ACCA Council Election 2020 – Omer Zaheer Meer

ACCA Council Election 2020 – Omer Zaheer Meer

Foreword:

My belief is that those of us fortunate enough, have a duty to give back to the profession and humanity. It’s not a favor to anyone but a blessing for our own-self.

It’s an honor to put myself forward for Council election, having been very actively engaged with ACCA. My ACCA advocacy, began in student society in 2003 and turned a leaf in London after becoming a member in 2008.

I’ve been ACCA’s Network Panel Member (Pakistan) member since 2015 and honored to be its first ever unopposed and unanimously elected Chairman (since 2018), representing its 40,000 members, affiliates and students.

My numerous contributions have been recognized by the award of ACCA’s Exceptional Public Value award (twice) and National Advocacy award. I’ve evolved from national to regional to global levels and learned about ACCA’s unique vision, workings and adaptability.

I’ve held many leadership positions besides being a managing partner at MLCC.

My Profile: https://omerzaheermeer.wordpress.com/about/

Existing Key contributions: https://omerzaheermeer.wordpress.com/2020/10/07/omer-zaheer-meers-existing-key-contributions-for-acca/

Commitment & Manifesto:

https://omerzaheermeer.wordpress.com/2020/10/08/manifesto-for-acca-council-2020-omer-zaheer-meer/

Conclusion

I’ll act on behalf of all members to ensure that the future direction of ACCA continues to address the evolving needs of our members and all stakeholders while championing the highest ethical standards.

 Please vote and support me and let’s “Think Ahead” together.

Thank you.

A Visit to the Scottish Parliament – Lessons in Democratic Norms

Dear Readers,

Peace be on you all,

In this post I’m sharing a fantastic experience of witnessing a true modern  democracy at work during my visit to the Scottish Parliament. When I reached, there were a couple of small protests going on right in front of the main entrance of the Parliament.

With people protesting outside, the parliamentarians kept addressing the issues inside in the debating chamber in front of their electorate. The openness, transparency & accountability while giving respect to the voices of the voters, is how it is supposed to be.

Giving respect to the masses while holding the representatives accountable is the true essence of a real democratic system.

It is a lesson for countries all over the world. What’s worth mentioning here is that although Romans had a semi-democratic setup, that was largely selective. The first model of a true modern democratic setup was established by Prophet Muhammad PBUH in the state of Medina.

Let’s hope we get to see further improvements in democratic setup of Scotland and the rest of the world.  I’ll now sign off by sharing that the Scottish people are very friendly and have a good-nature.

Enjoy the pictures below and see you here soon with the next blog post.

 

Announcement of Exceptional Public Value Award by ACCA

Dear Readers,

Peace be on you!

It’s with extreme pleasure that I announce that the prestigious Exceptional Public Value Award is to be awarded to myself by Ms. Helen Brand, OBE, CEO ACCA (the largest accountancy body globally). I’ll share the details with you after receiving the award, Insha Allah.

I’m honored by this privilege and grateful to ACCA for the recognition of my:

“contributions in the field of Budget and Taxation including but not limited to

  • the drafting of Anti-Graft Legislation focused on Undisclosed Foreign Income & Assets which was later adopted by the Treasury,
  • work done on the Regional Research Study on Indirect Taxation across South Asia and UAE,
  • MOU’s with Tax Bars,
  • Collaborations with Chambers of Commerce and Tax Bars,
  • Pre & Post Budget proposals and seminars,
  • continued member education events particularly on Taxation and
  • opportunities created through R&I sessions with key employers.”

Last but not the least, I’m thankful to you all for your support and prayers particularly my parents, siblings, mentors, colleagues and friends.

acca-exceptional-public-value-award

Regards,

Omer Zaheer Meer

Formal Launch of My Youtube Channel

Dear Readers and Friends,

Assalam O Alikum! (Peace be on you),

The constant suggestion by many of you to launch a formal Youtube channel covering my key public and/or professional engagements with a dimension of educating and enlightening has been turned into a reality.

It is with pleasure that I announce on this auspicious day of Friday that my team has successfully launched the same. The channel can be accessed at:

There are already some very interesting videos covering some of the key current issues and opportunities such as Immovable Property Taxation Issues, CPEC, Budget Proposals, Finance Act, e.t.c.

We aim to constantly update our channel with valuable knowledge sharing videos. Your feedback and appreciation would be the fuel to keep us going in this effort. I hope you find this useful and wish you all the best in your lives and careers.

Take Care,

Omer

Omer Zaheer Meer FCCA, CFA, AML Expert- Profile for MNP Elections 2016

Dear Reader,

Salam,

May this writeup find you in the best of spirits.

Professional Intro:

You may have already read my general professional introduction. If you haven’t please have a look at:

https://omerzaheermeer.wordpress.com/about/

Major Endeavors/Achievements for ACCA Community:

This is however to briefly introduce some of the brilliant endeavors undertaken for the development of ACCA community and thereby the accountancy profession in Pakistan.

  • Conducted and proposed CPDs particularly focused on taxation and local corporate laws to equip the members, affiliates and students with necessary technical skills in this extremely important area. (View Details )
  • Conducted almost all the taxation CPDs and one-third of the total CPDs for ACCA fraternity.
  • They’ve been phenomenally successful within the ACCA community and well received by the members of other accountancy bodies too, which in itself speaks of the top quality of the offering. The attendees included the top officials of firms, MNCs, businesses and public sector organizations.
  • These trainings have led to a multitude of members getting equipped for and landing job opportunities. The member satisfaction in Pakistan has increased manifolds and the CPD program is taken as a benchmark by the global head office. (View Details)
  • Represented and expedited for ACCA members in Pakistan to formally join the Taxation sector by getting joint events organized between the largest tax bar in Asia, LTBA and ACCA as Chairman Liaison Committee of LTBA.
  • This resulted in increased footprint for ACCA and culminated in an MOU between both bodies signed by ACCA’s Head of Taxation (Global) giving a formal pathway to ACCA members towards the lucrative taxation practice. (View Details)
  • Prior to this achievment, on my return from UK, I became the first ever ACCA to be enrolled as a member of a tax bar in Pakistan. This broke the monopoly of certain accountancy bodies there, created a precedent and opened up doors for ACCA members to join tax bars in Pakistan.
  • Organized collaborations between ACCA and LCCI resulting in ACCA being duly recognized by and included in the committees of LCCI; hence cementing the footprints of ACCA & opening of job opportunities at leading businesses for ACCA members.
  • Represented and/or introduced ACCA at various forums including LCCI, LTBA, MPDD, UET, several think tanks – being on their boards, e.t.c.
  • Moreover, prepared ACCA’s taxation proposals for the joint initiative with LCCI. This was unprecedented as ACCA was the ONLY accountancy body to be involved in this endeavor.
  • Helped organize and represented ACCA at the largest joint pre-budget seminar graced by dignitaries from all major tax bars, chambers, accountancy bodies and even the FBR team. Chairman FBR, the Chief Guest, highly appreciated the ACCA presentation by myself. This led to further enhanced footprint and acceptability of ACCA in Pakistan.  (View Details)
  • Proposed the idea of and assisted in ACCA’s practising liscence program for Pakistan.
  • Became the first ever ACCA practising license holder in Pakistan as a test case to ensure a smooth journey for all ACCA members in Pakistan. (View Details)
  • Similarly, my firm (Millennium Law & Corporate Company) became the Pioneer ACCA practising firm in Pakistan to create a case study for all ACCA members as well as bolstering the ACCA acceptance & footprints amongst professional firms.   (View Details)
  • Mentored a significant number of members, affiliates and students with their professional and personal inquiries, thereby contributing my share in the development of the ACCA community. (View Details)
  • Initiated unprecedented forums for ACCA community to interact with each other and the ACCA officials with ease.
  • Delivered the first ever “Thinking Ahead with ACCA” (a Ted Talk inspired program) on CPEC for enhanced recognition of ACCA in professional circles and increasing awareness of current issues within ACCA community. This is expected to be released soon globally.
  • Chaired ACCA’s Taxation sub-committee and finalized the budget and taxation proposals in an unprecedented manner which will further enhance the recognition of ACCA’s technical prowess amongst the relevant circles.
  • Recognized as a top professional to represent ACCA in the Professional Expert Forum.

These are just a few of the major endeavors, most of which were achieved in a very short span of time without being a part of the MNP.

Recognition by ACCA:

It was followed by few months being an MNP member as ACCA Pakistan in recognition of the outstanding achievements for ACCA community, nominated me as a technocrat member of the MNP. This allowed to further improve the deliverance for the collective benefit of the ACCA community.

Aim:

Therefore as an elected MNP member, I’ll be able to more effectively pursue a lot of positive projects planned for the future, achieving the highest standards of excellence for the benefits of the ACCA community, InshaAllah.

Request for Vote, Support & Campaign:

But this can ONLY be possible with your support and trust. In view of the above, you’re humbly requested for your kind:

  1. vote for my MNP candidature
  2. support by asking your contacts for the same &
  3. campaigning by spreading this message and your recommendation on social media and elsewhere.

Voting Process:

You shall be receiving an email from ACCA soon with the detailed instructions on the voting process.

Contact Details:

Thanks in anticipation of a positive response. Please feel free to contact me as always for any support and suggestions.

Cell:                0322-4219292

Email:             ozmeer@mlcc.pk

myMfb.com:  Omer Zaheer Meer

Twitter:          @Omer Zaheer Meer

Must Read: Malcolm X’s Letter from Makkah

Malcolm KSASource: Malcolm X’s Letter from Makkah (Original post from MyMFB.com)

Malcolm X, or Al-Hajj Malik El-Shabazz, is one Muslim who saw the light of true Islam through his Hajj in April 1964.  As a former member and speaker for the Nation of Islam, a black spiritual and nationalist movement, he believed that the white man was the devil and the black man superior.

After leaving the Nation of Islam in March 1964, he made Hajj, which helped change his perspective on whites and racism completely.

Here is an excerpt of a letter El Hajj Malik El Shabazz wrote a letter to his loyal assistants in Harlem… from his heart, telling them of his experience.  In it, he explains what it was during this blessed journey that made him so profoundly shift his perspective on race and racism.  We should keep in mind that this letter was written in a time when the history of African Americans in America was in making, a time when centuries worth of oppression was being spoken about and condemned in public.

“Never have I witnessed such sincere hospitality and overwhelming spirit of true brotherhood as is practiced by people of all colors and races here in this ancient Holy Land, the home of Abraham, Muhammad and all the other Prophets of the Holy Scriptures.  For the past week, I have been utterly speechless and spellbound by the graciousness I see displayed all around me by people of all colors.

“I have been blessed to visit the Holy City of Mecca, I have made my seven circuits around the Ka’ba, led by a young Mutawaf named Muhammad, I drank water from the well of the Zam Zam.  I ran seven times back and forth between the hills of Mt. Al-Safa and Al Marwah.  I have prayed in the ancient city of Mina, and I have prayed on Mt. Arafat.

“There were tens of thousands of pilgrims, from all over the world.  They were of all colors, from blue-eyed blondes to black-skinned Africans.  But we were all participating in the same ritual, displaying a spirit of unity and brotherhood that my experiences in America had led me to believe never could exist between the white and non-white.

“America needs to understand Islam, because this is the one religion that erases from its society the race problem.  Throughout my travels in the Muslim world, I have met, talked to, and even eaten with people who in America would have been considered white – but the white attitude was removed from their minds by the religion of Islam.  I have never before seen sincere and true brotherhood practiced by all colors together, irrespective of their color.

“You may be shocked by these words coming from me.  But on this pilgrimage, what I have seen, and experienced, has forced me to rearrange much of my thought-patterns previously held, and to toss aside some of my previous conclusions.  This was not too difficult for me.  Despite my firm convictions, I have always been a man who tries to face facts, and to accept the reality of life as new experience and new knowledge unfolds it.  I have always kept an open mind, which is necessary to the flexibility that must go hand in hand with every form of intelligent search for truth.

During the past eleven days here in the Muslim world, I have eaten from the same plate, drunk from the same glass, and slept on the same rug – while praying to the same God – with fellow Muslims, whose eyes were the bluest of blue, whose hair was the blondest of blond, and whose skin was the whitest of white.  And in the words and in the deeds of the white Muslims, I felt the same sincerity that I felt among the black African Muslims of Nigeria, Sudan and Ghana.

“We were truly all the same (brothers) – because their belief in one God had removed the white from their minds, the white from their behavior, and the white from their attitude.

“I could see from this, that perhaps if white Americans could accept the Oneness of God, then perhaps, too, they could accept in reality the Oneness of Man – and cease to measure, and hinder, and harm others in terms of their ‘differences’ in color.

“With racism plaguing America like an incurable cancer, the so-called ‘Christian’ white American heart should be more receptive to a proven solution to such a destructive problem.  Perhaps it could be in time to save America from imminent disaster – the same destruction brought upon Germany by racism that eventually destroyed the Germans themselves.

“Each hour here in the Holy Land enables me to have greater spiritual insights into what is happening in America between black and white.  The American Negro never can be blamed for his racial animosities – he is only reacting to four hundred years of the conscious racism of the American whites.  But as racism leads America up the suicide path, I do believe, from the experiences that I have had with them, that the whites of the younger generation, in the colleges and universities, will see the handwriting on the walls and many of them will turn to the spiritual path of truth – the only way left to America to ward off the disaster that racism inevitably must lead to.

“Never have I been so highly honored.  Never have I been made to feel more humble and unworthy.  Who would believe the blessings that have been heaped upon an American Negro?  A few nights ago, a man who would be called in America a white man, a United Nations diplomat, an ambassador, a companion of kings, gave me his hotel suite, his bed.  Never would I have even thought of dreaming that I would ever be a recipient of such honors – honors that in America would be bestowed upon a King – not a Negro.

“All praise is due to God, the Lord of all the Worlds.”

Malcolm X Thinker

Malcolm X saw and experienced many positive things.  Generosity and openheartedness were qualities which were impressed on him by the welcome which he received in many places.  He saw brotherhood and the brotherhood of different races and this led him to disclaim racism and to say:

“I am not a racist… In the past I permitted myself to be used… to make sweeping indictments of all white people, the entire white race, and these generalizations have caused injuries to some whites who perhaps did not deserve to be hurt.  Because of the spiritual enlightenment which I was blessed to receive as the result of my recent pilgrimage to the Holy City of Mecca, I no longer subscribe to sweeping indictments of any one race.  I am now striving to live the life of a true Sunni Muslim.  I must repeat that I am not a racist nor do I subscribe to the tenets of racism.  I can state in all sincerity that I wish nothing but freedom, justice and equality, life, liberty and the pursuit of happiness for all people.”

source:

From The Autobiography of Malcolm X with assistance from Alex Haley, the author ofRoots.

Is FBR’s incompetence hurting economy? (by failing genuine Taxpayers)

The following article has been published in Daily Nation, dated 27th April 2015

(E-Paper (Print Edition)http://nation.com.pk/E-Paper/lahore/2015-04-27/page-9)

(Onlinehttp://nation.com.pk/business/27-Apr-2015/fbr-s-incompetence-hurting-economy)

FBR’s incompetence hurting economy

Prof Dp

By: Omer Zaheer Meer

Federal Board of Revenue (FBR) is a semi-autonomous federal institution that is responsible for auditing, enforcing and collecting revenue for the government of Pakistan. It’s one of the most critical components of the revenue collection apparatus in Pakistan. As such it is supposed to be the pinnacle of professionalism, discipline and support to tax payers. Whether this is really the case shall be examined in this write-up. About couple of weeks ago, Chairman FBR invited this writer, while representing ACCA (UK) and LTBA at a historic pre-budget seminar that was organized with the collaboration of ICAP, ICMAP, ACCA, LTBA, PTBA, LCCI and several other Tax Bars, to send him proposals about the issues in and reforms for FBR. Below is a brief overview from this perspective.

Currently there are approximately 800,000 active income taxpayers out of a population of roughly 200 million in Pakistan. This is a meager 0.4% of the total population. On the other hand every Pakistani is paying indirect taxes on whatever they consume. The lack of trust of the taxpayer on the system and the resulting regressive taxation policies are a big hindrance in the attainment of an optimal taxation system. We’ve often discussed the problems with the taxation policies in Pakistan and proposed practical solutions. Frankly speaking there is only so much FBR can do in this regard since the policies are often driven by the IMF, World Bank and/or the political interests of the rulers. However the areas where FBR can and should play a very effective role are not in the best of states either and that is simply unfortunate.

Considering the tiny tax base it was only natural for FBR to attempt to broaden it. However the way they went about it is unprofessional to say the least while messing up a good endeavor big time. Recently notices claiming no existing tax registration based on “economic activities”, usually citing vehicle purchases were sent out to masses. Sounds positive? Hang on, what if it’s shared with you that many of those receiving these notices were not only tax payers already registered but paying millions in Income Taxes annually? This exemplifies a total lack of coordination within the systems and functions of FBR, which is unfortunately becoming a norm of late. Missing out on the records already held by FBR simply reinforces the misconceptions amongst the tax payers that FBR is out to bother already registered tax payers instead of acting as a facilitator and initiating genuine drives to catch tax evaders.

What’s tragic is that while on one hand such steps are undertaken citing the need to broaden the tax base but on the other hand proposals with huge potential to broaden the tax base such as bringing agricultural income and other exempt sections within the tax net as well as allowing use of CNIC as National Tax Numbers (NTN) and Sales Tax Registration Numbers (STRN) have been falling on deaf ears for almost a decade now. Of late, there has been news that CNIC may finally be allowed as NTN. If done, this will be a step in the right direction.

To underline the vast difference in the workings of FBR and similar bodies in developed countries, Let me share a personal experience with the readers to illustrate the significant gulf in the international standards and the ones practiced in our beloved country. While working in UK, I needed to change my tax code. For ease of understanding you can say it was like claiming a tax refund and I was not even a British national. It took me one phone call to UK’s HMRC (Her Majesty’s Revenue and Customs) during my office lunch hour to get it done by the end of the lunch. Yes, just in less than an hour. Now compare it to the experience of a genuine tax payer in Pakistan who is ridiculed and abused for even genuine works. Presumptive and advance taxes are collected but when it is time to issue refunds in line with the law, actual due refunds are held for months and even years despite completion of all legalities and verification. What is worst is that in most cases the FBR officials verbally accept the cases as genuine but claim that due to the pressure to meet revenue collection targets they are unable to follow the law and deliver the tax payer their due right.

The problem manifests from the nepotism and non-professional attitudes of some officers who treat tax-payers with utmost contempt instead of the dignity they deserve. Un-realistic targets setup by higher-ups then further aggravates the matters with coercive, non coordinated and even illegal measures used by certain sections within FBR. The widespread corruption within the department further worsens the matters.

It’d be reasonable to point out that although PRAL (Pakistan Revenue Automation (Pvt) Ltd) does mess up things at times, many of its’ positive endeavors were blocked for fears of eradicating corruption using different pretexts by certain sections of FBR. For example, PRAL once finalized a completely automated system of issuing refunds to tax payers with even an online payment instrument. Naturally there was a huge hue and cry. The project was dumped and the corrupt manual practices continue to date.

Now as if all this was not enough, even the laws governing the whole taxation system are made mockery of within FBR by several officers undermining the good work and efforts undertaken by their more professional colleagues. Just ask any genuine tax payer or tax practitioner about the treatment meted out to them by most FBR officials and you’d be shocked. Due to limited space, this topic will have to be continued in future write-ups.

As for now, perhaps the policy makers and senior FBR officials should consider this dire situation seriously to rectify all the serious problems within FBR. If they fail to do so, the next time they complain about low proportion of tax payers in Pakistan as compared to UK or other developed countries, they should realize that they only have themselves to blame.

The author is Director of the think-tank “Millat Thinkers’ Forum”. He is a leading economist, CFA Charterholder, experienced fellow Chartered Certified Accountant and anti-money laundering expert with international exposure who can be reached on Twitter and www.myMFB.com @OmerZaheerMeer or omerzaheermeer@hotmail.co.uk

Is Privatization right for Pak?

The following article has been published in Daily Nation, dated 2nd March 2015
(E-Paper (Print Edition): http://nation.com.pk/E-Paper/lahore/2015-03-02/page-9 )
(Online: http://nation.com.pk/business/02-Mar-2015/is-privatisation-right-for-pakistan )

Is Privatization right for Pak?

By: Omer Zaheer Meer

Privatization is coined as a solution to many economic woes facing Pakistan’s economy. It has been hailed as a solution to the woes facing PMLN’s government. The privatization commission has even shortlisted 31 institutions to “sell”. A very competent Mr. Zubair Umar, the brother of the youth icon and PTI MNA Mr. Asad Umar is heading the commission. On the face of it, the arguments appear to be logical and make sense. It’s pointed out that a government’s primary function is to run the state affairs and should facilitate the businesses instead of running them. The “white elephants” in the shape of public sector enterprises (PSE) are costing the national exchequer billions of Rupees annually which can be saved and spent on public welfare.

However once we start to dig deeper the situation is not as glossy as it may appear at first. First of all a successful privatization exercise has some pre-requisites like a conducive environment with investors’ confidence, a strong government able to enforce the agreements, proper selection of non-vital PSE’s and a fair process carried out in a transparent manner. Sans this, privatization cannot turn-around the state of PSE’s or the economy. Past experiences are a testament to this.

Once again the incumbent PMLN government is focused on privatization but unfortunately is ignoring the vital pre-requisites. The faulty selection of profitable and strategically vital entities, the extreme haste in the proceedings, missing policy guidelines, a lack of clarity and transparency in processes, non-conducive investment atmosphere and a less-than-desirable track record all warrants caution in examining the proposed solution of privatization.

Amidst the noise of overhauling loss-leaders several profitable institutions are also earmarked for privatization, which besides funneling billions to the treasury are also providing products/services at cheaper rates to the public as compared to the private sector in the international market.

One such example is the Oil and Gas Development Company Limited (OGDCL) which generated a profit of approximately PKR 91 billion in last fiscal year while providing the gas at 40 to 50% of the prices offered by private sector in international market. Another example is Pakistan State Oil (PSO) generating an after-tax net profit of approximately PKR 12,558,000,000 in the year ended 30th June 2013, a 39% increase from the previous financial year. Privatizing such institutions would not only lead to loss of billions to the exchequer but also an increase in the comparatively cheaper prices currently offered to the masses.

A case in point is the handing over of PTCL control to Etisalat by the Musharraf regime in which a minority shareholder effectively got all of PTCL for a paltry sum to be paid in installments, still partially outstanding. What is iconic is the fact that Etisalat itself is a Public Sector enterprise of UAE. This means that although the proponents of privatization strongly believe that “state cannot run vital services”, they have no qualms about a foreign state owned enterprise coming to Pakistan and doing the same. And just to analyze how effectively has this privatization venture gone we should realize that the same PTCL which was generating profits of billions of PKR but is now reporting heavy losses despite increased tariffs and with a falling standard of customer service often complained about. Similarly KESC which was sold on the hopes of a turnaround with substantial investments expected in infrastructure by the private party. Unfortunately it has instead become a much bigger white elephant requiring continuous rescue by the government while the new private owners continue to remit their profits abroad. Their failure to even invest in the necessary infrastructure maintenance has lead to undue load-shedding over and above that necessitated by load-management. Not only has the government of Pakistan lost revenues from healthier dividends and resulting taxes, it has also lost by falling share prices of its remaining stake in these entities. The public has suffered a deteriorating service and higher prices.

To put things in perspective let us also recall the privatization of MCB to Mian Mansha’s group, undoubtedly amongst the strongest business conglomerates in Pakistan. The deal was done at a fraction of the fair value of the tangible assets of MCB let alone considering the value of the brand and goodwill. Obviously such moves do not boost confidence particularly when the same group’s head attends important government policy meetings is said to be interested in getting “good” deals on more national assets at the cost of the nation.

It had been reported that the incumbent government sent a letter to IMF claiming a consensus of all political parties and parliament to privatize the national institutions. This obviously points towards the pressure emanating from the terms of the IMF package accepted by Pakistan and explains the underlying motive. This undue urgency leading to lack of planning should be avoided. The government needs to ensure it is not selling off profitable and strategically vital PSE’s in the name of privatization for short-sighted capital injections at the cost of long-term stability and revenues. Furthermore institutions providing vital services to the masses should not be on the wish-list of the potential sell-offs either.

As for those entities generating losses like PIA we need a proper plan of action. One leading argument for privatization is that since the private sector is driven by profit, the efficiency and performance of institutions is supposed to improve in private hands. Unfortunately the past record of privatization in Pakistan does not support this argument. Be it PTCL or KESC, not only their profits but the standard of services too has fallen in private hands. Also it brings up an interesting question as to why the government cannot introduce checks and balances along with incentives to ensure a turnaround they expect from private entities. Moreover, in developed countries strict legislation has been introduced to ensure avoidance of the common pitfalls of privatization, protecting the interests of all shareholders and safeguarding the continuation of service(s). Same needs to be done in Pakistan to address the issues already facing us from past public-private venture which effectively handed over whole PSE’s for a paltry minority stake in ownership.

While some proponents of the privatization point out the previously failed attempts at turning-around of state institutions but they conveniently ignore the major reasons of failure in undue interference, political appointments and misappropriation by government officials. The success stories like the last major successful turnaround of a loss-making steel mill into a profit generating venture are also conveniently swept under the carpet. They also choose to forget that if enterprises like PIA are privatized, which have the highest ratio of employees per aircraft of 500 compared to international standards of fewer than 150; it will still lead to layoffs and resulting backlash. Ideally a better option will be to establish an independent and empowered restructuring institution (RI) to overhaul PSE’s, which if handled properly will make the process less painful compared to a private venture while ensuring cost-effective quality services from a revenue-generating asset of the nation.

All that is required by the RI is to place competent professionals of utmost integrity at the top positions based solely on merit to run the PSE’s, introduction of a system of appropriate checks and balances run by professionals whose life is driven by measuring performance against goals, spurring motivation and ensuring excellence via improved performances. If for some reasons a privatization is deemed mandatory then a hurried privatization without a proper policy, appropriate selection of PSE’s and laws safeguarding the national interests as well as protecting the masses should be avoided as it will only lead to less efficiency by investors with conflicting interests, more unemployment, resulting lawlessness, inflation, loss of revenues and government bailouts.

The author is a leading economist, chartered certified analyst, qualified chartered accountant and anti-money laundering expert with international exposure who is helping reshape businesses at Millennium Law Company. He can be reached on Twitter and www.myMFB.com @OmerZaheerMeer or omerzaheermeer@hotmail.co.uk

Taxation can help declining economy

The following article has been published in Daily Nation, dated 23rd February 2015

(E-Paper (Print Edition)http://nation.com.pk/E-Paper/lahore/2015-02-23/page-9 )

(Onlinehttp://nation.com.pk/business/23-Feb-2015/taxation-can-help-declining-economy )

Taxation – Solving Pak’s Dilemma

Prof Dp

By: Omer Zaheer Meer

We’re all aware of the fact that it cost money to run countries and these funds are raised by taxes. Taxation is therefore an essential subject warranting attention from all concerned. In this write-up we’ll identify key issues in this regard and propose solutions to solve them amicably which have been presented by me at various think-tanks as well as published and publicized but unfortunately still awaits implementation from the decision makers.

Taxation is an extremely important source of funding for any state to finance the running of the Governmental functions. Even the oil rich Arab states are now beginning to recognize the importance of this and starting to shift towards a lasting economy with citizens contributing to the national treasury with their share of the taxes. To put it simply in all global economies, there is taxation both direct and indirect (in different combinations). Direct taxation is a tax directly levied on an individual or business’s income while indirect taxation entails taxes on products and services whereby consumers are made to pay taxes when they consume these.

In developed countries, realizing that taxation is necessary for providing them with necessary facilities, most citizens contribute their share to the state finances. Direct taxation is the dominant part of the tax system in such countries as it accrues some substantial benefits for the economy, people and the state. Importantly, direct taxation allows richer segments of the society to be taxed more and poorer classes are provided with relief and benefits. This proportionate taxation not only help smooth the flow of money across various classes of the society but it also helps in ensuring that every citizen has a minimum living standard by providing state assistance where required.

However, a different story is at work in Pakistan. A culture of tax avoidance has long engulfed the business horizons. An ongoing cat and mouse fight between the tax authorities and the taxpayers, with the later believing that it would be a waste to pay off their tax bills due to the deep pockets of the corrupt government officials, has led to a greater focus on indirect taxation. While the tax and state officials rightly point out that no state can perform the necessary duties with the empty coffers, the tax payers also have their point in that they don’t see any real delivery of essential services but instead are greeted with stories of herculean corruption rife all around. The plague of corruption is widely believed to be consuming most of the available resources. Hence, there seems to be a massive break-down of trust between the taxpayers and the “tax-man”.

This serious trust deficit leads to a difficult situation where finance ministry overemphasizes on indirect taxation to try to bolster its coffers.  Unfortunately this approach has serious negative ramifications for Pakistan’s economy and people which has manifested in worsening the already declining economic situation of the country.

In Pakistan, ordinary people are taxed indirectly on just about everything. Nowhere in the developed world is indirect taxation utilized as heavily as in Pakistan due to the negative effects that it creates for the economy. In Pakistan’s case (and that of many other developing countries following this strategy) the negative impacts far outweigh the contributions raised in this manner due to the missed opportunity costs.

For example, 25-30% had been routinely charged as an indirect tax on every liter of fuel (mainly Petrol, Diesel, e.t.c.) in Pakistan which is a basic necessity for everyday life compared to only 13% in the USA. This way of collecting taxes indirectly leads to inflationary pressures in the economy as the increased transportation costs translates into increased prices for just about everything including the commonly used commodities. The effects are hyper-inflationary in nature because there is a multiplicative rather than an additive element in the inflation passed-on at every level.

Furthermore the pay-rises are not proportionate to inflation thereby forcing people to rely on expensive credit to make their ends meet. Similarly businesses also require more finance to run their operations. This hyper-inflationary environment then leads to higher interest rate which negatively affects the businesses. With higher finance costs many business projects which would otherwise be viable becomes non-feasible. The resulting lack of employment opportunities combined with the limited money-supply puts recessionary pressures on the market. The above issues lead to the devaluation of the currency which in turn results in increased foreign debt burden. As a result, financing costs of the foreign debts rise leading to a higher proportion of GDP spent on debt financing. All this combined with hyper-inflation drags the already estranged economy further back in Pakistan’s case.

The above is a summary of the mess created by the taxation policies pursued by the previous government which are unfortunately continued by the incumbent finance ministry. The result is that while the standard of living of especially urban Pakistanis is generally considered well-off compared to most developing countries, Pakistan is considered to be lagging behind economically in the league of the nations.

What is actually required is to restore the faith of the taxpayers by implementing a multi-dimensional tax reforms agenda where:

  • Taxpayers are encouraged and incentivized for paying taxes.
  • Taxpayers are facilitated by making the process easier and fairer, focusing on maximum automation in order to stem out corruption.
  • Instead of increasing the tax rates the tax net is constantly widened.
  • More focus is given to direct taxation.
  • Meaningful tax rebates and reliefs are introduced for the less able sections of the society.
  • A system of proportionate taxation is adopted with more affluent contributing more to the treasury.
  • Certain exempt sectors are brought into the tax-net (subsidies can be given for assisting any under-pressure areas/products).
  • Tax rebates and incentives are introduced to encourage foreign/local investments in key sectors with tax-breaks for transfer of technology, e.t.c. as may be required in a particular sector.
  • Tax money is actually spent on public welfare and infrastructure projects, which will improve the spending capacity and the business environment in Pakistan.
  • The massive corruption in public contracts/projects, now routinely in the range of 40-50% of tender values, is eradicated for better and efficient use of public money through revamping the pay and accountability structures.

With all the natural resources at our disposal, a high proportion of population been young and hardworking and cheap labor availability, a fairer system of taxation culminating into a fairer economic policy can provide the necessary environment to harness the economic potential of Pakistan.

The key reforms outlined above, if properly implemented, can resolve the current enigma facing the treasury. Should such reforms be made with reliance on local resources and a will for change, there is no reason, why Pakistan cannot stand on its own feet and become an economic hub not only for the region but the whole world.

The writer is a leading economist who is also a qualified chartered accountant, financial analyst and anti-money laundering expert. He can be reached on Twitter and www.myMFB.com @OmerZaheerMeer or omerzaheermeer@hotmail.co.uk

Kashmir: The Forgotten Jugular Vein

The following article has been published in the Sunday Edition of Pakistan Today, dated 31st August 2014
(For online version: http://www.pakistantoday.com.pk/2014/08/30/comment/kashmir-the-forgotten-jugular-vein/ )

(For Published Version, Page 9:   http://issuu.com/abidoon/docs/dna_issue_39/9?e=3820687/9123742 )

Kashmir: The Forgotten Jugular Vein

What it still means to Pakistan

Prof Dp

By: Omer Zaheer Meer

The author is a Director of the think-tank “Millat Thinkers’ Forum”. He is a leading economist, qualified accountant and anti-money laundering expert with international exposure who can be reached on Twitter and www.myMFB.com @OmerZaheerMeer  or omerzaheermeer@hotmail.co.uk

Just like all beautiful things in this world, Kashmir, the heaven on Earth has been a victim of its own charm. While most people in the sub-continent and world over know of the miseries of Kashmiris since 1947, their hardships and slavery has dated back long. It was the fateful year of 1820 when tyranny took over the beautiful region with Ranjeet Singh annexing it. However it was yet to see the worst. In 1846, following the defeat of Sikhs in the first Anglo-Sikh war, the so-called “Maharaja” Gulab Singh “purchased” Kashmir along with all its inhabitants for a paltry 7.5 million Rupees from none other than the torch bearer of civilization and human-rights, the then British Empire. After the worst possible atrocities and subjugation a nation has been subjected to in human history, Kashmiris saw ray of hope with the arrival of 1947.

A new Muslim state was been carved out in the subcontinent named Pakistan. The region comprising this new state shared natural, logistical, economic, cultural, religious as well historic ties with Jammu and Kashmir. The overwhelming majority of Kashmir at the time, according to some studies over 80% was Muslim. The masses believed it was their democratic right as well as natural to become part of Pakistan. However there was a catch. According to the Independence Plan the Indo-Pak region was divided on the basis of religious majority of Muslims and Hindus but the independent princely states were to decide their own faith but encourage to join India or Pakistan while taking into account geographical contiguity and the wishes of their people. Any disputes were to be resolved by holding plebiscites.

The subjugation of Kashmiris ultimately led to an internal revolt in the “Poonch” region against the “Dogra Raj” resulting in declaration of “Azad” Kashmir government. The cries for support against the ruthless Dogra oppressors were answered by the poorly armed Pashton tribes from the mountainous terrains of Pakistan, sharing a strong bond of religion. As a result Hari Singh asked for help from India and was forced to sign an alleged accession document as per Indian claims despite having already signed a “standstill” agreement with Pakistan.

Worried by Indian aggression, Quaid-e-Azam ordered the British commander-in-chief of Pakistan Army, General Gracey to send in Pakistan Army units to aid Kashmiris but he refused setting a despicable blot on his name. A few low-ranking Pakistan Army officers voluntarily joined the warring tribes and reached the outskirts of Srinagar. However unnecessary changes of command, lack of proper arms and ammunitions and deficiency in numbers of the rag-tag militiamen meant they were no match materially for the regular Indian Army. However their passion, skill and bravery they fought with led them to not only liberate a vast region but inflicted such damage that the Indian Prime Minister Mr. Jawaharlal Nehru himself took the matter to the United Nations (UN) requesting a cease-fire and asking for a plebiscite in Kashmir under the UN watch, accepting it to be a disputed territory.

Before proceeding further, let me share an interesting excerpt from a historic address with you: “It (Kashmir) is a people with a soul of its own and an individuality of its own. Kashmir is not the property of either India or Pakistan. It belongs to the people of Kashmir, and the people of Kashmir alone will decide as to what their future affiliation and course of action will be”. The excerpt you just read is not said by any Pakistani or Kashmiri leader but these are words of the Prime Minister of India Mr. Nehru himself.

It is a sad tragedy that the so-called largest democracy in the world has enslaved an entire people against their will and back-tracked on its own commitments to not only them but the whole world for the seventh decade now. What’s more pitiful is the hypocrisy practiced by India. It annexed Hyderabad and Junagargh, both ruled by Muslim rulers despite the first declaring independence and the latter signing accession to Pakistan. India claimed that since the majority of the population was Hindu in both states, the independence and accession agreement do not hold. But when it came to Kashmir which was exactly a mirror image with a majority of Muslim population ruled by a non-Muslim ruler, India changed its own stance claiming the alleged accession agreement was to hold in this case. In effect, India practiced imperialist hypocrisy null of any principles. What’s more it even refuses to date to honor its own pledge of a plebiscite in Kashmir, which it made to the international community.

As of today, despite the partially successful 1948 liberation war and subsequent events including 1962 Indo-China war, the state of Jammu and Kashmir stands divided into three regions, the Indian-Occupied Jammu, Kashmir Valley and Ladakh, the Pakistan-administered Azad Kashmir and Gilgit–Baltistan and the Chinese-administered regions of Aksai Chin and the Trans-Karakoram Tract.

On its part, Pakistan fought several wars with India over the Kashmir dispute but missed some golden opportunities. During the 1962 Indo-China war, Kashmir was virtually “empty” of Indian Army and Pakistan was sent a message by Chinese to move in and take over what was rightfully theirs. However the dictator at the time, Field Marshal Ayub Khan let the opportunity slip. Earlier during the 1948 liberation war, Pakistan accepted a ceasefire when its tribal militia without support of regular Pakistan Army was inflicting serious damage to regular Indian Army, letting an opportunity to liberate Kashmir slip away.

Reading this all, you may be wondering why is Kashmir still so important to Pakistan and do Kashmiris still want to join Pakistan? While the latter can be determined by a plebiscite we can examine the first. All of Pakistan’s rivers flow from Kashmir. The Indian occupation has pursued controversial projects to implement a water control strategy designed to starve Pakistan of its lifeline of water supplies. The consequences of water scarcity require a detailed write-up but it can be safely said that it’ll put the very existence of Pakistan at risk.

It was not without reason that the wise Quaid-e-Azam said “Kashmir is the jugular vein of Pakistan and no nation can allow its jugular vein to be held by the enemy”. Even if one was to think beyond the atrocities by Imperialist India warranting a compassionate response, an independent Kashmir with defense pacts would be better for both Kashmir and Pakistan compared to an Indian Occupied one. Pakistan should therefore continue to stand beside the brave Kashmiris who have given unprecedented sacrifices for freedom and lend all the support possible for their just cause.