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  • KCCI urges government to shun pick, choose policy for business relief

    KCCI urges government to shun pick, choose policy for business relief

    KARACHI: The Karachi Chamber of Commerce and Industry (KCCI) has urged the government functionaries to avoid ‘pick and choose’ strategy for providing relief to businesses as it will never benefit the national economy.

    Chairman Businessmen Group (BMG) & Former President KCCI Siraj Kassam Teli and President KCCI Agha Shahab Ahmed in a statement on Thursday appealed the Prime Minister Imran Khan, Advisor Finance Hafeez Shaikh, Advisor Commerce & Investment Abdul Razak Dawood and Federal Minister for Industries & Production Hammad Azhar to announce across the board relief to all sectors of the economy instead of pursuing a pick and choose strategy which would never benefit the domestic economy or the people in the middle and lower income categories.

    Siraj Teli and Agha Shahab have emphasized that all the businesses and industries have been suffering losses and struggling to survive in business due to the outbreak of coronavirus pandemic.

    No industry or business have been spared by the impact of pandemic on economy, hence it is necessary to announce an across the board relief package for all sectors of trade and industry irrespective of size and level of business, so that businesses could survive unprecedented crisis and economic shocks.

    Recent relief packages announced by the SBP are limited mainly to export sectors or certain medium to large employers.

    Major part of the SMEs and nearly all domestic industries and businesses have not been benefited by any such package.

    Most of the businesses and industry are finding it hard to stay solvent in the present circumstances and may be forced to declare bankruptcies if timely relief is not provided to them.

    Chairman BMG Siraj Teli said: “As survival is the name of the game so the government should immediately extend relief at any cost without wasting time otherwise the businesses are going to become bankrupt and the economy would consequently sink. Support businesses now for survival and you (the government) can earn later.”

    President KCCI Agha Shahab said, “The pick and choose strategy being pursued by the government is discriminatory towards domestic industry and trade, which is neither in the interest of businesses nor the economy so it has to be stopped and immediate relief must reach out to all categories and sectors of trade and industry rather than one or two selected sectors.”

    Appreciating the relief provided in electricity bills for consumers below 300 units and also the reduction in petroleum prices, Siraj Teli and Agha Shahab said that the business and industrial community welcomes these moves but these were not adequate and there is a need to do more.

    In this regard, the government must announce further reduction in petroleum prices and also slash the electricity tariff, Sales Tax, Income Tax, Federal Excise Duty and Withholding Tax by 50 percent which would provide immediate relief to the entire nation.

    They further advised the government to bring down the interest rate to four percent in line with strategies adopted by the economies around the world where the interest rates have been slashed down to zero and even negative in some cases.

    They said that reduction in policy rate in bits and pieces is not enough to provide much needed stimulus to the economy hence, it is necessary to significantly reduce the interest rate in one go to 4 percent to help businesses sail through the unprecedented crisis.

    “All these measures would provide some breathing space to industries by bringing down the cost of doing business which is the need of the hour as these will provide much needed cash flow and help to avoid layoffs which have already started taking place.”

    While referring to relief measures given to some sectors and businesses, they opined that it is not certain that the government was going to get the expected returns from these sectors in the ongoing extremely critical situation in which every single business from a small trader to leading industrialist has his survival at stake so the government has to stop focusing on revenue generation and extend relief across the board which is desperately needed for the survival of the economy and businesses.

    “This year, the government will have to forget revenue and reduce its expenditures which is the only way to save businesses from total collapse and also the masses from unemployment, poverty, hunger and starvation. Practical and out of box measures have to be taken to spend minimum amount of funds on running the affairs of the government while all the saved funds must be utilized to support businesses”, they added.

  • Engro commits Rs40 million to extend partnership with SKMCH

    Engro commits Rs40 million to extend partnership with SKMCH

    KARACHI: As part of the Rs1 billion Hussain Dawood Pledge, Engro Foundation – the social investment arm of Engro Corporation – has provided an additional Rs40 million to extend its partnership with Shaukat Khanum Memorial Cancer Hospital (SKMCH) and Research Centre for expansion of COVID-19 testing capacity in Southern Punjab.

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  • Petroleum division recommends termination of dealers license on failure to maintain stock

    Petroleum division recommends termination of dealers license on failure to maintain stock

    ISLAMABAD: Petroleum Division has recommended termination of dealers licenses for failure to ensure sufficient stock for their respective Oil Marketing Companies (OMCs).

    The petroleum division is cognizant of the artificial shortage of POL products that is being created in the country by opportunist OMCs and petrol dealers, a statement said on Thursday.

    The petroleum division emphatically states that there is sufficient quantity of petrol stocks in the country.

    Additional production by refineries as well as planned imports are on schedule to meet the monthly needs.

    It is unfortunate that some OMCs and/or their dealers have resorted to such methods for profit maximization that are having an adverse impact on the lives of the esteemed consumers.

    Petroleum Division has asked OGRA to take action against the OMCs who are not maintaining the required stocks or whose pumps are dry.

    “We are also recommending termination of dealer licenses if they do not order sufficient product from their respective OMCs.”

    Information and complaints being received by Petroleum Division are being forwarded to OGRA for deployment of vigilance teams against low stocks and overcharging.

    OGRA has issued show cause notices to six OMCs and demanded immediate response.

    The spokesperson reiterates Petroleum Division’s affirmation in ensuring that culprits are brought to book.

    “If OMCs/dealers are not meeting their licenses conditions, OGRA will consider suspending or cancelling their licenses.”

    Meanwhile the petroleum division has instructed PSO to increase their imports and supplies. Refineries have also been directed to ensure sufficient operations to meet planned imports to meet projected demand.

  • FBR decides opening IR offices on Saturdays as coronavirus spreads rapidly

    FBR decides opening IR offices on Saturdays as coronavirus spreads rapidly

    ISLAMABAD: Federal Board of Revenue (FBR) has decided to open its field offices on Saturdays to meet monthly target of Rs415 billion despite rapid spread of coronavirus, which already claimed lives of tax officials.

    The FBR on Thursday issued a notification directing all chief commissioners of Large Taxpayers Units (LTUs), Regional Tax Offices (RTOs) and Corporate RTOs to observe Saturdays as normal working hours till June 30, 2020.

    “In order to enhance the efforts to meet the assigned revenue target of Rs415.5 billion for the current month [June 2020], all field offices will remain open on the Saturdays with effect from June 06, 2020 till June 30, 2020,” the notification said.

    FBR sources said that at least three tax officials had died of coronavirus during the past two days. Islah ud Din, Assistant Commissioner, RTO Quetta died on coronavirus on June 04, 2020. While, two other officials of RTO Faisalabad also lost their lives due to the pandemic.

    The sources said that there were many cases in field offices some were tested positive and others were yet to gone through the test.

    It is also worth mentioning that during past 10-15 days the cases were rapidly increased in the country.

    First corona case was reported in Pakistan during February 2020 and then the Sindh province was the first to impose lockdown on March 23, 2020. This resulted in halt of business activities and subsequent affected the revenue collection efforts.

    The revenue collection in May 2020 registered 31 percent decline to Rs227 billion as the collection was Rs330 billion in same month last year.

    The FBR sources said that same collection position would prevail during June 2020 as most of the collection was to be received of May 2020. The entire month of May was also under lockdown besides long holidays for Eid-ul-Fitr.

    The FBR collected Rs518 billion in June 2019. If consider 31 percent decline in June as well the collection for June 2020 may be at Rs358 billion.

    The FBR collected Rs3,518 billion during July – May 2019/2020 as compared with Rs3,266 billion collected in the corresponding period of the last fiscal year, showing growth of 7.7 percent.

  • Foreign exchange reserves decline by $1.68 billion

    Foreign exchange reserves decline by $1.68 billion

    KARACHI: The liquid foreign exchange reserves of the country fell by $1.68 billion to $16.92 billion by week ended May 29, 2020, State Bank of Pakistan (SBP) said on Thursday.

    The total foreign exchange reserves of the country were $18.599 billion a week ago.

    The foreign exchange held by the central bank fell by $1.712 billion to $10.362 billion by week ended May 29, 2020 as compared with official reserves of $12.074 billion.

    This decline is primarily attributed to the government external debt repayments of $1.669 billion.

    The foreign exchange held by commercial banks however increased by $34 million to $6.558 billion by week ended May 29, 2020 as compared with $6.524 billion a week ago.

  • Equity market ends down by 282 points on selling pressure

    Equity market ends down by 282 points on selling pressure

    KARACHI: The equity market ended down by 282 points on Thursday owing to selling pressure seen during the day.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 34,119 points as against 34,401 points showing a decline of 282 points.

    Analysts at Arif Habib Limited said that the market saw selling pressure today whereby E&P and Banking sectors contributed towards the decline besides other sectors, which were already adjusting downwards for the past couple of sessions, namely Cement, Fertilizer, OMCs and Pharmaceuticals.

    Overall, the Index slid by 311 points during the session after posting a small gain of 9 points early on, closing the Index -282 points.

    Yields of T-bill and 10y PIB increased significantly which diminishes the prospect of further rate cut.

    At the same time, lackluster participation from Mutual Funds, Banks and Insurance (and mostly on the sell side) has made current Index levels a hurdle, despite pre-budget timeframe.

    International crude prices were also under pressure, which brought E&P stocks down as well. Technology sector topped the index with 18.1 million shares, followed by Power (15.8 million) and O&GMCs (13.6 million).

    Among scrips, TRG led the volumes with 11.3 million shares, followed by UNITY (11.3 million) and HASCOL (8.1 million).

    Sectors contributing to the performance include Banks (-85 points), E&P (-79 points), Power (-34 points), Cement (-28 points) and Food (-24 points).

    Volumes increased from 129.9 million shares to 143.6 million shares (+10 percent DoD). Average traded value, on the contrary declined by 19 percent to reach US$ 33.9 million as against US$ 41.5 million.

    Stocks that contributed significantly to the volumes include TRG, UNITY, HASCOL, KAPCO and PAEL, which formed 30 percent of total volumes.

    Stocks that contributed positively to the index include SNGP (+9 points), ANL (+8 points), ABOT (+7 points), PMPK (+7 points) and FFC (+5 points). Stocks that contributed negatively include OGDC (-34 points), HUBC (-31 points), PPL (-28 points), MCB (-27 points), and UBL (-24 points).

  • SBP takes additional cash management measures amid rapid spread of coronavirus

    SBP takes additional cash management measures amid rapid spread of coronavirus

    KARACHI: The State Bank of Pakistan (SBP) has implemented additional measures for cash movement amidst the rapid spread of COVID-19. In a notification issued to the CEOs and Presidents of banks, the SBP emphasized the importance of these measures to protect those directly involved in cash management and operations.

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  • Rupee further strengthens by 67 paisas against dollar on inflows

    Rupee further strengthens by 67 paisas against dollar on inflows

    KARACHI: The Pak Rupee further gained 67 paisas against dollar on Thursday owing to supply of remittances and export receipts.

    The rupee ended Rs163.66 to the dollar from previous day’s closing of Rs164.33 in interbank foreign exchange market.

    Currency experts said that the supply of dollar into the market was seen in shape of remittances and export receipts.

    The local currency witnessed gain against dollar for second straight day. The rupee gained Rs1.23 against dollar in last two trading days.

    Earlier, in the first two days of the current week the rupee depreciated by Rs1.79 against the dollar.

    The dealers said that the rupee was remained under pressure during the day. However, inflows of dollars in shape of remittances and export receipts helped the rupee to recover against the greenback.

    Currency experts said that the deterioration in rupee value was due to higher demand for import and corporate payments.
    Further, they said that after ease in lockdown the demand was increasing and importers started purchasing dollars for future buying.

    The currency experts said that fall in exports and remittances also put pressure on the local currency.

    Overseas Pakistani workers sent home $1.790 billion in April, compared with $1.894 billion in previous month.

    Pakistan received $18.781 billion in remittances in July-April FY2020, compared with $17.801 billion in the same period last year.

    However, the experts said that the local currency recovered on the back of improved economic indicators.

  • Budget 2020/2021 preview: Ambitious tax collection target likely with less weight on documentation

    Budget 2020/2021 preview: Ambitious tax collection target likely with less weight on documentation

    KARACHI: The government likely to set an ambitious revenue collection target for budget 2020/2021 with less focus on documentation of economy in order to promote business.

    According to Budget 2020/2021 preview released by Topline Securities on Thursday, the government is expected to announce the Federal Budget for FY21 on June 12, 2020.

    The budget is likely to take into account the implications of COVID-19 outbreak, where it will try to ease the pain of the masses due to the pandemic by focusing on job creations and relief for the businesses.

    The analysts at Topline Securities expect IMF to show some leniency with the government in setting targets for next year, taking into account the impact of COVID-19 outbreak.

    The key challenge for the govt. will be restricting the fiscal deficit for the upcoming year as not only the govt. will have to factor in higher expenditures relating to COVID-19 outbreak, but also take hit on revenues because of the slowdown in overall economy.

    The government is already facing the prospect of registering a huge fiscal deficit of 8.0-9.0 percent of GDP in FY20 (primary deficit 3-4 percent).

    They believe the government will try to restrict the fiscal deficit in the budget to 8.5-9.0 percent of GDP for FY21 (6.5-7.0 percent excluding COVID-19 expenses), where expenditures relating to COVID-19 are likely to be marked separately.

    Recall that IMF had agreed to not include the expenses incurred on combating COVID-19 as part of budget deficit for FY20.

    They believe the same relief can be extended for 2020/2021 as well.

    They said the government is likely to earmark Rs1 trillion for dealing with COVID-19 pandemic and for providing relief to the business community.

    Considering the recession, the government may try to boost the economy through providing incentives to the agriculture sector.

    The government may give shape to earlier announced subsidy on fertilizers, tractors etc., which was part of the Rs50 billion Agriculture package along with few more steps.

    The government is also likely to focus on the construction industry in the Budget 2020/2021, where the government believes such relief measures can provide ease for the daily wagers.

    One of the measures is likely to include reduction in Federal Excise Duty (FED) on Cements. The government has already announced a construction package to support the economy.

    The analysts believe the government is likely to be less vocal about the documentation of the economy (unlike in recent previous budgets), as it may hurt the businesses.

    The analysts further said FBR is reportedly considering increasing the limit for providing Computerized National Identity Card (CNIC) on purchases of Rs50,000 to Rs100,000 in the upcoming budget.

    The government may announce relief measures with respect to reduction in import duties, taxes on essential food items etc.

    The government last year had increased these duties to curb the Current Account Deficit, which as desired resulted in contraction of imports but also led to a lower collection of import duties as quantity of imports fell.

    The government is in talks with the IMF to set the revenue collection target for the next year. The government wants to keep the FBR revenue collection target at around Rs4,800 billion, whereas IMF wants the same to be close to Rs5,100 billion (vs. Rs3,900-4,100 billion likely to be collected in 2019/2020).

    The analysts believe the government will once again set an ambitious FBR revenue collection target of Rs4,800-5,100 billion, which we believe will be difficult to achieve.

    Assuming nominal GDP growth, the government is likely to achieve FBR Revenue collection of Rs4,400-4,600 billion in the upcoming year, assuming smart lockdown ends by Jul-Aug 2020.

    The government can look to generate additional Rs75-100 billion in the form of Petroleum Levy in 2020/2021. Last year the target was set at Rs216 billion. The government can potentially generate Petroleum Levy in the range of Rs300-350 billion in 2020/2021 due to the decline in international oil prices.

    The government may look to increase taxes on beverages and cigarettes to bring them in line with other countries.

    The government may also look to impose/increase taxes on luxury items like farmhouses, passenger cars etc.

    The analysts believe a mini-budget in the later part of the year, especially if (1) the economy recovers slower-than-expected from the COVID-19 pandemic, (2) there are unforeseen developments due to COVID-19 and/or (3) global recession prolongs further.

    The government will try to cut expenses, including (1) Development Expenditures, (2) Current Expenditures and (3) Subsidies while making FY21 estimates.

    The Federal Public Sector Development Program (PSDP) is expected to be around Rs550-600 billion for FY21 compared to last year’s budgeted target of Rs700 billion. The utilization of PSDP this year is likely to be between Rs575 billion -600 billion.

    The Current Expenditure is likely to benefit from lower interest rates, where the govt. is likely to save around Rs600-700 billion in interest savings (from FY20 actual interest cost) and Rs800-900 billion from last year’s budgeted amount of Rs2.9 trillion.

    The government is reportedly also likely to reduce the Power Sector subsidy by Rs30-50 billion (vs. FY20 target of Rs272 billion), aided by lower international oil prices and interest rates.

    In total, the government can potentially save Rs600 billion -700 billion from the above without trimming down its Current Expenditures and Defense Expenditure.

    Government is likely to allocate Rs1,000 billion separately for COVID-19 pandemic for providing relief to the masses and the business community. The government can further extend relief to the daily wagers through cash payments, suspension of utility payments for small consumers etc.

    The government may make the Agriculture package part of the Federal budget with a few more additions. The package already includes a subsidy of Rs37 billion to farmers on fertilizers in the form of Rs925/bag on DAP and Rs243/bag on Urea.

    It also includes a subsidy of Rs2.5 billion on Sales Tax on locally-manufactured tractors for a period of one year, and Rs8.8 billion subsidy is for mark-up on loans.

    The government may provide some relief for the construction industry as well, in the shape of lower taxes and/or other measures to support the economy, Naya Pakistan Housing Program and construction of dams.

    Salaries and pensions of government employees may be increased.

    Tax rate on essential food items is likely to be reduced.

    Likely introduction of a centralized loyalty program to provide more incentives to overseas Pakistanis sending remittances. Under this loyalty program, children of overseas Pakistanis will be given 50 percent discount in the Overseas Pakistanis Foundation (OPF) schools and colleges.

    Regulatory and additional customs duties are also likely to be reduced by up to 2 percent. Currently, these duties range between from 2-7 percent.

    Minimum tax exemption limit on salaried class may be increased.

    As per news reports, government is also prioritizing higher allocation to safety net programs like Ehsaas and Kamyab Jawan Program.

  • FBR officials treat taxpayers as criminal using search powers

    FBR officials treat taxpayers as criminal using search powers

    KARACHI: Business community has resented the use of powers related to search by Inland Revenue officers and treating registered taxpayers as criminal.

    Karachi Chamber of Commerce and Industry (KCCI) in its proposals for budget 2020/2021 demanded amending such provisions to avoid such misuse of powers.

    The KCCI while highlighting provision Section 40 of Sales Tax Act, 1990, said that the officers of Inland Revenue at their discretion and opinion may obtain a warrant from the magistrate and conduct searches of the premises of registered persons at any time.

    The search made under sub-section (1) shall be carried out in accordance with the relevant provisions of the Code of Criminal Procedure, 1898 (V of 1898).

    The chamber said that the officials are treating registered persons as criminals.

    Powers to enter and search any place gives immense powers to officers of Inland Revenue. Such powers can be misused for harassment and extortion of tax payers.

    The law also does not define the “place” which can be search, therefore it may include homes and personal residences of tax payers.

    The chamber proposed that the provisions should be amended to prevent misuse.

    “No searches should be made without prior notice in writing to the registered person. No searches may be conducted outside the working hours and holidays or immediately prior to holidays.”

    The proposed amendment shall alleviate fears of the business persons and it will also encourage new tax-payers and curtail discretionary powers.