Pakistan interest rates are biting the businesses. But where there's a will there's a way
Business
South Korea prepares financial package for stock investors, small businesses
LAHORE/SEOUL (Web Desk/Reuters) – Producing economic slowdown and fewer job opportunities as well as stagnant wages, high interest rates have produced negative consequences not only in Pakistan but also around the globe.
No sane businessman can opt for expanding the existing setups or setting up new ones when the borrowing costs or interest rates have reached 22 per cent. The biggest victims are the small and medium enterprises as the big businesses always have, or can find, room and options thanks to the resources at the hand.
The unending series closure of small businesses and the layoffs around you are a testimony to the challenge we have.
Read more: Small businesses, common people everywhere are fed up with high interest rates
However, the governments in developed countries, unlike Pakistan, are providing relief to workers in the shape of handouts or incentives in the case of businesses.
The latest example in South Korea where, Reuters reported, the government said on Wednesday it plans to implement a package of financial policies to support stock investors and small business owners squeezed by high interest rates.
The financial support measures come three months ahead of the country's general elections and as the president holds a series of policy discussion forums this month.
The government is scrapping its plan to impose capital gain tax on income exceeding 50 million won ($37,359.99) from stock investments, which was introduced by the previous administration and due to be implemented from next year, the Financial Services Commission said in a statement.
Read more: PML-N to focus on interest rate cuts, employment generation
In South Korea, only "large shareholders", who hold more than five billion wons worth of stocks in a listed company, are currently subject to capital gains tax. That threshold was raised from one billion won last December.
The government would continue making progress to improve stock short-selling rules to ensure a "level playing field" between retail and institutional investors, said the commission, which is the ministry in charge of financial policies and regulations.
To help ease the burden of high interest rates, local banks will return a total of 1.6 trillion wons ($1.20 billion) of interest income to small businesses and the self-employed who have taken out loans, according to the commission.
For up to 2.9 million people with overdue repayments on loans, the government said it will provide a "credit rating pardon" to help them return to economic activity with a clean financial record.
