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Karachi, July 16, 2007
— IFC, the private sector arm of the World Bank Group, is supporting the Pakistan Business Council in its evidence-based business policy advocacy to promote economic growth, foster investment, and improve the country’s international competitiveness. The project, which is being implemented by IFC Advisory Services in the Middle East and North Africa - PEP-MENA, will help the council become an influential think tank and advocate for the country’s private sector.
The government of Pakistan has incorporated several proposals from the Pakistan Business Council into the 2007 Finance Act, which was recently adopted. The incorporation of the Holding Company Law in the Finance Act was a major achievement, as it will help local businesses expand and compete in the domestic and international markets. The new law will allow for group relief, which enables a “loss-claiming company” in a group to transfer cash to a “loss-surrendering company” equal to the amount of tax payable on the profits to be set off against the acquired loss. The rate for qualification for group relief, which was previously restricted in the country, is now 55 percent of the company’s capital
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To help implement the law, the Pakistan Business Council and the government are planning to form a joint committee with representation from the country’s Institute of Chartered Accountants and other stakeholders.
Syed Salim Raza, CEO of the Pakistan Business Council, said, “The key for achieving this breakthrough was to form a coalition by working closely with the Central Board of Revenue, the Securities and Exchange Commission, the Institute of Chartered Accountants, and other stakeholders.” He thanked the government, especially the Prime Minister, the Chairmen of the Central Board of Revenue, and the Securities and Exchange Commission for their support. He also acknowledged the contribution of the Institute of Chartered Accountants and other stakeholders and added, “The government will listen to evidence-based advice on legislation if we can clearly show that it contributes to a more conducive business environment. This piece of legislation is extremely important, as it will help overcome the unproductive business practice of holding businesses in single company entities.”
Samir S. Amir, Director of Research of Pakistan Business Council, said, “The financial impact resulting from the new changes in the law is expected to lead to major savings in the coming years. We are aware of 10 groups that will restructure in the near future.”
Markus Pilgrim, IFC Program Manager, said, “The new law will have a twofold impact: it will generate new investments as a result of the implementation of group relief, which will enable company groups to undertake larger and more diversified business opportunities. It will also reduce the cost of doing business through synergies, as certain functions become centralized.”
About IFC
IFC, the private sector arm of the World Bank Group, promotes open and competitive markets in developing countries. IFC supports sustainable private sector companies and other partners in generating productive jobs and delivering basic services, so that people have opportunities to escape poverty and improve their lives. Through FY06, IFC Financial Products has committed more than $56 billion in funding for private sector investments and mobilized an additional $25 billion in syndications for 3,531 companies in 140 developing countries. IFC Advisory Services and donor partners have provided more than $1 billion in program support to build small enterprises, to accelerate private participation in infrastructure, to improve the business-enabling environment, to increase access to finance, and to strengthen environmental and social sustainability. For more information, please visit
www.ifc.org
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About IFC PEP-MENA
IFC PEP-MENA is a multidonor facility for advisory services that supports private sector development across the Middle East and North Africa. IFC PEP-MENA focuses on improving the business enabling environment, strengthening financial markets, supporting SME development, and promoting privatization and public-private partnerships. From its inception through FY06, IFC PEP-MENA has committed more than $20 million in advisory projects. Its activities are funded jointly by IFC and the following donors: Canada, France, the Islamic Development Bank, Japan, Kuwait, the Netherlands, the United Kingdom, and the United States.
About the Pakistan Business Council
The Pakistan Business Council was formed in 2005 by 13 of the country’s largest business houses. Its objectives are to promote economic growth in Pakistan, foster internal and external investment, and improve the country’s international competitiveness. It plans to initiate a dialogue with Pakistan’s government on the country’s trade agreements. The project is expected to reduce the cost of doing business and improve the growth prospects for the Pakistani private sector.
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