Business Recorder Editorials 14th September 2026

Immovable property

EDITORIAL: According to a report carried by this newspaper recently, withholding tax collection by FBR from immovable property increased by 57 percent in the last fiscal year. Not only that, but to spur investment in the real estate sector the government in the budget for FY27 reduced the rate of advance tax on purchase of property by as much as 50 percent.

Experts, rightly attribute this inexplicable concession to a sharp rise in real estate prices and activity all over the country. In certain pockets of Karachi prices of plots have increased manifold over the past six months.

This inflow of money may reflect reverse capital flight from the Middle East—particularly the UAE—amid the US-Iran war, whose tremors have been felt across the region. Initially, the usual outflow of money from Pakistan appeared to have slowed.

More recently, some funds parked abroad may have also returned, as suggested by stronger remittance inflows and increased dollar supplies from exchange companies.

The news is encouraging as it is helping build forex reserves and improve the liquidity in the domestic market. However, there is a risk that this money is being channelled into unproductive assets primarily vacant plots in various localities, creating price bubbles without generating meaningful economic activity.

The funds are clearly not flowing into the stock market, as this asset class is not only considered riskier and requires active management, but it also offers limited upside now that the market has peaked. Real estate, by comparison, provides an easier avenue for parking funds, with the added advantage of fewer documentation requirements.

The worrisome part is that there is no interest in investing in real businesses—be it manufacturing or services. Pakistan’s investment-to-GDP ratio is hovering around its lowest levels, and the government is failing to attract investment despite attaining macroeconomic stability.

The Finance Minister should be questioned for failing to anticipate a reversal in capital flight and for not providing the right incentives to channel these funds into industrial sectors or other productive avenues.

The core issues are excessive taxation and slack in the industrial sector. Furthermore, the government is failing to provide a level playing field, as regulatory and taxation hurdles keep investment at bay. Consequently, our manufacturing base is losing competitiveness across multiple areas, and concrete efforts to improve the situation are entirely missing.

While some money enters the country through the Hundi-Hawala system, it may not be clean enough to be invested in documented sectors. Moreover, even when capital is documented, the fear of the tax authority deters investors from committing to formal sectors.

The government is reportedly studying the creation of an investment fund for overseas Pakistanis to finance USD 6.5 billion in Public-Private Partnership (PPP) projects; while this is a case of “better late than never,” the Finance Ministry should have anticipated this trend and introduced out-of-the-box solutions to bring this capital into the formal sector much earlier.

Our banks should also be questioned as to why they are not striving to retain this extraordinary flow within the banking sector to finance economic activity in the formal economy. It was not long ago, in 1998, when the PML(N) government froze the foreign currency accounts of resident citizens after our nuclear tests.

Shaukat Tareen, the then-president of Habib Bank Limited (HBL), immediately announced a scheme of substantial, expensive prizes to be awarded every month through lucky draws to the bank’s depositors. Other banks soon followed suit. This measure ensured that the massive rupee liquidity created by the freezing of dollar accounts remained within the banking system, rather than being channelled into unproductive sectors of the economy.

Nonetheless, it is not too late. The money keeps coming, and the flow is likely to continue, as the war is by no means over and the medium-term outlook for the Gulf region is bearish. The government, the Central Bank, and commercial banks should have a clear strategy for attracting capital into formal sectors or, at the very least, luring investors into government securities.

The government is always in need of financing, which is currently crowding out the private sector. Attracting foreign liquidity into government securities will allow the financial system’s liquidity to move toward productive assets.

The point is that there is an ongoing opportunity to attract capital into the country while retaining money that would normally flow out. The government, especially the Finance Ministry, should wake up and work on channelling this liquidity into the right avenues before it is too late.

While the world burns, literally

EDITORIAL: The latest rise in global food prices offers an uncomfortable measure of how several crises are beginning to reinforce each other. The UN Food and Agriculture Organisation’s food price index rose 1.9 percent in August alone and 2.5 percent from a year earlier, as extreme weather damaged crops while wars disrupted trade, energy and agricultural inputs.

Sugar prices jumped almost 12 percent in a month, wheat was 15 percent more expensive than a year ago, and even maize is feeling the consequences of disruption in the Strait of Hormuz. This is what happens when climate stress and geopolitical recklessness arrive at the same table.

And there is every reason to fear that the pressure will intensify. Exceptional heat has already reduced European crop yields, while a potentially record-strength El Nino threatens agricultural production across Asia. The closure of Hormuz has driven up fuel costs and disrupted an important route for fertiliser supplies. The Russia-Ukraine war, meanwhile, continues to interfere with Black Sea grain logistics years after it began. Each crisis enters the food chain through a different door, but eventually they meet in the price paid by consumers.

This convergence should be concentrating minds in governments everywhere. Instead, much of the international political elite remains consumed by the pursuit of military advantage, geopolitical leverage and domestic political survival.

Wars that have long since demonstrated their capacity to generate economic damage beyond their battlefields continue because the protagonists remain unwilling to compromise. Climate warnings become more alarming with every passing year, yet meaningful preparation continues to lag behind increasingly violent changes in weather.

Food is where these failures become particularly dangerous. Higher oil prices raise the cost of cultivation, transportation and processing. Fertiliser shortages increase production costs and eventually threaten yields. Drought and extreme heat reduce supply directly.

Disrupted shipping then makes moving whatever is produced more expensive and uncertain. These pressures can accumulate rapidly, leaving poorer countries importing both the consequences of distant wars and the inflation generated by a warming planet.

Pakistan should be especially worried. Its households already devote a large share of their incomes to food, its agriculture remains highly exposed to extreme weather, and its external account is vulnerable to increases in imported fuel and commodities.

A simultaneous rise in energy, fertiliser and food costs would travel quickly through domestic prices while adding pressure on foreign exchange requirements. The poorest households would inevitably suffer first because they possess the smallest cushion against another inflationary shock.

Yet the larger absurdity belongs to the international order itself. Governments have spent years acknowledging climate change as an existential threat while continuing to behave as though its economic consequences belong safely in the future.

At the same time, conflicts in Ukraine and the Middle East have been allowed to threaten grain routes, energy supplies, fertiliser availability and shipping through one of the world’s most important maritime passages. The political class appears remarkably skilled at identifying global emergencies and considerably less capable of preventing them from colliding.

The FAO numbers should therefore be read as an early warning. A 1.9 percent monthly increase in its index is manageable in isolation. The forces driving it are far more troubling because several could persist or worsen simultaneously.

A powerful El Nino will continue affecting weather patterns, wars show little sign of ending, Hormuz remains disrupted and agricultural producers must make planting decisions amid uncertainty over costs and climate conditions.

The world has already learned how quickly food, fuel and financial shocks can travel across borders. It should also have learned that waiting until shortages appear and prices explode is an exceptionally expensive form of crisis management. Yet here we are again, sleepwalking towards overlapping emergencies while those with the power to defuse some of them remain preoccupied with acquiring still more power.