Proper regulations needed to support ailing leasing sector: Raza Khan
Islamabad: (July 21)
Raza Khan, Chairman Coordination, FPCCI on Thursday said that government should announce a bailout package for leasing sector.
Leasing has great potential but it faces serious handicaps like unhealthy environment, lack of qualified staff, tax considerations, delayed payments, bad debts, and premature credit decisions which is marring its growth, he said.
Speaking to business community and representatives of leasing companies at FPCCI, Capital Office, he said that few years back we have some 33 leasing while 20 Mudaraba-based investment and finance companies.
Today we are left with only few active companies while a dozen semi-active concerns, he regretted.
Raza Khan said that institutions like World Bank and IFC have also reduced financing to leasing companies since the State Bank lifted the exchange cover.
He said that turnover tax imposed on gross receipts of the leasing companies is not helping raise funds, tax should be on profit and not the principal amount, he demanded.
Turnover tax has increased problems for leasing businesses while reduced share of taxes for the government, he said.
Recovery process is also slow which is hurting the recovery process, said Raza Khan adding that increase in number of banking courts can resolve this issue.
He said that bad debts, defaults and lack of financing are also some issues that are hampering this issue.
Leasing professionals to revisit strategy for finance leasing, operating leasing and contract hire and prefer business with tested clients to remain sustainable in these difficult times, he advised.
Mian Faysal Riaz, Country Corporate Head of the world's largest direct leasing company was also present on the occasion.
Imtiaz A Chaudhry said that leasing is playing an important role towards capital formation and assisting the other sectors in balancing, modernising and replacement.
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Muhammad Raza Khan,
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Muhammad Raza Khan,
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