KARACHI: North Karachi Association of Trade and Industry (NKATI) on Monday appealed the government for allowing immediate release of textile machinery that were stuck up due to import ban.
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Exorbitant electricity tariff hike threatens industry survival: KCCI
Karachi Chamber of Commerce and Industry (KCCI) on Monday said that exorbitant hike in electricity tariff has threatened the survival of industries and businesses.
The Leadership of Businessmen Group (BMG) and Karachi Chamber of Commerce of Industry (KCCI), while totally rejecting the unprecedented 80 percent hike in electricity tariff, stated that this unbearable upsurge in electricity tariff has created a miserable situation not only for the public but also for the business and industrial community wherein many businesses and industrial units will close down on their own as it was impossible to absorb such an extraordinary raise in electricity tariffs.
READ MORE: Karachi Chamber stresses need to rationalize power tariff
Addressing a press conference here on Monday, Chairman BMG Zubair Motiwala and President KCCI Muhammad Idrees demanded that keeping in view the gravity of situation and likely repercussions on the already ailing economy, the government must immediately withdraw hike in electricity tariff, Fuel Adjustment Charges (FAC) and reintroduction/ increase in Fixed Charges so that the industries could survive in an extremely competitive environment while the hardships being faced by common man could also be reduced in the ongoing era of inflation.
General Secretary BMG AQ Khalil, Senior Vice President Abdul Rehman Naqi, Former President Younus Muhammad Bashir, prominent members of the Business Community, representatives of Industrial Town Associations and sector-specific trade associations were also present at the press conference.
Chairman BMG stated that it was a matter of grave concerns that the base tariff has been raised by Rs9.8972 per unit, which has jacked up per unit cost from Rs19 to around Rs30 per unit, indicating an unprecedented hike of 50 percent. “This is not the end of the story as this increased electricity base tariff of Rs30 per unit will obviously be subjected to 17 percent Sales Tax, Excise Duty and Income Tax as well and when all these components are combined, an unbearable minimum impact in between 65 percent to 80 percent, would appear in the electricity bills”, he noted, adding that if electricity tariffs continue to go up at same pace, the per unit tariff may reach somewhere in between Rs55 to Rs65 in the next couple of months.
READ MORE: Political parties responsible for Pakistan economic crisis: KCCI
Touching upon another important aspect which has raised the cost of doing business for industries, he informed that variant tariffs have once again been restored for the industries under the policy of Peak and Off-Peak Hours which was suspended in the past and a uniform tariff was applicable throughout the day so that the industries could carry on their production at full capacity without any interruption. “The restoration of peak and off-peak hours is going to create a very difficult situation for the industries as they will either have to curtail their production or suspend operations during peak hours and then reengage labour for resumption of pending work during the remaining non-peak hours which happens nowhere around the world but only in Pakistan where such mess usually surfaces due to poor decisions and policymaking by NEPRA which never listens to consumers and only fully facilitates DISCOs.
He appealed the Prime Minister to look into NEPRA’s matters as many decisions taken by NEPRA were purely against the consumers and in recent history, the regulator has never favored the consumers. As consumers’ point of view was never being taken seriously at the so-called public hearing, NEPRA rules must be redefined and a consumer representative must also be included in NEPRA’s penal for Public Hearings.
He further noted that the industries of Karachi were paying at least Rs10 more than what was being charged from the industries in Peshawar which was a sheer discrimination and clearly gives an impression that policies were being devised in such a manner that the industries in Karachi close down units on their own and move to somewhere else.
READ MORE: Karachi Chamber demands declaring rain emergency
Expressing deep concerns over restoration and increase in Fixed Charges, Zubair Motiwala stated that this was unacceptable as it would further increase the cost of doing business because fixed charges were applicable as per load on operational and inoperative industries who, instead of being encouraged to reactivate operations, will be compelled to stay closed. “It is an imprudent move which was neither in favour of businesses nor the economy as it would refrain the industrialists from reactivating their closed units. Hence, the government must withdraw Fixed Charges to encourage industrialization and ensure creation of maximum employment opportunities.
Chairman BMG demanded that as the entire country suffers badly due to flash floods and all the cities, villages, highways and markets are completely flooded with rainwater hence in this extraordinary situation, the government should come forward and provide relief by pardoning electricity bills for a period of at least two months with a view to support the affectees during the relief and rehabilitation activities which could last during the next two months or may be more. In this regard, any industrial, commercial or domestic consumer with an electricity bill of less than Rs2 million must be pardoned from payment of bill for two months while the electricity bills of other industries must also be deferred at least for three months so that they could take some sigh of relief and reach a point where they are able to settle their outstanding bills, he said, adding that the deferred bills can be charged later in shape of three equal monthly instalments along with current bill from fourth month onwards which would be widely welcomed as it will minimize the burden on industrialists to some extent.
READ MORE: KCCI demands release of stuck up containers
General Secretary BMG AQ Khalil demanded that as KE’s agreement was about to expire in 2023, the government must look into the possibility of ending KE’s monopoly by unbundling the utility service provider and pave way for more players in the power generation and distribution sector.
President KCCI Muhammad Idrees was of the opinion that this huge impact of around 80 percent in the electricity bills was totally unbearable and unabsorbable by any industry hence, it has to be immediately withdrawn as it was impossible to run any industry at such an inflated cost.
“The industries are already in deep crises because of the devaluing rupee, inflationary trends and eroding buying power of common man whose electricity bills have also been raised higher by at least three times”, he said, adding that neither any industry nor shops or public will be able to bear this burden in the present circumstances.
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KATI flays imposition of new taxes
KARACHI: Korangi Association of Trade and Industry (KATI) expressed displeasure over promulgation of Presidential Ordinance to imposed new taxes.
KATI President Salman Aslam in a statement issued on Thursday expressed reservations over the imposition of new taxes worth Rs38 billion through a Presidential Ordinance.
Besides, he said instead of keeping the interest rate at 15 per cent, it should have been reduced considering the current situation, which would have stabilized the economy.
Salman Aslam, while reacting to the announcement of a further increase in income and sales tax on electricity bills and super tax said that the government has issued this ordinance to get additional revenue of Rs80 billion from the International Monetary Fund (IMF).
Due to this, the difficulties of the industry will increase enormously and it will be impossible to continue the industrial production process because the cost of production and electricity prices are already at the highest level in history and a further increase in them will bring the industries to the brink of collapse.
KATI chief said that along with the announcement of the agricultural policy, the Prime Minister should also announce the industrial and economic policy on the long-standing demand of the business community and industrialists so that investment in the country is promoted and the economy moves towards improvement.
Aslam said that the government is lifting the ban on imports of luxury and non-essential goods following the demand of the IMF, which will lead to the import of luxury goods despite the additional duty and outflow of valuable foreign exchange. He said that the ban on imports should have been maintained by the government.
Salman Aslam welcomed the government’s reduction in duty and import of raw materials, machinery, and other essential items.
He said that instead of imposing more taxes to collect additional revenue, the government should consult with the industrialists, and if taxes are reduced including the cost of production, tariffs of electricity and gas reduced, then the business will be faster in the country, the industrial wheel will start moving, which will help the government. The required tax target will also be achieved.
KATI President demanded the government not to increase super tax and tax on electricity bills, otherwise, industries in the country will be closed, unemployment will spread rapidly and the economic crisis will intensify due to lack of investment.
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Karachi Chamber stresses need to rationalize power tariff
The leadership of Karachi Chamber of Commerce and Industry (KCCI) on Tuesday underscored the exorbitantly high electricity tariffs need to be rationalized as the suggested increased electricity tariffs would prove disastrous for trade, industry, SMEs and the public.
Chairman Businessmen Group (BMG) Zubair Motiwala and President Karachi Chamber of Commerce & Industry (KCCI) Muhammad Idrees, while highly appreciating the Prime Minister for taking notice of public and business community’s complaints/ protests on inflated electricity bills.
In a joint statement, Chairman BMG and President KCCI said that the business community was grateful to Prime Minister Shehbaz Sharif for taking cognizance of the electricity tariff but while we appreciate, we would like to apprise that the abnormal increase would actually prove to be a disaster for the industries, especially Small & Medium Size Enterprises (SMEs) who are purely dependent on electricity and no alternate source including gas was available to these energy-starved SMEs.
READ MORE: Political parties responsible for Pakistan economic crisis: KCCI
This country badly needs SMEs who must be promoted at any cost as it is a well-known fact that SMEs are the backbone of any country’s economy so supporting SMEs should be the highest priority of the government, they added.
They further opined that trade cannot absorb this kind of an exorbitant increase in electricity tariff and the commercial users will suffer badly hence it has to be rationalized. The increase had been suggested when the dollar rate jumped from Rs180 to more than Rs240 which was abnormal and due to foul play of exchange players but now as it has come down and was likely to descend further, therefore the increase in electricity tariff was not making any sense at all.
They mentioned that the Karachi Chamber along with Industrial Associations and all Chambers of Commerce of Pakistan were of similar opinion that exorbitant increase in electricity tariffs cannot be absorbed hence, we urge the Prime Minister that this needs a rational exercise and carefully looked into because it can prove to be fatal for many industries and would lead to enhancing unemployment across Pakistan while the exports will also suffer badly from this behest.”
READ MORE: Karachi Chamber demands declaring rain emergency
They also pointed out that although ECC approved electricity rate at US$9 cent per kWh to export-oriented sectors from August 1, 2022 but this decision was withdrawn which was an imprudent move as the cost of doing business in Pakistan was already too high as compared to regional competitors.
The government must keep in mind that during the last two months, the exports have been constantly decreasing hence, electricity rate at US$9 cents per kWh to export-oriented sectors must continue otherwise the country’s exports would keep on descending and create more problems for the economy particularly the rising unemployment.
While stressing the need to continuously support the exports, Zubair Motiwala and Muhammad Idrees requested that before issuance of any kind of notification, Prime Minister should look into this matter on an urgent basis so that the uncertainty which has been now triggered due to the electricity tariff hike announcement could come to an end.
They also appealed the Prime Minister to look into NEPRA matters as many decisions taken by NEPRA were purely against the consumers and in recent history, the regulator has never favored the consumers. Why is it that all the decisions taken by NEPRA favor DISCOs and KE only.
READ MORE: KCCI demands release of stuck up containers
This also needs to be seen and the recent decisions of charging FCA and bringing back the fixed charges, which were abolished long time ago but have been arbitrarily reintroduced, must also be deferred.
As consumers’ point of view was never being taken seriously at the so-called public hearing, Chairman BMG and President KCCI demanded that NEPRA rules must be redefined and out of NEPRA’s penal of three judges at the Public Hearings, one should be a representative of consumers through Chamber’s recommendation.
In the end, they reiterated that all actions taken by NEPRA should be remanded back and those in pipeline should also be stopped forthwith.
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KATI rejects further petroleum price hike in Pakistan
KARACHI: Korangi Association of Trade and Industry (KATI) on Thursday strongly rejected any further increase in prices of petroleum products in Pakistan.
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Businessmen express shock over petroleum price hike in Pakistan
KARACHI: Businessmen have expresses shock over hike in petroleum prices in Pakistan despite massive reduction in oil prices in international market.
The businessmen are in shock and expressed their serious concern over the hike in petroleum products in Pakistan despite the fact that crude oil prices have plunged to below $90 a barrel while the rupee has jumped by around Rs30 versus dollar during the last fortnight, said a statement issued on Wednesday.
READ MORE: Miftah defends petrol price hike in Pakistan from August 16, 2022
The chairman of Businessmen Panel (BMP) and former president of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Mian Anjum Nisar reiterated his demand of passing on relief of cut in oil prices in the global market to the industry, besides bringing key policy rate to a regionally competitive level.
On Monday night, the federal government announced a hike of Rs6.72 per litre in the price of petrol for the remaining days of August 2022, according to a notification issued by the Ministry of Finance.
He voiced his concern over the increase in fuel prices despite downward trend in international market. The present government came into power to give relief to the masses, which should be its top priority, as the hike in petroleum prices will trigger inflation in the country.
READ MORE: New petroleum prices in Pakistan from August 16, 2022
He said that it was beyond comprehension that why prices were raised despite a reduction in oil prices at the international level, adding that the government should have mercy on poor masses and give them some relief.
Mian Anjum said when Russia invaded Ukraine last spring, energy experts were predicting that oil prices could reach $200 a barrel, a price that would send the costs of shipping and transportation into the stratosphere and bring the global economy to its knees.
Now oil prices are lower than they were when the war began, having dropped more than 30 percent in barely two months. The news of a slowing Chinese economy and a cut in Chinese interest rates sent prices down further, to less than $90 a barrel for the American benchmark.
Gasoline prices have fallen every day over the last nine weeks, to an average of less than $4 nationwide, and prices of jet fuel and diesel are easing as well. That should translate eventually to lower prices for things so that cost of production could come down to a regionally competitive level.
READ MORE: New petroleum prices in Pakistan from August 1, 2022
Moreover, a large number of fuel stations remained closed nationwide despite no strike or shortage of petroleum products in the country. He said that oil marketing companies (OMCs) and petroleum dealers have allegedly created an artificial fuel crisis as the coalition government increased petrol prices by Rs6.72 per litre.
Recent practices suggest they usually stop supplies of petrol and diesel to end-consumers for a couple of hours to make additional profit. However, this time around the suspension lasted for almost an entire day. Many petrol pumps had gone dry by Monday evening and new supplies came on Tuesday afternoon.
Federation of Pakistan Chambers of Commerce and Industry (FPCCI) former president demanded the government to reduce petroleum prices without any delay.
He demanded that the government should slash the prices of the petroleum products immediately as the international oil prices have substantively come down; and, the benefit needs to be shifted to the masses.
He noted with a sigh of relief that oil prices are now under $90 per barrel. The move will bring down the inflation in a much more effective and tangible manner than raising the interest rate to a 14-year high of 15 percent, he added.
Mian Anjum emphasized that the full force of the multiplier effect of the raise of the petroleum products has not yet materialized in Pakistan and inflation will keep rising in coming weeks if the relief from international market is not shifted to the end consumer.
READ MORE: New petroleum prices in Pakistan from July 15, 2022
FPCCI former chief explained that global macroeconomic sentiments are not optimistic and growth forecasts have been significantly lowered to the tune of being recessionary; and, the phenomenon may drive the international oil prices even lower than $90 per barrel in coming weeks. However, he maintained, we have to tread a cautious path and gradually but progressively lower the domestic petroleum prices.
The BMP Chairman called for the prudent and diligent regulation of the markets to allow the country to benefit from the downward trends in international oil prices, edible oils and initial signs of receding supply constraints in some other commodities.
He said that our industry already facing cut-throat competition in both national and international markets, as the industry was directly hit by the fluctuation of oil prices, which also directly increase inflation, he said. Its negative impact can be witnessed in the hike of cargo freight charges, which adds cost to the industrial production at all stages, he said.
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SBP assures allowing stuck up containers of banned import
KARACHI: The State Bank of Pakistan (SBP) has assured the business community of allowing to release all the containers with consignments of banned imported goods.
In a statement issued on Monday, President Karachi Chamber of Commerce & Industry (KCCI) Muhammad Idrees said that the State Bank of Pakistan (SBP) has agreed to release all the containers which arrived at the Ports until July 5, 2022 but remained stuck up awaiting approval from SBP.
READ MORE: Pakistan decides to lift ban on imported goods
While referring to a message received from Deputy Governor SBP Dr. Inayat Hussain, President KCCI said that Deputy Governor SBP has assured that all the cases wherein the Bill of Lading is prior to issuance of SBP’s instructions on July 5, 2022 which have been submitted by KCCI will be released within the next 2 to 3 days whereas any other pending request for release of similar stuck-up consignment may also be referred to SBP for timely release.
READ MORE: 15% surcharge imposed for clearance of banned items
Muhammad Idrees said that thanks to the untiring efforts made the leadership of Karachi Chamber, particularly Chairman Businessmen Group Zubair Motiwala who constantly remained in touch with Finance Minister Miftah Ismail and kept convincing him to resolve this matter, relief has finally been provided to perturbed importers which the business community warmly welcomes.
READ MORE: Pakistan allows release of banned items stuck up at ports
He thanked Finance Minister Miftah Ismail for taking keen interest in all the issues being raised by KCCI and issuing prompt directives for resolving the same on top priority which has help in restoring the confidence of the entire business and industrial community.
“This particular step to release stuck up containers along with some other pro-business measures and the government seriousness towards resolving the pressing issues suffered by the economy would ensure that the wheels of the industry keep on spinning without any interruption,” he added.
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Sindh reduces sales tax on services for IT sector: SRB
KARACHI: Dr. Wasif Ali Memon, Chairman, Sindh Revenue Board (SRB) has said that as the Sindh Government has drastically reduced Sindh Sales Tax on IT, Software Businesses and Call Centers from 13 percent to just 3 percent, all relevant businesses which moved to other provinces, should come back to Karachi where they will enjoy the lowest sales tax as compared to other provinces.
“IT related businessmen from Karachi Chamber whose peer businessmen moved to Lahore or any other city, must advise them to get back to Karachi where they will be charged a mere 3 percent ST without input tax whereas large establishments which prefer standard rate with input tax credit, have the option of to opt 13 percent with input tax credit facilities”, he added while exchanging views at a meeting during his visit to the Karachi Chamber of Commerce & Industry (KCCI).
READ MORE: Miftah assures shopkeepers of removing multiple taxes on electricity bill
The meeting was also attended by Chairman Businessmen Group Zubair Motiwala (Via Zoom), Vice Chairman BMG Jawed Bilwani, General Secretary BMG AQ Khalil, President KCCI Muhammad Idrees, Senior Vice President Abdul Rehman Naqi, Vice President Qazi Zahid Hussain, Former President Younus Bashir, Advisor SRB Mushtaq Kazmi and KCCI Managing Committee Members along with senior SRB officials.
Dr. Wasif stated that SRB performed exceptionally well during the last fiscal year wherein record-breaking Rs153 billion tax was collected therefore, the government has given an ambitious tax collection target of Rs180 billion for current fiscal year which can only be achieved through the support and cooperation of Karachi’s business community which was highly tax-compliant. “Despite the outbreak of COVID pandemic and extraordinary spells of rainfalls which terribly affected many businesses, the business community of Karachi has been regularly and sincerely paying taxes to SRB which we greatly acknowledge”, he added.
READ MORE: FTO investigates tax collection through electricity bills
He said that although Karachi contributes highest taxes to SRB but the activities of SRB were not confined to this city only as SRB’s Regional Offices have also been opened in Hyderabad, Benazirabad, Larkana, Sukkur and Mirpurkhas while an SRB Office in Ghotki will also be inaugurated soon.
In response to President KCCI’s suggestion, Chairman SRB agreed to form a joint SRB-KCCI Committee along with provision of direct helpline to KCCI members so that all their taxation issues could be promptly resolved.
Chairman BMG, in his remarks, pointed out that although Karachi contributes 94 percent taxes to SRB but it was really unfortunate that this city was not receiving sufficient development funds according to its matchless contribution which has resulted in miserably bringing down the standards of living and doing business in Karachi. “What we contribute to provincial kitty is always being highlighted and appreciated but what we get in return never comes into limelight which is very disturbing. Neither from federal government nor from provincial government, Karachi receives its due share”, he noted, adding that the injustices with this city must and brought to an end now.
READ MORE: Withdrawal of sales tax through electricity bills demanded
He stressed that keeping in view Karachi’s contribution of more than 70 percent to national exchequer and 95 percent to provincial kitty, it was high time that Karachi must receive what it deserves. Due to lack to development funds, Karachi’s infrastructure was in awful state and the same has been witnessed by the entire world during the current Monsoon season. “SRB should also have access to information about the expenditure of revenue so that we could compare revenue generation with expenditure”, he added.
Earlier, President KCCI Muhammad Idrees, while welcoming Chairman SRB, appreciated SRB’s all-time seriousness towards resolving issues being highlighted by KCCI which were promptly being responded and amicably resolved by SRB officials. “However, there are several pending taxation issues related to indenting businesses, travel agents and other businesses along with anomalies in SRB laws which also need to be extensively discussed and resolved in light of ground realities.”
To efficiently deal with all the SRB related taxation issues and revision in relevant laws, it was very crucial to form a joint committee between KCCI and SRB so these could be discussed and resolved in such a manner that the measures agreed upon result in bringing down the tax rates which would not bring down but in fact increase the provincial revenue as large number of taxpayers will certainly prefer to get registered in Sindh.
READ MORE: Tax through electricity connections on retailers, service providers
He said that thanks to KCCI’s rigorous efforts, the federal government has finally realized and agreed to treat the income of indenters as exports proceeds hence, the same must also be announced by SRB which would help minimizing the hardships being faced by indenters who were being charged heavy taxes on marginal commissions.
He appreciated the Sindh Government for paying attention to KCCI’s demand to reduce Sindh ST on IT, Software Businesses and Call Centers which would encourage a large segment of businesses to register the businesses in Sindh.
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FPCCI demands SBP to check speculative dollar trading
KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Wednesday demanded the State Bank of Pakistan (SBP) to check speculative dollar trading.
FPCCI President Irfan Iqbal Sheikh at a meeting with high level delegation of the SBP visited the Federation House, urged the central bank to use policy tool to check the speculative dollar trading over the past few weeks.
READ MORE: FPCCI warns factories closure as rupee crashes against dollar
The senior management of the SBP led by Governor (A) Dr. Murtaza Syed and comprising, among others, Deputy Governors Dr. Inayat Hussain and Ms. Sima Kamil visited the FPCCI to discuss current economic challenges and the measures being taken by the Government and SBP.
President FPCCI Mr. Irfan Iqbal Sheikh in his inaugural remarks welcomed Dr. Syed and the senior management of the central bank for their visit to the FPCCI.
Shedding light on current business scenario from FPCCI perspective, he requested the Governor (A) to use policy tools available at the central bank’s disposal to check the speculative dollar trading over the past few weeks.
He observed that importers, manufacturers and industries were at the receiving end due to speculative nature & unavailability of dollars, shortage of industrial raw materials and the resultant disruptions in the production processes.
READ MORE: Foreign investors discuss economic situation with SBP
Irfan maintained that over the past several weeks the commercial banks have been offering LCs to importers at the rates higher than inter-bank rates and requested the SBP to play its role for course correction.
Dr. Murtaza Syed, Governor (A) State Bank of Pakistan (SBP) has announced the formation of a committee and appointment of an SBP liaison officer for close coordination with the FPCCI and timely redressal of grievances of business committee. He made this announcement during his visit to the FPCCI on the invitation of their management.
The Governor (A) appreciated business community for their endurance in facing the challenges posed by both international and domestic events and ensured that SBP will provide them its full support by addressing their concerns as much as possible.
The Governor (A) in his address apprised the audience that staff-level IMF agreement is already in place and the board-level approval is expected in the third week of August as their board will meet after their vacations in the first-half of August are over.
READ MORE: SBP introduces foreign currency, rupee value business accounts
He added that SBP believes that rupee is undervalued at the moment and dollar has overshot in the forex market due to several reasons; however, he hoped that it will come down to its real value in 2 – 3 months. He invited the business community to sit together with the SBP for a constructive consultative process and give suggestions on prevailing economic situation, foreign exchange and other related issues.
Dr. Syed also assured the participants to look into technical requirement of prior approvals required by the commercial banks from SBP on the clearance of financial documents of the consignments with the H.S. Codes starting with 84 & 85 as these restrictions were affecting the import of tractor parts and other agricultural machinery as well.
A senior SBP official highlighted the support extended to the businesses in general and to the exporters in particular. SBP enhanced short term Export Refinance limits from Rs432 billion to Rs857 billion in just last four years reflecting an increase of almost 100 per cent. Likewise, outstanding stock of SBP’s long term fixed rate financing for the exporters (LTFF) has also witnessed an increase from Rs209 billion to Rs329 billion in last three years reflecting 57 per cent growth.
The Federation acknowledged that Temporary Economic Refinance Facility (TERF) massively helped in stimulating investment and boosting economy in the backdrop of COVID-19. It will not be out of context to mention that most of the business entities availed TERF at rates far below than the maximum cap of 5 per cent.
READ MORE: OICCI suggests duty cut on locally manufactured cars
The overwhelming success of TERF indicated that it was successful in filling the gap for long term investment in the country. An amount of Rs436 billion had been approved under this facility for 628 businesses.
The FPCCI members raised certain questions which were comprehensively answered by the senior SBP management during the meeting and ensured the FPCCI members that the senior management of the central bank was always available to listen to their issues and resolve them on priority. On a question regarding expiry of SBP’s Refinance Facility for Renewable Energy, the Federation was informed that the scheme has been extended till June 2024.
In the end, the President FPCCI submitted some suggestions for consideration of the SBP. The Governor (A) assured to look into the merits of these suggestions and take a decision soon.