Author: Mrs. Anjum Shahnawaz

SBP issues customers exchange rates on June 28, 2021

KARACHI: The State Bank of Pakistan (SBP) on Monday issued customers’ exchange rates on the basis of weighted average rates of commercial banks.

The SBP said that the data is compiled and disseminated for information only. These Exchange Rates are an estimate of the Exchange Rates quoted by various Commercial Banks to their clients.

They are compiled from the Exchange Rate sheets issued daily by various Commercial Banks providing their indicative Exchange Rates for commercial transactions with customers.

CURRENCY	BUYING	SELLING
AED	43.0174	43.1116
AUD	119.8112	120.0700
CAD	128.3150	128.5942
CHF	171.9180	172.2921
CNY	24.4730	24.5238
EUR	188.3419	188.7578
GBP	219.4002	219.8863
JPY	1.4263	1.4294
SAR	42.1055	42.1962
USD	157.8675	158.2308

June 28, 2021

NCCPL excludes Hascol Petroleum from list of eligible securities

KARACHI: National Clearing Company of Pakistan Limited (NCCPL) on Monday excluded M/s. Hascol Petroleum from the list of eligible securities after the stock exchange placed the oil company into defaulter segment.

The NCCPL said that this is with reference to Pakistan Stock Exchange Notice No. PSX/N-781 dated: June 25, 2021, regarding placement of M/s. Hascol Petroleum Limited (“HASCOL”) in the Defaulter’s segment with effective from Monday, June 28, 2021.

This event leads to action under Clauses 7A.3.5 and 7B.3.1.4 of NCCPL Regulations, 2015 that has been reproduced below for ready reference;

“Where a Security that has been quoted on the defaulter’s segment of the Exchange and notified to the Company, such Security shall not be eligible for trading in the SLB Market from the date it has been placed on the defaulter segment. However, all open SLB Contracts shall be released on Accelerated Maturity Date and/or Maturity Date as the case may be.”

“In case where such Security is reinstated during the review period, trading in SLB Market shall not be allowed during that review period.” (Regulations 7A.3.5)

“Where a Security that have been quoted on the Defaulter segment of the Exchange and notified to the Company, such Security shall not be made available on MF Market from the date it has been placed on the defaulter segment. However, all MF (R) Transactions shall be released as per the terms and conditions defined in the Margin Financing Agreement between MF Participants.”

“In case where such Security is reinstated during the review period, trading in MF Market shall not be allowed during that review period.” (Regulations 7B.3.1.4)

Where a MT Eligible Security that have been quoted on the defaulter segment of the Exchange and notified to the Company, such Security shall not be eligible for trading in the MT Market from the date it has been placed on the Defaulter segment. However, all open MT Contracts shall be released on Accelerated Maturity Date and/or Maturity Date as the case may be.

In case where such Security is reinstated during the review period, trading in MT Market shall not be allowed during that review period. (Regulations 7C.3.2 (15)

Accordingly, in pursuance of provisions stipulated in the above referred clauses of NCCPL Regulations, 2015, M/s. Hascol Petroleum Limited shall be excluded from the list of SLB Eligible Securities, MF Eligible Securities and MTS eligible Securities with effect from Monday, June 28, 2021.

June 28, 2021
Mobile, internet banking transactions grow more than double: SBP

KARACHI: The value of mobile banking, internet banking and e-commerce transactions all more than doubled during the third quarter of 2020/2021 when compared with the same period last year, State Bank of Pakistan (SBP) said on Monday.

Encouragingly, the number of internet and mobile banking users has also been increasing significantly, up 30.5 percent and 20.3 percent respectively during Q3FY21 over same period last year.

The State Bank of Pakistan released its Quarterly Payment System Review (QPSR) for the third quarter, January – March 2021, of the fiscal year 2020-21 today, which shows strong growth in the space of digital financial transactions in the country.

During Q3FY21, bank customers performed 309.5 million e-Banking transactions, valuing Rs22.5 trillion and registering growth rates of 31 percent by volume and 29 percent by value over the same quarter last year.

Most of the uptake in e-banking transactions was seen in internet banking and mobile banking transactions. The volume of mobile banking transactions reached 51.7 million, (up 144 percent) valuing Rs1.3 trillion (up 178 percent) compared to 21.2 million transactions valuing 467.5 billion in the same quarter, last year.

The number of registered mobile phone banking users reached 9.8 million showing an increase of 20 per cent from the same period last year. Similarly, 24.5 million internet banking transactions valuing Rs1.5 trillion were recorded during this period compared to Rs0.75 trillion in the same quarter last year, registering a growth of 74 per cent by volume and 109 per cent by value.

In response to SBP’s measures to incentivize the installation of Point of Sale (POS) machines to facilitate digital payments through debit or credit cards in the country, the number of POS machines have shown a substantial growth of 37 percent when compared with the same period last year. On these POS machines, 25 million card-based transactions amounting to Rs124 billion were processed showing an increase of 28 percent by volume and 21 percent by value compared to the same quarter last year.

The increase in the number of POS machines this year can be attributed to the measures that SBP took early last year which included the reduction in interchange fee on debit card payments thus improving the share of acquirers from overall merchant discount rate (MDR).

Non-cash based e-commerce transactions also increased substantially in the country during Q3FY21; e-commerce merchants processed 5.6 million transactions digitally amounting to Rs15.3 billion compared to 2.8 million transactions valuing Rs7.1 billion in Q3FY20, showing an increase of 100 percent by volume and 115 percent by value from the last year.

Total number of payment cards issued in the country stood at 44.5 million out of which 28.6 million are debit cards and 1.7 million are credit cards. Further, 6.4 million social welfare cards have been issued by banks on behalf of BISP, EOBI, Ehsaas and other government organizations and schemes.

It is worth mentioning that during the last few years, digital payment transactions in Pakistan have shown significant growth, reflecting the impact of favorable policies of SBP to incentivize customers.

Expansion in digital payment infrastructure as well as emergence of new payment aggregators have also played their role in this growth. In line with its declared objectives to digitize payment and financial services, SBP will continue promoting digitization in the country and expects the industry to e reciprocate the efforts that will in turn increase convenience for people of Pakistan.

June 28, 2021
SEC Pakistan imposes monetary penalty of Rs4bn on B4U Group for raising illegal deposits

ISLAMABAD: Securities and Exchange Commission of Pakistan (SECP) has imposed a heavy penalty of Rs4 billion on B4U group for raising deposits illegally and operating pyramid schemes.

In a tweet message on Sunday, the SECP said that it had concluded adjudication proceedings against B4U Group and its sponsors for raising illegal deposits from the public and operating pyramid schemes, in violation of the Companies Act, 2017.

The B4U Group comprises of 18 companies incorporated under the Act, as well as five unincorporated business setups. All the 18 companies were registered during the last two years. The main sponsor of B4U Group is Saif-ur-Rehman, along with his immediate family member.

The SEC Pakistan, after completing the due process of law, has disqualified the sponsors of B4U Group becoming a director of any company for a period of five years and has also imposed a penalty of Rs100 million on each of its sponsors. Further, the sponsors shall not be allowed to incorporate any new company under the Act.

“In addition the SECP has granted sanction for winding up of all 18 companies of B4U Group and imposed a penalty of Rs200 million on each company. Aggregate penalties amounting to Rs4 billion have been imposed on B4U Group.”

June 27, 2021
Tax officials given arrest powers on concealment above Rs200 million; changes made to Finance Bill 2021

ISLAMABAD: The government has reviewed the proposal related to power of tax officials to arrest persons under criminal proceedings for concealment of income.

The power to make arrest may be restricted to concealment of Rs200 million and above, sources in Federal Board of Revenue (FBR) said.

Through Finance Bill 2021, it is proposed to substitute the Section 203 which at present deals with procedure of appeal against the order of a Special Judge.

The Bill proposed to substitute section 203A which provides that an authorized officer may arrest a person as per the provisions of the Code of Criminal Procedure, 1898 on the basis of material evidence and he has a reason to believe that person has committed an offence of concealment of income or an offence warranting prosecution.

Further, where a person commits an offence, the Chief Commissioner with the prior approval of the Board either before or after the institution of any proceedings for recovery of tax, compound the offence if such person pays the tax due along with such default surcharge and penalty.

Accordingly, existing section 202 is proposed to be deleted from the statute.

If the person suspected of committing an offence or concealment is a company, every director or officer of that company whom the authorized officer has reason to believe that he is personally responsible for actions of the company contributing to offence or concealment of income or any offence, shall be liable to arrest.

Provided that any arrest shall not absolve the company from the liabilities of payment of tax, default surcharge and penalty.

The sources said that the after this proposal the business community strongly reacted and termed it immense discretionary powers to the tax authorities.

The government realizing the sensitivity of the situation made changes it its actual proposal and now the power of tax officials has be restricted in those cases where concealment is abve Rs200 million.

The government will present the Finance Bill 2021 after making certain changes before the Parliament for approval.

June 27, 2021
FBR announces reduction in sales tax rates on petroleum products

ISLAMABAD: Federal Board of Revenue (FBR) has announced reduction in sales tax rates on supply of petroleum products in order to ensure availability of fuel at lower rates.

The FBR issued SRO 807(I)/2021 dated June 26, 2021 for notifying the reduction in sales tax on petroleum products.

According to the SRO the sales tax rate on kerosene oil has been reduced to 6.7 per cent from 9.15 per cent. Similarly, sales tax on light diesel oil has been reduced to 0.2 percent from 2.74 per cent.

However, the sales tax rates on petrol and high diesel oil has been kept unchanged at 17 per cent.

The government on June 15, 2021 announced increase in prices of petroleum products for next fortnight, which are as follows: MS (Petrol) has been increased by Rs2.13 from Rs108.56 to Rs110.69 per liter, High Speed Diesel was increased by Rs1.79 from Rs110.76 to Rs112.55 per liter, Kerosene (SKO) was increased by Rs1.89 from Rs80.00 to Rs81.89 per liter and Light Diesel Oil was increased by Rs2.03 from Rs77.65 to Rs79.68 per liter.

FBR sources said that the sales tax rate has been reduced because the government had not passed on the actual increase in petroleum products prices to the general public.

June 27, 2021
How much a phone call will cost after new tax?

Persons making calls through their cell phones will cost 38 percent more following the implementation of proposed change in tax rate effective from July 01, 2021.

The government has proposed one rupee additional burden on a phone call having duration above five minutes. This was announced by Finance Minister Shaukat Tarin a day earlier at the Senate.

In fact the finance minister announced to reduce the tax burden as compared with the actual proposals announced through the Finance Bill 2021 that was additional tax on a call having duration above three minutes.

According to sources in telecom industry the existing call rate of duration above five minutes is Rs1.97, which also included 19.5 percent federal excise duty. However, with the implementation of proposed rates the call above five minutes will cost Rs2.72.

The telecom industry believes the proposed changes in taxation of call rates are not possible to implement.

Industry sources said that the proposed taxes are un-implementable as the charging structure is not linear and is based on bundle offers to facilitate prepaid users which account for 98 per cent of overall cellular subscribers in Pakistan.

This regressive move will play havoc with the prepaid bundles being enjoyed by the lowest segment of society as the operators will be constrained to remove such offerings, making voice calling significantly more expensive.

In addition, users will quickly learn to redial before 5 minutes to defeat this proposed levy hence it may bring nothing to the government but add to the complexity for the telecom sector and operators while causing massive inconvenience to the citizens.

June 26, 2021
Weekly Review: stock market likely witness mixed trend

KARACHI: The stock market likely to witness mixed trading activities during next week owing to grey list status of Pakistan and budget incentives.

Analysts at Arif Habib Limited said that the market to depict a mixed to positive trend in the upcoming week attributable to: FATF’s announcement to keep Pakistan on Grey List; and sectors that got major relief in the budget will remain in the limelight.

On the other hand, E&P scrips are expected to continue performing well due to higher international oil prices and government shelving divestment plan of OGDC and PPL and also deferring divestment of government shares in MARI.

However, a Current Account Deficit of USD 632 million for May’21 and uptick in CPI in the upcoming months, may dampen investors sentiments.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 6.8x (2021) compared to Asia Pac regional average of 16.5x while offering a dividend yield of ~6.9 per cent versus ~2.3 per cent offered by the region.

This week trading commenced on a negative note with the index shedding 226 points on Monday amid economic uncertainty given surge in international oil price along with deprecation of the rupee might which is expected to push up inflationary readings in upcoming months.

Pessimism at the bourse was further fueled by i) Unavailability of gas to non-export related industries, ii) Petrol shortage at many fuel stations in Pakistan as oil tankers go on a countrywide strike which might affect business of exporters, iii) proposal for reclassification of Pakistan from MSCI Emerging Market to Frontier Market, and iv) Uncertainty over the FATF plenary outcome led to profit taking by investors. The KSE-100 index closed at 47,603 points, down by 635 points or 1.32 per cent WoW.

Contribution to the downside was led by i) Cements (212 points), ii) Commercial Banks (178 points), iii) Oil and Gas Exploration Companies (58 points), iv) Pharmaceuticals (53 points), and v) Oil and Gas Marketing Companies (51 points). Scrip-wise major losers were LUCK (118 points), TRG (62 points), MCB (60 points), PSO (45 points), and HBL (44 points). Whereas, scrip-wise major gainers were SYS (67 points), FCEPL (43 points), HUBC (38 points), ANL (34 points) and MTL (21 points).

Foreigners offloaded stocks worth of USD 7.88 million compared to a net sell of USD 6.76 million last week. Major selling was witnessed in All other sectors (USD 7.42 million) and Commercial Banks (USD 1.94 million). On the local front, buying was reported by Individuals (USD 13.71 million) followed by Banks (USD 12.86 million). That said, average daily volumes and traded value for the outgoing week were down by 34 per cent and 35 per cent to 694 million shares and USD 112 million, respectively.

June 26, 2021
Finance minister urged to allow tax exemption on raw salt sales

KARACHI: Ismail Suttar, President, Employers’ Federation of Pakistan, and Chairman of Salt Manufacturers’ Association of Pakistan (SMAP), while appreciating the people-friendly Federal Budget of 2020-21, appealed to the Finance Minister, Shaukat Tareen to reconsider for exemption raw salt from tax regime.

In an appeal to the Finance Minister, EFP Chief stressed that table salt is considered an essential food item. He added that from 1990, until today, the iodized salt has remained exempted but businessmen producing iodized salt from table salt will have to pay sales tax on table salt and this will be reflected in the retail price of iodized salt.

“Table Salt is produced from raw Sea Salt, Ismail claimed, and Iodized Salt is produced by adding Iodine to the Table Salt. Law forbids marketing of table salt and allows only iodized salt for eating purposes. Therefore, raw salt if taxed will increase the cost of iodized salt and it will be a burden on the common man. So, the raw salt should be exempted from the sales tax regime”, he added.

Ismail Suttar further said that the salt which will be used and supplied as industrial salt may remain taxable because it will not affect the common man. It will be without Iodine so there should be two grades of salt: one iodized and the other non-iodized salt mostly used in industries after proper processing.

June 26, 2021
Gas supply suspension cripples industries, halts production

KARACHI: The Karachi Chamber of Commerce & Industry (KCCI) and its affiliated industrial town associations have shown deep distress towards non-supply of gas to industries of Karachi for the last 14 days since 11 June, 2021 with ZERO gas pressure which has crippled industries and halted production that will ultimately lead to huge losses.

According to a statement issued, the supply of gas has been closed in the name of annual turnaround (ATA) of Kunnar Pasaki field. Previously such disruption was caused due to ATA of Gambat field. All such ATA / maintenance must be planned at least six months and intimated to all concerned promptly. If SSGC as per its claim was facing gas shortfall of 200-250 mmcfd from Kunnar-Pasakhi Deep (KPD) gas field and Engro Terminal, this shortfall could have been surmounted through RLNG for the time being but instead of doing so, they announced abrupt suspension of gas supplies to industries which was totally unacceptable as it would prove disastrous not only for the business community but also for economy and the public.

KCCI appealed Prime Minister Imran Khan to order SSGC to refrain from suspending gas supply and also order a probe into the massive gas mismanagement as the industries in Karachi, which were already going through unbearable circumstances, cannot afford any interruption in their production activities due to suspension of gas supplies.

Despite of the fact that the Government has accorded priority in supply of gas to export sector, the export industries of Karachi are also deprived of gas. Exporters are fearing excessive delays in export shipments and will lead to shipment by Air or cancellation of orders. Whereas, the export shipment of 40 feet container by sea to USA costs USD 8,400/- while the same shipment by air costs USD 93,000/- which is equal to the total cost of said consignment of 40 feet container. In this manner, the export industries are facing colossal financial losses and shall be bankrupted leading to permanent closure and massive layoffs. Needless to mention here that more than 40 allied industries which include general industry are also associated with export industries which provide them goods and services.

It is pertinent to note that Karachi contributes to around 60 per cent in national exports. Due to the situation if 10 per cent export is affected it means 5 per cent decline in national export. The estimated losses caused to national exports on daily basis comes to around USD 44 million (PKR 7 billion). As per the Government’s gas priority policy five export sectors would be treated on a par with the power sector in gas supplies. In contravention to its own policy, the Government is providing gas to power company of Karachi while export sector has been deprived to gas.

KCCI is surprised as to why SSGC has disrupted gas supply on account of Annual Turn Around of Kunnar field on working days which must have been done during Eid Holidays when there is no industrial usage of gas. KCCI fail to understand why such incidences happen repeatedly only in Karachi in every 3-4 months. Whether such attempts on part of the Government are deliberate to compel the industries of Karachi to shift abroad? Why should the export industries of Karachi may bear the brunt of the mismanagement caused due to ill-planning on part of the Ministry of Petroleum and SSGC?

KCCI appealed to the Prime Minister of Pakistan and Federal Minister of Energy to take immediate notice of Zero Pressure of gas to industries of Karachi and intervene to resume gas as quick as possible so that the industries and export must not suffer further in the best interest of economy, exports and foreign exchange earnings.

June 26, 2021