Consequences of budget 2021-22, presented shortly, promises exceptional stability for the real estate sector. However, new government reforms have been put in place, and they will have a significant impact on the way real estate is perceived in the future. Therefore, we can anticipate only positive outcomes in the real estate sector, and we can only prepare ourselves for them in advance.
The Effect of Capital Market Incentives on the Economy
The government is expected to provide capital market incentives in the upcoming Budget 2021-22 by implementing viable ideas from the Pakistan Stock Exchange Limited (PSX), such as reducing capital gains tax (CGT) on securities dispositions.
According to the Ministry of Finance, the Pakistan Stock Exchange Limited (PSX) has submitted its budget recommendations for 2021-22. However, for the FBR to calculate the revenue impact of each proposal before holding direct discussions with stakeholders in the coming days, the Finance Ministry has delegated authority to do so.
As a result of these proposals, the market capitalization of Pakistan’s capital market has seen significant growth over the years. It reached a peak of approximately PKR 8 trillion on January 30, 2020, before plummeting to approximately PKR 5.7 trillion on April 1, 2020, as a result of the global economic downturn brought on by the pandemic. As a result, the national economic statistics of Pakistan have become unpredictable and pessimistic in recent years. Nevertheless, the first half of fiscal 2020 revealed some clear signs of an economic recovery. Likewise, the second half of fiscal 2020 showed some clear signs of an economic recovery. However, given the current circumstances, it is anticipated that the journey to long-term sustainable growth will take some time; however, the turnaround efforts are well underway. However, we can see the positive impact of these capital market incentives, and they have exceeded our expectations. Pakistan has enormous potential, especially if it implements substantial capital market structural changes as soon as possible.
Promotion of the Tourism Industry in Baluchistan
During the fiscal year 2021-22 budgeting process, the Baluchistan government intends to allocate a significant amount of money to develop and market the province’s tourism industry. In addition, Baluchistan’s administration has taken innovative steps to promote and improve tourism infrastructure in the province’s various tourist destinations.
Because the proposed projects will appeal to tourists and investors interested in investing in the province’s coastal areas, there will be favorable circumstances to take advantage of due to their implementation. The new projects would increase the number of tourist facilities, such as hotels, rest houses, restaurants, and the number of tourist information centers available to provide travelers with relevant information.
The Implications of Rising Oil Prices
The Prime Minister has decided to keep petroleum product prices at the same level as they were on May 1, 2021, and a fortnight before that. It is because it will benefit the general public. The government must change the Petroleum Levy and the Sales Tax on SKO and LDO products to maintain the same rates.
The government will lose PKR 2.77 billion in revenue if the current pricing structure is maintained. Therefore, prices will be implemented beginning on May 18th at the following rates:
Petrol costs PKR 108.56 per liter HSD, PKR 110.76 per liter SKO, PKR 80.00 per liter LDO, and PKR 77.65 per liter LDO.
The economy benefits from lower petroleum prices for a long time, so this decision sets the stage for favorable outcomes. Even though the government loses a significant amount of money, conventional wisdom holds that when people spend less money on gasoline at the gas pump, they will automatically send it somewhere else, as if by some flawless law of mathematics and economics. Aggregate economic activity is influenced by millions of individual decisions, which are controlled by psychological factors.
As a result of the Prime Minister’s decision, the immediate expectation of increased productivity and future success has been raised.
Aid to the Construction Industry from the Government
The Pakistani government included assistance for the real estate and construction industries (Taj residencia Islamabad) in 2021-22. The government has reduced taxes and provided funding to assist the construction and related industries in this year’s Budget. According to a government official, the initiative is an attempt to revitalize the country’s economic growth while also providing job opportunities. Furthermore, the cement FED has been reduced from PKR 2 to PKR 1.75 per kilogram of cement produced.
Positive consequences are in store for the construction industry as a result of these incentives. The building industries are better positioned to make a positive contribution to the nation. All sectors directly or indirectly related to the construction industry will prosper, and the substantial economic growth will only succeed.
Subsidy for the Naya Pakistan Housing Development Project
Prime Minister Imran Khan has laid the groundwork for the Naya Pakistan Housing Scheme, which will provide lower-cost housing to Pakistanis with limited financial resources. The country has been dealing with several economic declines, trade imbalances, low agricultural productivity, etc. Because the housing sector encompasses all of these issues simultaneously, the government believes that this sector – which includes finance, construction, and related building materials – is the only one that can handle them all. In addition, the Prime Minister believes that the country’s economy and banking sector will benefit from the government’s housing plan.
Government subsidies for the Naya Pakistan Housing Authority are expected to total approximately PKR 30 billion. This subsidy is one of the relief packages included in the upcoming Budget 2021-22, and the consequences of its implementation will be beneficial to the entire country. Affordably priced housing for the working class will be made available, will introduce the unemployment rate will be reduced, and the economy will gain new strength and stability.
It has been requested by the American Business Council (ABC) of Pakistan that the Federal Board of Revenue (FBR) include appropriate measures in the upcoming Budget (2021-22) to encourage Pakistan-born Americans to invest in projects and real estate, as well as to open bank accounts in Pakistan.
It revealed a shift in Pakistan resident status from three to six months in the ABC’s budget recommendations for 2021-22, submitted to the Federal Budget Office (preferably nine months). This shift will undoubtedly encourage the diaspora to consider Pakistan as a viable investment destination…
Also requested is the elimination of the requirement for an American of Pakistani descent to obtain a no-objection certificate to invest, establish, and manage businesses in Pakistan.
It should extend the same rights to people of Pakistani descent as they do to local Pakistani citizens when choosing their field of business.
The Possibility of the Reintroduction of the Amnesty Program
As part of the program, individuals, associations of persons, and corporations who declared their assets could generate up to $ 1 billion (PKR 121 billion) in tax revenue.
Currently, the government is not inquiring about the source of funds used to construct the building (by builders and developers). In 2021, the government will maintain the fixed tax on builders’ sales while reducing taxes on low-income people’s home purchases by up to 90 percent. However, there is a possibility that the government will reintroduce the amnesty scheme, given that the aftermath of the global pandemic is slowly coming to an end. It is anticipated that the government will take this step to attract more investment into the development sector.
Since the pandemic ratios in Pakistan are decreasing, it is likely that the tourism industry, the construction industry, and the real estate sector will receive new grants and will see rapid development. Consequently, there will be a significant influx of money, which will spread throughout all sectors of the economy. As the absence of the pandemic will determine many successes in the real estate sector, the next six months will be critical and priceless for the industry.
Waqas Hussain is a Senior Analyst and Search Engine Expert. Extensive experience being a lead writer in Estate Land Marketing | Blue World City. Work for years with local and international enterprises. Also, represent well-known brands in the UK.