Heavy taxes may stall investment in real estate sector
Interview with Mohammad Hanif Gohar – Chairman, Association of Builders & Developers of Pakistan (ABAD)
Mohammad Hanif Gohar is the Chairman of Gohar Group of Companies since 1988. He is a man of exemplary vision and enterprise, having led the Group for three decades, to international shores and having proven the competency and capabilities of the Pakistani housing, infrastructure and currency exchange field.
The Group is reflective of Mr. Hanif Gohar’s personal journey as he has single handedly helped lay the foundations and build this empire. It is a remarkable story similar to the age old Rags to Riches kind.
Coming from a very humble family background and having been through the turmoil’s of life, Mr. Mohammad Hanif Gohar has gained for himself a prestigious and respected status amongst his Industry Peers and society.
Today, the Group, under his leadership and guidance, has diversified in to real estate development, currency exchange, aviation, marketing, manufacturing, engineering, procurement & construction, civil contracting & infrastructure, property & facility management and logistics & warehousing services.
It is under Mr. Hanif Gohar’s mentorship that Gohar Group of Companies has emerged as one of the country’s foremost real estate developers, with 4.5 million sq ft of projects executed and another 3.5 million sq ft under various stages of development. His undying passion for scaling greater heights and setting even higher standards have resulted in the Group gaining a strong brand equity, with a reputation for consistently developing landmark projects and award-winning addresses. The company is guided by his philosophy of focusing on customers, emphasis on high quality construction, passion for innovation, commitment to ethics, and following an open organization culture.
As the chief mentor of the Group, Mr. Hanif Gohar has inspired his team to do the same and continues to motivate them by lending his expertise in charting out a robust growth strategy for all the Group companies.
Mr. Hanif Gohar has received numerous accolades and awards for the Group’s achievements and his outstanding contribution to real estate sector. He continues to be on various committees and has been the Vice Chairman of Association of Builders & Developers (ABAD). He is also serving as the President of the Association of All Pakistan Exchange Companies (B) along with the post of Senior Vice Chairman – Federation of Pakistan Chambers of Commerce & Industry (FPCCI).
Mr. Hanif Gohar donates his time and resources to support many philanthropic endeavors. He contributes his time and resources to organizations that are dedicated to education and medical research, meeting humanitarian needs and supporting the arts. He is a classical music enthusiast, a passionate sportsman and a proud Pakistani.
Chairman: Association of Builders & Developers of Pakistan (ABAD)
President: Association of All Pakistan Exchange Companies (B)
Vice President: Federation of Pakistan Chambers of Commerce & Industry (FPCCI)
Member: Karachi Chamber of Commerce & Industry (KCCI)
Member: Association of Builders & Developers of Pakistan (ABAD)
Member: Utilities, Power & Gas Sub-Committee of KCCI
Member: Pakistan Defense Officers Housing Authority
Signifying the role of builders and developers in the present situation of socio-economic development is quite visible in Pakistan these days. Mohammad Hanif Gohar Chairman Association of Builders & Developers has invited the attention of the policy makers that high rate of taxation likely to hurt the growth of property development currently at an ideal stage and well poised to gear up the economy of Pakistan.
In an exclusive interview, Mohammad Hanif Gohar looked quite optimistic of the government policies and remarked that after the agriculture sector, the construction industry is the only sector providing largest number of jobs not only to highly-skilled, skilled, semi-skilled workforce but simultaneously accommodating a huge number of unskilled work force and as well as contributing in the poverty alleviation in the country.
Pin pointing the importance of the construction sector, he substantiated his statement that at present the property development is contributing 2.5 percent to the Gross Domestic Product (GDP) of the country.
PAGE: One of the serious problems of the day faced by the country is the security concern as well as law and order situation particularly in urban areas of the country, although there are many other factors behind this menace yet the mushroom growth of slums especially in Karachi is a major source of crimes, these slums are considered as the factory for generating criminal activities besides providing shelter to the law bracers. Lyari gang war is the best example of the ugly role of the slums in civilized society. The organizations like ABAD in collaboration with the governments can develop low cost houses at an affordable price, which is an effective way to stop the growth of slums in major cities of Pakistan, would you share your views how ABAD can play a role in eliminating slums areas from urban areas of the country?
CHAIRMAN: ABAD is working for construction of low-cost houses and change slum areas into well-organized settlements so that people can live peacefully with all civic amenities and crime also could be controlled. In fact ABAD had moved a proposal that ABAD can contribute in development of vertical housing structure at all slum areas, which can promise to provide a decent living to the inmates of the slums and when one is provided a decent living he thinks hundred times prior indulging any criminal activity.
PAGE: There is an acute shortage of new housing units with shortfall running in millions for new houses, however, high cost of property is a major deterrent for the families with average income who cannot dream of owning a small house in the present situation of ever increasing cost of living in Pakistan. It is unfortunate that the interest rate in Pakistan is 42 years low but the middle income groups are unable to take advantage of the low interest rate for building a home because the cost of exorbitant price of land in Pakistan. It will not be out of place to mention that only moneyed people are taking advantage of the low price bank financing. What you would suggest to resolve the issue of growing number of shelter-less people in Pakistan?
CHAIRMAN: The ABAD has sent a presentation to Prime Minister Nawaz Sharif for constructing affordable housing schemes, which include to a proposal to make the government land at an affordable price so that people of average income may also have a house to live respectably in their own houses.
PAGE: The revenue department has recently increased the valuation of the properties and cost of stamps would make property development a costly affair, don’t you think it would affect construction industry which provides fuel for running over 82 large and small industries allied to property development?
CHAIRMAN: Association of Builders and Developers has moved some important suggestions to the government in which we have invited the attention of the finance minister to increase the collector value by up to 50 percent to stop corruption in the valuation mechanism but on the other hand, the government should cut the Capital Gains Tax (CGT) on the transfer of property from 10 percent to 5 percent and regulatory duty by one percent.
ABAD has strongly rejected the government’s efforts to give extraordinary discretionary powers to the income tax commissioner for determining value of property, terming it opening of another gateway of corruption. ABAD has also requested to the government to avoid levying irrational taxation on the construction sector and raw materials including cement and steel, as this act will not only lead to massive flight of capital from this sector but also affect growth of tax net, on one hand while on the other the increase of the cost will be passed on to the customer which may affect this vital industry, which is considered as an engine of growth in elsewhere in the world.
PAGE: How the construction industry views the recent steps taken by the government for increasing revenue from property and development sector, don’t you think it may stall the growth of real estate sector?
CHAIRMAN: As a result of recent steps for increasing capital value tax and other taxes, an adverse impact on the growth of property development in Pakistan has disrupted the pace of growth which is unfortunate, in fact, prior to go for such harsh steps the decision makers should have taken the stakeholders in to confidence for a viable solution for revenue generation with a view to save this industry from huge losses. However, we hope that the crisis prevailing at the moment would be resolved amicably and hopefully the government would realize the significance of real estate sector and its contribution to economic growth as well as a strong support against rising number of unemployment in Pakistan.
Profile of ABAD
Association of Builders & Developers of Pakistan (ABAD) is a national level representative organization of Builders and Developers registered under the Companies Ordinance, 1984 with Registration No. Karachi No. 4967 of 1977-78 and licensed under Trade Organization Ordinance, 2007. It is affiliated with the Federation of Pakistan Chambers of Commerce and Industry (FPCCI). It was formed in the year 1972 with the aim and objective of unifying and streamlining the construction activities of private sector.