1- Downfall of Pakistan Real Estate Sector before COVID-19 Pandemic
2- Prime Minister Relief Package for Construction Sector
Today, development is the second biggest segment in Pakistan’s economy after Agriculture. Approximately 30-35% of the work is directly partnered with the construction segment. Bank declared that the country’s real estate assets produce 60-70 % revenue in the economy. However, the industry could not perform at its full capability in the last few years due to multifarious reasons. The latest package announced by Prime Minister is a vital step in order to combat the economic crisis in the construction sector.
On a higher note, Coronavirus (COVID-19) pandemic is spreading across Pakistan nowadays. It all started with a first casualty on 26th February when two carriers diagnosed with positive for Coronavirus. It had been stated that both of them returned from Iran and tested positive. And then this contagious pandemic disseminated like a fire in the Jungle. Pakistan has closed its borders temporarily by doing all the precautionary measures in order to cope with this deadly virus. It is causing a negative impact on our economy because our economy has been derailed gradually. Full and partial lockdown in the country is diagnosing an economic failure and all business sectors are on the back foot now.
Pakistan’s Government is mitigating all the effects of Coronavirus wisely by implementing the right policies at the right time. But as compared to all other well-developed countries, Pakistan is combating with this pandemic very strongly. Thus the COVID-19 cases are far less than other well-established countries which are a vital sign for Pakistan. So let’s discuss the problems for the Real Estate Sector before this pandemic.
Downfall of Pakistan Real Estate Sector before Covid-19 Pandemic
Pakistan’s Real Estate sector has always been an important factor in the economic growth cycle. Pakistan Real Estate Sector didn’t flourish in 2017 due to the political vulnerability and undefined economic policies. Real Estate sector has been facing a serious backlash after the amendment of the rules in 2018. Different new policies, no incentives for investors, and additional taxes modified the persona of this sector. In 2019, the restriction imposed on the non-filers by FBR (Federal Board of Revenue) in order to reveal all the assets. Another restriction imposed by FBR in order to monitor all the banking transactions by non-filers. High duty taxes imposed on the transfer of property led to the investors on the back foot. All the investors, traders, businessmen, stockbrokers, buyers, and sellers got a huge setback and hardly managed to cope with all these circumstances in these two years.
All eyes were set on the overseas people so that they could invest heavily in Pakistan and the cycle of Real Estate flourished. As of now, temporary lockdown is observing a negative impact on the real estate sector but the buyers and sellers are much confident that this too shall pass. We got an optimistic approach after the announcement of the finest and historic Relief Package for Construction Sector by Prime Minister Imran Khan.
Prime Minister Relief Package for Construction Industry
Prime Minister of Pakistan Imran Khan announced a relief package for the Construction Sector in order to stabilize the economy and the interest of people towards Real Estate. It is a major breakthrough in the light of this COVID-19 pandemic nowadays. Prime Minister declared this incentive package on 3rd April 2020 in Islamabad. The main point of focus of this historic package is to facilitate labor across Pakistan associated to the construction sector.
Detailed Segregation of Relief Package:
While addressing the nation, the Prime Minister revealed that the real estate tycoons (Investors) will be free from the declaration of their income as long as the COVID-19 pandemic exists. In addition to it, he stated that those investors who are enrolled in the Naya Pakistan construction project will get an added dominance of a 90% tax waiver. He also told that a new board is going to be launched that will cater to all the affairs related to the Construction Industry Sector. Some important highlights are given below:
1. Investors will not be liable to declare the income they invest in a property in 2020; In short, they will not be answerable for their Invested Income.
2. There will be a fixed tax imposed on the construction sector. There will be no rise and fall of the prescribed tax. The Estate Developer will pay the tax per square foot/yard.
3. Constructors who are investing in all sorts of construction under the Naya Pakistan Housing Scheme will have to pay only 10% of fixed tax.
4. There will be no additional/ withholding tax for the construction sector except steel and cement sectors.
5. Capital gain tax will be exempted from selling a house or flat, that too comes under Naya Pakistan Housing Scheme.
6. A help center will be incorporated for all the Real Estate Constructors and Developers in order to resolve all the queries associated with it.
Learning Outcome:
- As per the estimates, Pakistan’s GDP is 180 Billion USD and almost an equal size of undocumented economy exists. It means if the incentives announced by the Government around 25% of the undocumented economy we get 40 Billion USD in the Construction sector. It will almost take care of 7.5 Million house-holds which almost address 75% of the families living below the poverty level. In addition to it, the Government sector development project and CPEC Project will be a vital sign in terms of poverty elimination. GDP from construction in Pakistan is expected to reach 351763.00 PKR Million in 2020
- Social Distancing is the key in order to fight with this deadly outbreak. We have to rise against the COVID-19 pandemic as a nation. We have to follow all the precautions properly prescribed by our Health Council. We have to make our surroundings hygienic by disinfecting all the contaminated areas exposed to the virus.
- As per Country’s Economic perspective is concerned, Prime Minister Imran khan is making a strong decision in order to combat against Coronavirus (COVID-19) pandemic. Imran Khan has developed a “Tiger Force” to target the volunteers in order to cope with this outbreak. He introduced a relief package worth 200 billion rupees for all the people affecting by a coronavirus. He is trying hard to make the right policies at the right time in order to strengthen the economy.
In a nutshell, if we act like a civilized citizen of Pakistan then we could overcome this in a short span of time. Optimistically the economy will be revitalized, businesses including our Real Estate Sector will be flourished soon and together we will make a statement:
” Pakistan is now a Covid-19 free Country”.