Impact of Last Govt Policies on Real Estate Sector
Real Estate Sector in Pakistan was galloping & progressing at a very fast speed about a decade ago. The last Government adopted such policies that vitiated the trust of the local & foreign investors. It had an adverse effect on the performance of the Real Estate Sector. As a result, this robust sector devastated and is still creeping for recovery.
Tax Complication Regarding DC and FBR
The investors were forced to astray in the labyrinth of evaluation of taxes. Earlier, properties were evaluated according to DC values, which were fixed in all Districts of Pakistan by the respective Deputy Commissioner. DC value was lesser than the market value. It is the value, which is prevailing in the market. Thereafter, FBR value was introduced by the previous Government to calculate Advance Tax on the properties. FBR Value is higher than DC value but lesser than Market Value. The complication of the evaluation system raised doubts among the investors, who sidelined themselves from the market, adopting the policy to wait & see. It crushed the Real Estate Sector and the Real Estate Agents as well.
DC Exorbitant Taxes in the Real Estate Sector
The last Government imposed exorbitant taxes in the Real Estate Sector to improve tax collection and force the investors to invest in industry instead of Real Estate Sector. Thus, the previous disowned a sector, which was generating heavy revenues for the Government. If the Government had provided incentives & facilities to the local & foreign investors of the Real Estate Sector, the revenue targets of the Government would have easily been achieved and the Government would not have to resort to IMF or World Bank.
Another reason of the fall of the Real Estate Sector is political instability and lack of leadership in the Country. Economy and political stability go hand in hand with each other. Pakistan is politically unstable and devoid of any real leader, who could take the Country & Nation to the pinnacle of success with his miraculous & charismatic leadership. The previous Government of PML (N) was getting weaker & weaker day by day due to confrontation with the Armed Forces, Intelligence Agencies & Judiciary etc and miscellaneous scams of corruption and non-governance. Later on, was dismissed by the Supreme Court of Pakistan on the charges of corruption, money laundering and having properties in the UK from illegal resources. PML (N) appointed Mr. Shahid Khaqan Abbasi as the Prime Minister, who proved to be a weaker Prime Minister than Mr. Nawaz Sharif as he had no political backing & support. Mr. Shahhid Khaqan Abbasi called the former Prime Minister as his leader despite the fact that he was ousted from the office of the Prime Minister on the charges of corruption & money laundering. The conflict between the ruling party and Armed Forces & judiciary destroyed the confidence of the local & foreign investors. As a result, the Real Estate Sector had to face complete disaster.
Election 2018 and Political Stability
After the Election of 2018, PTI has emerged as a majority party in National Assembly and Provincial Assembles of Punjab & KPK. Mr. Imran Khan is in the process of forming the Government. It is hoped now that the political stability will be restored in the Country. It is also hoped that Imran Khan as the Prime Minister of Pakistan will adopt such positive steps & policies like decreasing un-necessary taxes and restoring the confidence of the local & foreign investors in each sector of the economy including the Real Estate Sector which will be beneficial for the Country & Nation.
Writer: Rashid Bashir
Designation: Managing Director Chohan Estate