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  • KCCI demands immediate withdrawal of policy rate hike

    KCCI demands immediate withdrawal of policy rate hike

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has urged the central bank to immediately withdraw the rise in the key policy rate of 2.5 per cent.

    Chairman Businessmen Group (BMG) Zubair Motiwala and President Karachi Chamber of Commerce & Industry (KCCI) Muhammad Idrees, while highly criticizing the State Bank’s move to exorbitantly raise the interest rate by 2.5 percent to 12.5 percent in an emergent meeting, urged Governor SBP to immediately revisit and withdraw this irrational increase as it would prove disastrous for the economy, exports and the industries.

    READ MORE: SBP increases policy rate sharply by 250bps to 12.25%

    In a joint statement issued, Chairman BMG and President KCCI stated that the entire business & industrial community was in a state of shock to see SBP’s anti-business, anti-economy and anti-exports move which has been taken particularly in a situation when the country’s economy was not so bad. State Bank’s autonomy doesn’t mean that it was free to take such a harsh step overnight which has never happened in 25 years’ history.

    It was highly unfair to abruptly and exorbitantly raise the interest rates without bothering to hold consultation with the stakeholders, they said, adding that the Karachi Chamber, from time to time, requested Governor State Bank to visit KCCI so that numerous monetary issues and central bank’s policies affecting businesses could be discussed in detail but, unfortunately, Governor SBP has no time to discuss some of the most pressing issues being suffered by the business community of Karachi.

    READ MORE: KATI terms sudden policy rate hike as economic disaster

    They noted that last month, Pakistan’s exports recorded an increase of 29.1 percent on Month-on-Month (MoM) basis as compared to last year which clearly indicates that the export sector was performing very well but now, the increase in interest rate would have a deep negative impact on the export performance. It will be completely disastrous for the industries and future investments as nobody would come forward to set up any industry due to exorbitant interest rate and the high cost of doing business which was going to bring the survival of businesses at stake, they cautioned.

    Chairman BMG and President KCCI said that the extortionate increase in the interest rate seems like an attempt to completely shut down the industrial and export activities. Is the State Bank intending to completely block the desperately needed foreign exchange being earned through exports and bring Pakistan’s economy at par with the Sri Lankan economy, they asked and advised the SBP to compare Pakistan’s excessive interest rate with the global interest rates which, we fear, would cool down the economic activities.

    READ MORE: SBP intervention sought to stop further rupee devaluation

    They said that the decision to increase the interest rate has been taken to contain inflation but keeping in view the ground realities and the overall high cost of doing business, the business and industrial community firmly believes that enhanced interest rate would prove counter-productive by further nurturing the inflation.

    Chairman BMG said, “As leader of the business community of Karachi, I fervently demand that the decision to raise the interest rate must be revisited which is purely not in the interest of the country hence it has to be taken back while the SBP must also hold consultations with the stakeholders prior to imposing such decision directly affecting the business and industrial activities.”

    President KCCI said that the increase in dollar value was due to political turmoil, not because of poor economic performance which has not yet been suffered by impact of rising oil prices hence, the State Bank must refrain from creating more problems for the economy.

    READ MORE: Businessmen want early resolution of political uncertainty

  • KATI terms sudden policy rate hike as economic disaster

    KATI terms sudden policy rate hike as economic disaster

    KARACHI: Korangi Association of Trade and Industry (KATI) on Friday expressed annoyance over sudden 2.5 per cent increase in key policy rate by the State Bank of Pakistan (SBP) in an unscheduled meeting held a day earlier.

    KATI President Salman Aslam expressed concern over the sudden increase in interest rate by SBP by 2.5 per cent and setting the policy rate at 12.25 per cent.

    READ MORE: SBP increases policy rate sharply by 250bps to 12.25%

    He said that the unexpected meeting and decision of the Monetary Policy Committee would cause irreparable damage to the economy.

    Salman Aslam said that already due to increase in production cost, stabilization in electricity, gas and petrol prices, it is very difficult to compete with other countries in the region including India, China and Bangladesh. Salman Aslam said that increase in interest rates, export orders are also likely to be affected due to which the wheel of the industry is becoming extremely difficult to move.

    READ MORE: PKR becomes worst currency in region: KATI

    The country’s economy is already under pressure due to the political crisis. In such a scenario, the abrupt rise in interest rates by the SBP is beyond comprehension. He said that in view of such measures, there were concerns over the undue autonomy of the SBP in the business community.

    President KATI appealed to Prime Minister Imran Khan and Finance Minister Shaukat Tareen to take immediate notice of the increase in monetary policy rate. He said that due to political instability, the value of the dollar had reached an all-time high and a significant increase in interest rates was tantamount to inviting a major storm of inflation.

    READ MORE: KATI expresses concerns over rising inflation

    Salman Aslam said that the people of Pakistan and the business community could not afford further inflation. He said that industrialists and traders were facing economic crisis and raising interest rates above 12 percent would completely destroy industries and exports of the country. Expensive bank loans will further increase the cost of production.

    President KATI also appealed to the Governor SBP to immediately reverse the interest rate hike in the best interest of the economy.

    READ MORE: KATI strongly criticizes hike in petroleum prices

  • Foreign investors spend Rs14.5 billion on CSR activities

    Foreign investors spend Rs14.5 billion on CSR activities

    KARACHI: The foreign investors operating in Pakistan have spent around Rs14.5 billion on activities under Corporate Social Responsibilities (CSR) during the year 2020/2021, a statement said on Thursday.

    The foreign investors, who are members of the Overseas Investors Chamber of Commerce and Industry (OICCI), like previous years, once again reaffirmed their commitment to uplift the Pakistani society from all aspects and invested Rs14.5 billion in different CSR and Sustainable projects during 2020-21, stated in a press statement issued for sharing the highlights of OICCI Corporate Social Responsibility (CSR) Report 2020-21.

    READ MORE: OICCI organizes Women Empowerment Awards

    About 100 of the leading foreign investors and members of OICCI continued to stand by the government to fight the pandemic of COVID-19 besides carrying out their several CSR initiatives which benefit the marginalized communities across the country.

    The CSR activities of OICCI members do not only include monetary contributions but the intellect and time of their employees as well which develop sustainable and long-term projects across Pakistan with the underlying commitment to uplift the underprivileged strata of the society through different means.

    President OICCI, Ghias Khan, commended the unparallel commitment of OICCI members who are inspiring the corporate sector alike to invest in the society besides introducing latest technology and skills transfer for the local population.

    READ MORE: Ghais Khan elected OICCI president

    “The OICCI members keep on enhancing the CSR fabric through a proactive engagement between business and all stakeholders in the society which results in model CSR initiatives and Sustainability practices, largely in line with the United Nations Sustainable Development Goals (UN SDGs) to meet the growing needs of the society”, Ghias added.

    Vice President OICCI, Amir Paracha, highlighted that the annual CSR Report 2020-21 reflects the feedback from about half of OICCI membership who have shared their CSR activities. This year total CSR contribution was PKR 11 billion, which benefited about 34 million direct beneficiaries across the country. OICCI members and their colleagues spent around 1.4 million man-hours and partnered with 160 social and development sector organizations throughout Pakistan. The geographic distribution of the CSR activities has been 31 per cent in Sindh, 27 per cent in Punjab, 15 per cent in Khyber Pakhtunkhwa, 13 per cent in Baluchistan, 8 per cent in Gilgit-Baltistan, and 6 per cent in Azad Kashmir.

    READ MORE: OICCI expresses dismay over FBR action against mobile operator

    The COVID-19 continues to be a challenge for businesses throughout the world. Our members showed exceptional leadership and resilience in the fight against COVID-19. During the year, 90 per cent of our participant-members contributed about PKR 3.5 billion to various causes to fight the pandemic.

    Protecting Environment is one of the areas which is getting growing attention recently. 69 per cent of our participant-members carried out environment related pursuits and spent about PKR 1.5 billion for the purpose of protecting environment.

    With respect to specific UN SDGs, 79 per cent of the OICCI members focused on health and well-being, and actively supported health and nutrition related initiatives through donations to reputable hospitals, medical care camps and health awareness campaigns.

    READ MORE: OICCI members pay one third of total tax collection

    Moreover, 73 per cent of members contributed to Quality Education by funding primary and secondary school facilities, scholarships, and various vocational training programs for skills development. Gender Equality is also one of the focus areas where more than half of our participant-members supported the women empowerment activities and actively supported the “OICCI Women” initiative in place since 2017.

    OICCI is the collective body of top 200 foreign investors in Pakistan, belonging to 35 countries, who are also the largest contributor to the economy of Pakistan besides being the largest foreign investors.

  • PKR becomes worst currency in region: KATI

    PKR becomes worst currency in region: KATI

    KARACHI: Korangi Association of Trade and Industry (KATI) has said that the continuous depreciation in Pakistan Rupee (PKR) against the dollar made it the worst currency in the region.

    In a statement issued on Wednesday, Salman Aslam KATI President said that the value of the dollar was continuously rising which has made the Pakistani rupee one of the worst currencies in the region while raising fears of a severe surge of inflation in the country.

    READ MORE: KATI expresses concerns over rising inflation

    Political instability has cut off domestic and foreign investment, which is a matter of great concern. Salman Aslam said that the value of the dollar has reached a historic high of Rs 186 which is detrimental to the economy.

    He said that the countries whose currencies had depreciated so fast in the world were on the verge of collapse and those governments have failed to rebuild their economies.

    In such a case, it becomes the responsibility of the SBP to intervene realizing the gravity of the matter and stopping the diminishing value of the rupee.

    READ MORE: KATI strongly criticizes hike in petroleum prices

    President KATI said that the political leaders of the nation should also work for reconciliation for the sovereignty of the country and the nation instead of political confrontation otherwise Pakistan could not afford to face further economic crisis.

    Salman Aslam said that the historical rise of the dollar and the economic crisis are first and foremost hurting trade and it has become very difficult for exporters to compete in the world.

    READ MORE: Korangi Association flays key policy rate hike

    President KATI expressed concern that if the situation continues like this, the fear of high inflation, unemployment, and chaos is increasing. He appealed that the sovereignty of Pakistan shall not be compromised and the economy must be saved by finding immediate solutions to the problems.

    Salman Aslam also appealed to Governor SBP to play his role in preventing rupee depreciation on an emergency basis.

    READ MORE: Around 65,000 industry workers vaccinated: KATI

  • SBP intervention sought to stop further rupee devaluation

    SBP intervention sought to stop further rupee devaluation

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) Tuesday urged the central bank to immediate intervene in to stop further devaluation of Pakistan rupee (PKR).

    In a statement KCCI President Muhammad Idrees expressed deep concerns over continuous devaluation of rupee against dollar as the foreign currency hit a new all-time high by crossing Rs186.

    READ MORE: Dollar continues record spree against PKR; hits 185.23

    He urged the State Bank of Pakistan (SBP) to play its role and devise effective strategy to stop further devaluation rupees which was having a deep negative impact on the economy, particularly the inflation.

    “Although the experts are attributing the rupee devaluation to political uncertainty but the SBP, being the regulator, has to play a role otherwise, it will create a lot of problems for the economy which is sinking as it faces a lot of challenges due to widening current and fiscal deficits,” he said.

    READ MORE: Businessmen want early resolution of political uncertainty

    Muhammad Idrees said that rising dollar against rupee was raising the cost of doing business, making Pakistani goods uncompetitive in the export markets and unaffordable for common man at the local markets as the impact of rising dollar value is usually passed onto end-users.

    He said that it has to be understood that the share of exports in GDP stood at around 10 percent while the rest of 90 percent was local trade and imports hence the devaluation is hurting and has reached to a level where it has become unbearable.

    “Due to lack of effective price control mechanism, an abnormal upsurge has been witnessed in the prices of almost all the commodities of household usage which have to be controlled to ease the already overburdened and miserable life of the inflation stricken common man,” he stressed.

    READ MORE: Direct flights between Pakistan, Tajikistan needed

    “Severe devaluation of rupee has raised the cost of doing business and fostered the inflation, therefore, it is really crucial to review the current strategies being pursued by the regulator,” he reiterated.

    President KCCI feared that the economic crises including energy crises, devaluing rupee against dollar and rising trade deficit etc. would push the economy to a point of ‘no return’ and may even put Pakistan’s survival at stake. “All the efforts made to maintain GDP growth of 5 percent plus will go wasted if the ongoing political uncertainty continues for long period.”

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

    He stressed that the emerging situation has to be efficiently addressed and handled very carefully otherwise, the excessive devaluation will continue to increase the cost of doing business, which would terribly affect the industrial performance, raise unemployment and open the floodgates of inflation, particularly for the middle and lower segments of the society, besides making the already poor poorer due to unbearable inflation.

  • 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.