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  • SSGC stops gas supply to industries under load management plan

    SSGC stops gas supply to industries under load management plan

    KARACHI: Sui Southern Gas Company (SSGC) on Tuesday suspended gas to local industries for three and a half months effective from November 15, 2022.

    The gas utility in an announcement stated that as part of load management plan, gas supplies to all local industrial customers for their use for power generation are being suspended for three and a half months i.e. from November 15, 2022 to February 28, 2023.

    READ MORE: Pakistan has sufficient stock of fuel to meet domestic demand

    Moreover, 50 per cent reduction in supplies of export industrial units for their power generation shall also be carried out for the same period.

    The SSGC said that the decision had been taken in view of the widening demand and supply gas especially with arrival of winter.

    SSGC implements government of Pakistan’s gas load management plan whereby it gives top most priority to the domestic and commercial sector for supplying gas, especially those living in Balochistan where demand for gas increases manifolds due to space and water heating needs.

    READ MORE: ECC approves raising petroleum levy to Rs50 per liter on RON 95

    “This situation is further compounded by the fact that gas reserves are being fast depleted at an annual rate of 10 per cent that further places pressure on the company’s line pack system,” it added.

    The company said that these closure are in line with the contract already signed between SSGC and each individual industrial consumer that clearly states:

    READ MORE: Petroleum sales decrease by 22% in four months of 2022-2023

    “Gas supply will be provided by the company on ‘as and when available basis’ only during the period from March to November each year. The consumer will make dual firing arrangements to avoid loss of production as and when gas is not available during March to November and also during December to February when the company will keep the consumer’s gas supply disconnected at his cost, each year.”

    READ MORE: K-Electric posts huge losses despite 144% jump in tariff adjustment revenue

    The company further said that gas volume curtailed from this management would be diverted to domestic customers for them to cater their enhanced gas loads in context of the winter season.

    “Gas thus saved approximately 160 mmcfd gas thus saved will then be diverted to Balochistan where gas serves as lifeline for the majority of the population.”

  • Pakistan car sales increase 21 pc in October 2022

    Pakistan car sales increase 21 pc in October 2022

    KARACHI: Sales of domestically manufactured cars in Pakistan have increased by 21 per cent Month on Month (MoM) in October 2022.

    Pakistan Automotive Manufacturing Association (PAMA) has released the sales and production data for the month of October 2022, where car sales witnessed an increase of 21 per cent MoM in October 2022 to clocked in at 11,129 units.

    READ MORE: Pakistan car sales plunge 50% in 1QFY23

    Analysts at Insight Securities said that the rise in sales is mainly due to improved stock levels which led to a partial resumption of production activities.

    To highlight, companies were facing higher Non Production Days (NPD) in September 2022 due to import restrictions on CKD parts.

    During first four months (July – October) of the fiscal year 2022-2023, cumulative passenger car sales during the period plunged by 47 per cent YoY, to clock in at 39.7k units due to supply constraints and economic slowdown resulting in subdued demand.

    READ MORE: Pakistan car sales plummet by 50% on import restriction

    Trucks & buses sales declined by 14 per cent MoM to clocked in at 326 units in October 2022. Cumulatively on 4MFY23 basis, truck & buses sales fell by 40 per cent YoY. Jeeps/SUVs and pickups sales soared by 22 per cent MoM to reach at 2.2k units.

    Whereas, on 4MFY23 basis, Jeeps/SUVs & pickups are fell by 45 per cent due to aforementioned reasons. Tractors sales went down by 12 per cent MoM due to fragile agriculture demand.

    Company wise, PSMC sales improved by 33 per cent MoM in October 2022 primarily due to upbeat demand of hatchback segment driven by better fuel economy and affordability.

    Alto remained the top contributor, led by increase in sales of 76 per cent, followed by Cultus and Ravi, up by 50 per cent and 38 per cent, respectively.

    READ MORE: Pakistan car sales drop 59% in July 2022

    Similarly, INDU sales grew by 29 per cent MoM to clocked in at 3.4k units, compared to ~2.6k units in September 2022. Wherein major contributor are Fortuner & Hilux, up by 84 per cent.

    HCAR sales went up by 11 per cent MoM to clocked in at 1.4k units in October 2022 . Wherein major contributors are Civic & City, up by 14 per cent.

    Hyundai volumetric sales posted a decline of 50 per cent MoM to clock in at 0.5k units.

    MTL volumes witnessed an increase of 2.35x MoM to stand at ~1.5k units whereas AGTL sales declined by 74  per cent MoM to clock in at ~0.4k units.

    READ MORE: Pakistan car sales surge 54 per cent in FY22

    The analysts believe that the automobile industry will remain under pressure on both supply and demand front amid tough business environment, sky-rocketing inflation and higher financing rates further exacerbated by shortage of CKD kits.

    Moreover, despite multiple price hikes, gross margins are likely to stay depressed amid continuous pressure on PKR against USD.

    Meanwhile, ongoing floods are expected to wipe out 30 per cent-40 per cent of auto demand from rural area. Thus, we have an underweight stance on automobile industry.

  • Direct tax collection up 41% in four months of current fiscal year: FBR

    Direct tax collection up 41% in four months of current fiscal year: FBR

    Direct tax collection registered an increase of 41 per cent during first four months (July – October) 2022-2023, Federal Board of Revenue (FBR) said on Saturday.

    The FBR strongly rebutted the news report regarding income tax collection. It clarified that the present policy of FBR and the Federal government is also based on direct tax dominated system i.e. the principle of equity where tax contribution is proportional to “ability to pay”.

    READ MORE: What income is taxable in Pakistan?

    As a result, direct taxes collection continue to register steady growth and during the first four months of the current year direct taxes/income tax have risen to Rs886 billion which is 41 per cent higher than the direct tax inflows during the same period last year.

    It is also mentioned that there is a shift in the tax mix and the ratio of direct tax to indirect tax is also increasing. Resultantly, during first four months of the current year, percentage contribution of direct taxes in overall revenue has increased to more than 41 per cent for the first time in a decade, as against 36-39 per cent in the past few years as has also been quoted by the authors.

    READ MORE: FBR, SBP discuss stuck-up consignments, LC opening

    Although, FBR does not agree with the notion that withholding taxes are collected in indirect mode, FBR, during the last few years, has adopted the policy of reducing withholding tax provisions and introducing measures which directly target the rich.

    Even, during the current year’s budget, maximum amendments were introduced regarding direct taxes. These amendments were aimed at taxing affluent and wealthy class by including provisions such as super tax, CVT on foreign assets, deemed rental income on the assets of the rich and higher rates for companies earning high profits such as banks.

    READ MORE: World Bank satisfied with progress of Pakistan Raises Revenue Program

    These provisions alone have a revenue impact of approximately Rs250 billion. At the same time certain withholding tax provisions were eliminated and consequently, the percentage contribution of withholding taxes in direct taxes has also been reduced to 65.8 per cent during first four months from 67.15 per cent during corresponding period of the previous year.

    Authors have also pointed out towards declining tax-to-GDP ratio. Although, tax-to-GDP ratio is lower than what is desired, it is clarified that the current ratio is due to rebasing of GDP from 2005-06 figures to 2015-16 figures, thus adversely impacting it.

    READ MORE: FBR Member PR holds meetings to create return filing awareness

    With base year 2005-06, tax-to-GDP ratio would have been higher by at least 2 percentage points. To further improve the ratio, FBR is continuously striving to increase the tax base with the help of IT/automation and third party data.

    In this regard Directorate General of Broadening of Tax Base was made functional during last month along with establishment of Directorate General of Digital Invoicing and Analysis.

  • President Alvi calls for increasing tax-to-GDP ratio

    President Alvi calls for increasing tax-to-GDP ratio

    Lahore: President Dr. Arif Alvi emphasized the imperative for Pakistan to bolster its tax collection mechanisms and elevate the tax-to-GDP ratio as a strategic approach to address persistent financial challenges.

    (more…)
  • FBR, SBP discuss stuck-up consignments, LC opening

    FBR, SBP discuss stuck-up consignments, LC opening

    Islamabad: In a collaborative effort to address challenges related to stuck-up consignments and the opening of Letters of Credit (LCs), the Federal Board of Revenue (FBR) and the State Bank of Pakistan (SBP) engaged in discussions on Friday.

    (more…)
  • Pakistan remittances decline by 15.7% in October 2022

    Pakistan remittances decline by 15.7% in October 2022

    KARACHI: Inflow of workers remittances has declined by 15.7 per cent in the month of October 2022 when compared with the same month of the last year, according to data released by State Bank of Pakistan (SBP) on Friday.

    READ MORE: Home remittances decline to $7.68 billion in 1QFY23

    The inflows of home remittances fell to $2.215 billion in October 2022 when compared with $2.628 billion in the same month of the last year.

    The remittances in October 2022 also witnessed a fall of 9 per cent when compared with $2.437 billion received during the month of September 2022.

    READ MORE: Pakistan remittances from Saudi Arabia fall by 7.5% in two months

    Remittances inflows during October 2022 were mainly sourced from Saudi Arabia ($570.5 million), the United Arab Emirates ($427 million), the United Kingdom ($278.8 million) and the United States of America ($253.1 million).

    The cumulative inflow declined by 8.6 per cent to $9.9 billion during first four months of the current fiscal year.

    READ MORE: State Bank signs deal to analyze property prices

    The inflow of remittances has been recorded at $9.9 billion during July – October of current fiscal year 2022/2023 as compared with $10.83 billion in the corresponding period of the last fiscal year.

    READ MORE: SBP bars banks from taking service charges on flood donations

  • PKR slips to dollar as foreign exchange reserves fall sharply

    PKR slips to dollar as foreign exchange reserves fall sharply

    KARACHI: Pakistani Rupee (PKR) slipped against the US dollar on Friday owing to massive decline in foreign exchange reserves of the country.

    The exchange rate witnessed a decline of 22 paisas in rupee value to end at PKR 221.64 to the dollar from previous day’s closing of PKR 221.42 in interbank foreign exchange market.

    READ MORE: Rupee makes recovery as limit imposed on dollar cash movement

    Currency experts said that the devaluation in rupee value came after significant decline in foreign exchange reserves was recorded.

    Pakistan foreign exchange reserves slipped sharply by $958 million by week ended November 08, 2022 owing to external payments, State Bank of Pakistan (SBP) said a day earlier.

    The foreign exchange reserves of the country have been recorded at $13.721 billion by week ended November 04, 2022 as compared with $14.679 billion a week ago i.e. October 28, 2022.

    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 $13.507 billion.

    READ MORE: PKR ends stable against US dollar in interbank

    The official foreign exchange reserves of the State Bank plunged by $958 million to $7.957 billion by week ended November 04, 2022 as compared with $8.913 billion a week ago.

    The SBP attributed the decline to external debt servicing. “Major external debt repayments executed during the week includes repayment of government commercial loans. Refinancing of these loans is in process which will improve foreign exchange reserves in coming weeks,” the central bank added.

    The foreign exchange reserves held by the central bank witnessed a record high at $20.146 billion by week ended August 27, 2021. Since then the official reserves of the SBP dropped by $12.189 billion.

    The central bank has taken various measures to monitor outflow of the foreign currency in order to stabilize the rupee value.

    Currency experts said that the latest measures of the government to limit the cash dollar taking out of Pakistan supported the local currency to make gain.

    READ MORE: SBP limits cash up to USD 5,000 taking out of Pakistan

    On November 08, 2022, the SBP issued a circular to restrict the amount of foreign currency in cash up to equivalent to USD 5,000 from USD 10,000.

    The central bank issued a circular stating that it had reviewed the existing foreign currency cash carrying limits for travel purposes, and decided to further rationalize the same.

    As per the revised limits individuals with age 18 years and above (adults) can now take out of Pakistan foreign currency (FCY) equivalent to USD5,000 per visit, while those below the age of 18 years (minors) can carry out foreign currency equivalent to USD2,500 per visit. Further, the annual ceiling to take out FCY for adults and minors shall be USD30,000 and USD15,000, respectively.

    READ MORE: US Dollar falls by 26 paisas to PKR 221.66 in interbank market

  • Pakistan banks may issue corporate cards for cross-border commercial payments

    Pakistan banks may issue corporate cards for cross-border commercial payments

    KARACHI: State Bank of Pakistan (SBP) has allowed banks to issue corporate cards to their business customers for making cross-border commercial payments.

    The SBP through a circular dated November 08, 2022 issued to presidents and chief executives of authorized dealers (ADs) in foreign exchange said that banks desirous to facilitate their business customers may issue corporate cards, to be used strictly in accordance with the applicable provisions of the Foreign Exchange Manual and the profile of the customer. “ADs shall institute a robust mechanism to monitor the payments through such corporate cards,” the SBP added.

    READ MORE: State Bank, NBP to withdraw petitions in Riba case: Ishaq Dar

    According the circular the central bank had observed individuals were using their debit/credit cards for cross-border transactions, which are of commercial nature and are not aligned with their personal needs as well as their risk profile.

    In order to ensure judicious use of cards, including virtual cards, it has been decided to place an annual limit of $30,000 per individual on card based cross-border transactions. For the purpose of this circular, the year will start from November 1, 2022, however, limit for the current year will be calculated from the date of issuance of this circular. This limit would be applicable for an individual across the banking industry.

    READ MORE: State Bank launches environment, social risk management manual

    The SBP advised the banks to conduct proper due diligence of the individual customers at the time of their onboarding/ update of risk profiles and duly incorporate their cross-border payment needs through cards in their profiles.

    Banks are also directed to ensure that issuance of multiple cards to a single customer are commensurate with their risk profile and are monitored collectively. Further, banks should only allow those card based cross-border transactions, which are in-sync with the personal needs of the customers and have no commercial purpose.

    READ MORE: SBP limits cash up to USD 5,000 taking out of Pakistan

    Although, it is the primary responsibility of a customer to ensure that his/ her annual limit is not breached at any time, ADs shall institute a mechanism of ongoing monitoring whereby card based cross-border payments by individuals through single/multiple cards are only allowed in accordance with the limit prescribed above and as per the risk profile of the customer.

    Besides, ADs are advised to run an awareness campaign to inform their customers about the contents of this circular and the fact that cross-border commercial payments through cards issued to individuals are not permissible.

    READ MORE: SBP, FIA jointly take action against illegal exchange companies

    ADs are advised to ensure meticulous compliance of these instructions and bring the same to the notice of all their constituents. Any non-compliance of above instructions may be dealt with under relevant provisions of the Foreign Exchange Regulation Act, 1947 and any pecuniary or administrative action, as deemed necessary, may be initiated against the delinquent ADs.

  • Pakistan FX reserves slip sharply by $958 mn on external payments

    Pakistan FX reserves slip sharply by $958 mn on external payments

    KARACHI: Pakistan foreign exchange reserves slipped sharply by $958 million by week ended November 08, 2022 owing to external payments, State Bank of Pakistan (SBP) said on Thursday.

    The foreign exchange reserves of the country have been recorded at $13.721 billion by week ended November 04, 2022 as compared with $14.679 billion a week ago i.e. October 28, 2022.

    READ MORE: Pakistan FX reserves rise to $14.69 billion after ADB transfer

    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 $13.507 billion.

    The official foreign exchange reserves of the State Bank plunged by $958 million to $7.957 billion by week ended November 04, 2022 as compared with $8.913 billion a week ago.

    READ MORE: SBP’s weekly forex reserves dip by $157 million to $7.44 billion

    The SBP attributed the decline to external debt servicing. “Major external debt repayments executed during the week includes repayment of government commercial loans. Refinancing of these loans is in process which will improve foreign exchange reserves in coming weeks,” the central bank added.

    The foreign exchange reserves held by the central bank witnessed a record high at $20.146 billion by week ended August 27, 2021. Since then the official reserves of the SBP dropped by $12.189 billion.

    READ MORE: Pakistan’s weekly forex reserves increase nominally

    It is pertinent to mention that the SBP’s reserves witnessed sizeable increase a week ago after the Asian Development Bank (ADB) released the fund amounting $1.5 billion to Pakistan on October 26, 2022.

    The foreign exchange reserves held by commercial banks flat at $5.764 billion by week ended November 04, 2022 when compared with $5.766 billion a week ago.

    READ MORE: Pakistan’s forex reserves continue to fall; deplete to $13.25 billion

  • State Bank, NBP to withdraw petitions in Riba case: Ishaq Dar

    State Bank, NBP to withdraw petitions in Riba case: Ishaq Dar

    ISLAMABAD: Finance Minister Senator Muhammed Ishaq Dar Wednesday said that State Bank of Pakistan (SBP) and National Bank of Pakistan (NBP) will withdraw their petitions from the Supreme Court of Pakistan against the judgment of Federal Shariat Court in which the Court had ordered implementation of interest-free (Riba free) banking system in the country.

    READ MORE: KCCI demands implementation of Riba free banking

    He said that in this regard he held several meetings and detailed discussions with the SBP Governor and under the special directives of Prime Minister, it was decided that both the SBP and NBP would withdraw their petitions against the decision.

    He said that the government would also expedite its efforts to introduce Shariah compliant banking system in the country for rapid growth and promotion of Islamic bank and finance.

    READ MORE: SBP seeks Supreme Court guidance on Riba case judgement

    He further informed that during 2013-2018 several steps were being taken to promote Islamic economic system and a special committee comprising on Islamic scholars were also formed, adding that Islamic Banking system also observed significant growth and progress at that time.

    READ MORE: IPS demands implementation of court judgment on Riba

    However, he said that from last few years the sector was completely neglected and no further progress was witnessed, adding that promotion of Islamic economic system and interest free banking was the top priority of incumbent government

    He said that government was also determined to overcome all the challenges faced for introducing interest free banking system and it will take all possible measures to take forward the interest free banking and economy for the prosperity of nation.

    READ MORE: Court judgment: Riba is Haram in any form