nationalization of private enterprise and offers a wide choice of industries to private entrepreneurs, including areas hith- erto reserved exclusively for the public sector.
The incentives that are offered to the foreign investor
include:
--
A 5-year income tax holiday for approved industries such as agro-based industries, banking, telecommunications and power generation in designated areas;
Liberal facilities allowing repatriation of foreign capital to the extent of the original investment, profits and any additional amount resulting from re-invested profit or the appreciation of the capital investment;
An export processing zone in Karachi and Lahore, set up to promote foreign investment in export-oriented indus- tries. All goods manufactured in these zones will be exempt of duties and taxes;
--
Relaxed exchange control restrictions (see second point);
Free movement of currencies in and out of Pakistan; No special restrictions to be applied to ownership, by foreigners, of land and buildings;
Relief from double taxation and a simplification of investment procedures; and,
Allowance for investors to import a Mercedes car for personal use without payment of any Government tariffs.
Despite the economic ineptitude displayed by the Paki- stan Government, the violent uprisings, and the massive energy shortage, the number of work stoppages has been on
the decline.
It seems that, as the population continues to grow at a rapid rate, jobs are becoming harder to find and workers are holding onto their jobs longer than before.
One of the problems facing the Government is how to achieve a better income distribution.
At the moment there are massive income inequalities, which goes some way to explaining the prevalent social
unrest.
But with the increasing population, Pakistan is becoming less able to support its rising numbers of unemployed, resulting in unyielding pockets of poverty and malnutrition. On top of these domestic problems, the country is also faced with a growing foreign debt.
In 1986, the debt reached an
all-time high of
$US10.3 billion (about $HK80.3 billion) and Paki- stan is paying about $US1.2 billion (about $HK9.36 billion) annually
on amortizing its debt.
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Red tape and bureaucracy, another characteristic of Pakistan, are further holding back the expansion of the economy. As a result, both domestic and foreign investments are being withheld.
As far as taxation goes, all companies, resident or not, are subject to income tax at a flat rate of 30 percent, plus 'super
tax'.
Super tax for private limited companies, including branches of companies incorporated abroad, is 25 percent, while public limited companies pay 10 percent and banking companies pay 35 percent.
In general, all expenditure other than that of a capital or personal nature is admissible as tax deductible, provided it is spent wholly and exclusively for the purpose of business.
Now that the civilian Government has been dismissed, President Zia is, evidently trying to bring the country more into line with the Islamic faith.
One of the reasons that President Zia gives for sacking Junejo's Government was that it was an insufficiently Mus- lim orthodox government, and in his first move to extend Islam in Pakistan, President Zia ordered all civil servants to observe daily prayers.
Government employees have been warned that they will be punished for not praying.
President Zia's zeal for Islam is likely to split the country
further.
Pakistan is a country with numerous religions and it is unclear how a central Muslim legal authority could satisfy
everyone.
It appears that Pakistan is going to have to look forward to a few more years of upheaval and reorganization before it finds political and economic stability.
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