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Category: Trade & Industry

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  • Businessmen want early resolution of political uncertainty

    Businessmen want early resolution of political uncertainty

    KARACHI: Business community is perturbed over political uncertainty after dissolution of national assembly following rejection of no-confidence motion against the prime minister.

    Chairman Businessmen Group (BMG) and Former President Karachi Chamber of Commerce & Industry (KCCI) M. Zubair Motiwala, while expressing deep concerns over the ongoing political crises that led to dissolution of National Assembly, stated that the entire business and industrial community was perturbed over the recent political developments as the economy was already in a fragile state due to devaluation of currency, descending reserves, rising commodity prices, widening current account and fiscal deficits therefore, these political crises must not be stretched for a longer period and resolved at the earliest with a view to save the economy from further woes.

    READ MORE: Direct flights between Pakistan, Tajikistan needed

    “The exports of Karachi city, which stood at 54 percent last year, have now descended to 50 percent as the lawmakers, who mostly remained busy in dealing with the opposition all the time, hardly had any time to look into and resolve the gas issue being suffered by the industries of Karachi that has caused 4 percent reduction in exports this year”, Zubair Motiwala said, adding that similar was the situation in case of other economic indicators which have also been drifting downward due to political uncertainty and the lack of attention.

    READ MORE: Withholding tax should be on income: FBR Chairman

    He said that the business community was gravely perturbed at this uncertain situation as the businesses are at a standstill, customers have disappeared from the markets and traders are facing serious liquidity crunch. 

    He stressed that people at the helm of the affairs must realize that the political issues were terribly hurting the economy so these have to be tackled prudently at the earliest otherwise, we fear that the already ailing economy would face more challenges and all the efforts made to somehow keep the economy afloat would go wasted.

    READ MORE: Karachi Chamber fears deep impact of PKR devaluation

    Chairman BMG said that the Karachi Chamber has always rightly demanded from the governments from time to time to introduce and strictly implement a ‘Charter of Economy’ duly agreed by all political parties of the country but unfortunately, this legitimate demand was never taken into consideration which was the reason for all the economic ills being faced by the country. “Consistency in the government policies and a clear roadmap to move forward which is devised through Charter of Economy, are the key factors leading to progress, prosperity and development which can only be achieved through Charter of Economy,” he added.

    READ MORE: POS retailers to get refunds automatically: Tariq Mustafa

    He said that the country was in a dire need of a Charter of Economy or road-map, developed in consultation with the business and industrial community and endorsed by all political parties. “We hope that the political crises are amicably resolved at the earliest and the Charter of Economy, which is the need of the hour, is also introduced and implemented in the larger interest of the country as any delay is going to prove very harmful for the economy.”

  • Political unrest dents foreign investors’ confidence: Nisar

    Political unrest dents foreign investors’ confidence: Nisar

    KARACHI: The businessmen panel of Pakistan’s apex trade body has said that the political uncertainty has dented the confidence of foreign investors.

    The Federation of Pakistan Chambers of Commerce and Industry’s Businessmen Panel (BMP) has said political uncertainty has rattled the Pakistan economy, hitting the stock market constantly, as the country has witnessed the capital  outflow of around $1.5 billion during the ongoing fiscal year, with major foreign investment outflows from Pakistan Investment Bonds (PIBs) despite high-yields returns on them.

    The BMP chairman and FPCCI former president Mian Anjum Nisar observed that the uncertainty at the political front and parliament moving closer to the vote of confidence motion dented investors’ confidence, resulting into the investment outflow of at least $400 million from the country just in a single month of March.

    He said that country-to-country inflows reflect the changing situation on external fronts of the economy, as the FDI inflows from China has dropped to $384 million during Jul-Feb FY22 compared to $522 million in 8MFY21. In spite of good relations with China, Pakistan is unable to attract Chinese investors for any vital change in the economy. China is the biggest trade partner of the country but the balance is largely in favour of China.

    Quoting the figures of the central bank, he said that foreign direct investment (FDI) fell by 33 per cent in February 2022 compared to preceding month of January, as the second half of the current fiscal has been facing several negative impacts including political instability, the war in Ukraine and a hike in oil prices in the international markets.

    The record increase in oil prices as well as in other commodities rates has widened the trade deficit. Though the country reported a positive growth of FDI inflows by 6 per cent during July-February 2021-22 (8MFY22) but this growth is far lower than the $11.6 billion current account deficit confronting the country.

    Mina Anjum Nisar said that the returns on the treasury bills and PIBs are highly attractive for foreign investors, as such high rates on government-guaranteed risk-free bonds are unprecedented but unfortunately the outflows from PIBs reached $353 million in March.

    In the same way, the yields on the treasury bills rose to 11.99 percent for three-month papers, 12.5 percent for six months, and 12.7 percent for 12 months.

    During the ongoing fiscal year, the total outflows from equity, PIBs, and treasury bills stand at $1.558 billion against total inflows of $654.3 million. The cumulative net flow during the nine months through March 2022 comes in at $904.36 million.

    The single-day outflow on 24 March was $91.3 million against an inflow of $2.3 million in equity. The outflows from the PIBs and treasury bills were $50 million and $34.8 million, respectively, during the same day, the report shows.

    During the current fiscal year, the total PIB inflows stood at $104.3 million so far, and inflows have remained at just $0.15 million during this month.

    The total inflows of the PIBs and treasury bills during March stand at $0.15 million, while outflows of the two domestic bonds are $352 million. If the outflows from equity are counted, the total outflows of foreign investment were $402.35 million, while the cumulative net flow was $378.3 million. The inflows in equity during March stand at $23.9 million.

    Poor investment climate hit the FDI inflows which noted a sharp decline of 50pc to $110 million in January this year from $218.7m in December 2021.

    Real change was noted in January since the first half of the current fiscal year (1HFY22) witnessed a growth of 20pc in FDI. The inflow in December 2021 was much higher at $218.7m – showing a jump of 29pc – compared to $169.4m in December 2020.

    The declining trend of last two months could eliminate the positive growth trend of 20pc growth during 1HFY22.

    Though exports showed growth of 25pc but the amount is still not enough to mitigate the impact of the huge import bill. The only positive news was the inflow of remittances which kept its pace of growth during 8MFY22.

    The SBP data showed FDI inflow in February this year was $90.8m compared to $137m during the same month in FY21; a decline of 33.6pc.

    Portfolio investment during July-Feb FY22 showed that the outflow was higher at $314m compared to an outflow of $253m in 8MFY21.

  • Yarn merchants urge SBP to stop rupee deterioration

    Yarn merchants urge SBP to stop rupee deterioration

    KARACHI: Yarn merchants have urged the State Bank of Pakistan (SBP) to stop the rupee depreciation against the US dollar otherwise it will make industry to continue business.

    Chairman Pakistan Yarn Merchants Association (PYMA), Saqib Naseem and Vice Chairman Sindh Balochistan Region, Muhammad Junaid Teli, while expressing deep concern over the continuous depreciation of the rupee and the sharp rise in the value of the dollar, requested the Governor State Bank of Pakistan, Reza Baqir, to adopt effective strategies for stability of rupee.

    READ MORE: PYMA seeks duty, taxes cut on yarn in budget 2022/2023

    In a statement, PYMA office-bearers warned that rupee devaluation was going to have a deep impact on inflation as it would raise the cost of doing business, making Pakistani goods non-competitive in the export market and unaffordable in the domestic markets.

    READ MORE: PYMA fears cancellation of export orders

    They highlighted the negative effects of the rising value of the dollar on the country’s economy, especially business activities, and said that on the one hand, the relentless storm of inflation was in full swing. On the other hand, the continuous depreciation of the rupee and the high level of the dollar has led to a huge increase in the production cost of the yarn business and industries.

    READ MORE: Saqib Naseem elected central chairman PYMA

    PYMA office-bearers Said, “Raw materials are not available in the country as per the industrial demand, the industries have to import the raw materials from abroad in order to continue uninterrupted production activities. However, these days the soaring value of the dollar has put the business community in a difficult position, especially the production costs of SMEs have skyrocketed.”

    READ MORE: PYMA demands cotton import through land routes

    Saqib Naseem and Junaid Teli requested the Governor State Bank, Reza Baqir to prevent further depreciation of rupee and to prevent the dollar from appreciating, adopt strategies that reduce the cost of doing business. This will definitely boost trade and industry and create ample employment opportunities.

    Otherwise it will be difficult to do business and run industries which will affect exports and also increase unemployment in the country.

  • Direct flights between Pakistan, Tajikistan needed

    Direct flights between Pakistan, Tajikistan needed

    KARACHI: Pakistan and Tajikistan should start direct flights in order to reduce travel time. The issue was raised by the Ambassador of Tajikistan to Pakistan Ismatullo Nasredin and President Karachi Chamber of Commerce and Industry (KCCI) Muhammad Idrees at a meeting.

    (more…)
  • PYMA seeks duty, taxes cut on yarn in budget 2022/2023

    PYMA seeks duty, taxes cut on yarn in budget 2022/2023

    KARACHI: Pakistan Yarn Merchants Association (PYMA) has proposed cut in duty and taxes on yarn in the forthcoming budget 2022/2023.

    The association demanded reduction in Customs Duty, Sales Tax, withholding income tax and abolishing Regulatory Duty and Additional Customs Duty on yarn in the next Federal Budget 2022/2023.

    READ MORE: CGT exemption on private company shares suggested

    In the budget proposals, PYMA Chairman Saqib Naseem, Vice Chairman Sindh Balochistan Region, Muhammad Junaid Teli, Chairman Standing Committee on Budget, Taxation Farhan Ashrafi, said that 13 per cent customs duty has been imposed on Polyester Pre-Oriented yarn (POY), we suggested that without any additional customs duty, it should be 7 per cent through SRO or tariff.

    READ MORE: KTBA proposes up to 20% capital gain tax on real estate

    “The product POY (5402-4600) is a medium yarn for manufacturing polyester textured yarn (DTY) which is considered a completely separate industry in India, China, Vietnam and Bangladesh,” they said, adding that polymerization plants require huge capital whereas texturizing units can be easily set up through SME sector. In addition, the industry can export DTY to international markets.

    According to PYMA’s budget proposals, 11 per cent customs duty is levied on Polyester Fully Drawn Yarn (5402-4700), while in the new budget, PYMA has proposed to reduce the customs duty to 7 per cent through SRO or tariff.

    READ MORE: FBR urged to issue rules for WHT on digital transactions

    Similarly, customs duty on Polyester Texturized Yarn should be reduced from 11 per cent to 9 per cent as fabrics made from artificial, synthetic yarns are used by the common man.

    PYMA termed the 2 per cent regulatory duty on polyester spin yarn as unfair and proposed to abolish it as zero percent which is the basic raw material of weaving and knitting industry. Therefore, there is no justification for imposing regulatory duty on it. They suggested maintaining the current 17 per cent sales tax rate which is adjustable.

    READ MORE: New import income tax regime should be abolished

    PYMA also called for eliminating the discrimination between commercial importers and manufacturers, and said currently withholding income tax on commercial importers of Yarn is 2 per cent while on manufacturers under SRO 1125 is only 1 per cent. Therefore, we proposed 1 per cent withholding income tax on both. Similarly, withholding tax on yarn traders should be reduced from 0.5 per cent to 0.25 per cent

    Saqib Naseem, Junaid Teli and Farhan Ashrafi, in the budget proposals, were of the opinion that due to continuous business recession and unstable economic situation, yarn traders are not ready for it, and they are reluctant to register with FBR. As a result, the national exchequer may face significant losses in terms of revenue.

    READ MORE: Adjustable advance tax proposed for corporate services

    In the budget proposal, PYMA pointed out the anomaly regarding the turnover tax, saying that it was agreed with top FBR officials that it would remain at 0.1 per cent, so it was suggested that the turnover tax be kept at 0.1 per cent.

  • KTBA elects Rehan Jafri as President

    KTBA elects Rehan Jafri as President

    In a recently held Annual General Meeting, the Karachi Tax Bar Association (KTBA) announced the results of its elections, with Syed Rehan Hasan Jafri being re-elected as the President for the year 2022.

    (more…)
  • Tax slabs reduction may be considered: FBR chairman

    Tax slabs reduction may be considered: FBR chairman

    KARACHI: Dr. Muhammad Ashfaq Ahmed, chairman, Federal Board of Revenue (FBR) on Tuesday said reduction in income tax slabs may be considered.

    Addressing the business community at Federation of Pakistan Chambers of Commerce and Industry (FPCCI) said that existing income tax slabs were implemented after due consideration.

    Earlier, the business community pointed out high number of tax slabs in the Income Tax Ordinance, 2001.

    READ MORE: Withholding tax should be on income: FBR Chairman

    Commenting on requirement of Computerized National Identity Card (CNIC) on transactions, he said this condition was introduced three years ago. The FBR has gathered bulk of information due to this condition. Further, many cases of using fake CNICs for making transactions were also reported, he added.

    The FBR chairman said that retailers had positively responded to integration of Point of Sales (POS) in Karachi. “Many issues will be resolved with improvement in supply chain,” he added.

    The business community raised the issues of audit notices. Dr. Ashfaq said that action would be taken if audit notices were not responded. “The audit notices should be responded with documentary evidence,” he said.

    READ MORE: UAE favorite hiding for Pakistan assets: Dr. Ashfaq

    About the tax laws, he said that foreign companies investment in Pakistan are unaware about our domestic laws, he said and assured that the FBR would facilitate both local and foreign investors to understand tax laws.

    Earlier, Anjum Nisar, Chairman, Businessmen Panel (BMP) said that delay in tax refunds create liquidity issues for industries. He said if taxpayers delays in compliance then he is subject to penalty and surcharges. Similarly, this should be apply to tax officials, he added.

    Irfan Iqbal Sheikh, President FPCCI, put forward the concerns and complaints of the business, industry and trade community of Pakistan to the Federal Board of Revenue during the detailed visit of its Chairman, Dr. Ashfaq Ahmed; along with the top brass of FBR.

    READ MORE: FBR explains cash discount under sales tax laws

    FPCCI President said that excessive and unsubstantiated tax notices; maladministration and corrupt elements; requirement of buyers’ CNIC copy; huge backlog of refund cases; double taxation; misuse of erstwhile FATA & PATA exemptions; higher rates of corporate, sales and withholding taxes; mandatory POS integration with FBR; multiplicity of income tax slabs and SRO culture are the major impediments in reforming the taxation system and broadening of the tax base.

    Irfan Iqbal Sheikh added that 29 percent corporate tax and 17 percent sales tax are too high for economic growth, industrialization and employment generation; and, rates of these taxes should be gradually and progressively brought down. He elaborated that no country of the world has ever progressed in the absence of industrialization; while commending the recently announced industrial growth package of the federal government.

    READ MORE: FBR amends fresh property valuations for Islamabad

    Engr. M.A. Jabbar, VP FPCCI, emphasized that we have to do away with the notice manufacturing practices of the taxation machinery as that prohibits the new taxpayers to register themselves into the system to avoid unnecessary regulatory interferences.

    Dr. Ashfaq Ahmed, Chairman FBR, expressed his willingness to have policy deliberations over FPCCI’s demand of reducing audit period to three years from the current six years. He also apprised the session that FBR has performed exceedingly well despite the debilitating economic conditions arising out of COVID-19 pandemic and have collected record taxes. He also expressed his optimism that FBR can soon achieve a Tax-to-GDP ratio of 12 per cent.

  • Withholding tax should be on income: FBR Chairman

    Withholding tax should be on income: FBR Chairman

    Karachi, March 14, 2022 – The Chairman of the Federal Board of Revenue (FBR), Dr. Muhammad Ashfaq Ahmed, emphasized the need for a shift in the approach to withholding tax (WHT), suggesting that it should be levied on income rather than transactions. He made these remarks during an address at the Karachi Chamber of Commerce and Industry (KCCI) on Monday.

    (more…)
  • Karachi Chamber fears deep impact of PKR devaluation

    Karachi Chamber fears deep impact of PKR devaluation

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has expressed deep economic impact of massive devaluation of Pakistan Rupee (PKR) against the dollar.

    (more…)
  • Political turmoil to create economic instability: FPCCI

    Political turmoil to create economic instability: FPCCI

    KARACHI: Perturbed with ongoing political uncertainties following the no-confidence motion moved, the business community urged the treasury and opposition to resolve the issues through talks as unrest creating unstable economic conditions.

    Anjum Nisar, chairman, Businessmen Panel (BMP) and former president of Federation of Pakistan Chambers of Commerce and Industry(FPCCI) feared that political climate of the country has become unpredictable due to political uncertainty, reducing the level of investment and affecting the economic growth of the country, suggesting the government as well as the opposition parties to settle issues through talks in parliament, which the right way to resolve the issues.

    READ MORE: FPCCI demands allowing clearance of solar equipment

    He appealed the political leadership to act wisely and show commitment with the country, as the lack of political stability is ruining the trade and economic activities in the country.

    The FPCCI former president said that this situation might create unstable economic conditions, generating higher risks, and transforms into low investment while inflation is one of the key sources of uncertainty. The high rate of inflation leaves the nation uncertain about potential investments, he added.

    READ MORE: FPCCI proposes charter to protect economy from politics

    He said that the financial sector is stable, as the government has continuously been bringing reforms in different sectors. He said that the government has been working on sustainable growth which will boost up to 6% further. He said several reforms had been made in industrialization, housing and agricultural sector.

    He said that the country is facing a huge economic loss only because of wrong statements and irrational attitude of political players. He said that a week of stalled economic activity costs the country around $ 500 million and $2 billion per month and poor economy like Pakistan cannot afford even one million dollar loss to exports. He said that at a time when country is facing severe internal and external challenges, the situation is bound to affect the national interests.

    READ MORE: Banks not issuing forms for land trade with Turkey: FPCCI

    He said that in the past, politics of agitation has caused irreversible loss to the national economy besides tarnishing the soft image of the country. He said that in present scenario, country cannot afford to bear more economical loss. He said that business community is the main stakeholder of the economy and it should not be treated as useless thing.

    He said the economy of Pakistan was on the path of sustainable growth due to successful economic policies of the government.

    He appreciated the government to make all out efforts for reducing the negative effects of inflation by creating conducive atmosphere for investors, jobs for youth and targeted subsidies.

    READ MORE: FPCCI suggests regulating cryptocurrencies in Pakistan

    He attributed the higher economic growth to rising exports, increasing remittances and improving tax collection that had gone up by 32 percent. However, he also said the economy had to face certain difficulties due to higher commodity prices in the international market. The utilization of electricity had gone up by 13 per cent whereas the corporate profits were also at historic high, he said. The Pakistan economy has continued to recover despite the challenges of the Covid-19 pandemic, but imbalances have widened and risks remain elevated. Timely and consistent implementation of policies and reforms remain essential to lay the ground for stronger and more sustainable growth, he said.

    Pakistan can double its traditional exports in next five years and lift exports by providing incentives to the sector and building a strong ecosystem for startups in the country, he said.

    He said the government is also focusing on improving productivity by reviving industries and improving the agriculture sector.

    He said that China has planned to shift up to 85 million jobs to foreign countries in next 10 years and Pakistan government can request the Chinese leadership to move at least 10 million jobs to Pakistan by relocating its key industrial units to special economic zones in the country, he suggested. He said that China can increase imports from Pakistan that would also improve productivity and generate more opportunities for jobs in the country.