Pakistan Economy - News & Updates

[ejaz007]

Pakistan asks US to write off loans

* Gilani tells Holbrooke move will help govt overcome economic problems * Asks US envoy to expedite passage of aid for Pakistan

Staff Report

ISLAMABAD: Prime Minister Yousuf Raza Gilani asked the US on Friday to write off Pakistan’s debts, to help the government overcome the prevailing economic problems that have been accentuated by the war on terror, a mass displacement from Swat and adjoining areas and the global recession.

Gilani made the appeal at a meeting with special US envoy Richard Holbrooke – who had called on the Prime Minister.

Gilani also urged the US administration to expedite an initiative in the US Congress to increase aid for Pakistan, and called for the provision of much-needed military supplies for Pakistan’s campaign against terrorism.

The prime minister acknowledged that the US had assisted Pakistan in providing relief to internally displaced people from Malakand by providing a $300 million aid package. “Major European and Muslim countries would follow America’s lead and step forward with timely assistance,” he hoped.

Gilani said the army’s offensive against the Taliban had the backing of the entire nation. “The government and all national institutions are fully on board in fighting the menace of terror, and there is ... a spirit of reconciliation on national issues among all political stakeholders,” he said.

Holbrooke said the US would look into Pakistan’s request to write off debts, and steps were already being taken to fast track the supply of military equipment.

According to the APP news agency, Gilani – in a separate address to Pakistan People’s Party office-bearers from Balochistan – also called on the US to review its policy on drone attacks in the Tribal Areas, as “it is proving to be counterproductive”. He assured the PPP office-bearers that there would be no drone attacks in Balochistan.

Daily Times - Leading News Resource of Pakistan

 

[Omar1984]

Foreigners eager to invest in Pakistan

Sunday, June 07, 2009
By By Faryal Najeeb

KARACHI: Foreign delegates attending the ‘My Karachi Oasis of Harmony’ exhibition have said that they are eager to invest in Pakistan as it has high potential for trade.

They said that despite the law and order situation, business people were willing to enter the country due to excellent opportunities available here.

Speaking to The News, on the second day of the event, General Manager of China High Top Trading, Tsingbo Zhao, said that his company has designed projects to generate electricity through wind turbines in Pakistan. Though he did not provide any investment details, Zhao stated that they are collaborating with the government on the project which they plan to establish on the outskirts of Karachi.

He said that if the government allocated a vast area of land to them, then they would plan to install at least a hundred of their designed wind turbines, each of which would be 18m in length and of 750kgs and would have the capacity to produce over 30 megawatts of electricity. Zhao also informed that they are designing projects which would utilise solar energy to create power.

“Using coal to generate electricity is not the best option as it involves environmental issues as well. However, using wind turbines and solar energy to create electricity is feasible as Pakistan’s weather is ideal for this kind of generation,” he added.

Commercial Attache of Turkey in Pakistan, Nail Ersoy, said that the trade balance remains in favour of Pakistan due to the country’s high export of textile products to Turkey. He said that very recently a trade delegation of Pakistan had visited Turkey which was the second largest compared to other countries. He said the meeting in Turkey had been very successful and several new and non-traditional areas had been explored to increase trade between the two countries. Referring to their investments in Pakistan, Ersoy informed that Turkey has several stakes in the upcoming Textile City and the Gwadar Port also holds great importance for them.

Secretary to Consul General of Indonesia, Aftab Ahmed Shahid, said that though the balance of trade was in Indonesia’s favour, there was a lot of trade potential between the two countries.


Foreigners eager to invest in Pakistan

 

[ejaz007]

Pakistan, Iran sign gas pipeline agreement

ISLAMABAD: Pakistan and Iran have signed an agreement to activate a bilateral gas pipeline project, without India's participation, after 14 years of negotiations over what was initially framed as the Iran-Pakistan-India (IPI) gas pipeline project.

Sources in the ministry of petroleum and natural resources told Daily Times here on Saturday that Pakistan Interstate Gas Company (PIGC) and the Iranian National Oil Company (INOC) signed the agreement late Friday in Turkey.

The official said that the agreement would be governed through a third country law that was why it was signed in Turkey.

Under the gas sale purchase agreement, Iran would provide 750 million cubic feet of gas per day to Pakistan for the next 25 years, which would generate 4000MW of electricity. Officials in Islamabad termed the deal a major breakthrough and an achievement that would greatly help Pakistan meet its energy needs.

The project, when initially mooted in 1994, was intended to carry gas from Iran to Pakistan and on to India. New Delhi withdrew from the talks last year over repeated disputes on prices, transit fees and security issues.

The pipeline project would be completed by 2013, the sources maintained. "The gas pipeline would begin from Gawadar near Iranian border having 800 kilometer length. The determination of gas price would be linked with oil prices in the international market but will be less than 25 percent as compared to crude oil prices," sources maintained.

Officials of the ministry of Petroleum and Natural Resources termed the agreement as landmark achievement of the government and expressed the hope the it would help Pakistan to meet shortfall both for commercial and domestic purposes.

The country urgently needed gas and the agreement would greatly help the country to over come the shortfall.

Another official of the concerned ministry said that the new exploration and production petroleum policy 2009 with alluring incentives would definitely accelerate the investment in the oil and gas sector. Pakistan was rich in oil and gas, particularly Balochistan. If the government manages to enforce its writ by giving the ownership feeling to the local people, then aggressive oil and gas exploration could be carried out. This was the only way left for Pakistan to cater to the energy needs of the country. staff report

Daily Times - Leading News Resource of Pakistan

 

[Neo]

Mobile firms link $1bn investment to tax relief ​

Sunday, June 07, 2009

ISLAMABAD: Mobile phone operators have told Prime Minister Syed Yousuf Raza Gilani that they would invest $1 billion in the next fiscal year 2009-10 if the government waives activation charges, reduces sales tax to 16 per cent and delays licensing for 3G (third generation) services, it is learnt.

“If such facilitations are not provided, the mobile operators will not bring another $1 billion investment in the country,” said a high-level official of one of the mobile companies while talking to The News here on Saturday.

Chief executives of mobile companies held a meeting with Prime Minister Gilani a few days ago in which they discussed making more investments in the next fiscal year.

“But this investment depends on waiving the activation charge of Rs500, cutting sales tax from 21 per cent to 16 per cent and delaying licensing for 3G because the market situation is not ripe,” the official added.

“If mobile companies’ demands are not met in the next budget, then they will only invest in what is already in the pipelines to address their administrative problems,” he stated.

The existing law and order situation and higher inflation, he said, played havoc with the industry which had invested over $6.7 billion in Pakistan.

He noted that foreign direct investment (FDI) attracted by the sector stood at $629 million in April-June 2008, which declined to $364 million in the next quarter (July-Sept).

Import of handsets was worth $127 million in April-June 2008, which declined to $70 million during July-September. The imports nosedived to just $17.95 million in the October-December period, indicating that smuggling was on the rise.

Cellular companies are paying 31 per cent taxes as well as Rs750 on the import of mobile phone sets. There is 21 per cent GST and federal excise duty and 10 per cent withholding tax on pre-paid cards.

After increasing taxes by the government in the budget for 2008-09, he said that revenue collection declined by around 9 per cent as it was standing at Rs9.463 billion in first quarter (July-Sept) of the current fiscal year, which decreased to Rs8.858 billion in the second quarter (Oct-Dec) of 2008-09.

The growth of the sector also witnessed a decline as it registered negative growth by 0.3 per cent in the October-December period during the current fiscal year 2008-09.

According to the PTA report, he said that it was the projection of the regulator that higher taxation resulted in revenue collection.

According to PTA projection, revenue collection could be materialised at Rs45.496 billion with the imposition of 15 per cent tax, which was projected to decline to Rs41 billion with increased GST rates of 21 per cent. —MH

 

[Neo]

Pakistan, Iran sign gas pipeline agreement​

ISLAMABAD: Pakistan and Iran have signed an agreement to activate a bilateral gas pipeline project, without India's participation, after 14 years of negotiations over what was initially framed as the Iran-Pakistan-India (IPI) gas pipeline project.

Sources in the ministry of petroleum and natural resources told Daily Times here on Saturday that Pakistan Interstate Gas Company (PIGC) and the Iranian National Oil Company (INOC) signed the agreement late Friday in Turkey.

The official said that the agreement would be governed through a third country law that was why it was signed in Turkey.

Under the gas sale purchase agreement, Iran would provide 750 million cubic feet of gas per day to Pakistan for the next 25 years, which would generate 4000MW of electricity. Officials in Islamabad termed the deal a major breakthrough and an achievement that would greatly help Pakistan meet its energy needs.

The project, when initially mooted in 1994, was intended to carry gas from Iran to Pakistan and on to India. New Delhi withdrew from the talks last year over repeated disputes on prices, transit fees and security issues.

The pipeline project would be completed by 2013, the sources maintained. "The gas pipeline would begin from Gawadar near Iranian border having 800 kilometer length. The determination of gas price would be linked with oil prices in the international market but will be less than 25 percent as compared to crude oil prices," sources maintained.

Officials of the ministry of Petroleum and Natural Resources termed the agreement as landmark achievement of the government and expressed the hope the it would help Pakistan to meet shortfall both for commercial and domestic purposes.

The country urgently needed gas and the agreement would greatly help the country to over come the shortfall.

Another official of the concerned ministry said that the new exploration and production petroleum policy 2009 with alluring incentives would definitely accelerate the investment in the oil and gas sector. Pakistan was rich in oil and gas, particularly Balochistan. If the government manages to enforce its writ by giving the ownership feeling to the local people, then aggressive oil and gas exploration could be carried out. This was the only way left for Pakistan to cater to the energy needs of the country.

 

[Neo]

Pakistan becomes the 20th most attractive outsourcing destination​

CHICAGO: Deteriorating cost advantages and improved labor quality are driving a dramatic shift in the geography of off shoring according to the latest edition of global management consulting firm AT Kearney's Global Services Location Index (GSLI), a ranking of the most attractive off shoring destinations. AT Kearney is a global management consulting firm that uses strategic insight, tailored solutions and a collaborative working style to help clients achieve sustainable results.

While India, China and Malaysia retain the top three spots they've occupied since the inaugural GSLI in 2004, a fundamental shift in the index has taken place as once strong Central European countries have yielded ground to countries in Asia, the Middle East and North Africa.

Pakistan has become the 20th most attractive outsourcing destination, according to consulting management firm AT Kearney. Even as concerns increase about Pakistan's stability and the growing displaced population due to ongoing military operations with the Taliban, the country made a significant jump on AT Kearney's 2009 Global Services Location Index released May 18. Pakistan went from number 30 in 2007 to number 20 in 2009.

The GSLI analyses and ranks the top 50 countries worldwide for locating outsourcing activities, including IT services and support, contact centres and back-office support. Each country's score is composed of a weighted combination of relative scores on 43 measurements, which are grouped into three categories: financial attractiveness, people and skills availability and business environment.

Established Central European countries including Poland, the Czech Republic, Hungary and Slovakia, once among the premier off shoring destinations for Western Europe companies, have fallen significantly due to a rapid increase in costs driven by both wage inflation and currency appreciation against the dollar. Meanwhile, low-cost countries in Southeast Asia and the Middle East made significant gains this year as the quality and availability of their labor forces improved. Egypt, Jordan and Vietnam ranked in the GSLI's top 10 for the first time ever.

"While cost remains a major driver in decisions about where to outsource, the quality of the labour pool is gaining importance as companies view the labour market through a global lens driven by talent shortages at home, particularly in higher, value-added functions," said Norbert Jorek, a partner with AT Kearney and managing director of the firm's Global Business Policy Council. "In response, governments all over the world are investing in the human capital demanded by the off shoring industry."

The Middle East and North Africa is emerging as a key off shoring region because of its large, well educated population and its proximity to Europe. In addition to Egypt and Jordan, ranked at sixth and ninth, respectively, Tunisia (17th), United Arab Emirates (29th) and Morocco (30th) all rank among in the GSLI's top 30 countries. "The Middle East and Africa area has the potential to redraw the off shoring map and in the process bring much needed opportunities for its large, underemployed educated class," said Johan Gott, project manager for the Global Services Location Index.

Saharan Africa also showed strength. Ghana ranked 15th, Mauritius 25th, Senegal 26th and South Africa 39th.

Countries in Latin America and the Caribbean continue to capitalize on their proximity to the United States as nearshore destinations. Chile placed highest among countries from the region, ranking 8th on the strength of its political stability and favorable business environment. Other strong performers in the region include Mexico (11th), Brazil (12th) and Jamaica, which rose 11 places to rank 23rd.

India, China and Malaysia continue to lead the index by a wide margin through a unique combination of high people skills, favorable business environment and low cost. In particular, India has remained at the forefront of the outsourcing industry and actually has become an enabler for industry growth through expansion of Indian off shoring firms into other countries.

"The dynamics of global off shoring are clearly shifting as companies re-evaluate the political risks, labor arbitrage and skill requirements in the context of the likely aftermath of the global economic crisis," said Paul A. Laudicina, AT Kearney chairman and managing officer. "Risk management will take on new importance to protect global service delivery from interruption and ensure capabilities are strategically dispersed rather than concentrated in a few cost-effective locations." daily times monitor

 

[Neo]

PM presses US for civilian N-tech​

* Gilani says Pakistan has always opposed drone attacks
* Wants new laws to deal with terrorists​

LAHORE: The United States should share its nuclear technology with Pakistan to ensure that the balance of power in the region remains intact, Prime Minister Yousuf Raza Gilani said on Saturday.

Talking to journalists at the foundation-laying ceremony of the Aiwan-e-Quaid-e-Azam in Johar Town, Gilani said the US already had a civilian nuclear deal with India and Pakistan now believes that it should be extended similar concessions.

Responding to a question on Pakistan’s stance on Iran’s nuclear programme, he said that acquisition of peaceful nuclear technology was the right of every country.

Drone attacks: Gilani said Pakistan had clearly told the US that drone attacks were counter-productive and that they only serve to compound the problems that the country faces. He said, “We are strongly against these attacks because they are against our strategy of segregating peace-loving tribal people and militants”. “We have asked the US to provide Pakistan the technology and the possession of drones so that in case of credible intelligence, we ourselves can take action,” he added.

To a question about India’s reaction over the release of Hafiz Saeed on court orders, the prime minister said there were some loopholes in the country’s laws and legislation had to be carried out to deal more effectively with elements committing crimes in other countries.

The PM also announced a financial grant of Rs 100 million for Aiwan-e-Quaid-e-Azam. Punjab Governor Salmaan Taseer and Chief Minister Shahbaz Sharif were also present on the occasion.

 

[Neo]

Agriculture sector contributed 4.7 percent to GDP growth in 2008-09​

ISLAMABAD (June 07 2009): Agriculture sector has contributed 4.7 percent in growth of gross domestic products (GDP) during the 2008-09 financial year. According to sources, the contribution of major crops is 7.7 percent attributed to 12.3 percent higher production of wheat, 25 percent of rice, 12 percent of maize, 60 percent of gram and 25 percent of sesamum during the current financial year.

The production of cotton has increased by 1.4 percent, but the production of sugarcane declined by 21.7 percent. The production of wheat is 23.42 million tons against 20.958 million tons last fiscal year.

THE WHEAT PRODUCTION IN PUNJAB: stands at 17.9 million tons;

Sindh: 3.542 million tons;

NWFP: 1.108 million tons; and Balochistan: 0.867 million tons. Total wheat cultivation area this year was 9.062 million hectares as against 8.54 million hectares last year.

The cotton crop production has registered 6.031 million tons in the current financial year as against 5.94 million tons last year. Punjab produced 4.46 million tons cotton; Sindh: 1.51 million tons; Balochistan: 45,500 tons cotton. Total cotton cultivation area this year was 2.81 million hectares against 3.05 million hectares last year. Cotton (lint) production was 11.819 million bales. Rice output during the current financial year is 6.95 million tons as against 5.56 million tons last year.

The rice crop production in Punjab is 3.64 million tons; Sindh: 2.53 million tons; NWFP: 0.128 million tons; and Balochistan: 0.64 million tons. The rice crop was sown on an area of 2.96 million hectares this year as against 2.51 million hectares last year. Pakistan produced 50.04 million tons sugarcane in the current financial year as against 63.920 million tons during last year.

The sugarcane output in Punjab has been recorded at 32.2 million tons; Sindh: 13.3 million tons; NWFP: 4.408 million tons; and Balochistan: 379,000 tons. The sugarcane crop area was 1.029 million hectares this year as against 1.241 million hectares last year.

Total production of Bajra for this year is 0.29 million tons; Jowar: 0.164 million tons; maize 4.035 million tons; sesamum: 41,000 tons; gram: 0.76 million tons; barely: 83,000 tons; mustard: 0.14 million tons; and tobacco: 0.113 million tons.

Fruit production during the current financial year was 7.399 million tons. The production of pulses declined by 8.9 percent from 0.280 million tons to 0.255 million tons during the current financial year. The production of pulses includes 13,500 tons mash; 21,100 tons of masoor; 0.157 million tons of moong. The production of vegetables this year has been estimated at 5.72 million tons as against 5.6 million tons during 2007-08.

The gross output in livestock sector increased from 3.4 percent to 3.8 percent in the current financial year in comparison to last year. Livestock products registered the same growth rate for the two years - 207-08 and 2008-09, ie 3.2 percent. Milk production value increased from Rs 361,673 million in 2007-08 to Rs 373,401 million in 2008-09. Poultry's growth increased from 6.6 percent last year to 11. 2 percent in the current financial year.

 

[Neo]

'Projects helpful in elimination of poverty to be included in ADP'​

LAHORE (June 08 2009): Chief Minister Punjab Muhammad Shahbaz Sharif has said that next Annual Development Programme (ADP) will be responsive to the needs of the poor and special measures will be taken for the uplift of backward and far-flung areas of the province. He said that such projects would be given priority under ADP which could help eliminate poverty, ignorance and unemployment.

He was addressing a high level meeting regarding ADP formulation here on Sunday. Provincial Minister for Finance Tanvir Ashraf Kaira, Senator Ishaq Dar, Member National Assembly Ahsan Iqbal, Chief Secretary Punjab, Chairman Planning & Development, secretaries of Finance, Schools and Communication & Works departments as well as officers concerned were present. He said that priorities would have to be set within available resources and realistic utilisation of funds will have to be ensured.

He said that instead of putting additional burden on the common man in the next budget, such segments should be brought into the tax-net which could afford to pay. He said that welfare and uplift of the poor masses remained the top priority of the government and a number of revolutionary measures had already been taken in this regard including Sasti Roti, Food Support Programme and Punjab Educational Endowment Fund. He said that such schemes were being included in the next ADP which could accelerate development process in the province. The meeting considered in detail various projects in different sectors for next ADP.

 

[Neo]

Industrial sector enters restructuring phase​

MULTAN (June 08 2009): Pakistan's industries battered by falling exports amid the global economic slowdown, have entered a restructuring phase, which will encourage banks to enhance private sector lending, Former Punjab Minister for Industries Khawaja Muhammad Jalaluddin Roomi said while talking to newsmen here on Sunday. Private sector credit off take has decelerated sharply in recent months.

Between July-April 2008-09, the private sector got credit worth only Rs48 billion compared with Rs 371 billion in the same period of the previous year. This trend along with a substantial increase in government borrowing from commercial banks has fanned concerns that the private sector may not get its share of credit.

He said "banks should start lending once exports picked up". NPLs (non-performing loans) have also risen in the SME sector, the textile industry and the consumer segment. "According to the State Bank of Pakistan (SBP) recent economic review, banks have also not been able to mobilise deposits. Towards this, banks should adopt a customer-centric segmented approach.

"Banks and financial institutions should focus on improving the quality of service by using automation and training of staff to satisfy the customers," Roomi said.

 

[Neo]

Special package likely for war-hit industry in NWFP​

ISLAMABAD (June 08 2009): The federal government is likely to announce a special relief package in the budget for the industry of terrorism-hit province, ie, North West Frontier Province (NWFP), it is learnt reliably. In this regard, deliberations have already been completed at the top level in which a critical role was played by the provincial government, the sources added.

According to a survey conducted by the Industrialist's Association Peshawar (IAP) 37 percent negative growth has been recorded in the industrial sector of Peshawar as compared to overall 7.6 percent negative growth in Large Scale Manufacturing (LSM). Meanwhile the Association has written a letter to the Prime Minister's Advisor on Finance, Shaukat Tarin, asking for relief for the war-affected industry. IAP has submitted the following proposals to the government for consideration: No load shedding of electricity and natural gas on industries in Peshawar.

Withholding tax on cash withdrawal or companies registered with the SECP (only) be stopped and these payments be made at the time of submitting of tax returns instead of in advance. State Bank of Pakistan (SBP) should issue prudential regulation to permit banks to defer loan repayment for one year similar to textile sector, last year.

No audit for the next two years of registered companies/industries who have submitted income tax returns. Relief on mark-up should be extended on the pattern of textile sector; all banks should be instructed not to charge more than three percent above their cost of funds for the working capital of industries in NWFP.

The IAP has also cited the example of Bangladesh where upper limit on all industries is 2.5 percent.

According to the association, all the proposals have no revenue loss to the GoP but would go a long way in easing the anger of the people of NWFP towards the federal government. Islamabad Chamber of Commerce and Industry has also proposed that the government should extend the 10-year tax holiday for manufacturing sector in NWFP to revive business and economic activities in the province.

Mian Shaukat Masud, President, ICCI in a statement said on Sunday that the province has sustained a loss of over Rs 515 billion since the war on terror started.

He said due to militancy, in less than one year about 843 production units have closed down in NWFP bringing down the number of operational industrial units to 594 in December 2008 while around 34000 workers have lost jobs during the year: the workforce engaged in the industrial sector has dropped from 58,000 a year ago to 24,000 in 2009. Majority of industrial units have closed in the war-hit area which includes 287 units from Swat, 178 from Buner, 36 from Malakand, 32 from Dir and 115 from Mardan.

 

[Neo]

Fourth China-South Asia Business Forum: China urged to make sizeable investment in Pakistan​

LAHORE (June 07 2009): President of the SAARC Chamber of Commerce and Industry (SAARC CCI), Tariq Sayeed has underlined the need for a sizeable investment by China in the South Asian countries, particularly Pakistan to have a quantum leap in trade with the countries in the region.

According to a message received here on Saturday, Tariq Sayeed, stated this in his keynote speech at the 4th China-South Asia Business Forum, entitled "Facing Global Financial Crisis: Economic and Trade Co-operation between China and South Asian Countries," at Kunming, China.

He said foreign direct investment had played a vital role in elevating China as the second largest nation with regard to exports. SAARC CCI President called for enhanced economic co-operation between China and South Asia as a mechanism to face challenges posed by global financial meltdown. The global financial crisis had broken inertia of sustainable and double digit economic growth of China and many developing countries, which were heavily dependant on the US and EU countries, he added.

He underlined the need to evolve a common strategy by China and South Asian countries to face the challenges. Tariq Sayeed said on account of its ability to produce quality goods at highly competitive prices China enjoyed huge trade surplus with 134 countries, as a result medium sized economies facing huge trade deficit perceived China as threat to their economies.

He urged the public and private sectors of China to change this perception through a sizeable FDI into such countries, which are facing huge trade deficit with it including Pakistan. He said since 2000 trade between China and South Asian countries had witnessed a steady growth of more than 20 per cent per annum and trade volume was expected to exceed $60 billion mark by the end of 2009.

Referring to a study, he said China's trade with India would reach $60 billion, with Pakistan $10 billion, Bangladesh $5 billion, Sri Lanka $4 billion, Nepal $800 million and Maldives $200 million by 2010. However, he said pace of China-South Asia trade was relatively slow as compared to China's trade with ASEAN, which was likely to reach $275 billion by 2010.

Appreciating the economic policies of China, he said since it adopted liberal policies in 1982 the country had made tremendous growth. It had been successful in attracting FDI of worth $800 billion since then including $82 billion in 2008 alone, which had been instrumental in making China as the second largest export-oriented country and reducing poverty from 50 percent to 16 percent, he added.

"Developing countries need to follow Chinese Economic Model, if they want to attain sustainable growth," said President SAARC CCI. He said the government of Pakistan had embarked upon a very liberal and friendly policy towards South Asia, which would help in effective implementation of SAFTA and provide China enormous opportunities in the neighbouring region.

SAARC CCI President gave some recommendations to further improve economic co-operation between China and South Asia, which included Chinese FDI in South Asian countries, transfer of technology, close relationship between business communities, frequent exchange of delegations at socio-economic and cultural levels, promotion of tourism, removal of non-tariff barriers, technical assistance to increase production base of agriculture and manufacturing sectors.

 

[Neo]

Govt may unveil Rs2.9tr budget with 4.9pc deficit ​

Tuesday, June 09, 2009

ISLAMABAD: The government is to announce a Rs2.9 trillion federal budget based on “revival of economy with a human face” with a 4.9 percent fiscal deficit.

The budget will contain the imposition of 5 percent carbon duty on petroleum gases, 1-5 percent central excise duty on aeroplane and 2 percent on textile spinning machine, a senior official who is the part of the budget making confided to The News.

The government will impose the carbon duty of 7.5 to 10 percent on high-speed diesel (HSD), while 5 percent on the other petroleum products.

The 5 percent carbon duty will be levied on the products that include coal, coke coal, crude oil, motor spirit, aviation spirit, kerosene oil including jet fuel, light diesel oil, furnace oil and petroleum gases and bitumen, a senior official told The News.

The official said the government is also considering imposing 1 to 5 percent central excise duty on import of aeroplane and if one percent duty is levied, than the projected revenue stands at Rs8 million, if 2 per cent then revenue to be at Rs16 million and if 5 percent then revenue will stand at Rs40 million.

The government is also inclined to place levy by 1 to 5 percent CED on jute cutting machines with projected revenue of Rs8, Rs18 and Rs40 million respectively. Likewise the government is likely to impose duty on iron and steel by 2 percent with projected revenue of Rs9 million.

The government is also likely to impose 1 to 3 percent CED on import of cows from India with projected revenues of Rs8, Rs15 and Rs38 million. The official said that country is expected to gather revenue of Rs140 billion by the levy of carbon duty on petroleum products. And if the proposed CED on other mentioned items gets implemented the government is projected to gather revenue of Rs20 to over Rs50 billion. “The government would not impose any duty on power related projects.”

Meanwhile the Prime Minister Syed Yousaf Raza Gillani was briefed by Advisor to Prime Minister on Finance Shaukat Tarin on upcoming budget landscape.

A senior official who attended the meeting told The News that Prime Minister showed concern over the low revenue collection and said that the next year target of Rs1405 billion as revenue should be finalized in a manner that it should be realized. The official said that a 5 per cent cut in excise duty on vehicles is expected that will provide ease to the masses to purchase the vehicles and make the industry economically viable.

In the cement industry the government is also inclined to reduced the excise duty, as this step will help increase the production of the cement in the country. Next year, the government is to initiate two biggest projects that include Diamer-Basha dam and Neelum-Jhelum Hydropower project and the consumption of the cement would increase manifold. However, the duty on cigarettes would increase by 8 to 10 per cent.

When contacted Adviser to Prime Minister Shaukat Tarin conformed that the government will announce the budget with less than 5 per cent fiscal deficit -that is a 4.9 per cent deficit.

However, he claimed that the government is making the budget keeping in view the 3.4 per cent budget deficit which was earlier agreed and increase by 1.2 percent to 4.6 percent fiscal deficit has been made keeping in view the $2 billion Tokyo pledges and further increase by 0.3 per cent in fiscal deficit has been made because of the grants to be trickled down to Pakistan for internally displaced persons’ relief, rehabilitation and reconstruction. “So we are well within the 3.4 percent fiscal deficit.”

Mentioning about the carbon tax, he said that it is necessary to change the behaviour of the Pakistani masses consuming 80 per cent electricity from diesel run thermal powerhouses. “We need to develop habits to use electricity efficiently and rationally and also need to go on for coal electric power, more hydro generation with other alternative means such as wind and solar energy.”

 

[Neo]

500,000 people visit ‘My Karachi’ exhibition: KCCI president​

Tuesday, June 09, 2009

KARACHI: Karachi Chamber of Commerce and Industry (KCCI) President Anjum Nisar said this year 500,000 people visited the ‘My Karachi Oasis of Harmony’ exhibition, making it a bigger success than the previous year.

Speaking at a press conference on the concluding day of the exhibition at the Karachi Expo Centre on Sunday, Anjum Nisar said that after witnessing the success of the event, the Karachi Chamber had decided that from next year onwards, the event would be held in February rather than June and had been extended from three days to five days.

He said they had received an overwhelming response from women entrepreneurs and next year more stalls would be provided to them. The KCCI, he added, was aiming to achieve the target of one million visitors in 2010.

KCCI president Nisar said every year My Karachi is held to highlight the positive image of the country, especially the Karachi city and the success of the event proves that the KCCI had managed to accomplish its aim.

He also said that in August 2009, the KCCI would be celebrating its 50th anniversary which would be marked in an extravagant way. Speaking to The News, visitors at the event said that exhibitions at the Expo Centre were very welcome as they provided a great outing for families. Many said they wanted to spend the weekend in leisure and also made essential purchases at bargain prices.

The visitors also said owing to the law and order situation in the city, families now avoided visiting public places, but family-related events at the Expo Centre was an ideal excuse for friends and relatives to gather in order to have fun and shop without fear of being robbed as usually the case in the city’s bazaars.

 

[Neo]

Under-invoicingof Chinese goods soars above $5bn ​

Tuesday, June 09, 2009

LAHORE: The industrial sector has drawn the attention of the government to the difference of $5.809 billion between 2003 and 2007 in figures of Chinese government for goods exported to Pakistan and the officially recorded imports of these goods in Pakistan.

The local manufacturers point out that though under-invoicing has been in vogue in Pakistan since long, it has never been possible to record its quantum as most of the imports were from open market economies where the officials do not bother if the goods are under-invoiced. However, ever since Pak-China trade started expanding it has become possible to at least document the quantum of under invoicing channelled through Chinese products.

The Chinese economy is still principally controlled by the state and the amount received by the Chinese exporter for under-invoicing the goods to the third country are well documented. The Chinese official data reflects the actual export figures while the data of the importing economy reflects the invoiced amount less the amount paid by the importer to the Chinese supplier in cash.

They pointed out that in 2003 the Chinese government in its exports statistics declared that it has exported goods worth $1854.970 millions to Pakistan but the official figures of imports from China was recorded by the Pakistani government as $1150.363 only during that year. There was a difference of $4704.607 million in the amount quoted on the official sites of both countries.

In 2004 Pakistani government declared that goods worth $1488.774 million were imported from China while the statistics of the Chinese government showed that the goods exported to Pakistan that year were worth $2465.769. The difference between the two countries on the goods imported in to Pakistan enlarged to $976.995 million. In 2005 Chinese claimed to have exported goods worth $33427.662 Pakistan while the local authorities claimed imports of only $2349.395 enlarging the differential in figures to $1078.267 million.

This trend continued in 2006 and 2007 for which the official figures of both countries are available on their websites. In 2006 the difference in the exports claimed by Chinese and import invoices cleared by the Pakistanis rose to $1324.439 million and in 2007 it enlarged further to $1624.825 million.

Proven under-invoicing of goods imported from China into Pakistan is a major stumbling block in the growth of Pakistan’s domestic industry. Former President Lahore Chamber of Commerce and Industry Mian Anjum Nisar said that the discrepancies in the Chinese and Pakistani trade statistic was pointed out in 2004 and ever since then to every government in Pakistan. He said Pakistan and China in fact have signed a treaty under which Chinese promised to check the under-invoicing and enclose the actual invoice of the goods in each consignment but the practice has not yet taken place.

Industry circles point out that under-invoicing cannot be done without the connivance of clearing staff at the Customs. They said the bureaucracy in fact is not interested in implementing the agreement with the Chinese. They said in current high tech age it is possible for both the governments pass on immediate detailed information of the goods traded between the two countries on daily or even hourly basis.

Industry circles pointed out that the under invoiced finished goods from China and many other countries have marginalized the SME sectors of the economy. They said Chinese under-invoicing has been documented by the difference in trade statistic of the two governments while under-invoicing from Far East and even European country is of the same level but cannot be proved through country trade data. However they said if the custom officials assert themselves and find out the global rates of raw materials used in these products they could arrive at fair price of the under invoiced items.