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Category: Trade & Industry

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  • FPCCI urges following coronavirus SOPs to avert industrial halt

    FPCCI urges following coronavirus SOPs to avert industrial halt

    KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Saturday urged trade and industry to follow SOPs related to coronavirus in order to avert complete halt of industrial and economic activities.

    FPCCI’s ruling group BMP Chairman Mian Anjum Nisar has asked the traders to strictly follow the government’s SOPs in markets for curbing the spread of deadly coronavirus and averting halt of the industrial wheel.

    Moreover, there is also need to speed up vaccination process, especially for the industry workers in the country, for the smooth operation of trade and industry, he added.

    “The businessmen themselves have to ensure a strict implementation of the standard operating procedures in markets and commercial areas in order to curb the spread of Covid-19 pandemic,” he said and warned that the third wave of coronavirus had spread to dangerous levels and the situation demanded that the business community play a role in strict compliance with the SOPs in business areas to control further Covid-19 infections.

    Mian Anjum Nisar stressed that a reduction in coronavirus cases would help the government to consider easing restrictions on businesses, as it would cause great losses to trade activities, render thousands of daily-wage workers and other workers jobless, making the lives more miserable, fuel a further increase in inflation besides badly impacting the economy.

    He said that during the third wave of coronavirus the situation has been deteriorating mainly due to lack of implementation of COVID-19 standard operating procedures and the solution lies in speeding up our vaccination programs, instead of opting for closure of trade and industry amidst GDP growth of just 1.5 percent. He said that in view of combating the coronavirus situation the government can impose smart lockdown where required, as complete lockdown would halt industry.

    The FPCCI former president pointed out that due to the previous lockdowns, Pakistan’s economy had suffered a loss of billions of dollars while millions of workers lost their jobs. Pakistan’s economy suffered negative growth last fiscal year for the first time in the history due to Covid-19, he said, adding that the best way to save the economy and businesses from more losses is to follow the SOPs.

    He observed that the complete lockdowns had created havoc globally, as the countries, which were providing loans had also came under debts while Pakistan is already facing financial crunch due to huge burden of debts. So, complete lockdown is not a good option, he added.

    He observed that the government will have to make visible reduction in taxes in the budget to help revive the businesses, which are near to bankruptcies owing to slowdown amidst coronavirus.

    He asked the government to take concrete steps to attract foreign investment, saving the livelihood of millions of workers associated with various sectors, as foreign investment in Pakistan’s long-term projects like power plants and oil and gas exploration.

    The BMP Chairman said that with a view to save the economy from the impacts of the slowdown due to the COVID-19 the government should announce special incentives for a cash-strapped SMEs, which represents more than 90 percent of around 3.2 million business enterprises in Pakistan, contributing 40 percent to the GDP, employing more than 80 percent of non-agricultural workforce, and generating 25 percent of export earnings.

    He expressed dissatisfaction over the financial packages by the government for the businesses to deal with the financial crunch, called for a significant cut in import duties and waiver of sales tax, income tax and additional income taxes, for the smooth running of trade and industry.

    He asked the government to expedite the process of vaccination and supply ample quantity of doses not only to the whole public but also to the trade and industry.

    Mian Anjum Nisar said that rising mortality in the midst of the third Covid-19 wave and growing anxiety in the business circles over possible restrictions on international travel and trade necessitate ramping up the pace of vaccination.

    To speed up inoculations, the government will need to bridge vaccine supply gaps with active participation from the federating units and the private sector, he added.

  • Prolong Eid holidays to adversely affect exports: APTMA

    Prolong Eid holidays to adversely affect exports: APTMA

    KARACHI: All Pakistan Textile Mills Association (APTMA) has strongly reacted to the announcement of the government regarding Eid Holidays and stated the prolong closure may adversely affect economic activities.

    The Patron in Chief APTMA, Gohar Ejaz has rejected the decision of the Government for Eid ul Fitr holidays from 10th to 16th May 2021. While expressing his concerns, stated that this will bring the whole country practically shut down for 10 days from Saturday, 8th May to Monday 17th May 2021.

    Shutting down the country for 10 consecutive days is unacceptable as it would create a lot of glitches for the economy, industries, particularly the exporters who will not be able to dispatch their shipments abroad due to the complete closure of banks, ports, customs, and all other departments during excessive holidays. 

    He warned that we cannot afford such extended holidays as they will result in giving losses of up to billions of rupees to the national exchequer and terribly affect business activities particularly the exports.

    Simultaneously, it will badly affect and deprive the daily wage earners of the country of their desperately needed earnings for continuous 10 days. Workers will find it impossible to feed their families creating a social disaster.

    He particularly highlighted the Textile Industry that despite the issues and hardship, committed to double the exports.

    Textile manufacturers have orders in hand and are working day and night to dispatch shipments according to the agreed schedule.

    This decision will end up in the cancellation of orders which will not only result in losses to manufacturers but also to the country.

    Keeping in view the social overall business climate and economic crises being faced by the country, Gohar Ejaz requested the Government to review the decision of Eid ul Fitr holidays from 10th to 16th May 2021.

    The holidays should only be from 13th to 16th May 2021. The government should not shut down production and transportation for 10 days as the country simply cannot sustain such production and export loss.

  • Shaukat Tarin assures FPCCI of taking on board before making economic decisions

    Shaukat Tarin assures FPCCI of taking on board before making economic decisions

    ISLAMABAD: Finance Minister Shukat Tarin on Friday assured the representatives of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) to have a regular interaction.

    He also affirmed that all key stakeholders would be taken on board before making important economic decisions.

    The finance minister held a meeting with the FPCCI members through a video link. Adviser to the PM on Commerce Abdul Razak Dawood, SAPM on Finance and Revenue Dr. Waqar Masood, Chairman FBR and other senior officers participated in the meeting.

    While addressing the meeting, the Finance Minister briefed the participants about the economic priorities of the Government.

    He also outlined that the Government is adhering to strict financial discipline for achieving macro-economic stability and enhancing revenue generation.

    The Minister also outlined that Pakistan’s economy is showing signs of recovery amid Coronavirus pandemic, with construction and manufacturing sectors in lead. However, the third wave of COVID-19 is particularly challenging, he added.

    The Minister also stressed the role of Chambers of Commerce and Industry as a bridge between the Government and the traders for active coordination and welcomed suggestions from the members of FPCCI on the occasion.

    The representatives of FPCCI felicitated the Finance Minister on assuming new responsibilities and discussed the matters related to sales tax harmonization and rationalization of taxes.

    In his concluding remarks, the Finance Minister stated that the suggestions presented during the meeting would be accorded due consideration.

  • Gul Ahmed Textile declares 4-time increase in net profit during nine months

    Gul Ahmed Textile declares 4-time increase in net profit during nine months

    KARACHI: Gul Ahmed Textile Mills Ltd. (GATM) on Wednesday declared unprecedented four-time growth in after tax profit for the nine-month period ended March 31, 2021.

    According to the financial results, the textile unit declared Rs3.45 billion as profit after tax for the period July – March 2020/2021 as compared with profit after tax of Rs699 million in the same period of the last fiscal year.

    The company declared earnings per share at Rs8.08 for the period under review as compared with Rs1.64 in the same period of the last fiscal year.

    The sales of the company increased to Rs63.57 billion during the nine-month period ended March 31, 2021 as compared with Rs44.89 billion in the same period of the last year.

    The textile unit declared gross profit at Rs12.3 billion for first nine months of the current fiscal year as compared with Rs8.12 billion in the corresponding period of the last fiscal year.

    Gul Ahmed Textile Mills Limited announced an interim cash dividend for the nine months ended March 31, 2021 at Re1 per share i.e. 10 percent. It also declared bonus share in proportion of one share of every five shares held i.e. 20 percent.

  • Philip Morris announces 100pc increase in after tax quarterly profit

    Philip Morris announces 100pc increase in after tax quarterly profit

    KARACHI: Philip Morris (Pakistan) Limited, makers of cigarettes in the country, has announced around 100 percent increase in net profit for the quarter ended March 31, 2021.

    According to financial results submitted to Pakistan Stock Exchange (PSX) on Tuesday, the profit after tax for the quarter ended March 31, 2021 increased to Rs718 million as compared with Rs361 million in the corresponding period of the last year.

    During the period ended March 31, 2021, the company’s domestic net turnover stood at Rs4.44 billion reflecting increase by 6 percent versus same period last year.

    Increase in Distribution & Marketing expenses showed commitment by the Company to continuously allocate the resources for Commercial initiatives which can earn the best returns. Further, we continue to find efficiencies in Administrative Expenses to ensure the increase remains under inflation.

    During the same period ended March 31, 2021, the company’s contribution to the National Exchequer, in the form of excise duty, sales tax and other government levies, stood at Rs7,089 million (higher by 23.3 percent compared to the same period last year) reflecting 61.1 percent of first quarter of 2021 Gross Turnover.

    Giving industry background, the company said that the lack of a level playing field is one of the key challenges for the legally compliant tax paying cigarette industry.

    In 2013, the share of non-tax paid illicit sector was 23 percent but due to sheer lack of enforcement, it has now captured almost 40 percent of the market.

    Significant and excessive excise increases over the past few years have widened the price gap between legal and non-tax-paid illicit cigarettes thus facilitating downtrading and contributing to the exponential growth of the illicit cigarette sector.

    Excessive excise duty increases of 93 percent on Value Tier brands (i.e. from Rs17/pack in April 2018 to Rs33/pack in June 2019) during Federal Budgets of September 2018 and June 2019 have stretched the price gap and non-tax paid illicit brands continue selling at below minimum price prescribed under tax laws i.e. Rs63/pack.

    Further countless tax-evading brands of cigarettes across the country are being sold as low as Rs25/pack (avg. illicit price is Rs38/pack). For reference: Total Tax/pack (Excise & Sales Tax) on value brands is Rs44/pack.

    The company said that it had support the introduction of Track and Trace system as it will be an effective tool to supplement enforcement efforts against tax evasion.

    However, since 2019, the Federal Board of Revenue (FBR) has made multiple attempts to implement the system but, till date no major progress has been made on this front.

  • Foreign investors call for strong protection of intellectual property rights

    Foreign investors call for strong protection of intellectual property rights

    KARACHI: Foreign investors from the platform of Overseas Chamber of Commerce and Industry (OICCI) have demanded strong protection of intellectual property rights in Pakistan for encouraging innovation and creativity in people and society.

     ‘The Overseas Investors Chamber of Commerce and Industry (OICCI) has always championed the cause of protecting Intellectual Property Rights in Pakistan which is critical for attracting and retaining FDI in the country’, commented Irfan Siddiqui President of OICCI on “Intellectual Property Rights Day” celebrated worldwide on April 26th annually.

    Irfan Siddiqui  added that ‘close monitoring of IPR regime in Pakistan has always been a fundamental part of the OICCI agenda.  Laws which give a strong protection to Intellectual Property Rights (IPR) play a key role in encouraging innovation and creativity in people and society’.

    OICCI stated that this year’s World Intellectual Property Rights Day, theme “IP & SMEs: Taking your ideas to market”, will help to highlight the fact that a strong IPR is not only a requirement for multinationals, but a key point for all commercial entities and consumers. Pakistan’s recent accession to the Madrid Protocol has given local businesses, especially exporters, protection of  their Trade Marks in 196 different member countries. There are various indigenous Geographical Indication (GI) products in Pakistan (eg, Peshawari chappals, Ajrak print and Sindhri mangoes). The GI (Registration and Protection) Act 2020 is crucial to secure worldwide recognition of the Pakistani products and has helped establish a system for the registration and protection of GI rights in Pakistan.

    ‘IPR protection motivates innovators, promotes business growth, creating employment, and diversifying the choice of products available to consumers. Strong and effective enforcement of IPR legal framework benefits consumers as they get the feeling of purchasing safe and guaranteed products, especially healthcare products”, commented Erum Shakir, OICCI Managing Committee member and Chairperson of the OICCI IPR Subcommittee

    Sharing the experience and way forward for improving the IPR regime in Pakistan, OICCI members representing the collective voice of top 200 foreign investors in Pakistan, have observed that while the IPR laws in Pakistan are, by and large, world class, its implementation is far from being effective. While appreciating various initiative of the IPR regulator in Pakistan, Intellectual Property Organization of Pakistan (IPO-P) towards facilitating IP protection and rationalizing the associated costs, the registration process for IPR ( copyrights, patents and Trade Marks) needs to be fully digitalized and fast turnaround timing to facilitate all IPR owners, spread all over the country.  This is needed to encourage, new innovators and SMEs to opt for IP Registration. Moreover, a fast track resolution of IP disputes, with enhanced capacity and knowledge sharing on IPR in special courts / tribunals is expected to accelerate new  registration of IPR and build positive image for the country.

    In conclusion, Irfan Siddiqui, OICCI President, observed, “we are proud of OICCI members contribution over the years in raising the awareness about the importance of Intellectual Property Rights in Pakistan for  attracting new FDI, and in promoting innovation and creativity and jobs in the country .  Working in partnership with IPOP and all relevant stakeholders, OICCI is promoting knowledge sharing for a more effective and business friendly IPR regime , so as to encourage innovators in Pakistan and worldwide to share their invention , including latest patents in medicine, in the country.  Without adequate IP protection, local innovators are unable to attract investments, business creation is slow, and jobs lost. Economic prosperity relies on job growth, and strong, effective IP rights have a role to play in creating both”.

  • FBR advised to simplify withholding tax regime on imports

    FBR advised to simplify withholding tax regime on imports

    KARACHI: Federal Board of Revenue (FBR) has been urged to simplify the withholding tax regime on imported goods under Section 148 of the Income Tax Ordinance, 2001.

    Overseas Investors Chamber of Commerce and Industry (OICCI) in its proposals for budget 2021/2022 urged to FBR to simplify the withholding taxes on goods at the import stage.

    It suggested that the criteria for obtaining exemption under Section 148 of the Income Tax Ordinance, 2001 should be based on discharge of advance tax liability as per section 147 of the Income Tax Ordinance, 2001 and clause 72B of the part 1 of the second schedule should be restored.

    Raw materials imported at the rate of 5.5 percent withholding tax should not be subject to minimum taxation. This anomaly should be clarified by FBR at the earliest.

    Procedure for application of reduced rate of 2 percent on import of raw material for own use which are not covered under Part II of Twelfth Schedule is highly cumbersome and should be simplified.

    Section 148 (1) of the Ordinance to amended via the following insertion:

    “Provided that the Commissioner shall issue exemption certificate/ certificate of non-deduction / collection of advance tax at source at import stage within fifteen days of filing of application to exempt entities upon verification:

    Provided further that the Commissioner shall be deemed to have issued the exemption certificate upon the expiry of fifteen days to the aforesaid company and the certificate shall be automatically processed and issued by Iris”.

  • Customs needs to improve performance: Karachi Chamber

    Customs needs to improve performance: Karachi Chamber

    KARACHI: The performance of Pakistan Customs is not at par with expectations of trade and industry. This mismatch between expectations and delivery should be resolved effectively, said Shari Vohra, President, Karachi Chamber of Commerce and Industry (KCCI).

    He said while exchanging views with a delegation of Senior Collectors of 31st Mid-Career Management Course from Directorate General of Training & Research (Customs) who were led by Additional Director Junaid Usman Akram during their visit to Karachi Chamber.

    The meeting was also attended by Senior Vice President Saqib Goodluck, Vice President Shamsul Islam Khan and KCCI Managing Committee Members.

    Shariq Vohra was of the opinion that the Customs Department has to improve its efficiency as per international standards and must stay abreast with global changes and technological advancements as staying confined to traditional and obsolete practices for clearance of goods would never yield positive results in terms of expediting procedures for clearance of goods.

    “Although Customs Department is a tax collector but it has to be a facilitator as well,” he added.

    He was of the opinion that free dwell time of five days usually expires because of slow pace of Customs Department that causes severe losses to the business community on account of demurrage and detention charges on a daily basis which not only makes the imported goods uncompetitive in the local markets but also affects the exports.

    “At times, many consignments carrying essential raw material for export-oriented industries are also held up by Customs authorities for long which raises the cost of raw material and eventually increases the cost of exportable goods.

    “This is a very serious issue which requires special attention as it makes many Pakistani products uncompetitive in the international markets,” he explained.

    Additional Director Directorate General of Training & Research Junaid Usman Akram, while appreciating KCCI for regularly holding interactions with Customs Officers of Mid-Career Management Course, stated that it was very important to hold frequent interactions between Customs Officials and the business community as such interactions were a perfect source for having access to first-hand knowledge which helps in better understanding the issues and accordingly devising strategies for creating an enabling business environment.

    He said that the Customs Department, despite limited human resource, was sincerely working to facilitate the business community even in extraordinary situations.

    “Despite the outbreak of COVID-19 pandemic and subsequent lockdown last year when employees of most of the organizations starting working from homes, the Customs Department remained fully operational and not a single day leave was taken by any official that clearly shows the sheer commitment and dedication of the entire department,” he added.

    Speaking on the occasion, Senior Vice President KCCI Saqib Goodluck briefed the delegation about the overall operations of Karachi Chamber and how effectively it has been raising voice for resolving issues being faced by the business and industrial community, besides giving the valuable Budget Proposals which were compiled after consultation with all the stakeholders including all industrial town associations and sector-specific trade bodies.

  • Ministry releases Rs2.5 billion under DLTL to support exporters

    Ministry releases Rs2.5 billion under DLTL to support exporters

    ISLAMABAD: The ministry of commerce has released Rs2.5 billion under Drawback of Local Taxes and Levies (DLTL) to support the exporters in resolving liquidity issues.

    Abdul Razak Dawood, Adviser to Prime Minister of Pakistan for Commerce and Investment, in a tweet on Friday said that the ministry of commerce had released Rs1.15 billion for the non-textile sector and Rs1.35 billion for the textile sector under DLTL schemes.

    “Hope this will resolve the liquidity issues of our exporters and enable them to enhance exports,” Razak Dawood said.

  • Premature reversal of tax exemption hurt investors’ sentiment: PBC

    Premature reversal of tax exemption hurt investors’ sentiment: PBC

    KARACHI: Pakistan Business Council (PBC) has said that the premature reversal of tax exemption hurt the investor sentiments.

    In a letter sent to Finance Minister Shaukat Tarin, the PBC said that the recent reversal of tax exemptions, some which had just a few years to run, and others which were conceptually aimed at promoting scale and consolidation through formation of groups, wider shareholding through listing, and resultant improved governance and formalization of the economy have hurt the investor sentiment.

    “We urge you to restore the incentive to list companies, exempt inter-corporate dividends from tax (and from withholding tax), allow corporate players in agriculture to avail the same tax benefits as the unincorporated and restore the tax benefits on income arising from use of intellectual property abroad. The earlier termination of tax credits on investment in plant and machinery also needs to e reversed,” the PBC said.

    The business council about the fiscal targets said that a 27 percent increase in the tax target for fiscal year 2021/2022, in an economy forecast to grow at a nominal rate of under 14 percent, with little evidence of improvement in FBR’s capability to broaden the tax base, bodes ill for existing tax-payers.

    “Successive governments have lacked the political will to pursue non-taxpayers. Relying on existing taxpayers for additional revenue accelerates the informalization of the economy,” it said.

    The PBC has long advocated for the separation of fiscal policy from collection of taxes and for addressing the talent and technology gaps that prevent the FBR from broadening the tax base.

    “Unrealistic tax targets is putting the cart before the horse. Taxing the already taxed is akin to killing the goose that lays the golden eggs,” the PBC said.

    Fundamental fiscal reforms will take time to deliver, and the benefits will be sustainable. We must not be distracted by short-term targets.

    Regarding energy costs, the PBC said that the mooted 27 percent increase in power tariff, on top of the already uncompetitive energy cost, the burden of which will fall entirely on the shoulders of honest customers, is not a growth driver.

    The narrative on denying the five main export sectors of energy at a regionally competitive cost and forcing the captive power producers to switch to the grid, reliability of which is yet unproven, does not portend well for exports.

    Efforts should instead be focused on fixing the inefficiency and losses of transmission and distribution. Ominously, the delay in settlement of the agreed dues of the IPP’s threatens the gains made on renegotiating capacity charges. Industry, both export oriented and domestic is the engine of employment.

    Burdening it with the cost of systemic inefficiencies and cross subsidies to residential users impedes its competitiveness and restricts its capability to create jobs.

    Subsidies are best addressed through the Ehsaas Programme. Allow industry to create livelihoods and generate taxable revenues. Facilitate the major export sector through the much-awaited Textiles Policy.

    The PBC is encouraged by the State Bank of Pakistan’s differentiated treatment of demand-pull and supply/utility cost-push inflation. However, if the latter causes remain unchecked, there is a high risk of a multiplier effect on core inflation. Higher borrowing costs on this account will also sap growth.

    The business council said that the Temporary Economic Refinance Facility (TERF) which lapsed in March led directly to over Rs400 billion investment in plant and machinery and indirectly to an approx. Rs300 billion investment in land and industrial buildings.

    This will add jobs, enhance exports, and strengthen “Make-in-Pakistan.” The cost of the interest subsidy will more than be covered by additional tax revenues. At least retaining a version of TERF should be considered for medium sized businesses. Beyond the immediate timeframe, SME and longer-term lending can be taken over by properly configured and resourced development finance institutions which need to be established.

    It said that the current fiscal policy discourages incorporation of businesses by levying tax on dividends and subjecting gains on sale of shares to CGT, irrespective of the holding period. Unincorporated businesses escape both these taxes. Manufacturers suffer from taxation at each stage of the value-chain whilst commercial importers benefit from presumptive tax at the import stage. Minimum tax based on turnover, besides being inequitable, also acts as a barrier to entry of new players by increasing the capital investment required to fund the tax liability until their businesses become profitable. Incentives hitherto available to motivate business with the formal sector have been removed.

    The PBC urged a comparative study of the fiscal policy affecting corporatization and the manufacturing sector.

    The rate at which import tariffs on raw and intermediate industrial inputs is being reduced could be accelerated to promote domestic manufacturing.

    Food shortages and inflation risk hunger, unrest and law and order stability. Higher cost of food also reduces discretionary spending, lowering demand, a critical driver of growth. The government should walk the talk on “agriculture emergency,” especially on wheat and cotton. These have the greatest impact on hunger, jobs, and exports.

    Impeding investment, cost, and ease of doing business are colonial-era, complex, time consuming, paper-based, and personal interaction-reliant bureaucratic processes. Fragmentation between the federal and provincial authorities has further made doing business more complex – taxation and unharmonized food standards are just two examples. We are encouraged by the government’s resolve under the Pakistan Regulatory Modernization Initiative (PRMI) and Civil Service Reforms to address the regulatory environment. The recent move to unify reporting of federal and provincial GST on a common portal and the Single Window initiative to speed up clearance of consignments portend well for the economy. The Raast and Roshan digital initiatives undertaken by the SBP also hold potential to promote financial inclusivity, visibility, speed, and cost of transactions. The lessons on digital “Know-Your-Customer” can be emulated in the wider economy – in opening of bank and broker accounts, for instance. Supplemented by fiscal incentives, digital transactions would also help broaden the tax base.

    The continued bleeding of revenue by State-Owned Enterprises (SOEs) remains a lingering concern. This depletes the amount that the government can invest in socio-economic development. Several attempts to restructure and dispose SOEs have failed. Impeding this process are: PPRA regulations, public sector recruitment rules and fear of action by the National Accountability Bureau (NAB). These and other factors that thwarted the success of Sarmaya-e-Pakistan need to be addressed to arrest the bleeding of SOEs.

    Reform of the NAB law is necessary to address the near paralysis of decision making by the bureaucracy. Two examples, from just the critical energy sector are delay in settlement of amounts due to IPPs and decisions affecting K-Electric.