KARACHI: SITE Association of Industry (SAI) on Friday strongly rejected the increase in power tariff and prices of petroleum products announced by the government a day earlier.
Abdul Rashid, President, Site Association of Industry, Karachi, while expressing deep concern over the recent increase in base tariff of electricity by Rs7.90 per unit, announced by NEPRA, and sharp increase in petroleum prices, saying that these steps should be taken back immediately in the best interest. Otherwise, the dream of development of the country’s economy will never come true.
SAI President said that the business community would not accept the self-imposed decision of NEPRA as raising base electricity tariff without public hearing is a total violation of laws.
He termed the sharp rise in petroleum prices after the hike in electricity tariffs as dangerous for the economy, and said that it would not only lead to a storm of inflation but also cause huge losses to the industries as the production cost of the industries is already high. It has grown to an unbearable level, so the government should refrain from taking such measures as putting the survival of the industry at stake.
“The government needs to take steps to promote exports of Pakistani products so that the economy and business can flourish and that is possible only when the cost of doing business is reduced by significantly reducing the prices of electricity, gas, petroleum products and water,” he opined.
SAI chief added that raising electricity tariffs was not wise but these crises could be overcome only by focusing on increasing energy production and alternative energy projects.
Abdul Rashid demanded Prime Minister Shehbaz Sharif to issue notification to abolish 17% sales tax on solar energy as per his promise, also explain the HS code for importing raw materials, and the 30% duty on the import of machinery should be abolished immediately so that the production activities can be promoted without any hindrance.
KARACHI: Korangi Association of Trade and Industry (KATI) on Friday demanded the government of immediate withdrawal the price hike in petroleum products and electricity.
KATI President Salman Aslam in a statement demanded to immediately withdraw the increase in prices of petroleum products by Rs 30 per liter and electricity by Rs 7.90 per unit.
He said that the government dropped petrol bombs on the people for the second time in a week and for the second time increased the price by Rs. 30 per liter which will increase the production cost to a dangerous level.
President KATI said that OGRA had announced on May 31, 2022 that prices would be maintained the next 15 days which was withdrawn on the second day.
He said that the government did not miss any opportunity to increase inflation on the people, the government on the same day increased the price of petrol by Rs30 while the unit price of electricity was increased by Rs7.90 per unit which is beyond the purchasing power of a common man.
On the other hand, Moody’s also issued a negative rating to Pakistan and sounded the alarm of economic crisis and bankruptcy.
President KATI said that the present government was failing to provide relief to the people in the midst of severe economic crisis and was increasing the problems of the common man instead of reducing them. He said that foreign exchange reserves have also reached a three-year low. In such a scenario, the government is failing to formulate a clear policy.
Salman Aslam said that in view of the current situation, economic policy needs to be formulated so that the poor could not face economic difficulties in this era of inflation.
President KATI said that economic instability has put investment at risk while it has become impossible to run industries with the highest cost of production ever.
President KATI said that it is feared that the unemployment rate in the country will also increase rapidly. The government should immediately take a decision in consultation with the stakeholders to deal with the financial crisis facing the country and announce immediate relief for the low-income group. He said that investment protection and bailout packages for industries should be provided.
KARACHI: Pakistan is heading towards the worst food inflation amid hike in tariff of electricity and increase in prices of petroleum products, the apex trade body said on Friday.
Suleman Chawla, Acting President of Federation of Pakistan Chamber of Commerce and Industry (FPCCI), in a statement on Friday expressed the shock and awe of the entire business, industry and trade community at the unprecedented, one-tranche and massive electricity tariff hike of Rs. 7.91 / kWh; resulting in Rs. 24.82 / kWh base tariff for the year 2022 – 23, while it was Rs. 16.91 / kWh for the outgoing year 2021 – 22.
It is a rate hike of a staggering 47 percent by NEPRA; and, it will jolt the cost of doing business and ease of doing business indices, he added.
Suleman Chawla explained that the cumulative effect of the fuel and power rate increase my unleash a historical economic stagnation; and, will result in a lot of bankruptcies, inevitable defaults on account of electricity bills, many export orders would not be fulfilled, huge loss of employment opportunities and loss of tax revenue will follow.
Acting FPCCI Chief added that inflation has already climbed to 13.8 percent, which is a 30-month high; and, with accounting for the latest developments, it is slated to cross 20 percent in a short span of 4 – 8 weeks.
Chawla apprised that the collective price spirals through combined multiplier effects of fuel and power prices will affect the masses the worst through food inflation; who will be further hit by impending unemployment. Hence, the government should come up with a protective mechanism for SMEs in consultation with the apex chamber; as SMEs are the real engines of growth and employment generation.
Dissecting the main contributing factors in the power tariff hike, he enlisted rising fuel prices, capacity costs & challenges, transmission & dispatch (T&D) losses and rupee devaluation – which all can be dealt with better management and planning.
KARACHI: The US dollar halted five days gaining streak of the Pakistan Rupee (PKR) on Friday after the foreign exchange reserves of the central bank fell below $10 billion.
The exchange rate witnessed 33 paisas decline to end at Rs197.92 to the dollar from previous day’s closing of Rs197.59 in the interbank foreign exchange market.
The dollar made a gain after five days consecutive decline against the rupee.
The foreign exchange reserves of the State Bank of Pakistan (SBP) fell two years low to $9.72 billion by week ended May 27, 2022. The SBP foreign exchange reserves were at $10.089 billion a week ago i.e. May 20, 2022. The central bank said that its reserves were decreased by $366 million to $ 9.723 billion due to external debt repayment. The SBP’s foreign exchange reserves were at $9.96 billion on June 19, 2020.
The foreign exchange reserves held by the central bank witnessed a record high at $20.146 billion by week ended August 27, 2021. Since touching the peak the central bank’s foreign exchange witnessed a continuous decline. The official reserves of the SBP fell around $10.423 billion by week ended May 27, 2022 from touching the peak on August 27, 2021. The official reserves of the SBP also reduced to payment for 1.46 months for import cover.
Overall the foreign exchange reserves of the country declined by $379 million to $15.771 billion by week ended May 27, 2022 as compared with $16.150 billion a week ago. The country’s foreign exchange reserves hit all-time high of $27.228 billion on August 27, 2021. Since then the foreign exchange reserves have declined by $11.547 billion.
The dollar hit record high at Rs202.01 on May 26, 2022. However, with the decision of the government to partially withdraw the subsidy to get next tranche of the IMF, the rupee sharply made gains against the dollar. The local unit made a recovery of Rs4.42 against the dollar during past five sessions.
The rupee remained under pressure against the greenback during the current fiscal year. The State Bank of Pakistan (SBP) has taken various measures to support balance of payment and the local currency. However, the measures ended in a failure to help the rupee to recover losses.
The SBP on May 23, 2022 announced a sharp increase in policy rate by 150 basis points to 13.75 per cent from 12.25 per cent.
Recently the government announced to impose a complete ban on imports to support balance of payment and help rupee to stable. However, these measures appeared in failure as the exchange rate yet again deteriorated today massively.
Pakistan’s import bill massively increased to $72.18 billion during first 11 months (July – May) 2021/2022 as compared with $50.03 billion in the same period of the last fiscal year, showing an increase of 44.28 per cent.
Pakistan is a net importer of petroleum products to meet its domestic demand. The country’s energy bill was $17.03 billion during the first nine 10 months (July – April) 2021/2022 as compared with $8.69 billion in the corresponding period of the last fiscal year, showing a massive growth of 96 per cent. The oil bill is around 25 per cent of the total import bill of the country.
It is generally known that affordability issues in buying essential items lead to rise in street crime. Pakistan is witnessing massive surge in prices of essential items over the period of last few months with the rise in prices of commodities in both international and domestic markets.
The new coalition government by PML-N in a span of one week increased the prices of petroleum products twice. The rise in both the announcements was phenomenal. The government increased the price of petrol, which is commonly used for all motor vehicles, especially motorcycles in large number.
The government firstly increased the prices of petroleum products by Rs30 per liter each on May 26, 2022. The second announcement came on June 02, 2022, which further increased the prices of POL products by Rs30 per liter on each product.
Pakistan Bureau of Statistics (PBS) on Friday June 3, 2022, issued weekly data of Sensitive Price Indicator (SPI) for the week ended June 02, 2022. The SPI calculates difference in prices of essential items. The SPI shows a record increase in inflation by 2 per cent on weekly basis and 20.04 per cent on year on year (YoY) basis.
This inflation reflects only the increase in petroleum prices that were effective from May 27, 2022. The remaining impact on inflation after the second announcement of POL price increase will reflect on inflation data of next week ended June 09, 2022.
The previous government maintained the petrol prices at huge subsidized rates to facilitate the citizens. As though the new government still kept the same subsidy on petrol till May 26, 2021.
However, on account of pressure by the International Monetary Fund (IMF), the government has to forcibly increase petrol prices to persuade the IMF to release the next tranche of $1 billion.
The current increase of petrol prices in the international market has left no option for the government to minimize the prices. Therefore, the government decided to increase petrol prices and keep the petroleum levy and sales tax at zero percent.
The prices of petroleum products from June 03, 2022 shall be: Petrol at Rs209.86 per; High Speed Diesel at Rs204.15 per liter; kerosene oil at Rs181.94 per liter; and light diesel oil at Rs178.31 per liter.
The people are not mentally prepared for this price hike and are displaying huge disappointment with the new government. The people are also opposing the new government because of making such a harsh decision.
The increase in the petrol prices simply indicates the increase in prices of all the basic and other commodities. It is because the hike in POL prices reflects the transportation prices. Thus results in price hike in the other commodities too.
The citizens predict that in future there will be street crimes on a huge scale because of this inflation. The local citizens will always be unsafe while outside. The people also blame the new government for the increase in the POL prices as they do not have the potential to control the government.
(By Syed Faisal Shahnawaz: The writer is a student of Upper Cambridge at St. Patrick’s High School, Karachi. He is regular contributor at PkRevenue.com)
KARACHI: On June 03, 2022, the State Bank of Pakistan (SBP) issued the foreign exchange rates for customers, providing insight into the values of various currencies in Pakistani Rupees (PKR).
KARACHI: Pakistan Stock Exchange (PSX) has proposed rationalizing tax rates for listed companies through incentives and credits, in order to encourage documentation of economy.
The PSX in its proposals for budget 2022/2023 submitted to the Federal Board of Revenue (FBR) said that it is generally observed that when companies opt for a listing on a stock exchange, their profits grow substantially due to effective corporate governance, better disclosures, and ability to raise capital from the market. Increased number of listed companies and higher profitability leads to higher tax revenue for the government, including incremental revenues from CGT. Hence it is important to encourage companies to get listed on PSX.
However, tax credit on enlistment under section 65C has been omitted by the Finance Act, 2021. This tax incentive was a very small carrot with no significant revenue impact. Had this section not been omitted, only 8 listed companies would have availed this tax credit which we estimate, based on their latest audited financial statements, the tax revenue impact would have been Rs. 342 million per annum.
Further, the CGT collected on these 8 symbols for the 6 months period from July 2021 to December 2021 is Rs. 237 million, and, extrapolating based on this 6 months average collection of CGT, the tax collection for the 12 months period could be Rs. 474 million, compared to the total estimated tax credits of Rs. 342 million that would have been availed by these 8 companies.
The average rate of tax in the Asian region is 19.62%; whereas, currently in Pakistan the corporate tax rate is 29%. As such it is imperative that the corporate tax rate after the tax credit is brought down reasonably to compete with the other regional and global countries.
Therefore, in order to encourage documentation and create a long term positive impact on tax revenue, there should be reduced rates of tax for listed companies compared to unlisted companies.
To encourage documentation of the economy, the corporate tax rate should be permanently lowered for listed companies, by giving tax credit of 20% of tax payable for those companies that meet the prescribed requirements including a minimum free float of 25% throughout. This will be long term positive for tax revenue.
The table below outlines the five-year summary of listings and de-listings on the Pakistan Stock Exchange:
Particulars
Number of Companies
Capital (Rs.)*
New Listings
24**
57,381 Million
De-listings
38
7, 241 Million
Delisted due to Merger
9
120, 525 Million
*As of December 31, 2021
**It includes listings of preference shares of already listed companies.
Rationale
i) It is generally observed that publically-listed companies are able to improve profitability due to effective corporate governance, better corporate disclosure and availability of additional funds.
ii) The incremental benefits arising from the preferential tax structure for listed companies will foster a business environment that encourages new listings on the stock exchange, resulting in higher trading volumes and lead to:
a) Higher tax revenue from listed companies’ income as a result of higher corporate profits.
b) Higher revenues from tax on brokers activity on new listings.
c) Higher revenue from Capital Gains Tax on disposal of newly listed securities
iii) Furthermore, with the government’s increased pace of privatization of its entities, the stock market will attract local and foreign investors and increase the market size. The average rate of tax in the Asian region is 19.62%; whereas, currently in Pakistan the corporate tax rate is 29%. As such it is imperative that the corporate tax rate after above tax credit is brought down reasonably to compete with the other regional and global countries. Following are the average worldwide corporate tax rates:
LOCATION
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Africa
29.0
28.3
27.9
27.9
27.5
28.73
28.81
28.45
28.50
27.97
Asia
22.9
22.1
21.9
22.6
21.9
20.05
20.65
21.32
20.06
19.62
Europe
20.4
20.6
19.7
20.1
20.5
18.35
18.38
20.27
19.99
19.84
Oceania
28.6
27.0
27.0
27.0
26.0
23.67
22.00
23.75
23.75
23.75
North America
33.0
33.0
33.3
33.3
33.3
23.08
23.01
25.85
26.06
26.37
OECD
25.2
25.3
24.1
24.9
24.8
24.18
23.93
23.59
23.51
23.04
Global
24.4
23.7
23.6
23.9
23.6
22.96
23.03
24.18
23.85
23.54
Proposed Amendment
Reinstate section 65C of Income Tax Ordinance, 2001 to be read as under:
“Where a taxpayer being a company opts for enlistment in any registered stock exchange in Pakistan, a tax credit equal to twenty percent of the tax payable shall be allowed for the tax year in which the said company is enlisted and for the following years for those companies that meet the prescribed requirements including a minimum free float of 25% throughout and”.
KARACHI: The exchange rate of Bitcoin (BTC) in Pak Rupee (PKR) is Rs5,977,742.35 on June 03, 2022 at 12:37 AM Pakistan Standard Time (PST), in the open exchange market. The rate of Bitcoin has been calculated and compared with the rate Rs5,927,177.71 at closing on June 02, 2022.
The rate of Bitcoin in US Dollar (USD) is $30,439.61 on June 03, 2022 at 12:37 AM Pakistan Standard Time (PST) in the open exchange market. The rate of Bitcoin has been calculated and compared with the rate $29,802.93 at closing on June 02, 2022.
Disclaimer: All data and information is provided for informational purposes only. The data has not been provided for trading purposes or financial, investment, tax, legal, accounting, or other advice. In the case of trading, it is advised to consult your broker or financial representative to verify pricing before executing any trade. The exchange rate does not constitute investment advice. Further, it is not a recommendation to buy, sell or hold any security or financial product.
KARACHI: The exchange rate of Ripple (XRP) in Pak Rupee (PKR) is Rs80.18 on June 03, 2022 at 12:35 AM Pakistan Standard Time (PST), in the open exchange market. The rate of Ripple has been calculated and compared with the rate Rs78.64 at closing on June 02, 2022.
The rate of Ripple in US Dollar (USD) is $0.41 on June 03, 2022 at 12:35 AM Pakistan Standard Time (PST), in the open exchange market. The rate of Ripple has been calculated and compared with the rate of $0.40 at closing on June 02, 2022.
Disclaimer: All data and information are provided for informational purposes only. The data has not been provided for trading purposes or financial, investment, tax, legal, accounting, or other advice. In the case of trading, it is advised to consult your broker or financial representative to verify pricing before executing any trade. The exchange rate does not constitute investment advice. Further, it is not a recommendation to buy, sell or hold any security or financial product.
