as improve the regulatory regime. The two vital government agencies have also discussed the draft Bond Pricing Agency (BPA) Rules 2016. The problem is in the government policies and not in the national economy. People are ready to invest in the country, but they are restrained from doing it by various government agencies, causing not only loss of the government revenue, but disappointment to the business community.
The government agencies must understand that not every businessman is tax evader and not every man in authority is a saint. Business means business and everything should be dealt on merit and fair play. The countries in the world are making progress with leaps and bounds, but the Pakistani economy goes one step ahead and two steps back. Until the policymakers come to reasons and take realistic approach, it will be difficult to achieve the cherished goal of prosperity in the country.
