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Author: Mrs. Anjum Shahnawaz

  • Trade deficit narrows by 15.33pc to $31.82 billion in 2018/2019

    Trade deficit narrows by 15.33pc to $31.82 billion in 2018/2019

    ISLAMABAD: The country’s trade deficit has narrowed by 15.33 percent during fiscal year 2018/2019 owing to decline in import bill, according to data released by Pakistan Bureau of Statistics (PBS) on Friday.

    The trade deficit declined to $31.82 billion in last fiscal year as compared with $37.58 billion in the preceding fiscal year.

    The decline in trade deficit can be attributed to 10 percent decline in total import bill. The imports declined to $54.79 billion during fiscal year 2018/2019 as compared with $60.79 billion in the preceding fiscal year.

    However, exports failed to exhibited growth despite several incentives announced by the government in the past.

    The exports fell by one percent to $22.97 billion during the last fiscal year as compared with $23.21 billion in the preceding fiscal year.

    In the month of June 2019 the exports fell sharply by 18.32 percent comparing the previous month. The exports were $1.71 billion in June 2019 as $2.1 billion in the month of May 2019.

    On the other hand imports also fell by 13.45 percent during the month under review. The imports were at $4.36 billion in June 2019 as compared with $5.04 billion in the month of May 2019.

    Analysts said that the decline in both imports and exports were due to budgetary measures announced in the month of June 2019.

    They said that the government had taken very harsh measures to generate revenue for the fiscal year 2019/2020. The elimination of zero-rate of sales tax negatively impacted the exports. On the other hand the rise in import duties and taxes also discouraged the foreign purchases.

    The analysts further said that the fall in rupee value also another major reason for decline in both exports and imports during the month of June 2019.

  • FPCCI seeks removal of protective duties on Pakistani products by Turkey

    FPCCI seeks removal of protective duties on Pakistani products by Turkey

    KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has urged Turkish authorities to remove protective duties imposed on Pakistani products.

    “Turkey should remove local preventive in PTA/FTA with Pakistan,” said Engr. Daroo Khan Achakzai, President, FPCCI in a statement on Friday.

    He said that in the past textile exports to Turkey was based on normal tariffs of imports but later Turkey imposed protective duties i.e. 18 percent which were very high, leading to decline in the earlier registered increase in the textile exports to Turkey.

    The volume of bilateral trade between both nations drastically reduced from US$1.08 billion to US$792 million after imposition of protective duty on textile.

    He appreciated the efforts of Government of Pakistan and Turkey to enter into Strategic Economic Framework (SEF) for enhancement of bilateral relations in trade, tourism, healthcare, hospitality, industry, education, housing, agriculture, aviation and banking.

    He further stated that Pakistan and Turkey has concluded nine rounds of negotiations including SEF; but so far the reports/outcome of negotiation has been not shared with the concerned stakeholders.

    He emphasized on the need of strong home-working of the government with the consultation of stakeholders for formulating list of concessionary items for FTA in trade with Turkey.

    Turkey being part of customs union with the EU, providing assumption that Pakistan may also have access to Turkish market under GSP+ status.

    This assumption was diluted due to refusal of Turkey to extend GSP+ status to Pakistan and Turkey proposed conducting negotiations on bilateral FTA between both countries.

    The President FPCCI urged the government to resolve all antidumping and non-tariff barriers before entering into SEF.

    Textile, rice, cutlery, crockery, badges, Musical instruments, surgical instruments, gloves, footwear, sports good, construction materials and leather products are the main exportable items of Pakistan that needs special market access to Turkey by reduction in tariff rates.

    He also stated that Pakistan offer Turkish for their participation in special economic zones which may add to the quality competition in specific housing, food and pharmaceutical industries.

    He also underlined the need of activation of train service with Turkey in order to reduce trade cost and transit time as trade through sea is not cost effective for both the nation.

    He further added that Turkey should promote trade directly with Pakistan instead of third countries like importing of surgical items from Germany that are originally manufactured in Pakistan.

    He also underlined the need of simplification of visa procedure for genuine businessmen and traders. He further added that Pakistan and Turkey both are active members of ECO, Developing eight and Organization of Islamic Countries (OIC). FPCCI will take up the above issues in the meeting between FPCCI and TOBB in the forthcoming meetings, he added.

  • Stock market ends down by 203 points on lack of investors confidence

    Stock market ends down by 203 points on lack of investors confidence

    KARACHI: The stock market ended down by 203 points on Friday due to lack of investors confidence.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 33,672 points as against 33,875 points showing a decline of 203 points.

    Analysts at Arif Habib Limited said that the market remained lackluster today, following the trend seen in recent past sessions.

    The source of Low volumes and lack of investor confidence in equities appears to be higher interest rate, which was further aggravated by an earlier than anticipated schedule of Monetary Policy.

    As per SBP, Monetary Policy will now be announced on July 16 rather than end July, as earlier anticipated.

    HUBC, which have been in the limelight in past sessions remained negative amidst low volumes.

    Overall, index moved in the range of +126 points and -276 points, ending the second session at -193 points (unadjusted). Cement Sector led the volumes table with 9.6 million shares, followed by Power (7.8 million). KEL ranked first in terms of volumes with 6.9M shares, followed by MLCF (4.5 million).

    Sectors contributing to the performance include Cement (-40 points), Power (-28 points), O&GMCs (-27 points), E&P (-18 points), Autos (-18 points), Fertilizer (+33 points).

    Volumes increased by 40 percent DoD to reach 55.3 million shares as against 39.5 million.

    Average traded value also increased by 58 percent to reach US$ 14.3 million as against US$ 9.1 million.

    Stocks that contributed significantly to the volumes include KEL, MLCF, BOP, ESBLR and TRG, which formed 35 percent of total volumes.

    Stocks that contributed positively include FFC (+30 points), EFERT (+13 points), UBL (+10 points), HBL (+9 points) and MEBL (+3pt). Stocks that contributed negatively include PSO (-21 points), ENGRO (-15 points), HUBC (-15 points), POL (-12 points) and DGKC (-11 points).

  • Rupee continues losing streak against dollar

    Rupee continues losing streak against dollar

    KARACHI: The Pak Rupee continued losing streak on Friday amid higher demand for import and corporate payments.

    The rupee ends 31 paisas to close at Rs158.80 to the dollar from previous day’s closing of Rs158.49 in interbank foreign exchange market.

    The foreign exchange market was initiated in the range of Rs158.40 and Rs158.70. The market witnessed day high of Rs158.90 and low of Rs158.50 and ended at 158.80.

    Currency experts said that the rupee fell during the entire week despite inflows of $994 million from IMF two days ago.

    The exchange rate also witnessed depreciation of the rupee in the open market. The buying and selling of dollar was recorded at Rs158.70/Rs159.30 from previous day’s close of Rs158.50/Rs159.50 in cash ready market.

  • SBP to announce monetary policy on July 16

    SBP to announce monetary policy on July 16

    KARACHI: State Bank of Pakistan (SBP) will announce key policy rate for next two months of July 16, 2019, a statement said on Friday.

    The SBP said that the Monetary Policy Committee of the central bank would meet on Tuesday, July 16, 2019 at SBP Head Office Karachi to decide the policy rate.

    In the previous monetary policy announced on May 20, 2019, the committee decided to increase the policy rate by 150 basis points to 12.25 percent effective from May 21,2019.

    The decision was taken into account the considerations and the evolving macroeconomic situation, the committee noted that further policy measures are required to address underlying inflationary pressures from (i) higher recent month-on-month headline and core inflation outturns; (ii) recent exchange rate depreciation; (iii) an elevated fiscal deficit and its increased monetization, and (iv) potential adjustments in utility tariffs.

    Analysts at Arif Habib Limited said that the SBP would adopt a proactive stance to increase its benchmark policy rate by 100 basis points in July 2019 to address the underlying pressure on the economy.

    In its report issued on June 28, the analysts said that in addition, monetary tightening is expected on the back of i) rising inflationary pressure due to increase in prices of petroleum products, essential food items and price revision of utilities, ii) an elevated fiscal deficit and its increased monetization, and iii) recent exchange rate depreciation.

  • Cash payment above Rs5 million for immovable property to attract penalty of 5pc of total value

    Cash payment above Rs5 million for immovable property to attract penalty of 5pc of total value

    KARACHI: A person who purchases immovable property having fair market value greater than Rs5 million through cash or bearer cheque then the person is liable to pay five percent of the value of immovable property as penalty.

    From tax year 2020 starting July 01, 2019 the purchase of immovable property has been prohibited through any bearer instrument or cash if its value is above Rs5 million.

    According to the FBR if a person commits offence than such person shall pay a penalty of five percent of the value of property determined by the Board under sub-section (4) of section 68 or by the provincial authority for the purposes of stamp duty, whichever is higher.

    A new section has been inserted in the Ordinance which provides that purchase of assets set as out below shall now only be made through a crossed cheque drawn on a bank or through a crossed demand draft or crossed pay order or any other crossed banking instrument –

    (a) Immovable property having fair market value greater than Rs05 million; (b) Any other asset having fair market value of more than Rs01 million.

    For the purpose of this section, the fair market value means the value notified by FBR under Section 68(4) of the Ordinance or the value fixed by the provincial authority for the purposes of stamp duty, whichever is higher.

    In the event, the transaction of purchase of the asset is not carried out in the manner prescribed above, such asset shall not be entitled for allowance of depreciation or amortization, as specified under the Ordinance.

    The amount paid other than in the specified manner shall not be regarded as cost under Section 76 of the Ordinance for the purpose of computing gain on disposal of such asset.

    In addition a penalty of five percent of the fair market value of the asset so purchased shall also be levied.

  • Consumers may not able to get 5pc sales tax rebate till FBR notification

    Consumers may not able to get 5pc sales tax rebate till FBR notification

    ISLAMABAD: General public may not be able to avail 5 percent rebate on their purchases until a notification is issued by the Federal Board of Revenue (FBR).

    Through Finance Act, 2019 a new proviso has been added wherein customers of Tier-1 retailers are entitled for pay-back up to 5 percent of sales tax involved in the sales tax invoice.

    This shall encourage the customers to demand sales tax invoice from registered retailers.

    “However, these provisions shall be applicable when the Board so notifies,” said the FBR in instructions to Inland Revenue offices regarding enforcing changes to sales tax laws made through Finance Act, 2019.

    The FBR informed the IR about changes made to regime of Tier-1 retailers.

    These changes are included option to pay 2 percent turnover tax has been withdrawn.

    Provisions relating to SRO 1125(I)/2011 under which zero-rate sales tax was available, have been omitted, thus subjecting textile and leather items to normal rate except for the integrated retail outlets for which the rate shall be 14 percent as per amendment in Eighth Schedule.
    Another new proviso aims at expanding the scope of real-time integration beyond textile and leather. These provisions shall become effective when the Board so notifies.

    After such notification, the input tax shall be reduced by 15 percent for retailers failing to integrate Point of Sales (POSs) in the prescribed manner, as provided in the newly inserted sub-section (6) in section 8B.

  • Raising loans on interest prohibited, SECP issues draft amendment to Shariah regulations

    Raising loans on interest prohibited, SECP issues draft amendment to Shariah regulations

    ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) on Thursday issued draft amendments to Shariah Governance Regulations, 2018 saying that raising loans on interest is prohibited.

    In regulation 11, the SECP proposed following amendments:

    “(ii) the collective amount raised as loan on interest whether long-term or short-term debt does not exceed thirty percent of the market capitalization or total assets of the company, knowingly that raising loans on interest is prohibited whatsoever the amount is;

    “(iii) the total amount of interest-bearing deposits and Shariah non-compliant investments, whether short-, medium- or long-term, shall not exceed thirty percent of the market capitalization of total equity or total assets of company knowingly that interest taking deposits and investments are prohibited whatsoever the collective amount is”;

    The SECP further proposed amendment:

    “Provided that the prevailing Shariah screening criteria of the Exchange for all shares Islamic index may be used only for the companies on the all shares Islamic index, and shall be replaced with the above criteria by 30th June 2020.”

    For disposal of Shariah non-compliant investments, the SECP proposed:

    “Shariah compliant companies shall divest the Shariah non-compliant investments above thirty per cent threshold within a period of one year or when the market value of the investment equals the cost of investment, whichever is earlier:

    “Provided that the Commission may, for reasons to be recorded in writing and subject to such conditions or restriction as it may deem fit to impose on recommendation of the Shariah Advisory Board, relax any of the requirements of this regulation in case of any difficulty arises in giving effect to any of the requirements of this regulation in a particular case, or class of cases.”

    In regulation 3, it is proposed:

    “Provided that the companies on PSX All Shares Islamic index shall be deemed to be Shariah compliant till December 31, 2019:

    “Provided further that for purpose of availing tax rebate, the Shariah compliant companies referred in the first proviso shall meet the criteria as prescribed in Income Tax Ordinance, 2001.”

  • CNIC condition not applicable on purchases below Rs50,000

    CNIC condition not applicable on purchases below Rs50,000

    KARACHI: The condition of providing CNIC details is not applicable on purchases up to Rs50,000 by a person, said Zeeshan Merchant, former vice president of Karachi Tax Bar Association (KTBA).

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  • SBP issues procedure for loans under PM’s Kamyab Jawan SME Lending Program

    SBP issues procedure for loans under PM’s Kamyab Jawan SME Lending Program

    KARACHI: The State Bank of Pakistan (SBP) on Thursday announced the official procedure for obtaining a loan under the Prime Minister’s Kamyab Jawan SME Lending Program, a flagship initiative aimed at empowering youth and small enterprises across the country.

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