Govt's dividend income may rise 100%.

KARACHI -- The Pakistan Tehreek-e-Insaf (PTI) government, which is desperately in search of pockets to ramp up revenue receipts without introducing new taxes or increasing the rate of existing taxes, may collect more than double the non-tax revenue in the shape of dividends from state-owned enterprises (SOEs).

The government may receive an additional Rs34 billion to Rs64 billion in dividend from the SOEs in the next fiscal year starting July 1, 2021 if it introduces a policy requiring the state units to pay 50% of the net income in dividend to their shareholders.

Many SOEs listed on the Pakistan Stock Exchange (PSX) earn hefty profits, but disburse low dividend to the shareholders, including the government. They avoid paying a reasonable dividend to keep cash in hand to cope with any financial trouble in future.

'As we are already aware, SOEs at present are paying a relatively low cash dividend to the shareholders,' Arif Habib Limited (AHL) Head of Research Tahir Abbas said in a letter containing budget proposals to Finance Minister Shaukat Tarin. A predominant reason for the low dividend payout by the SOEs is the massive circular debt that has led to liquidity constraints in the energy chain. 'Earning heavy profits will be a major stimulant for government's non-tax revenues,' he added.

A healthy dividend yield will be beneficial for investor confidence in the stock market and subsequently for the development of capital markets. 'Higher dividends will benefit the government in terms of revenue in lieu of withholding tax that is paid on shares not owned by...