Cost of negligence
ONCE again, Karachi has witnessed a tragic fire, this time engulfing a six-storey commercial-cum-residential building on Shahrah-i-Pakistan. At least four people have died and several have been injured, besides an untold amount of property lost. This incident, following closely on the heels of the RJ Mall fire, raises questions about the city’s preparedness for such emergencies. The response to this fire, while commendable in its scale, highlights systemic issues. The delay in the arrival of snorkels and the apparent lack of coordination among different emergency services is concerning. Moreover, it is distressing to hear that local residents played a more pivotal role in evacuation than the official responders. The recurring nature of these tragedies points to a deeper malaise: the lack of stringent fire safety measures. The fact that the building housed foam, cushion, and mattress shops — highly flammable materials — without apparent adequate fire safety measures is a glaring oversight. It calls into question the enforcement of building codes and safety regulations by the authorities.
The caretaker chief minister’s order for an inquiry is welcome, but it must not become another forgotten promise. The inquiry into the RJ Mall fire is still underway, with no visible outcome or changes implemented. Karachi’s citizens need more than just post-tragedy reassurances; they need proactive measures to prevent such incidents in the first place. The government’s move to initiate a fire safety audit in commercial buildings is a positive development but it needs to be a city-wide, continuous effort, ensuring all buildings comply with safety standards. It is time the city developed a more effective emergency response mechanism and enforced stringent fire safety regulations. The loss of lives in such preventable incidents is a stark reminder of the cost of negligence and inaction. Karachi’s residents deserve a safe city, and it is the duty of the authorities to ensure that safety is not just a promise, but a reality.
Published in Dawn, December 8th, 2023
Filing returns
THE grim realities of Pakistan’s flailing efforts to ensure tax compliance often present themselves as farce. According to a report published in these pages, some 10,000 officers of the Federal Board of Revenue have not bothered to file their income tax returns for the last two years. The trend is especially pervasive in officials below Grade-17, with the rate of non-compliance reported to be somewhere between 60-70pc across the country. A significant percentage of senior officers, too, seemingly have no qualms about failing to meet the legal requirement of filing taxes, which puts a big question mark on the FBR’s moral authority. It is particularly galling that compliance levels are low even though FBR employees have been granted a much longer deadline to file their taxes compared to ordinary citizens — a ‘special privilege’ extended to them by the country’s tax chief.
While, on the one hand, the FBR has been threatening ordinary citizens with the suspension of utility connections and phone services in case they fail to comply with tax notices, its own officers seem not to be bothered at all by the consequences of failing to do so. This is a deeply embarrassing reality check for the FBR, and it must be asked why an otherwise serious obligation has been allowed to be turned into something of a running gag. It is almost a given that the deadline to file returns will be extended every year, which gives citizens reason to be complacent about fulfilling this national duty in a timely manner. Clearly, the disincentives for non-compliance are too low, and potential filers, therefore, do not take the matter seriously enough. It should also be acknowledged that filing returns could still seem like a rather intimidating task to the majority of ordinary citizens, given the dismal state of financial literacy in the country. A concerted effort, therefore, needs to be made at the national level to familiarise people with the process of filing tax returns, remove their misconceptions, and continuously simplify the process so that more and more citizens can file their returns independently. It seems clear that Pakistan still has a very long way to go in order to reach a respectable degree of compliance. Perhaps it is time for the authorities to start questioning their methodologies and stop repeating the same cycle again and again.
Published in Dawn, December 8th, 2023
Privatising SOEs
WHY does the government want to demolish the historic Roosevelt Hotel in New York — one of the eight properties our bankrupt national airline owns outside Pakistan — to build a new one through a joint venture, as disclosed recently by an aviation official during a Senate hearing?
What kind of massive losses will PIA suffer further if the agreement does not materialise? Does the plan make any business sense? Apparently, the official did not elaborate, perhaps because the disclosure was meant to prepare the ground for the implementation of the plan and build a favourable, supportive public opinion.
Since the details of the plan remain sketchy, it is hard to evaluate it objectively. But given the fact that the hotel, located in the heart of Manhattan, has bled money for years, contributing little or nothing to the moribund airline’s annual cash flow, it makes no business sense to undertake the new venture.
Currently rented to the New York City government for three years for $220m to house immigrants, the century-old hotel suffered large financial losses after the Covid-19 pandemic, and had to be shut down.
Back in 2020, the government held serious discussions to sell the hotel to boost PIA’s finances and to avoid the privatisation of the airline. But the plan was dropped after the hospitality industry suffered a massive hit owing to the pandemic.
Whenever a government tries to sell state-owned enterprises, vested interests become active, seeking ways to get around the reforms agenda the country must implement for longer-term economic stability.
We have been seeing this since the early 1990s when Pakistan decided to privatise public businesses, which had already started to sink fast and become a major liability for taxpayers.
Thus, it has been known for the last three decades that the government needs to sell SOEs quickly. In certain areas, such as banking and telecom, it succeeded. But in the case of PIA and the Pakistan Steel Mills it has not.
PSM keeps losing money more than seven years after it was shut down. It was, therefore, widely expected that certain interests would try to stall the privatisation of PIA that has accumulated losses to the tune of Rs717bn.
The plan to demolish Roosevelt Hotel may not be part of the devious strategy to stall the national carrier’s sale the authorities have been trying to pull off as early as possible, but it should not be given the green signal unless the financial advisers currently conducting due diligence of PIA submit their opinion on the plan, even if PIA properties do not have any link with the airline’s disinvestment.
With the losses of SOEs mounting every year and becoming a major drag on the budget, it is time to speed up the privatisation process.
Published in Dawn, December 8th, 2023