With an unproductively high taxation rate in Pakistan, as a result we are largely seeing two main shifts: One, more and more firms are either shifting to the undocumented sector or are simply closing down and/or exiting (the cases of MNCs being on the run to exit Pakistan or the recent industry closures are quite obvious to everyone by now, and Two, with an increasing shift to the undocumented sector, the demand for credit in off-line private credit market has exploded. To explain this , traditionally when companies need a loan, they turn to a bank, but of late increasingly, they are choosing to trade in the undocumented sector in order to avoid taxation and therefore, turning to off-line financial options that are not really banks but do have a lot of unofficial cash to lend. This is the off-line private industrial credit market and by market estimates today constitute almost 25% of the industrial credit in circulation, be it be in stock investments, operational funding, direct working capital cash injections or even long-term investments for capacity enhancements and BMRs.

LHC upholds Punjab Healthcare Commission’s authority to regulate medical prices

The situation has become risky and the environment so un-conducive for the legitimate operators that unless checked, we could perhaps be sitting on potentially the gravest financial crisis of the country history thus far, both financially and operationally. In economic or finance terms, such a phenomenon is often referred to as the Cockroach Problem. The term was originally coined by Jamie Dimon, the financial genius CEO........

© The Nation