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Category: Trade & Industry

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  • Pakistan Business Council urges Sindh to reopen industries

    Pakistan Business Council urges Sindh to reopen industries

    KARACHI: Pakistan Business Council (PBC) has urged Sindh government to allow industries to reopen with surety of safety compliance to prevent coronavirus.

    In a letter to Sindh Chief Minister on Wednesday, PBC appreciated the proactive steps taken by your government to contain the spread of the Covid-19.

    No doubt countless lives have been saved. We also record our appreciation of the phased and safety driven manner in which your government has allowed economic activity to resume.

    Many of our members in food, pharmaceutical, iron and steel and export sectors in Sindh have demonstrated a heightened sense of responsibility to safe-work practices.

    There are anomalies between the sectors allowed to reopen by various provinces. These are working to the detriment of those with manufacturing facilities in Sindh.

    As a result, the Sindh based units are losing revenue and market share, whilst continuing to pay employees and incur fixed costs.

    A case in point is electronic appliance manufacturers which have been allowed to reopen in Punjab, whilst those in Sindh are still locked down.

    PBC advised the Sindh government to allow industries other than steel, cement and apparel to resume operations, conditional of course to compliance with the SOPs prescribed.

    Prolonged shutdown carries the risk of permanent closure of some undertakings and the consequent loss of jobs and revenue to the Government of Sindh.

    The Pakistan Business Council (PBC) is a private sector business policy advocacy forum composed of the largest businesses including multinationals operating in Pakistan.

    Its members contribute nearly 25 percent of the national tax revenue, generate 40 percent of annual exports and contribute every 9th rupee to Pakistan’s GDP.

    Members operate in nearly all sectors of the formal economy and many have a strong presence in Sindh.

  • Textile exporters demand extension in filing duty drawback claim

    Textile exporters demand extension in filing duty drawback claim

    KARACHI: Textile exporters have demanded the commerce ministry of allowing extension in filing claims for duty drawback up to July 31, 2020.

    Pakistan Hosiery Manufacturers Association (PHMA) in a statement on Tuesday said that the commerce ministry should consider extension in cut-off date of submission of incremental claims of Duty Drawback on Taxes (DDT) for the year 2018-2019 from May 31, 2020 to July 31, 2020.

    This will facilitate and enable textile exporters to submit their claims at convenience without hassle, in view of global business slowdown, lockdown amid COVID19 and reduced working hours for the last almost two months.

    Likewise, in current scenario and unprecedented set of challenges being confronting to the textile industry, the government should also consider and facilitate textile exporters by allowing them to submit remaining 50 percent incremental duty drawback of taxes claims under Duty Drawback Order 2018-21 on achievement of 10 percent increase during financial year 2019-2020 on the basis of nine months’ performance as export production remained standstill and suffered during a whole quarter due to lockdown amid corona pandemic.

    This imperative and favorable move by the government will facilitate textile exporters and it will boost their confidence to achieve extra mile beyond in enhancement of exports in succeeding years.

    In his letter to Abdul Razak Dawood, Advisor to Prime Minister on Commerce, Textile & Investment, Chaudhry Salamat Ali, Central Chairman PHMA has drawn his attention towards Ministry’s Notification No. 1(42-B)TID/18-TR-II dated 3rd August 2018 for Duty Drawback of Taxes Order 2018-2021 according to which the Government provided extension in Prime Minister’s Package of Incentives for Exporters in order to provide drawback of taxes collected from textile exporters.

    Duty Drawbacks on Taxes (DDT) under the Order shall be allowed for shipment made from 1st July 2018 to 30th June 2021 while the cut-off date for filing of claims for exports in each financial year shall be 31st July May of the subsequent year.

    Salamat Ali apprised that several member exporters approached informing that they have been facing inconvenience, amid economic slowdown and lockdown due to COVID19, to process and complete the procedural requirements as per Duty Drawback of Taxes Order 2018-2021 to submit their DDT incremental claims for the year 2018-2019 at Banks/Authorized dealers by cut-off date 31st May 2020 which is approaching very fast.

    Due to COVID19 textile industry of Pakistan was affected and remained totally closed for a period of around 50 days and industries resumed operations/ productions after special permission from the Government. Country has faced a complete lockdown situation from 23rd March 2020.

    In such a scenario, banks as well as SBP are open with reduced working hours and limited number of staff which has been causing delays. Last year the Ministry had also extended the cut-off date to 31st May 2019 to 31st July 2019, consequently, in view of current scenario, date of submission of DDT claims for year 2018-2019 must be extended from 31st May 2020 to 31st July 2020 with necessary advice to State Bank of Pakistan, accordingly.

    Salamat Ali added that economic slowdown in the wake of COVID19 has brought detrimental effects on the textile industry and exports of Pakistan. The Textile Export Industry has faced colossal financial losses due to cancellation of orders, delayed payments against LCs, disputes as some buyers refused to collect the export shipments at destinations.

    The textile industry resumed operations after two months acquiring special permission, nonetheless, supply chain remained disruptive due to closure of allied industry which provides supplies and materials to smoothly run the wheels of textile export industries.

  • PBC Advocates Abolishing Anti-Dumping Duty on Raw Material Used for Exports

    PBC Advocates Abolishing Anti-Dumping Duty on Raw Material Used for Exports

    KARACHI: Pakistan Business Council (PBC) has advocated abolishing anti-dumping duty on imported raw material that are used for export oriented units (EOU).

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  • OICCI lauds SECP for improving regulatory environment

    OICCI lauds SECP for improving regulatory environment

    KARACHI: The Overseas Investors Chamber of Commerce and Industry (OICCI) has praised Securities and Exchange Commission of Pakistan (SECP) for improving regulatory environment for registered entities.

    In a statement on Monday the OICCI felicitated the SECP on the Companies (Amendment) Ordinance, 2020 promulgated on April 30th.

    The Chamber, along with other leading business association, has in the past challenged some of the over-regulatory conditions introduced in the Companies Act 2017 without due engagement of the key stakeholders.

    The amendments to the Companies Act 2017, according to OICCI members, will further improve the regulatory environment in line with regional practices.

    Abdul Aleem, CE/Secretary General of the OICCI commenting on the amendments said: “foreign investors have always supported regulatory environment which are predictable, consistent and transparent.

    “The recent April 30th 2020 amendments to Companies Act 2017 had been under discussion between the SECP and other stakeholders, including OICCI during a series of “Consultative session and feedback” meetings held in 2018 and 2019 and acceptance of several recommendation should be a matter of satisfaction for business entities.”

    He further said ‘a few recommendations are still not part of the proposed amendments and we shall request SECP to also review these so as to attract sizeable FDI in these challenging, post COVID 19, global investment environment’.

    Pakistan’s FDI for past several years has been less than one percent of the GDP against the regional norm of 3 percent and above.

    Some of the key amendments in the Act which were challenged by the chamber, which have now been addressed in the amendments include; limiting the scope of the definition of “officer”, allowing a non-listed company to buy back its shares in line with the right already given to listed companies, doing away with the requirement for a ‘foreign national’ to hold National Tax Number as per the provisions of IT Ordinance, 2001, deletion of the clause where a director could be disqualified for a period up to five years if the affairs of the company have purportedly been conducted in a manner which has deprived the shareholders a reasonable return, deletion of the complete section whereby, inter-alia an independent director and a non-executive director were held liable in respect of some acts of omission or commission by a listed or a public sector company, deleting the personal liability of the Directors whereby they were required to make payments under certain circumstances including a situation where the return on the investments was not according to certain criteria, doing away with the impractical provision to deposit any unclaimed or unpaid amount to the credit of the Federal Government, introduction of a ten percent shareholding threshold in the much debated section on Companies’ Global Register of Beneficial Ownership and deletion of the section requiring security clearance before appointment of Directors.

    A key matter recommended by OICCI, and other stakeholders, to delete the reference to ‘lineal ascendants and descendants’ from the ambit of related parties has not been addressed and OICCI has again requested SECP to review this important matter.

    “Negative perception of Pakistan among potential foreign investors has been a key impediment in attracting sizeable FDI in the country. Pakistan’s rating in the World Bank Ease of Doing Business has only recently improved to 108 from being 147 in 2018 and needs much more business friendly measures to attract its due share of the global/regional FDI, ”Aleem concluded.

  • Karachi Chamber demands lifting lockdown completely as corona cases rise above 40,000

    Karachi Chamber demands lifting lockdown completely as corona cases rise above 40,000

    KARACHI: Business community has demanded complete ease in lockdown on Sunday as cases of coronavirus have increased to over 40,000 in the country.

    The government has started easing lockdown since last Monday but the cases of coronavirus increase at faster pace. The corona cases have increased to 40,151 till May 17, 2020.

    Chairman Businessmen Group (BMG) & Former President Karachi Chamber of Commerce & Industry (KCCI) Siraj Kassam Teli in a statement urged the Sindh Government to completely do away with the ongoing lockdown at least during the last week of Ramadan ul Mubarak in which all the shops and shopping malls be permitted to operate 24-hours a day, which would not only help in dealing with the overcrowding issue at various commercial markets due to limited timings but would enable the small traders/ shopkeepers to recover some of the previous losses suffered by them because of the prolonged lockdown that began from March 23.

    Siraj Teli stressed that the lockdown has to be completely relaxed during the last six days from Monday to Saturday before Eid so that Karachiites could visit commercial markets without any hassle, haste or worries while the shopkeepers could also deal with their customers in an uncrowded atmosphere which was really needed to ensure social distancing, one of the key precautionary measure required to effectively contain further spread of coronavirus pandemic.

    “Subsequently, the lockdown can once again be fully re-imposed during Eid-ul-Fitr holidays and up to May 31 as announced by Sindh Government and from June 1, 2020 onwards, the Sindh government, after reviewing the overall situation, may follow the same formula in which small traders/ shopkeepers are allowed to operate for four days a week from Monday to Thursday and the lockdown remains active on Friday, Saturday and Sunday.

    While appreciating numerous steps taken by Sindh Government since the imposition of lockdown to prevent spread of coronavirus pandemic particularly the hard work by Chief Minister Syed Murad Ali Shah, Chairman BMG regretted that it was really unfortunate to see that during last week when the lockdown was eased, small traders and shopkeepers breached their commitments made to Sindh Government by grossly ignoring the mutually agreed Standard Operating Procedures (SOPs).

    “The Karachi Chamber, being the premier Chamber and actual representative of the entire business & Industrial community, is not only too concerned about the losses suffered by small traders, shopkeepers and the industrialists but also equally worried about the lives of the masses as we cannot afford to run our businesses at the cost of the lives of the innocent public, who could become victim of the life-threatening virus anytime, hence it is the moral and social responsibility of everyone to adopt the SOPs”, Siraj Teli said, while appealing the Small Traders and Shopkeepers from each and every commercial market across Karachi to strictly adhere to all the SOPs at any cost during the remaining days of the ongoing shopping season of Eid ul Fitr as any negligence towards these SOPs would create a disastrous situation, which was already too bad as the number of COVID-19 infected people continues to rise across the country.

    “Meanwhile, the citizens must also be very careful and take necessary precautionary measures so that we all could collectively battle against the life threatening coronavirus pandemic and save our beloved country from further disaster”, he added.

    Siraj Teli further commented, “Since day one, I have been reiterating that Coronavirus is not going to go anywhere and it is going to stay with us for the time being. It has become part of our lives and we will have to live with it. We cannot afford to keep the businesses closed forever so the government and the business community will have to jointly devise ways and means of how to safely get back to daily routine life in the presence of the virus.”

    He was of the opinion that all the SOPs were not just limited to the shopping season of Ramadan only but these must become part of our daily lives and routine business activities.

    He said, “The Sindh government has strived really hard during the last almost two months to contain the spread of coronavirus pandemic. We cannot put all these efforts at stake hence, the shopkeepers must strictly ensure social distancing and take precautionary measures within and outside their business premises which is not only in favor of their own lives and businesses but also in the larger interest of the country. Every single life is very important so we all have to maintain strict discipline and adopt the SOPs which would help us in continuing our businesses in the presence of the virus”.

  • FPCCI says lowering interest rate by one percent not to help economy

    FPCCI says lowering interest rate by one percent not to help economy

    KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Friday said that the decision to lower interest rate by one percent will not help the country to boost especially considering adverse impact of coronavirus.

    FPCCI president Mian Anjum Nisar while responding to rate cut by State Bank of Pakistan (SBP) and said that despite clear message by all segments of economy particularly trade and industry the SBP reduction of one percent policy rate is surprising and unfavorable to bleeding economy.

    He said that given the current deteriorating economic situation all the Central Banks are supporting by significant reduction in interest rate along with stimulus packages while current decision not based on forward-looking inflation.

    He further stated that the FPCCI deplores the regulator’s conservative stance where the speed and the magnitude of the response do not match the havoc caused by the virus.

    FPCCI completely agrees with the external account situation detailed in their monetary policy statement where current account deficit (CAD) will remain in control as was the case in April.

    He said that May and June imports will be even lower than 3 billion per month on account of fewer orders placed by importers due to depressed demand under lockdown.

    Nisar further said since the external situation is in manageable as per SBP, there is sufficient information available on the inflation front to forecast a much lower rate than 7-9 percent forecasted for next year by SBP.

    Importantly, SBP in their 17th March, 2020 MPC press release stated: “Average headline inflation is expected to remain within the SBP’s 11-12 percent forecast in FY20, before falling to the medium-term target range of 5-7 somewhat earlier than previously forecast.”

    FPCCI based on its own research tends to agree with SBP’s earlier assessment of 5 percent anticipated inflation. We would have understood a cautious approach if the situation was normal but in these unprecedented times, we urge the regulator to appreciate the gravity of the situation where most businesses are expected to accrue markup when their sales are ZERO.

    The need of the hour is to take a more aggressive approach to policy making where what can be done tomorrow should be done today.

    FPCCI acknowledges the regulator’s approach on refining their decisions and policies based on constructive feedback as has been demonstrated in multiple improved iteration of various refinance schemes. In the same spirit, we stand ready to work closely with the regulator in our quest to bring down the rate to 5% in the shortest possible time.

    Mian Anjum Nisar President FPCCI urged the SBP to shift its pre-COVID-19 mindset and adopt the policies according to the sentiment of the Prime Minister Imran Khan and Businesses community to bring out economy from crises.

  • FPCCI recommends audit exemption for commercial importers

    FPCCI recommends audit exemption for commercial importers

    KARACHI – The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has called on the government to reinstate audit immunity for commercial importers in the upcoming federal budget 2020–2021.

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  • FBR should shun multiple tax audits

    FBR should shun multiple tax audits

    KARACHI: Business community has advised Federal Board of Revenue (FBR) to shun conducting multiple audits of a taxpayer in a year in order to ensure ease of doing business.

    In its proposals for budget 2020/2021 submitted to the FBR, the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) said that registered Tax payers receive notices of multiple audits in a year such as Income Tax audit under Section 177 of the Income Tax Ordinance 2001, Withholding Tax audit under Section 161 of the Income Tax Ordinance 2001; Sales Tax audit under Section 25 of the Sales Tax Act 1990.

    Moreover, the taxpayers also receive multiple notices of amendments in assessments under Section 122 of the Income Tax Ordinance 2001 and under Section 111 of the Income Tax Ordinance 2001 to explain sources.

    The multiplicity of audit of a single taxpayer in a single year is against the concept of ease of doing business and creating unnecessary problems for tax payers.

    The FPCCI recommended that multiplicity of audits in a single year be done away with and replaced with the concept of composite audit of registered taxpayers.

    Further, it is suggested that new audit parameters should be enforced after consultation with all stakeholders.

  • FPCCI demands 400 basis points cut in policy rate

    FPCCI demands 400 basis points cut in policy rate

    KARACHI: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Thursday demanded the central bank to cut the policy rate by 400 basis points to five percent.

    The State Bank of Pakistan (SBP) is scheduled to release monetary policy statement on Friday May 15, 2020. The central bank in past two months reduced the policy rate by 4.25 percent to present 9 percent.

    FPCCI President Mian Anjum Nisar in a statement said that the State Bank of Pakistan (SBP) should bring down the interest rate to 5 percent.

    He said that the future anticipated expected inflation will further decline due to low demand and other effects of lockdown to control over spread of coronavirus.

    On the other hand external front is also presently sustainable due to foreign financial support and rescheduling of debt that has supported reduction in current account deficit.

    The FPCCI chief further stated that with both demand driven and import based inflation in check there is no reason to gradually bring down the interest rates when the case for immediate relief is apparent.

    He said economy of Pakistan is already hit very hard as business activities remain stop while they are paying 12 percent banks markup and cannot survive on such high KIBOR rate.

    There is 4-5 percent interest rate in Pakistan immediate regional competitors China, India Bangladesh.

    The SBP should also advice banks to revise KIBOR on a monthly basis instead of quarterly to pass on the benefit of lower rates faster to companies struggling to survive.

    The impact to banks on their deposits will be insignificant as majority is demand deposits instead of time deposits.

    Therefore, SBP lower interest rate to 5 percent in one go that is immediately reduction of 400 basis points rather lower in stages.

    He said that tough situations under COVID-19 demand support while conditions rationally suggest lowing of policy rate directly to 5 percent.

    While appreciating SBP role in sustaining economic growth through supporting trade and industry, Anjum Nisar emphasized upon financial relief by reduction in the interest rate.

    He said State bank should take measures and develop strategy to protect the pace of economic and trade progress of Pakistan Other- wise we will again face economic crises, lower industrial growth and shifting of industrial units in sick industry.

  • Uniform tax rate suggested on rental income

    Uniform tax rate suggested on rental income

    KARACHI: The tax rate on rental income should be made uniform for individual, Association of Persons (AOPs) and company at 15 percent.

    Federation of Pakistan Chambers of Commerce and Industry (FPCCI) in its proposals for budget 2020/2021, recommended to bring uniformity in taxing the rental income.

    The FPCCI said that at present for every person except companies the income from property is chargeable to tax at the rate specified in Division (VIA) of Part I of the First Schedule to the Ordinance, which is considered to be their final tax liability and they are not allowed any expenditure against gross rent, except option provided under sub-section (7) of section 15A of the Ordinance, in case income exceeds Rs.4 Million. Whereas, the companies are required to pay normal tax (current at 29 percent) on such income after adjustment of admissible expenditure out of gross rent.

    The tax rate on rental income has now been gradually increased from 20 percent to 35 percent for individuals and AOPs though the Finance Act, 2019.

    Apart from that the lessor is also required to pay Sindh Sales Tax at the rate of 3 percent to Sindh Revenue Board (SRB), which makes the total tax impact very unfair and exorbitant and lead towards un-documented business.

    The present scheme of taxation on rental income resulted the rents of warehouses had increased exorbitantly and the exporters who warehoused their exportable goods are financially hurt.

    Moreover, it has also distorted the income of the senior citizens, retired persons, pensioners, widows etc., whose livelihood solely depends upon rent of their property, made from their income in good old days.

    The FPCCI made following proposals:

    i) The rental income from property, AOP or individual and company be taxed at a uniform rate of 15% of the Gross Rent as full and final discharge of tax liability.

    ii) Rental income taxable under Normal Tax Regime should be allowed to be adjusted against business loss. The restriction imposed through Finance Act, 2013 needs to be reconsidered.

    Giving the rationales to the proposals, the FPCCI said:

    i) The impact of taxes (direct and indirect) on rental income will be rationalized.

    ii) Investors will be encouraged to declare their genuine rental income.