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  • Foreign investors express satisfaction on security environment

    Foreign investors express satisfaction on security environment

    KARACHI: The foreign investors operating in Pakistan have showed satisfaction over security environment especially after quick response of law enforcement agency against failed terror attack on Pakistan Stock Exchange (PSX).

    “The smooth and professional handling of the brazen attack on Pakistan Stock Exchange on June 29, and restoring order within a very short time, is a testimony of the OICCI members’ confidence in the ability of the LEAs to professionally combat any threat to life and property in the country, said Haroon Rashid, President Overseas Investors Chamber of Commerce and Industry (OICCI) while commenting on latest findings of security survey,

    OICCI is the largest chamber in terms of economic contribution and representing top 200 foreign investors in Pakistan, has released the results of its latest Annual Security survey 2020, covering feedback on the security environment from July 2019 to June 2020.

    Overall, the foreign investors have shown high level of satisfaction on the fast improving security environment and have also appreciated the performance of law enforcement agencies (LEAs) in the main business centers of Pakistan, Karachi and Lahore, raising the security satisfaction profile of the two cities and bringing them at par with other megacities in the region.

    The OICCI President said: “Foreign investors are not deterred by isolated incidences and continue to take a holistic view of the operating environment, which, OICCI members perceive to be highly positive showing continuous improvement.”

    The survey respondents included CEOs and senior management of member organizations, and was participated by 70 per cent of the OICCI’s 200 members, who belong to 35 countries and operate in 14 key sectors of the economy in Pakistan.

    It may be noted that over two third of the OICCI members have their head offices in Karachi with operations all over country. The survey was conducted from May 15th till June 22nd.

    OICCI 2020 Security Survey indicates that the foreign investors, overall, are impressed with further improvement in the security environment over the past twelve months, since July 2019, especially in Karachi and Lahore, with noticeable improvement in other business centers as well.

    While giving assessment of the overall security situation, 60 percent of the respondents have reported improved security environment for own and Customer’s Business, as well as for their respective suppliers and employees.

    Irfan Siddiqui, OICCI Vice President pointed out: “this improvement is over and above the already improved security environment last year, and the continuous improvement recorded in the OICCI members annual security surveys since 2015.”

    He further added that It is highly encouraging that despite many disruptions during the past twelve months, due to Azadi March in December 2019, border tension with India during Q3 2019, and subsequent travel restriction since end March 2020 due to COVID 19, the visit of foreign nationals visiting Pakistan for OICCI members business, pre COVID 19, showed a healthy increase, as over 40 percent respondents reported more visitors than last year, with 26 percent hosting more than 50 visitors and most respondents getting between 20 and 50 visitors.

    The foreign business visitors were mainly from China, UK, USA, UAE, as well as other European and Asian countries.

    Due to the sustained improvement of the security environment, OICCI members reported that over 90 percent of the Board and management meetings of their Pakistan business operations, involving HQ and/or Regional Management, were held within the country.

    In terms of serious crimes, 87 percent respondents indicated a decrease over last year in Karachi and Lahore. However, the survey respondents have expressed concern on the increasing trend of street crimes.

    All in all, 37 percent respondents in Karachi and 27 percent in Lahore reported concern on increasing street crimes.

    According to the results Islamabad experienced the lowest increase in street crimes among the key business centers.

    There was also a thumbs up for the LEAs as, by and large, the foreign investors were satisfied with the performance of Law Enforcement Agencies, with over 90 percent expressing satisfaction in their interactions with Karachi and Lahore Police, Sindh Rangers, Punjab Police and CPLC and 84% for Sindh Police.

    OICCI Security survey is very comprehensive and gives a detailed feedback of a large number of foreign investors operating in Pakistan on various aspect of doing business connected with security and its impact on their operation which is regularly sought by diplomats and security professionals.

    Established in 1860, Overseas Investors Chamber of Commerce and Industry (OICCI), is the largest Chamber of Commerce in Pakistan based on economic contribution in the form of taxes and investment by its members and is the collective voice of over top 200 foreign investors in Pakistan, including over 50 Fortune 500 companies, who contribute about one third of the total tax collection in the country and a significant portion of the GDP.

    Coming from 35 countries and working in 14 key sectors of the economy, OICCI members are leaders not only in economic activities and investment but are also thought leaders in transfer of technology and in CSR activities.

  • KCCI rejects extension in lockdown

    KCCI rejects extension in lockdown

    KARACHI: Business community on Wednesday rejected the extension in lockdown till July 15, 2020 by the Sindh government and said that procedures should be laid down to allow business activities.

    Karachi Chamber of Commerce and Industry (KCCI) said urged the provincial government to withdraw the notification immediately.

    In a statement Siraj Kassem Teli, chairman Businessmen Group and former president KCCI and Agha Shahab president KCCI rejected the extension in lockdown.

    Sinch March 23, 2020 the Sindh government imposed partial lockdown to prevent spread of coronavirus. At least 213,467 confirmed cases of coronavirus have been reported up to July 01, 2020 in the country. Besides, the pandemic claimed 4,395 lives to date.

    The KCCI said that restaurants, marriage halls, beauty parlors, cinemas etc. were shut for the last four months and their business were almost on verge of collapse.

    They said that due to the continuous lockdown these businesses would close down and it would result in mass unemployment.

    They urged the provincial government to allow opening of all businesses with strict Standard Operating Procedures (SOPs). They said that if through administrative measure an effective lockdown had been imposed then why not in case of implementing the SOPs.

    The provincial government should realize problems of business community and resolve those on priority basis.

  • Haroon Rashid elected as President OICCI

    Haroon Rashid elected as President OICCI

    KARACHI: Overseas Investors Chamber of Commerce and Industry (OICCI) has elected Haroon Rashid as president of the chamber with effect from July 01, 2020.

    Haroon Rashid is Chief Executive Officer of Shell Pakistan Limited.

    His appointment came following a successful tenure of Shazad Dada, who resigned as the President of OICCI after resigning from Standard Chartered Bank and taking over as President of United Bank Limited.

    Irfan Siddiqui has been elected as the Vice President of the OICCI from July 1, 2020. Irfan is the founding President/CEO of Meezan Bank Limited.

    He initiated the formation of Al-Meezan Investment Bank in 1997, which was converted into a full-fledged scheduled Islamic Commercial Bank in May 2002 – the first ever Islamic Commercial banking license given in Pakistan.

    Commenting on his appointment as the President of OICCI, Haroon Rashid was very upbeat and said, “It is really an honor to have been elected as the President of a prestigious organization like the OICCI, which is the largest chamber in the country in terms of economic contribution, contributing over one third of all government levies and is also the largest foreign investor in the country”.

  • KCCI urges K-Electric to stop load shedding

    KCCI urges K-Electric to stop load shedding

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has expressed serious concerns of electricity shortfall which caused massive losses to trade and industry.

    Agha Shahab Ahmed Khan, President KCCI urged the K-Electric to immediately stop the ongoing load shedding spell and focus on improving the infrastructure, particularly power generation capacity and distribution network which is in a terrible state.

    In a statement issued, Agha Shahab pointed out that due to K-Electric’s poor performance, almost all the localities of Karachi and also the seven industrial zones have to suffer unannounced load shedding and power failures every day for many hours that results in substantial losses.

    “The industries have suffered badly due to the outbreak of coronavirus and the subsequent lockdown for more than two months and now, K-Electric has also resorted to massive load shedding, which poses threat to the already staked survival of industries,” he said and asked ‘What is the motive behind carrying out immense load shedding in an extraordinary situation?’

    “The unannounced and prolonged load shedding by K-Electric would prove to be the last nail in the coffin of industries and the economy”, he opined and added that People from different walks of life, who have been inhabiting in various localities, sought KCCI’s assistance to exert pressure on K-Electric’s management so that uninterrupted power supply in every area could be ensured.

    He stressed that K-Electric must adopt measures on war footing to minimize the hardships being suffered by the citizens and the business community of the largest city of Pakistan which contributes a lion’s share of more than 70 percent revenue to the national exchequer. Karachiites are already under tremendous mental pressure due to coronavirus pandemic and their sufferings multiply further when they have to go through prolonged load shedding every day and night.

    President KCCI said that K-Electric has been earning huge profits of billions of rupees every year but unfortunately, it has not been adequately investing on improving the dilapidated distribution network which was in a very bad shape as every year whenever the electricity demand shoots up in the city during summer season, K-Electric fails to deal with the situation and the public pays the price for this failure in shape of load shedding.

    Agha Shahab further advised that as Monsoon season is just ahead and heavy rainfalls have been forecasted by the Metrological Department, K-Electric must act sensibly and responsibly, avoid repeating mistakes and adopt stringent measures to ensure uninterrupted and safe power supply during the rainy season. “Dozens of people were electrocuted during last year’s Monsoon season and the same situation may happen this year as well because no safety measures have been adopted so far hence K-Electric’s management must take up this matter on priority and devise effectively strategies to save precious lives in case the city undergoes torrential rains”, he added.

    Agha Shahab requested Prime Minister Imran Khan, Governor Sindh Imran Ismail, Chief Minister Sindh Murad Ali Shah and other concerned ministers at the Federal and Provincial levels to review the situation and issue strict directives to K-Electric to improve its infrastructure and ensure uninterrupted power supply to public and also the business and industrial community who are already suffering terribly because of the outbreak of coronavirus pandemic.

  • FPCCI advises central bank to bring down interest rate to 5 percent

    FPCCI advises central bank to bring down interest rate to 5 percent

    KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has advised the State Bank of Pakistan (SBP) to bring down the key policy rate at 5 percent considering the prevailing situation due to coronavirus.

    FPCCI president Mian Anjum Nisar on Friday appreciated the SBP for slashing key policy rate by 100 basis points to 7 percent in an unscheduled meeting of Monetary Policy Committee which has so far slashed the key interest rate by 6.25 percent from 13.25 percent since March 17, 2020.

    He said the rate cut is a welcome move, but only 100bps (basis points) cut is not enough. In the prevailing circumstances, interest rate at 7 percent is not feasible for the businesses, he said.

    “FPCCI hopes the central bank will consider the plights of the business community and rates would be brought to 5 percent soon,” he added.

    He said that the businessmen’s apex body welcomes the central bank’s move to cut the interest rates by 1 percent, urging it to bring discount rate to at least 5 percent in line with global financial trend.

    “This is commendable step of the State Bank, as it has now started shifting toward supporting trade and industrial growth and employment generation which is not possible without sizeable cut in key policy rate,” he added. He said that the banks should now also be advised to follow the lines of SBP immediately accordingly.

    “The banks should be instructed to revise KIBOR on a monthly basis instead of quarterly basis to pass on the benefit of lower rates speedily to the trade and industry, which are struggling to survive, Mian Anjum Nisar suggested and added that the impact on banks on their deposits will be insignificant.

    FPCCI President said that the reduction in policy rate by 6.25 percent since March 17, 2020 is commendable step of the government in the present situation that will positively affect cost of doing business and will encourage the investors and industrialists to make new investment in the country.

    The president FPCCI also said that the pandemic COVID-19 has affected the global economy and pushed to the depression resulting contraction in the economic activities and a threat to unemployment.

    He asked the SBP to go the extra mile in these arduous times and leave no stone unturned in providing relief to the financially distressed businesses.

  • KCCI declares policy rate cut insufficient

    KCCI declares policy rate cut insufficient

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) is not satisfied with one percent interest rate cut by the State Bank of Pakistan (SBP) and said it is very little reduction.

    Chairman Businessmen Group (BMG) and Former President Karachi Chamber of Commerce & Industry (KCCI) Siraj Kassam Teli and President KCCI Agha Shahab Ahmed Khan, have expressed disappointment over a meager reduction of just one percent in Policy Rate by the State Bank of Pakistan, terming it “too little, too late”.

    They stated that for a long time even before the pandemic, KCCI has consistently demanded to bring the policy rate to down to 4 percent in one go rather than in instalments.

    Reduction in policy rate in bits and pieces did not provide the much needed thrust to economy whereas a one-time major reduction to 4 percent could have triggered growth and accelerated economic activities.

    Reduction in policy rate in bits and pieces is not enough to provide stimulus to the economy hence, it is necessary to significantly reduce the interest rate in a single step, to rescue the trade and industry which is going through an unprecedented crisis.

    Revision in policy rate to 7 percent will effectively mean the interest rate for large scale borrowers will be 8 percent to 9 percent after adding the bank’s spread while it will not be less than 10 percent to 12 percent for smaller entities.

    In a statement, Siraj Teli and Agha Shahab pointed out that the business and industrial community is going through difficult times and many will not be able to survive through the economic crisis.

    Nearly all major economies have supported businesses by reducing their policy rates to as low as zero percent realizing the gravity of a global economic meltdown and its impact on businesses.

    It is surprising that the decision makers at the SBP and the governor do not have the perception of ground realities of Pakistan and the serious economic challenges the country will have to face in the near future if growth does not pick up soon.

    They opined that there is now ample justification for meaningful reduction in policy rate because the inflation has declined sharply due to a steep fall in prices of crude oil, commodities and raw materials, while the demand has also been suppressed.

    Therefore, it is imperative to support the business and industrial community at such a critical time through further reduction in policy rate.

    Chairman BMG and President KCCI underlined the fact that KCCI had expressed reservations to the Prime Minister of Pakistan on various occasions and also to Governor State Bank of Pakistan during his last visit to KCCI before pandemic about astronomically high interest rates which stifled growth and increased cost of doing business.

    They hoped that realizing the gravity of the situation, the State Bank would once again review its Monetary Policy at the earliest and revise the policy rate downward by another 300 basis points to provide much needed thrust to economy and trigger growth in the face of upcoming challenges created by Covid-19 pandemic that has affected the entire world.

  • FPCCI seeks intervention to prevent Pak Rupee depreciation

    FPCCI seeks intervention to prevent Pak Rupee depreciation

    KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has urged the government to immediately control the depreciation of Pak Rupee.

    FPCCI President Mian Anjum Nisar has urged the government to control surge of dollar against Pakistani currency, as the rupee has dropped to more than two-month low of 167.65 against greenback in the interbank market while it has fallen to 168 versus the US dollar in the open trade.

    FPCCI President, in a statement issued here on Wednesday, observed that the rupee has dropped by Rs1.08 against the dollar in a single session in the interbank market, falling to 167.77, a level last seen in the start of April.

    He said that huge depreciation of Rupee continued to damage national economy, as the cost of deals done by the businessmen with their foreign counterparts has increased manifold due to massive fall of rupee against dollar.

    Apart from increasing exports and controlling imports the government will have to take administrative measures, as a large demand of cash dollars are seen in the market, he suggested.

    He said that the rupee has dropped by 2.8 percent or Rs4.55 against the dollar since the start of June, as it was closed at 163.10 at the end of last month.

    Mian Anjum Nisar appreciated the positive development, related to the imports, which have now started decreasing since the last financial year followed by the government’s initiative of imposing regulatory duties.

    He said that the country would hopefully receive multilateral inflows during this week, which could help strengthen the rupee and the foreign exchange reserves, as the government has signed a $1.5 billion loan agreement with the World Bank, Asian Development Bank and Asian Infrastructure Investment Bank.

    FPCCI President said that excessive government borrowing, absence of foreign flows, lack of foreign investment and the huge current account deficit are the vital reasons for constant depreciation of Pak rupee.

    Terming rupee depreciation against dollar a mysterious development, the leader of business community said that continued fall of rupee is not understandable with a fact that there was no fundamental change in country’s imports during last few months while other economic indicators are also same for a long time.

    He said that the local currency has been under pressure due to falling foreign exchange reserves and increasing outflows amid foreign debt repayments.

    The SBP’s foreign exchange reserves have been under pressure due to external debt repayments recently, which were dropped to $10.1 billion as of June 12 from $12.3 billion on May 8.

    Mian Anjum Nisar was of the view that State Bank of Pakistan and Ministry of Finance will have to remain vigilant in this regard.

    Besides this, the SBP and the government also need to intervene and come up with policy reforms to control depreciation of rupee which is becoming more and more valueless.

  • Foreign investors express concerns on proposed rates for imported raw materials

    Foreign investors express concerns on proposed rates for imported raw materials

    KARACHI: Foreign investors have raised concerns over the proposed tax rates on import of raw materials.

    Overseas Chamber of Commerce and Industry (OICCI), which is represented of foreign investors and multinational companies in Pakistan, highlighted anomalies in the Finance Bill 2020 and proposed rectifications.

    The OICCI said that the reduction in rate of income tax u/s 148 to 2 percent on import of raw materials/items mentioned in Part II of the Twelfth Schedule is a significant relief that will improve the cash flow position of companies.

    However, two concerns have been voiced on the changes proposed:

    a) The Bill seeks to introduce a new Schedule as the Twelfth Schedule to the Ordinance wherein all the goods imported into Pakistan may be classified under either of the three categories viz Part I, Part II and Part III based on PCT code wise listing of goods.

    However, certain core raw materials used by manufacturers are still falling under the category of 5.5 percent income tax by virtue of non-inclusion in Part II of Twelfth Schedule.

    It is suggested that a general rate of 2 percent may be prescribed for all imports by manufacturing companies for own consumption.

    b) The Bill now seeks to omit Clause 72B, therefore, exemption would no longer be available in respect of tax collected under Section 148 of the Ordinance to an industrial undertaking.

    Though there is substantial reduction in rate of collection of tax, as a result of withdrawal of such exemption, nevertheless, the taxpayer operating on margins lower than the rate of advance tax collected on imports or having adjustable losses/tax credits or enjoying tax exemption may still face liquidity hitches.

    In order to avoid cash flow issues and tax refundable situation, it is suggested that instead of omitting clause 72 B, industrial undertakings importing raw materials for in house consumption should be provided an option.

  • KCCI submits recommendations to rectify anomalies in Finance Bill 2020

    KCCI submits recommendations to rectify anomalies in Finance Bill 2020

    KARACHI: The Karachi Chamber of Commerce and Industry (KCCI) has submitted its recommendations to rectify anomalies in the Finance Bill 2020, highlighting concerns over several taxation measures impacting trade and industry.

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  • Budget fails to address industry issues amid COVID crisis: APTMA

    Budget fails to address industry issues amid COVID crisis: APTMA

    KARACHI: All Pakistan Textile Mills Association (APTMA) has rejected the federal budget 2020/2021 saying that the budget has failed to address serious industry issues in the light of the worldwide Covid-19 created crisis.

    This is likely to lead to large scale unemployment and closures and as the market dynamics have changed Post Covid, it said in a statement issued on Monday

    Bold and direct steps were required to retain our export earnings and maintain employment in a shrinking world Market due to lack of demand especially textiles which constitute 60 percent of export earnings.

    It said our Balance of Payments position is likely to worsen as a result of the lack of appreciation of the issues facing exports and the expected 20 percent drop in remittances (World Bank estimate) due to large scale layoffs in the Gulf countries and Saudi Arabia.

    Resolution of followings is requested at earliest;

    1. Provision of Regionally Competitive Energy Prices

    Continuation of regionally competitive fixed electricity tariff at 7.5cents/KWh and $ 6.5 per MMbtu for RLNG/gas across the value chain to ensure competitive export pricing.

    Non continuation of regionally competitive energy rates will lead to direct closure of around 30 percent of factories within six months.

    Unless corrected, as of July 1st, 2020, exporting sectors will be charged Rs 24 / kwh as normal B3 industrial tariff instead of Rs 12 earlier and even if RLNG is continued at $ 6.5 /MMBTU this contrasts with $ 3.5 RLNG /Gas tariff for India and Bangladesh. Meanwhile Electricity Prices in India have seen a further drop of 16 percent over the last 2 months while currently averaging about 7.2 cents/kwh for Industry. Energy accounts for 35 percent of conversion costs in the Textile value chain and therefore competitive pricing of exports is very highly sensitive to Energy pricing.

    It had been agreed that Rs 20 billion will be allocated for energy for use in maintaining 7.5 cents / kwh for electricity and $ 6.5 / MMBTU for RLNG/ Gas. The budget however only allocates Rs 10 billion for RLNG.

    Competing countries are already poised to combat highly competitive market conditions through cheaper electricity and gas rates.

    2. Zero Rating/ 17 percent GST

    Continuation of 17 percent GST is not sustainable as by design GST refunds of 5 months remain in pipeline.

    As a result Rs 20 billion per month has shifted from the coffers of the industry to FBR (amounts to Rs 100 billion plus which is in process at all times).

    This has increased the cost of doing business by about 6 percent.

    Sales tax exemption on imports through Bond, EOU & DTRE would be withdrawn immediately.

    17 percent is a very high level incentive to cheat. A lower rate would;

    a) Allow Proper Documentation

    b) Increase FBR Revenue through wider application

    c) Allow organized domestic retailers to compete in the 13 Billion dollars domestic textile market.

    We therefore requested the government to restore zero rating or to reduce sales tax rate to 5 percent across the value chain.

    3. 1.5 percent Turnover Tax/ Minimum Tax

    This tax increases cost of exports by an average 5-6 percent as the tax is levied on the same goods multiple times as it passes through the value chain.

    The Textile Industry works on very slim margins and turnover tax acts as an accelerator to early closure of mills.

    Continuation of 1.5 percent turnover tax in a situation where there will be no profitability is completely unjustified.

    4. MMF & Polyester Staple Fiber

    There is 7 percent customs duty on the import of polyester staple fiber with total import expenses in the range of 20 percent including antidumping duty.

    Polyester staple fibre is a raw material of the industry and as repeatedly committed by the government should not be subject to any duties.

    More than 60 percent of world textile trade is in MMF materials and this duty protection given to obsolete plants in Pakistan is denying the Pakistani industry any chance to compete in this growing majority section internationally or domestically.

    Any protection to domestic polyester plants may be given directly by the government and not at the cost of our country’s economic future.

    5. DLTL

    With refunds of approximately 5 percent due on $ 10 billion exports the quantum of DLTL due will be Rs 80 billion. This was also the amount requested for allocation by Ministry of Commerce.

    The budget has allocated only Rs 10 billion for DLTL. DLTL is a calculation of government taxes component in the cost of exports and if this is not catered for will further weaken our export competiveness.

    6. TUFF

    Rs 4.5 billion are pending under TUFF scheme.

    Whereas amount allocated in this budget for TUF scheme is only Rs 400 million.

    The amounts have been due for the past 7 years and this sort of delay annuls industries’ faith in Government commitments.

    7. New Textile Policy

    Implementation of the in principle approved Textile Policy is required in true letter and spirit for Pakistan to maintain and increase employment and exports.

    It may please be noted that without correction of these issues in the budget proposals, the industry will contract by 30-40 percent and well over one and half million people will lose their jobs.