Blog

Import of heavy electric vehicles allowed at 1 percent customs duty

ISLAMABAD: Federal Board of Revenue (FBR) has allowed import of heavy electric vehicles at one percent customs duty.

Through Finance Act, 2020 the duty at one percent has been made part of Customs Act, 1969.

According to the Finance Act, 2020 the imports of electric buses, electric trucks and electric prime movers have been allowed at one percent of customs duty and there is no condition attach to the imports.

However, imports of other electric vehicles including auto rickshaw, 3-wheeler loader and motorcycle have been allowed reduced duty rate at 50 percent of the prevailing tariff rate of customs duty as specified in the First Schedule to the Customs Act, 1969.

There are conditions attached to the imports of such motor vehicles. The FBR said that the concession shall be admissible for a period of five years with effect from July 01, 2020, on import of 10 electric vehicles (CBU – Completely Buildup Unit) of the same variant to the assembled / manufactured to the extent of maximum 200 units, to 2-3 wheeler segment, duly approved / certified by the Engineering Development Board (EDB).

The EDB shall monitor compliance with the EV Policy 2020 and intimate FBR immediately in case of violation by any manufacturer to stop further clearance at the concessional rate.

July 19, 2020
Pakistan mulls opening tourism spots by mid-August

ISLAMABAD: Pakistan is considering to open tourist spots across the country by mid of August provided that the COVID-19 situation was remained under control, said Special Assistant to Prime Minister of Pakistan Syed Zulfiqar Abbas Bukhari.

He, however, categorically announced that all tourist spots would be remain closed during Eid ul Azha holidays. He said decision to this effect has been made to prevent people from coronavirus as it was experienced during Eid ul Fitar.

He stated this while talking to a delegation of Hotels, Guest Houses and Tourism Association at Islamabad on Friday July 17, 2020.

He said that year 2021 will be considered as year of Tourism and all avenues of recreation would opened by reviewing COVID-19 favorable situation after Eid ul Azha.

Central President Gulariz Khattak, Chairman Tahir Aurakzai, General Secretary Dr. Usman Qazi, Information secretary Asif Khan and Secretary Training Sulman Awan apprised about the issues and difficulties being faced by the Association Members.

Zulfiqar Bukhari said that in accordance with the vision of Prime Minister of Pakistan Imran Khan, Tourism would be promoted throughout the country and keeping on board all Provinces effective measures were being adopted to extend maximum facilitations to all stakeholders and as well as tourists.

Responding the recommendations of delegation members, Zulfi Bukhari assured proper representation of Hotels, Guest Houses and Tourism Association in National Tourism Coordination Board and also assured for taking up the matter of issuing interest free loans to those whose business had been badly affected due to COVID-19.

He also assured for renewing registration of guest houses as soon as possible to mitigate the suffering of guest houses owners. He said COVID-19 SOP’s and guidelines has been finalized in consultation with Provinces and only reply of Sindh Province is awaited and after completion of process necessary action would be taken for opening hotels and guest houses.

Matters pertaining to promotion of tourism, regularization and streamlining the procedures also came under discussion.

July 19, 2020
Pakistan spends Rs217 billion on import of mobile phones in FY20

ISLAMABAD: Pakistan has spent Rs217 billion on import of mobile phones during fiscal year 2019/2020 amid slow economy and outbreak of coronavirus pandemic.

The import of mobile phones was Rs217 billion during fiscal year 2019/2020 as compared with Rs102.75 billion in the preceding fiscal year, showing 81 percent growth, according to data released by Pakistan Bureau of Statistics (PBS).

Market sources said that reduction in duty and taxes and restriction of registration with the Pakistan Telecommunication Authority (PTA) has increased the import of mobile phones through legal channels.

The import of mobile phones in terms of US Dollars also increased to $1.4 billion during the fiscal year under review as compared with $755.55 million in the preceding fiscal year.

Despite imposition of lockdown in the country to prevent coronavirus, the country imported mobile phones worth Rs38.2 billion in June 2020, which is 115 percent higher when compared with Rs17.78 billion in May 2020.

The market sources said that due to lockdown the importance of digital economy had increased. They said that financial transactions were being done through mobile phones, which were the easiest way.

July 19, 2020
Import of old, used motor cars falls by 55.41 percent in 2019-2020

KARACHI: The import of used and old cars massively fell by 55.41 percent during fiscal year 2019/2020 due to condition of payment of duty and taxes through foreign exchange imposed by the government.

The import of used and old cars in Completely Built Unit (CBU) condition fell to $99 million during 2019/2020 as compared with $222 million in the preceding fiscal year, according data released by Pakistan Bureau of Statistics (PBS).

The commercial import of used or old cars is not allowed under prevailing laws of the country. However, in order to facilitate expatriate Pakistanis the government allows incentives to bring cars into the country.

The Federal Board of Revenue (FBR) has allowed Pakistani nationals residing abroad including dual nationals can import old and used vehicles into Pakistan under these schemes: Personal Baggage; Gift Scheme; and Transfer of Residence.

The cars not older than three years and other vehicles not older than five years can be imported under these schemes, the FBR said.

These schemes were grossly misused in the past and bulk of imported cars brought into the country.

However, the ministry of commerce in February 2019 amended Import Policy Order, 2016 and made it mandatory for clearance of cars through foreign exchange, which should be certified by banks.

Since then the clearance of the cars has come to a standstill. Customs authorities said that a large number of imported cars were at the port but importer had failed to make payment as per procedure prescribed by the ministry of commerce.

However, later in a meeting of Economic Coordination Committee (ECC) decided to allow payment for duty and taxes for customs clearance of imported cars through local resources with condition that if foreign exchange becomes short due to currency fluctuations or change in duty and tax rates.

The overall import of CBU vehicles during fiscal year 2019/2020 fell by 43 percent. The import of heavy vehicles including buses and trucks has declined by 24.5 percent. While import of CBU motorcycles fell by 71.63 percent.

On the other hand the import of cars as Completely Knocked Down (CKD) condition also fell by 41.57 percent to $478 million during 2019/2020 as compared with $818 million in the same period of the last fiscal year.

Market sources said that massive depreciation in the local currency during past couple of years had increased the cost of local car manufacturers.

Further, the rates of locally assembled cars for end consumers also jumped up sharply.

These factors have reduced the productions of locally manufactured cars and subsequently reduced the import of cars in CKD condition.

The overall import of vehicles in CKD fell by 41.63 percent to $727.52 million during 2019/2020 as compared with $1.24 billion in the preceding fiscal year.

July 18, 2020
Weekly Review: market likely trade in green on housing sector activity

KARACHI: The stock market likely to trade in green owing to expected rise in demand of cement and steel in the wake of incentive provided to housing sector.

Analysts at Arif Habib Limited said that the market to remain green especially cyclical sectors to remain in the limelight including cements and steel due to government focusing on reviving economic activity through housing and construction sector.

That said, continuous slowdown in Covid-19 cases on daily basis is further improving investors’ confidence.

The benchmark KSE-100 of Pakistan Stock Exchange (PSX) is currently trading at a PER of 8.1x (2020) compared to Asia Pac regional average of 13.1x while offering a dividend yield of ~6.0 percent versus ~2.7 percent offered by the region.

The market commenced on a positive note, continuing the rally being witnessed since the last three weeks.

During the mid-week, 13 days winning streak came to an end as the index slipped by 66 points on account of profit taking.

Optimism in the bourse was sourced from: i) Capital injection from local investors as equities are being viewed as the preferred asset class, ii) Government planning to build low cost subsidized houses which rejuvenated investors’ interest in the cement sector, iii) State Bank of Pakistan has asked all commercial banks to allocate five percent of their portfolio to construction sector, again attracting interest in cements and iv) PM inaugurated construction works at Diamer Bhasha Dam that will increase demand for Cements and Steel.

Likewise, Commercial Banks performed well due to expectation of improved earnings in the upcoming results.

As a result, the KSE-100 index closed at 37,331 points, up by 1,140 points or 3.15 percent WoW.

Contribution to the upside was led by i) Cements (213 points), ii) Oil and Gas Exploration Companies (196 points), iii) Fertilizer (149 points), iv) Automobile Assembler (91 points), and v) Commercial Banks (55 points). Scrip wise major gainers were LUCK (85 points), POL (78 points), DAWH (77 points), PPL (75 points), and INDU (63 points). Whereas, scrip wise major losers were BAFL (13 points), NBP (9 points) ABOT (8 points), SYS (8 points) and COLG (7 points).

Foreigners offloaded stocks worth of USD 27.37 million compared to a net sell of USD 9.46 million last week. Major selling was witnessed in E&P (USD 20.40 million) and Fertilizer (USD 2.61 million). On the local front, buying was reported by Individuals (USD 15.93 million) followed by Insurance Co. (USD 14.29 million). That said, average daily volumes and traded value for the outgoing week were up by 22 percent and 34 percent to 426 million shares and USD 99.3 million, respectively.

July 18, 2020
FBR recommended imposing penalty for late return filing instead extending last date

ISLAMABAD: Federal Tax Ombudsman (FTO) has advised the Federal Board of Revenue (FBR) to impose penalty for late filing of income tax returns instead extending the last date.

The FTO in its annual report recommended that the FBR that instead of extending the last date for filing of Returns, late filing be allowed with certain penalty per month or any part of it, as it would be a more revenue-pro measure.

The FTO further recommended that in order to encourage increase in filing of Returns by employees of government and autonomous bodies, it was recommended that FBR to approach the concerned Authorities/Establishment Division to issue instructions to heads of government Departments, autonomous bodies and large scale public sector organizations for obtaining certificate of filing of Returns by their employees falling in the tax net, at the end of last date of filing of Returns, and link their promotions/increments to filing of Returns.

It was also suggested to devise mechanism in consultation with Securities and Exchange Commission of Pakistan (SECP) to ensure that business entities registered with SECP, who were non-filers, must file Income Tax Returns regularly.

It was also recommended that proper assistance to the Return filers be provided through establishment of facilitation centres at convenient places.

July 18, 2020
Annual foreign direct investment grows by 88 percent

KARACHI: Foreign Direct Investment (FDI) into the country registered 88 percent growth to $2.56 billion during fiscal year 2019/2020, State Bank of Pakistan (SBP) said on Friday.

The FDI posted $1.198 billion increase during the fiscal year under review as compared with $1.36 billion in the preceding fiscal year i.e. 2018/2019.

The inflows under the head of FDI grew by 18 percent to $3.285 billion during fiscal year 2019/2020 as compared with $2.78 billion in the preceding fiscal year. However, outflows recorded 49 percent decline to $724 million as against outflow of $1.42 billion in the preceding fiscal year.

The portfolio investment registered 32 percent contraction in outflows during the period under review. The outflows from the capital market recorded $281.7 million during fiscal year 2019/2020 as compared with the outflow of $415 million in the preceding fiscal year.

The total foreign private investment posted 140.7 percent growth to $2.279 billion during July-June 2019/2020 as compared with $947.2 million in the preceding fiscal year.

The foreign public investment in debt securities witnessed outflow of 241.3 million during fiscal year 2019/2020 as compared with $1 billion in the preceding fiscal year.

The total foreign investment including public and private rose to $2.038 billion during fiscal year 2019/2020 as compared with outflow of $54.8 million in the preceding fiscal year.

July 18, 2020
SECP proposes amendments to insurance laws

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has issued draft bill to amend Insurance Ordinance 2000 with aim to bridge regulatory gaps in existing laws.

The draft law has been placed on SECP’s website for stakeholders and public consultation.

The draft bill will address the regulatory gaps in existing law and provide a conducive regulatory environment to encourage market development, the SECP said.

It will facilitate use of technology, provide ease of doing business and address entity specific and systemic risks by shifting towards Risk Based Supervision (RBS) and Risk Based Capital (RBC) Regime, it added.

The amendments in law will also strengthen the regulatory framework and ensure its alignment with the Insurance Core Principles (ICP) of the International Association of Insurance Supervisors (IAIS).

The significant reforms proposed in the draft bill include introduction of dedicated micro-insurers, provisions for regulation of takaful and re-takaful, regulation of local and foreign reinsurance business for enhancement of local capacity, regulation of reinsurance brokers, flexibility for introduction of new intermediaries, insurance repository and insurance self-network platform, provisions for regulation of index based insurance and InsurTech.

Provisions for introduction of RBS and RBC regime and establishment and operation of a guarantee fund for insolvency of insurers have been included to strengthen the regulatory framework and align the law with core principles of IAIS and address systemic risk.

The amended law will also assist in enhancing compliance with AML/CFT frameworks.

The changes include requirement of appointed actuary and product filing of personal lines for non-life insurance, appointment of internal actuary for life insurers and enhancement of market conduct provisions.

The regulatory powers of the Commission for regulation and supervision of insurance companies and intermediaries, have also been streamlined in the draft bill.

July 18, 2020
Share market continues gaining momentum, up by 329 points

KARACHI: The share market continued gaining momentum and increased by 329 points on Friday, analysts said.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 37,331 points as against 37,001 points showing an increase of 329 points (+0.9 percent DoD).

Market realized a gain of +353 points during the two session and closed the day at +329 points. HASCOL turned out to be the head turner, despite posting a loss of 25B the stock ended the session in green with a volume of 87.2 million shares.

Refinery sector saw NRL and PRL hitting upper circuit after news of recent disruption in oil supplies and similar performance was observed in other Refinery stocks. Banking sector stocks remained muted throughout the session. Steel sector also performed on the back of expectation of an increase in steel prices.

O&GMCs posted highest volumes of 92.9 million shares courtesy of HASCOL, and was followed by Chemical (52.9 million) and Technology (39.2 million). Among scrips, LOTCHEM (24.8 million) and UNITY (22.1 million) followed HASCOL.

Sectors contributing to the performance include Inv Banks (+60 points), Fertilizer (+52 points), Power (+40 points), Chemical (+35 points) and Autos (+26 points).

Volumes increased further from 402.6 million shares to 466.1 million shares (+16 percent DoD). Average traded value however declined by 2 percent to reach US$ 94.6 million as against US$ 96 million.

Stocks that contributed significantly to the volumes include HASCOL, LOTCHEM, UNITY, MLCF and TRG, which formed 35 percent of total volumes.

Stocks that contributed positively to the index include DAWH (+58 points), ENGRO (+48 points), HUBC (+42 points), THALL (+20 points) and PAKT (+15 points). Stocks that contributed negatively include HBL (-14 points), EFUG (-8 points), PPL (-6 points), EFERT (-6 points), and OGDC (-5 points).

July 17, 2020
Rupee depreciates by 33 paisas on growing demand for imports

KARACHI: The Pak Rupee depreciated by another 33 paisas against dollar on Friday owing to rising demand of the foreign currency for import payments.

The rupee ended Rs167.33 to the dollar from previous day’s closing of Rs167.00 in interbank foreign exchange market.

Currency experts said that due to economic normalcy return after ease in lockdown the domestic demand for imported goods had increased.

They further said that due to weekly holidays ahead also escalated the demand for the foreign currency.

The local unit fell by around 70 paisas during the outgoing week.

The experts believed that the rupee would rebound in coming days owing to sufficient inflows.

State Bank of Pakistan (SBP) has said that the workers’ remittances rose by a significant 50.7 percent during June 2020 to reach monthly record high $2.46 billion compared with $1.63 billion in June 2019.

Similarly, on a cumulative basis, workers’ remittances increased to a historic high level of $23.12 billion during FY20, witnessing a growth of 6.4 percent over $21.74 billion during FY19.

According to Pakistan Bureau of Statistics (PBS) the import bill of the country fell by 18.6 percent to $44.57 billion as compared with $54.76 billion in the preceding fiscal year.

This helped the country to curtail the trade deficit for the year. The trade deficit of the country shrank by 27 percent to $23.18 billion during fiscal year 2019/2020 as compared with the deficit of $31.8 billion in the preceding fiscal year.

July 17, 2020