KARACHI: The Overseas Investors Chamber of Commerce and Industry (OICCI) said that the foreign investors operating in Pakistan and multinational companies (MNCs) have contributed around 1/3rd of the total tax collection by Federal Board of Revenue (FBR) during fiscal year 2019/2020.
(more…)Category: Trade & Industry
This section covers news on trade and industry. Pakistan Revenue is committed to providing the latest updates on business trends.
-
Industry rejects cut in gas supply; terms anti-business move
KARACHI: Karachi Chamber of Commerce and Industry (KCCI) on Friday strongly rejected the cut in gas supply for industrial consumers and CNG stations.
Chairman Businessmen Group (BMG) and Former President KCCI Siraj Kassam Teli and President (KCCI) Agha Shahab Ahmed Khan, while totally rejecting SSGC’s load shedding schedule for Industrial Consumers and CNG Stations, stated that this unjust and anti-business move would completely destroy the industries who are already going through the toughest time and questing really hard for survival particularly in an extraordinary situation caused by coronavirus pandemic.
In order to overcome the ongoing electricity load shedding, SSGC has announced to carry out gas load shedding for three days to be suffered by industrial consumers, captive power plants and CNG stations which would prove detrimental for the industries who are already in deep crises and at the verge of complete collapse due to negative impact of lockdown imposed since March 2020, Siraj Teli and Agha Shahab said while terming SSGC’s load shedding as ‘sheer injustice’ and ‘conspiracy’ against the city of lights which is deliberately being plunged into darkness.
They pointed out that the government has always reiterated its resolve to provide uninterrupted electricity and gas supply to five export-oriented zero-rated sectors which hardly cover up around 1300 to 1500 industries but what about the rest of 14,500 industries, out of a total number of 16,000 industries in Karachi which continue to remain deprived as no relief has ever been given and they, despite being taxpayers, have to bear all the anguish and go through gas and electricity load shedding, exorbitant tariffs, infrastructure and other civic issues.
Instead of providing relief to all the industries in the ongoing extraordinary situation, the ECC recently approved Rs2.89 per unit tariff hike in KE Bills and now the hardships would aggravate further as the business community is being compelled to face gas load shedding for three days a week which is unacceptable, they added.
They criticized that if the government has to create so much trouble through such anti-business policies then they should formally make an announcement once and for all that all the industrialists should immediately shut down their factories forever and go somewhere else.
-
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
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
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
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
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
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
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
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.