ILO Baseline Study on Hospitality Business in Pakistan - August 30, 2011

ILO-Pakistan has conducted a baseline study to establish gendered situation analysis of the hospitality sector. According to this study, in the twin cities of Islamabad/Rawalpindi, a major part of hospitality business is closing down or functioning below their capacity and less than half of the business is running only. The hospitality sector is a vast field, ranging from hotels/restaurants and transportation to recreation and entertainment/resorts and tourism, and is part of the service sector, which contributes to the 59% of GDP while employing 35% of workforce in Pakistan. This study also shows that businesses are relatively worse off in Rawalpindi as they have to pay taxes at the rate of 27% while in Islamabad, businesses pay taxes at 17%....a differential of 10%.

Moreover, the varied implementation of regulations like one dish in wedding ceremonies (where Rawalpindi being part of the Punjab province comes under the law of one dish i.e. THE PUNJAB MARRIAGE FUNCTIONS Act 2003) also affects business in Rawalpindi, as people want to hold their functions in Islamabad instead of Pindi. Moreover, with the presence of GHQ in Rawalpindi, many set ups are supported by armed forces (which makes them tax exempt), which allows them to offer lower rates and increasing competition (however effectively crowding out the private investment in hospitality business).

Source: Published in The News International, August 30, 2011