Published in Dawn, The Business and Finance Weekly, March 18th, 2019
CHANGING established practices that have served the nexus of power is not
easy, especially in Pakistan. Therefore, the success of progressive changes
inserted in the legal framework will depend on civil awareness and the
public’s demand to follow through with them.
The country made a long overdue move last week towards greater transparency,
credibility and reliability by enacting the Benami Transaction (Prohibition)
The fact that it took the country a good 16 years, after it decided to shun
the benami system (where the real owner of an asset is undisclosed) in 2003,
reflects the hold and influence of the beneficiaries on the opaque framework
of the state structure.
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The mighty elite have yet to digest the radical change in the legal framework
and make adjustments to shield its undeclared assets.
The move, market watchers expect, will spark fear when the full implications
of the Benami law are understood. They foresee a fall in property prices
going forward as benami holders rush to dump their assets in the market to
ward off the risk of confiscation.
“I anticipate a surprisingly rich haul from this move,” an expert commented
referring to expected action against benami bank accounts.
There is little doubt that if implemented diligently the said law can
minimise and, over time, eliminate the abuse of a loophole (benami) in the
legislative framework. This has traditionally been used to conceal wealth and
its movement, presumably to evade tax and/or obscure illicit purposes.
Market watchers foresee a fall in property prices as benami holders rush to
dump their assets in the market to ward off the risk of confiscation
The relevant circles in Islamabad declined to quantify the possible impact of
the said law in terms of unearthing hidden wealth which has been parked in
bank accounts and property.
The hierarchy was not able to offer a convincing response on how the Federal
Board of Revenue (FBR), that has failed to perform its basic function
(revenue collection), will shoulder the additional responsibility of
identifying rogue owners of accounts and properties in the country.
Experts believe the process initiated by the enactment of the law will take
about a year before justice is served on owners of benami fixed or liquid
assets. “The fate of properties and accounts attached in the initial phase
will set the tone and establish the efficacy of the exercise,” commented a
senior officer in the FBR.
In a written response to a Dawn query on the time required to implement the
law, FBR Member Inland Revenue Policy Dr Hamid Ateeq Sarwar said: “The
jurisdiction assigning orders are being issued. Investigation and attachment
of properties part will become operational from April 2019. The adjudication
part will start from July 1, 2019 as the prosecution requires a period of 90
to 120 days before adjudication.”
When pressed for the expected worth of property that falls in the category
and could be confiscated in the first year to set the ball rolling, a member
of the government economic team declined to throw a number in the absence of
any study that sheds light on the monetary worth of benami properties and
bank accounts in Pakistan.
“It can be anywhere between five to 20 per cent of the total holdings but in
absence of verifiable data it is not fair to make projections,” a senior
officer commented, adding that the Economic Crime Wing (ECW) of the FIA might
have better projections.
Several attempts to reach the director general FIA, ADG ECW or other seniors
for comments proved futile. Many officers were on leave or too busy to share
their assessment of the law or identify hurdles in its implementation.
The practice of holding and operating a benami bank accounts and properties
has been rampant in South Asia. There might be a historical explanation for
the trend but in modern times there exists no justification for the practice
used and abused by socially irresponsible elements to park and shuffle their
The relevant circles are not sure how far the enactment of the new law will
strengthen Pakistan’s case at the global monitoring forums such as with the
Financial Action Task Force (FATF), but they insist that it’s a move in the
Shabbar Zaidi, senior partner at AF Ferguson and former provincial minister
confirmed the veracity of the law. “It is a very good piece of legislation
that addresses a blatant anomaly in the framework,” he said over phone.
Assessing the possible impact of the Benami prohibition law on the property
market in Pakistan, Hasan Bakshi chairman ABAD, hoped it will drive shadow
owners out making conditions conducive for genuine buyers to enter the
“People with undisclosed streams of massive income have flouted the property
market, pushing prices beyond the reach of the middle class. If implemented
with the right spirit the new law can burst the bubble and broaden the base
of participation, along with enhancing the level of activity in the market,”
When reached over phone, officials in the ministries of finance and law in
Sindh and Punjab were still in the process of studying the new legislation to
comprehend what it would mean to them.
A senior bureaucrat in Sindh expressed apprehensions. “Unless the government
invests in capacity building, the criminal elements will continue to game the
system to their advantage despite a new law. What’s the fun in having better
laws if they can’t deliver justice?” he asked.
A member of the provincial economic team in Punjab was not particularly
excited. “The proof of the pudding is in the eating. If the law succeeds in
exposing and penalising people in possession of wealth not justified by their
means we will do all in our means to help the federal government,” he told
Dawn over phone from Lahore.