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Category: Trade & Industry

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  • KCCI opposes proposal to extend tenure of FPCCI office bearers

    KCCI opposes proposal to extend tenure of FPCCI office bearers

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has strongly opposed to the proposal regarding extending the tenure of office bearers of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) from one year to three years, a KCCI statement said on Wednesday.

    Vice Chairman Businessmen Group (BMG) & Former President Karachi Chamber of Commerce & Industry (KCCI) Haroon Farooki, General Secretary BMG AQ Khalil and Acting President KCCI Khurram Shahzad, who represented KCCI at a meeting of the Standing Committee on Commerce & Textile held in Islamabad on Wednesday, strongly opposed the proposed Bill to extend the tenure of FPCCI’s Office Bearers from one year to three years which will not be acceptable to the Business & Industrial Community of entire Pakistan.

    The meeting, which was presided over by Chairperson of the Standing Committee ‏‏Mirza Muhammad Afridi, was also attended by PM’s Advisor on Commerce Razzak Dawood and other prominent members of the Standing Committee along with representatives of Chambers of Commerce from different provinces of the country.

    While sharing their opinion over this particular issue, KCCI’s representatives pointed out that the tenure of FPCCI’s President currently lasts for one year but some elements were attempting to extend this term to three years through amendments in relevant laws which was not practical and would be strongly resisted by the business & industrial community.

    “It is going to be a sheer injustice for those Chambers of Commerce who intend to take charge of the apex body but after such an extension of three years, any chamber of commerce from any province of the country will have to wait for more than two decades to reassume the charge of FPCCI’s presidency”, they added.

    Vice Chairman BMG Haroon Farooki stated that the bill proposes amendment in Section 11 of Trade Organization Ordinance (TOO) 2013 which pertains to one year tenure of the Office Bearers but this particular section was not confined to the tenure of FPCCI Office Bearers only as it was also applicable on all other Chambers of Commerce and Trade bodies. “This bill seeking amendment in Section 11 of TOO 2013 is not practically, technically and legally implementable for FPCCI only as it will have an impact on all the trade bodies hence it must be immediately withdrawn”, he added.

    KCCI’s representatives emphasized that the said Bill to extend the tenure of FPCCI Office Bearers should have been consulted with the all the stakeholders prior to bringing it at the Senate for debate and fact-findings. Majority of the business community in fact the entire business community of country was against this bill hence, it should be immediately dismissed, they demanded.

    After listening to KCCI’s point of view and all the reservations expressed by the representatives of other Chambers, the proposer of the Bill and PM’s Advisor Razzak Dawood, while agreeing to KCCI’s viewpoint, immediately withdrew the bill which was warmly welcomed by all the representatives of the business & industrial Community present at the meeting.

  • Govt preparing comprehensive policy to develop Karachi: Ali Zaidi

    Govt preparing comprehensive policy to develop Karachi: Ali Zaidi

    KARACHI: Federal Minister for Maritime Affairs Syed Ali Hyder Zaidi has said that the federal government is preparing a comprehensive policy for the development of Karachi and the first phase of cleaning drains has been completed and garbage will be lifted in the second phase of Clean Karachi Movement spearheaded by him.

    The federal minister was addressing a meeting with members of Association of Builders and Developers of Pakistan (ABAD) here on Friday at ABAD House. Chairman ABAD Muhammad Hassan Bakshi, Senior Vice Chairman Anwar Dawood, Vice Chairman Abdul Kareem Adhia, Chairman Southern Region Ibrahim Habib, PTI MPAs Jawed Siddiqui and Bilal Gaffar were also present on this occasion.

    Ali Zaidi said that due to his efforts with the help of Frontier Works Organization (FWO) Karachi witnessed that rain water during second and third spell water was receding fast as almost all drains were cleaned. He lamented that civic sense among the public has been faded as a result of abrogation of Civic Studies from the syllabus of schools.

    He said that Rs. 100 million was donated by various entities and individuals for Clean Karachi Movement. This money, he continued, was directly deposited into the bank account of FWO opened for the Clean Karachi purpose.

    Earlier, addressing the gathering Chairman ABAD Muhammad Hassan Bakshi demanded of the federal minister to request government for declaring Karachi as the second Capital of Pakistan as this city is generating more than 70 percent revenue. He also requested Prime Minister Imran Khan to held meeting the Federal Cabinet in Karachi and also stay in Karachi for atleast fifteen days to show ownership of the city.

    Hassan Bakshi demanded of the federal government to pave way to lift ban on construction of high rise buildings in Karachi, although the ban imposed by the Supreme Court of Pakistan in lifted but still builders are not getting approvals for the same.

    Senior Vice Chairman ABAD Anwar Dawood said that it is fact that Karachi needs cleanliness but the government should also take stern action to clean garbage of corruption for the betterment of the economy and development of the country. Chairman Southern Region Ibrahim Habib thanked federal minister and PTI MPAs and media for attending the meeting.

  • KCCI warns of mass unemployment, business closure on new mini budget

    KCCI warns of mass unemployment, business closure on new mini budget

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has warned the government of mass unemployment and closure of business as a result of any move to introduce mini budget or imposing additional taxes to bridge the fiscal deficit.

    In a statement on Friday, Acting President of KCCI Khurram Shahzad, while referring to various rumors and some media buzz going on about the announcement of yet another mini budget or imposition of additional taxes to overcome the yawning deficit, warned that any such move would prove ruinous for the economy as the industries and businesses, which were already underperforming due to imposition of exorbitant taxes in the budget for current fiscal year, will not be able to sustain the impact of more additional taxes.

    Khurram Shahzad stated that the business & industrial community was not in a position to bear any more of such shocks which would lead to closure of many businesses and cause massive unemployment which was already on the rise therefore, the government must strictly refrain from such an anti-business and anti-industry move.

    Referring to the forthcoming visit of the IMF team which is due after Aashura to discuss fiscal issues with special focus to restrict target of primary deficit within the desired limits, Khurram Shahzad pointed out that under IMF conditions, the primary deficit has to be brought down from 1.8 percent of GDP to 0.6 percent of GDP in the current fiscal year but, instead of declining, the deficit has gone all the way up to 3.6 percent.

    “It means that the government will have to carry out massive adjustments of Rs1,300 billion to reduce primary deficit to 0.6 percent of GDP which many experts believe will be done through another mini budget in which more additional taxes are likely to be imposed but this unwise move would plunge the country into further economic crises and the economy may reach to a point of no return,” he added.

    He said that Federal Board of Revenue (FBR), on one hand, has been claiming that the tax base has improved to 2.561 million taxpayers and the overall growth was also achieved while on the other, the State Bank of Pakistan (SBP) has forecasted further economic slowdown while the International Monetary Fund (IMF) has also expressed deep concerns over worsening fiscal front, creating a very confusing situation which was beyond business community’s understating. “We are totally confused about the ground realities as the statements given by FBR were contradicting what the State Bank and IMF have been forecasting”, he added.

    Khurram Shahzad said that the business & industrial community fully respects and appreciates the vision, thinking and resolution of Prime Minister Imran Khan which would certainly transform Pakistan into the most flourishing economy of the region but in order to pull the economy out of crises, the decision makers will have rethink all the strategies and policies which have proved counterproductive so far and instead of showing any signs of improvement, these measures have actually broken the backbone of common man due to across-the-board inflation and also radically enhanced the cost of doing business, resulting in the overall depressed performance of almost all the businesses including Large Scale Manufacturing Units, SMEs and export oriented industries and other businesses.

    “We, the business and industrial community of Karachi, are hoping that the PTI government would review all its existing policies and strategies which have failed miserably to provide any relief neither to the business & industrial community nor to common man and they come up with those practical steps in consultation with all the stakeholders which prove favorable for the economy, businesses and the common man,” he added.

  • SBP urges business community to discourage cash transactions

    SBP urges business community to discourage cash transactions

    Dr. Reza Baqir, the Governor of the State Bank of Pakistan (SBP), has called on the business community to reduce cash transactions to aid economic growth. Speaking to members of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Friday, Dr. Baqir emphasized the importance of promoting transactions through the banking system.

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  • Yarn merchants demand restoration of 1pc withholding tax for textile value chain

    Yarn merchants demand restoration of 1pc withholding tax for textile value chain

    KARACHI: Pakistan Yarn Merchants Association (PYMA) has demanded the Federal Board of Revenue (FBR) to restore one percent advance income tax for textile value chain.

    In a statement on Tuesday, Muhammad Saqib Goodluck Chairman, PYMA (Sind & Baluchistan Zone) strongly protested over imposition of 4 percent withholding tax instead of 1 percent requested to withdraw recent clarification of FBR.

    He said that during different meetings with FBR, imposition of 1 percent withholding Tax was agreed over Textile Value Chain (Doubling, Twisting, Knitting, and Weaving) but clarification from FBR says imposition of 4 percent withholding Tax instead of 1 percent on whole Textile Chain, is not acceptable at any cost.

    Saqib Goodluck in his letter to Chairman FBR, Shabbar Zaidi has clearly refused to accept imposition of 4 percent withholding tax instead of 1 percent and declared this step of FBR as highly disastrous said that on total amount of every receipt, 4 percent advance income tax could not collected which will increase the cost.

    On purchase of cotton from Ginners, deduction of 4 percent from invoice will increase pressure on Ginners to reduce cost of cotton.

    In fact, they must be responsible for ginning charges which is 35 percent of ginned cotton. Similarly, from manufacturing of yarn up to manufacturing of cloth, imposition of every tax will develop highly negative impacts on cost and local raw material.

    He further said that local manufacturers spinning units and commercial importers of yarn works at low margins but large volume, when it reach up to retails stage with reference to polyester chain, it comprises four to five stages.

    If upon fourth or fifth stage, 4 percent tax deducted, then cost of raw material will increase and ultimately withholding tax will increase from total margin and cases of income tax.

    Refund will increase, which takes a long time to receive. It will be more difficult than GST because deduction of withholding tax on input carries no subsidy.

    A large number of production units are engaged in exports as well as sales in local market.

    FBR while examining audited balance sheets of public listed companies and other companies that withholding tax received over lesser margin is how much excessive. Therefore, for the survival of whole textile value chain 1 percent withholding tax must be implemented.

  • High tax rates to discourage industrialization: KCCI

    High tax rates to discourage industrialization: KCCI

    KARACHI: Raising the tax rate is not the right solution for enhancing revenue as it will discourage expansion and industrialization but the actual solution lies in broadening the tax net, Junaid Makda, President, Karachi Chamber of Commerce and Industry (KCCI) said in a statement on Saturday.

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  • NAB not to process sales tax, income tax cases of business community

    NAB not to process sales tax, income tax cases of business community

    KARACHI: Justice Javed Iqbal, Chairman, National Accountability Bureau (NAB) has said that the bureau will not process cases of income tax and sales tax of business community.

    He was talking with Engr. Daroo Khan Achakzai, President, Federation of Pakistan Chambers of Commerce and Industry (FPCCI) at a meeting, said a statement issued by FPCCI on Friday.

    A delegation of FPCCI under the leadership of President FPCCI Engr. Daroo Khan Achakzai met Chairman NAB, Justice Javed Iqbal at NAB Head Quarter Islamabad.

    During the meeting Engr. Daroo Khan Achakzai expressed his views that entire business community of Pakistan appreciates the role of NAB and the measures taken by it for transparency and curb the corruption of the country.

    He said that business community is the backbone of the country contributing in economic development. NAB is business friendly institution that considers business community as its priority and addressing the issues.

    Chairman NAB said that NAB would not process the cases of income tax and sales tax of business community and has ordered to return back all previous cases of business community to FBR as per law. He informed that he has ordered withdraw all notices served by NAB Multan on owners of flour mills of Multan, Bahawalpur and D.G Khan division. He said that he himself would review the notices of flour mills.

    President FPCCI Engr. Daroo Khan Achakzai appreciated the personal efforts of Chairman NAB for looking into the of issues of entire business community. He thanked the Chairman NAB for the establishment of Special Cell for entire business community in NAB Secretariat.

    Chairman NAB Justice Javed Iqbal also acceded to the request of President FPCCI for visiting the Federation House.

  • Tax measures, rupee depreciation adversely hit auto industry

    Tax measures, rupee depreciation adversely hit auto industry

    KARACHI: The revenue measures taken by the government in the budget 2019/2020 and massive depreciation in Pak Rupee value have been major challenges for the auto industry as these factors have already adversely hit the sales volumes in the first half (January – June) 2019, a report said.

    Pak Suzuki Motors Company Limited in its report for the period ended June 30, 2019 (January – June 2019) said that sales volume of auto industry for cars and light commercial vehicles was recorded at 118,519 units compared to 134,494 units in corresponding period of last year, registering decrease of 12 percent.

    Sales volume of the Company during the half year January – June 2019 declined by 11 percent from 76,482 units to 68,147 units, in line with industry trend.

    The total sales volume of the Company represented 56 percent of Pakistan’s total market of cars and light commercial vehicles. The Company operated at 80 percent capacity utilization and achieved production volume of 60,098 units, the report said.

    During the period under review, the organized market (PAMA member companies) for motorcycles and three wheelers decreased from 990,102 units to 855,396 units. Decrease of 134,706 units represents 14 percent decline in sales volume over same period of last year. However, Company sales volume remained consistent and achieved sales volume of 11,600 units as compared to sales volume of 11,292 units in corresponding period of last year.

    The report said that the company incurred net loss of Rs 1,526 million compared to net profit Rs 1,298 million in same period of last year. Net sales revenues increased by Rs 3,145 million from Rs 62,284 million (Jan-Jun 2018) to Rs 65,429 million (Jan-Jun 2019).

    Higher prices in current period contributed in increased sales revenue by 5 percent over the same period of last year. Gross profit decreased in absolute terms by Rs 2,886 million from Rs 4,258 million (Jan-Jun 2018) to Rs 1,372 million (Jan-Jun 2019). Gross profit margins as a percentage of net sales declined from 6.8 percent to 2.1 percent of net sales.

    “Devaluation of Pak Rupee resulted in increase in imported material cost, consequently adversely affecting the gross profit margins.”

    It said that Pakistan’s economy is in difficult situation. “We witnessed sharpest increase in policy rates in recent time by State Bank of Pakistan (SBP).”

    SBP further increased policy rate by 100 basis points to 13.25% in ‘Monetary Policy’ announced in July 2019. Average inflation for fiscal year 2019-20 is expected to remain in the range of 11% to 12% due to higher fiscal deficit, inflation and Pak Rupee depreciation.

    In July 2019, the Executive Board of the IMF program approved a 39-month arrangement under the Extended Fund Facility (EFF) for US$ 6 billion to support the Government of Pakistan’s economic reform program.

    Outlook for external financing has improved with the disbursement of the first IMF tranche associated with IMF EFF, activation of Saudi Oil Facility and other commitments from multilateral and bilateral partners.

    Current Account deficit has continued to fall reducing external pressure.

    The tax measures announced in the Federal Budget 2019-20 have severely hit the auto industry. Additional Customs Duty (ACD) on imported material has been increased by 2 percent to 5 percent. The government also imposed ‘Regulatory Duty’ on import of different kinds of vehicles. The government has enlarged the scope of Federal Excise Duty (FED) and imposed FED on locally assembled cars as well as on imported cars at the rate of 2.5 percent with engine capacity up to 1000cc, 5 percent from 1001cc to 2000cc and 7.5 percent on 2001cc and above.

    Tax credit on investment in Plant & Machinery under section 65B of Income Tax Ordinance 2001 has been reduced from 10 percent to 5 percent for tax year 2019 while no tax credit from tax year 2020 and onwards.

    Further Government withdrew gradual reduction in corporate tax rate from 29 percent to 25 percent and on the other hand increased minimum tax from 1.25 percent to 1.5 percent of turnover.

    “These additional taxes coupled with massive depreciation of Pak Rupee adversely affected the cost of vehicles and it forced the OEMs to increase the prices of their vehicles,” the report said, adding that consequently, higher prices of vehicles will likely affect sales volume of auto industry as price hikes will weaken the purchasing power of costumers.

    According to the report the Company is endeavoring to improve sales, profitability and diversity in its operations by upgrading the existing products and launching new products.

    The company launched the New Alto in June 2019. New Alto harbors contemporary 660cc R-series engine, modern design, spacious interior with great fuel efficiency and Japanese technology.

    New Alto received overwhelming response from customers due to its distinguished features.

    Macroeconomic indicators of the country are challenging for auto industry. Pak Rupee devaluation, rising raw material prices, increase in interest rate and additional taxes and duties imposed through Federal Budget are major challenges for auto industry.

    Variation in forex rates and import duties influenced the pricing of products due to high element of imported components in total cost of products. Your Company has geared up to meet the challenges in future with wide range of quality products at competitive prices through an efficient network of authorized dealers.

  • FPCCI demands immediate release of export refunds, duty drawbacks

    FPCCI demands immediate release of export refunds, duty drawbacks

    KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has demanded the government of issuing all outstanding export refunds, rebates and duty drawbacks.

    In a statement issued on Tuesday, Engr. Daroo Khan Achakzai, President, FPCCI urged the Advisor to the Prime Minister on Finance & Revenue, Dr. Abdul Hafeez Shaikh to fulfil his commitments made, from time to time, particularly in the Finance Act, 2019 and release export sectors’ all accumulated refund claims including deferred Claims ; Customs Duty Drawback ; DLTL etc., lying pending for payment since long for facilitating and enabling environment to the exporters to overcome their liquidity crunch, meet their export orders well in time; enhance exports and reduce trade deficit so that the export targets as envisaged in the Finance Act, 2019 are met.

    Referring to the Finance Act, 2019 the FPCCI Chief recalled that although a provision had been introduced wherein promissory notes would be issued to the Claimants at their option by a newly formed company called the FBR Refund Settlement Company Ltd., but there is a very slow progress in processing of the pending Sales Tax refunds and issuance of RPOs.

    The FPCCI Chief appreciated Dr. Abdul Hafeez Shaikh, Advisor to the Prime Minister on Finance & Revenue and FBR for initiating Expeditious Refund System (ERS) for automated payment on generated Refund Payment Orders (RPOs) in the wake of withdrawal of zero-rating on Sales Tax inputs for five export oriented industrial sectors and also appreciated for providing Sales Tax refunds for manufacturing of five export-oriented sector, within 72 hours through Risk Management (RMS), however, lamented for the delay in implementation of these system.

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  • Car sales plunge by 42pc in July 2019

    Car sales plunge by 42pc in July 2019

    KARACHI: Car sales have witnessed a sharp decline of 42 percent in July 2019 owing to massive depreciation in local currency and tax measures taken in the budget 2019/2020, analysts said on Monday.

    According to statistics released by Pakistan Automobile Manufacturers Association (PAMA), the car sales were 12,482 units in July 2019 as compared with 21,344 units in the same month of the last year.

    Industry analysts said that the local currency witnessed sharp decline during current calendar year, which hampered the growth in car sales.

    The significant decline was witnessed in cars with engine capacity of 1300CC and above. The sales of this segment fell by 62.6 percent to 3,607 units in July 2019 when compared with 9,659 units in the same month of the last year. The production of this category was also declined to 5,582 units as compared with 9,833 units.

    The sales of small cars with engine capacity of 1,000 CC also fell by 53.73 percent during the period under review. The sales of cars under this category fell to 2,051 units in July 2019 as compared with 4,433 units in the same month of the last year.

    The sales of cars below 1,000 CC, however, increased to 5,310 units from 4,783 units.