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Pakistan’s small businesses hit hard by COVID-19

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Small businesses in Pakistan have been adversely affected by the Covid-19 pandemic. The low demand at home, disruptions in supply chains, constraints in international trading, and expected prolonged lockdowns are now leading to severe cash flow problems, the inability to pay back debts and cancellation of orders from clients. 

This rising uncertainty is gradually leading them to lay off employees which will have welfare implications. In some sectors where recovery is difficult to predict, small businesses have started planning for the worst: complete shutdown. This crisis could also imply a much bleaker outcome for the startup ecosystem in Pakistan.  

The government has announced a SME relief package. The central bank has also come forward to relieve some of the funding and finance related concerns of private enterprises. Yet, many micro and small businesses do not understand how to apply or if they are eligible, to receive such assistance. There are others who argue that this one off relief may not be enough given that businesses are going to face depressed demand for a longer term. Pakistan’s past record of small businesses trying to access such fiscal packages is also not encouraging, partly because many such firms do not access formal banking channels for their needs or banks impose steep collateral requirements. Also, large segments of micro enterprises have the entire or some components of their businesses in the informal sector.

Federal and provincial governments have two issues to address now: how to ensure that small businesses are able to access and utilize existing government-provided assistance, and secondly, what more can be done to support private enterprise in these times.

A progressive fiscal policy and commitment to redistributive taxation is in line with the spirit of Riasat-e-Madinah to which Prime Minister Imran Khan often refers to. A sincere effort is required to reduce the burden of compliance costs faced by small firms- often filing returns several times during a year and to multiple tax bodies across the country. 

Dr. Vaqar Ahmed

On the former, it would be best to start by addressing information and outreach gaps. As the problems for businesses are evolving in real-time, hence there remains a need for structured and more frequent public-private dialogue which should be inclusive enough to also give representation to women, youth-led firms and social enterprises. Such a dialogue will also give a sense to the government about how these businesses will get affected in the forthcoming rounds of Covid-19.

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On the latter, I believe the forthcoming budget for the fiscal year 2020-21 should be seen as an opportunity not only to provide support to collapsing businesses but also to put in place economic incentives that encourage enterprises to consider resilient business models. A large part of this has to do with reimagining a better taxation regime.

A progressive fiscal policy and commitment to redistributive taxation is in line with the spirit of Riasat-e-Madinah to which Prime Minister Imran Khan often refers to. A sincere effort is required to reduce the burden of compliance costs faced by small firms – often filing returns several times during a year and to multiple tax bodies across the country. It is an opportunity now to automate, rationalize or eliminate several filing and payment layers in taxation to ultimately help reduce the cost of doing business.

After a lot of persuasion from local think tanks and the International Monetary Fund (IMF), federal and provincial governments agreed to establish a National Tax Council (NTC) to harmonize the general sales tax (GST). 

Currently all provinces have a different structure of GST on services. There are also issues regarding definition of certain activities which the federal government may assume to be under its jurisdiction. Perhaps smaller firms have been the hardest hit due to the fragmented tax structure across the federation and it is time now to expedite NTC’s establishment and work in this direction. Even when the system is finally harmonized, the GST should not be collected by multiple windows at federal and provincial levels. A unified tax return and collection should be made possible through online mechanisms.

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It will also be timely to think about which sectors should be motivated to scale up production and services in the face of this health-related emergency. Hospitals and private clinics operating at micro, small, and medium scale are primary candidates for cut in GST on services and even rationalization in direct tax rates. Firms producing personal protective equipment should also see a relief in taxes. The trade taxes faced by such producers or even hospitals importing from abroad need to be revisited. The agro-based and food processing enterprises will need similar help as their input supplies face price and supply volatilities.

Covid-19 also increased demand on several other sectors providing essential services. Our policy circles have rarely seen these sectors as important for the social and mental wellbeing of society until the pandemic struck. It will now be timely to recognize the services of firms (including schools) providing online services. The economic policy managers must think out of the box how best to leverage e-commerce in the battle against Covid-19. 

– Dr. Vaqar Ahmed is an economist and former civil servant. He is author of ‘Pakistan’s Agenda for Economic Reforms’ published by the Oxford University Press. Twitter: @vaqarahmed

Courtesy : ArabNews

Business

How to make the new ‘Living with Covid’ plan work for your small business

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The UK government has confirmed that England will end all Covid self-isolation laws on Thursday, as part of its ‘Living with Covid’ plan. What does this mean for SMEs?

Earlier this month, Boris Johnson announced that all Covid-19 rules in England will be scrapped by the end of February.

The new plan has major implications for small businesses, including scrapping the requirement for individuals to self-isolate if they test positive for Covid-19.

Free mass testing is also scheduled to end on April 1.

Below, we look at what exactly the changes are, what they mean for small business owners, and how you can support and prepare your workforce for ‘Living with Covid’.

What is England’s ‘Living with Covid’ plan?

Boris Johnson’s ‘Living with Covid’ plan will take place over three stages.

The first stage has already taken place. New rules introduced on February 21 mean that staff and students in most education and childcare settings no longer have to test twice weekly.

But the change that will have the biggest impact on small businesses is the scrapping of all self-isolation rules from 24 February.

That means people with Covid will no longer be legally required to self-isolate for the previously-required period of five days.

Other new rules include:

  • Guidance will remain that those who test positive stay at home for five days
  • Contact tracing will end
  • Workers will no longer need to tell their employer if they need to self-isolate
  • Self-isolation support payments for those on low incomes will be scrapped

From 1 April:

  • Covid-19 tests will no longer be free except for the most vulnerable
  • Covid passports will be scrapped (except for international travel)
  • Employers will no longer have to explicitly consider Covid in their health and safety risk assessments

The plan Boris Johnson has announced to end all legal restrictions is for England only. Restrictions remain in place in other parts of the UK.What do small business leaders think of the announcement?

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In a press release, Federation of Small Businesses (FSB) National Chair Mike Cherry said: “Small firms right across England will be hoping that this week definitively marks the end of chopping and changing restrictions that have blighted them over the past two years.

“The priority now must be containing the virus and protecting community wellbeing whilst avoiding the need to shut down the economy entirely.”

What if my employees test positive for Covid-19?

The scrapping of Covid-19 self-isolation laws puts the responsibility of managing Covid-positive employees onto the business owner.

This means employers are in a slightly trickier situation when it comes to sick policies.

The government has said that ‘guidance’ will remain in place for those who test positive to stay at home and avoid contact with others for at least five full days.

But the lack of legal rules is likely to result in individuals attending the workplace whilst either positive for Covid-19 or showing symptoms.

With the majority of the UK adult population now fully-vaccinated, symptoms will be milder. It would be unusual for someone to take a week off work because of a cold, and it’s likely only those with serious and/or debilitating Covid-19 symptoms will take time off work.

How can I support members of staff who might be worried about testing positive?

Regardless of the law, the government’s new plan may raise difficult issues for employers, who need to walk a thin line between living with Covid-19 and ensuring the safety of staff.

Many employers have chosen the latter option in the past.

Indeed, data from employee parking software ParkOffice has shown that employers allowed their staff to abandon the office enmasse during the spread of the Omicron variant pre-Christmas, despite there being no official Government advice to restrict movement.

Over the four week period between late November and the traditional break for Christmas, ParkOffice found there was a massive 92.5% decline in office goers across the UK.

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As more people return to the office, your staff might want to avoid individuals who attend the workplace whilst positive for Covid-19 because they feel it is unsafe.

Legally, employers have a duty to support these employees and manage risks to those affected by their business. Here are a few examples for what that might look like:

Health and safety assessment

While no longer legally required, the way to do this is to carry out a health and safety risk assessment – including the risk of COVID-19 – and to take reasonable steps to mitigate any risks to other employees who might be worried about becoming infected with Covid-19.

The Government’s working safety guidance sets out a range of mitigations employers should consider including identifying poorly ventilated areas and taking steps to improve air flow in these areas.

Run an employee engagement survey and/or forum

Employee feedback surveys are meant to improve productivity by understanding the way your employees think about your company’s current policies and ways of working.

Check the attitude of your workplace towards the new ‘Living with Covid’ plan with an anonymous feedback survey before you decide on any long-term policies.

It might be that your staff are happy to work with people who have tested positive for Covid – or, you might learn that they are unhappy with the new rules and will require more reassurance and support measures.

This is not only a helpful exercise for business leaders, as you can hear concerns and issues directly from your employees. It’s also a good communication channel for staff members to air any grievances and feel they are being listened to.

Similar to this approach is an employee engagement forum. This is essentially a team discussion amongst a handful of volunteers from your workforce who can then share their ideas on a problem and give feedback on how other employees might be feeling.

Implement your own self-isolation policy

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If you feel that a large enough majority of your staff are concerned about the government’s new plan, there are more forceful steps you can take.

The end of the legal obligation to self-isolate does not prevent employers from having their own restrictions on workplace attendance for those who test positive for Covid-19 – if you choose to do so.

Typically, these rules would be contained in the employer’s policies and may, for example, stipulate that individuals who either test positive for Covid-19, and/or are displaying symptoms of the virus, work from home until a negative test is taken.

This more assertive action is not without potential risks, and you should make sure to properly communicate your reasoning to staff members to avoid alienating them.

You should also consider:

  • Purchasing home-testing kits for employees who are displaying symptoms of Covid-19 and wish to take a test.As free testing has now been scrapped, putting the onus of purchasing a test on your employees could cause friction.
  • Choosing to keep in place rules on face-coverings, hand washing and other safety measures should you wish. These might further reassure employees that the workplace is safe to continue working in.

Conclusion

The government’s ‘Living with Covid’ plan means it is now lawful for employees to attend the workplace with Covid-19 or with symptoms.

Still, employers should carry out employee surveys to check the temperature of their staff and keep an eye on the mood of the workplace on Covid-19 issues.

There is still debate about whether or not these restrictions should be lifted and a good employer should ensure they are addressing the concerns of staff members who might not feel safe coming into the office – particularly after nearly two years of living with Covid-19 safety measures.

Open communication through employee surveys and even specialist engagement committees will help your staff to function properly and ensure they feel properly supported.

Via Startups

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Covid-19

Consul General of Liberaland in Pakistan Faisal Butt hails Imran Khan’s strategy that reduced Covid-19 Cases in Pakistan .

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Lahore: Consul General of Liberland in Pakistan Faisal Butt has appreciated the strategy of the Pakistani government in view of the reduction of corona cases in Pakistan. In his statement, he said that Pakistan has taken better steps to control the spread of corona in comparison to the neighbouring countries .

As a result of these measures , Pakistan is rated amongst the lowest covid 19 cases reported countries . Not only the cases but also the death toll is much less than other countries.

He said that there was no doubt that Pakistan was making progress even in conditions like corona. All the credit goes to the government of Prime Minister Imran Khan.

Today, other Asian countries, including Europe, also appreciating Imran Khan’s strategy. He further said that the day is not far when the people of Pakistan will be vaccinated and declared a Corona free country.

Referring to the relations between Pakistan and Liberland, he said that Corona has enveloped the whole world, which has hampered relations, imports and exports with many countries. As soon as the situation improves, not only diplomatic but also trade relations between Pakistan and Liberals will be restored.

The Consul General said we are planing to sign the agreements between the Liberland Chamber of Commerce and the Lahore Chamber of Commerce. A plan of action will be announced soon.

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China

What will the post-COVID world look like?

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Although virologists have been warning of the risks of a global pandemic since the SARS outbreak in 2003, the world was still mostly unprepared when confronted with the COVID-19 crisis. However, it was also unlucky.

It was unfortunate that the pandemic came in the run-up to a US presidential election that has created an environment as politically polarized as any the country has experienced. As a result, much of the US media coverage of, and debate about, the virus and the global policies needed to deal with its effects have been more about the presidential race rather than the pandemic.

This has obviously had a clear effect on international politics because of the importance of the role of the US and its global leadership.

It was also bad luck that the health crisis came at a time of high tensions between the US and the second largest global power, China, where the virus originated. This further complicated any potential global unified response.

As a result of the global uncertainty, it is difficult to forecast how critical aspects of the crisis, which seems likely to continue for at least another 12 months, will play out in the Middle East, and also what a post-COVID world might look like.

One certainty is that most countries will be forced to shift their focus and resources to domestic matters rather than regional issues.

The virus and the resultant shutdowns imposed to “flatten the curve” of infections have had, and will continue to have, devastating consequences on economies and national budgets. It seems that despite the soft reopening of parts of economies around the world, the current health concerns will prevent a full restoration of business activities for some time, especially if the number of infections and deaths start to rise again after governments relax precautionary measures.

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In our increasingly interconnected world, it is difficult to determine whether any country will come out on top economically, and consequently geopolitically, especially given mounting levels of debt.

Countries able to borrow in their own currency seem to be at an advantage; this applies mainly to the US and the EU (if the European countries can unify their policies), and indirectly also explains the current debate in the Gulf about the unpegging of currencies.

Another certainty is that with less money available, wars and proxy wars will become prohibitively expensive and all parties will be forced to scale down their ambitions. As a result, aggression will be reduced and consensus and agreement might be more readily reached. Countries and their allies or proxies who have refused to sit at the negotiation table might now change their minds and mellow, or perhaps even be forced to completely withdraw from conflict zones.

Take Iran, for instance, which has been targeted recently by a successful US policy of maximum pressure. The country is facing problems domestically and, with the added pressure of low oil prices, it will be less able to maintain its financial support to the Houthis in Yemen, the militias in Iraq, and Hezbollah.

Does that mean Tehran will cease its meddling? Nothing is certain but domestic turmoil might force it to do so.

As Iran’s problems have grown, the region has witnessed during the COVID-19 pandemic the emergence of a more assertive Turkey. This has happened despite the fact the country is also suffering economically.

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It has been a long time in the making. Turkish involvement has spread to many regional issues beyond its normal national security zone. Its involvement in neighboring Syria is understandable, given that the conflict there directly threatens Turkey’s security. More interesting is the Turkish interest in Libya, where Ankara is pushing for a continued presence with no apparent direct threat or rationale to explain this. This is happening while it also increases political rhetoric that promises continued interference in the domestic affairs of Arab countries in the years to come.

A closer look at the issues reveals that Turkey is focusing its involvement on key points on Europe’s energy routes. This is not surprising, as Europe remains Ankara’s main and constant focus. So, Turkey is now directly competing with Russia — the biggest supplier of gas to Europe — in Syria, where Iran is also strongly entrenched as the country is a key Mediterranean access point for its gas and energy deliveries to Europe.

Turkey is challenging Russia for control of the tap that provides Europe with its energy stability, and this explains its involvement in Libya and other countries. The same logic explains Ankara’s negative reaction to the Israeli-Greek-Cypriot gas-pipeline project, EastMed. This motivates its strategy, as it hopes to leverage it to make more gains in the region.

Therefore, we can expect an increased Turkish focus on the Mediterranean and on supply-chain routes and access points for energy, as well as merchandise being shipped from the East to Europe.

On that point, the land routes of China’s Belt and Road Initiative include one that goes through Russia and another that passes through Turkey. This massive project is also something Turkey is well aware of, and Ankara is striving to ensure it has a presence on key points along the BRI’s Maritime Silk Road. Once again, it is being guided not by national security concerns but a desire to increase its regional clout.

It is difficult to forecast how critical aspects of the corona crisis will play out in the Middle East. 

Khaled Abou Zahr

While Russia and Turkey face off on the ground over an increasing number of issues, it is interesting to note the apparent lack of any direct involvement by the US or China, the two biggest global powers, and, surprisingly, the total absence of European nations, which should be the most concerned about what is happening.

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In weighing how global and regional powers will direct their foreign policies and manage existing conflict zones, their own domestic political, economic and social stability will play an important role.

Yet, apparent weaknesses might invite bold moves and dangerous power-grab attempts. This delicate balance will be the key driver for international policies in the coming years. One might say that uncertainty and volatility have spread from the stock-markets to the geopolitical arena.

  • Khaled Abou Zahr is the CEO of Eurabia, a media and tech company. He is also the editor of Al-Watan Al-Arabi.

Courtesy : Arabnews.pk

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