KARACHI: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Tuesday voiced strong concerns regarding the federal government’s approval of a 1263MW power plant to be run on imported RLNG. This plant, being developed by Punjab Thermal Power Ltd in Jhang, has sparked significant debate over its economic and environmental implications.
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FPCCI demands only three Eid holidays
KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Monday demanded the government of reducing Eid holidays to three to avoid business and economic losses.
The apex trade body expressed displeasure over yet another set of SOPs and Public Holidays on account of Eid-Ul-Fitr announced by NCOC without consulting business, industrial, and trade community of Pakistan.
Mian Nasser Hyatt Maggo, President FPCCI, has demanded that industries and markets should only be closed for 3 days on account of Eid-Ul-Fitr; otherwise, there will be irreversible loss to already struggling businesses and huge shortfall in tax collection will further decelerate the economic activity.
Mian Nasser Hyatt Maggo maintained that ports, customs, and required banking services for them should not even be closed for 3 days during Eid-Ul-Fitr; as exports are as necessary for survival of Pakistan as airports and hospitals. Even a single day closure of ports during Eid will add to existing huge glut and backlog for exporters and cause financial and goodwill loss for not being able to ship the consignments on agreed schedules. He demanded that ports timings should be extended to 05:00 PM with immediate effect.
Mian Nasser Hyatt Maggo, also expressed his shock over proposed Eid Holidays from 10-15 May, where ports, customs, and banks will remain closed and shipping lines will keep operating.
This is utterly illogical as without ports, customs, and banks, there will be no use of shipping lines operating.
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FPCCI urges following coronavirus SOPs to avert industrial halt
KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Saturday urged trade and industry to follow SOPs related to coronavirus in order to avert complete halt of industrial and economic activities.
FPCCI’s ruling group BMP Chairman Mian Anjum Nisar has asked the traders to strictly follow the government’s SOPs in markets for curbing the spread of deadly coronavirus and averting halt of the industrial wheel.
Moreover, there is also need to speed up vaccination process, especially for the industry workers in the country, for the smooth operation of trade and industry, he added.
“The businessmen themselves have to ensure a strict implementation of the standard operating procedures in markets and commercial areas in order to curb the spread of Covid-19 pandemic,” he said and warned that the third wave of coronavirus had spread to dangerous levels and the situation demanded that the business community play a role in strict compliance with the SOPs in business areas to control further Covid-19 infections.
Mian Anjum Nisar stressed that a reduction in coronavirus cases would help the government to consider easing restrictions on businesses, as it would cause great losses to trade activities, render thousands of daily-wage workers and other workers jobless, making the lives more miserable, fuel a further increase in inflation besides badly impacting the economy.
He said that during the third wave of coronavirus the situation has been deteriorating mainly due to lack of implementation of COVID-19 standard operating procedures and the solution lies in speeding up our vaccination programs, instead of opting for closure of trade and industry amidst GDP growth of just 1.5 percent. He said that in view of combating the coronavirus situation the government can impose smart lockdown where required, as complete lockdown would halt industry.
The FPCCI former president pointed out that due to the previous lockdowns, Pakistan’s economy had suffered a loss of billions of dollars while millions of workers lost their jobs. Pakistan’s economy suffered negative growth last fiscal year for the first time in the history due to Covid-19, he said, adding that the best way to save the economy and businesses from more losses is to follow the SOPs.
He observed that the complete lockdowns had created havoc globally, as the countries, which were providing loans had also came under debts while Pakistan is already facing financial crunch due to huge burden of debts. So, complete lockdown is not a good option, he added.
He observed that the government will have to make visible reduction in taxes in the budget to help revive the businesses, which are near to bankruptcies owing to slowdown amidst coronavirus.
He asked the government to take concrete steps to attract foreign investment, saving the livelihood of millions of workers associated with various sectors, as foreign investment in Pakistan’s long-term projects like power plants and oil and gas exploration.
The BMP Chairman said that with a view to save the economy from the impacts of the slowdown due to the COVID-19 the government should announce special incentives for a cash-strapped SMEs, which represents more than 90 percent of around 3.2 million business enterprises in Pakistan, contributing 40 percent to the GDP, employing more than 80 percent of non-agricultural workforce, and generating 25 percent of export earnings.
He expressed dissatisfaction over the financial packages by the government for the businesses to deal with the financial crunch, called for a significant cut in import duties and waiver of sales tax, income tax and additional income taxes, for the smooth running of trade and industry.
He asked the government to expedite the process of vaccination and supply ample quantity of doses not only to the whole public but also to the trade and industry.
Mian Anjum Nisar said that rising mortality in the midst of the third Covid-19 wave and growing anxiety in the business circles over possible restrictions on international travel and trade necessitate ramping up the pace of vaccination.
To speed up inoculations, the government will need to bridge vaccine supply gaps with active participation from the federating units and the private sector, he added.
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Shaukat Tarin assures FPCCI of taking on board before making economic decisions
ISLAMABAD: Finance Minister Shukat Tarin on Friday assured the representatives of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) to have a regular interaction.
He also affirmed that all key stakeholders would be taken on board before making important economic decisions.
The finance minister held a meeting with the FPCCI members through a video link. Adviser to the PM on Commerce Abdul Razak Dawood, SAPM on Finance and Revenue Dr. Waqar Masood, Chairman FBR and other senior officers participated in the meeting.
While addressing the meeting, the Finance Minister briefed the participants about the economic priorities of the Government.
He also outlined that the Government is adhering to strict financial discipline for achieving macro-economic stability and enhancing revenue generation.
The Minister also outlined that Pakistan’s economy is showing signs of recovery amid Coronavirus pandemic, with construction and manufacturing sectors in lead. However, the third wave of COVID-19 is particularly challenging, he added.
The Minister also stressed the role of Chambers of Commerce and Industry as a bridge between the Government and the traders for active coordination and welcomed suggestions from the members of FPCCI on the occasion.
The representatives of FPCCI felicitated the Finance Minister on assuming new responsibilities and discussed the matters related to sales tax harmonization and rationalization of taxes.
In his concluding remarks, the Finance Minister stated that the suggestions presented during the meeting would be accorded due consideration.
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Tax exemption withdrawal ahead budget to adversely affect trade, industry
KARACHI: The apex trade body of the country has expressed reservations over withdrawal of tax exemptions ahead of federal budget 2021/2022 and said that it will adversely affect trade and industry.
Mian Nasser Hyatt Maggo, President of Federation of Pakistan Chambers of Commerce and industry (FPCCI) in a statement on Sunday said that under the prevalent difficult condition of COVID-19, the pre-budget withdrawal of number of exemptions will affect trade and industry negatively, which is based on planning of fiscal based promised position for year up to June-2021.
“Such non predictability is against the sustainable growth of business economy and encroaches upon ease of doing business,” he said.
He was referring to the Tax Laws (Second Amendment) Ordinance, 2021 dated March 24, 2021.
While expressing concerns over the amendments before budget, he said that FPCCI has already suggested that the amendment should be made only with prior consultations with, to be affected stakeholders with sufficient time space to prepare the future plan of the left out period up to June-2021.
The outcome of consultations of both public and private sector may have otherwise trimmed the contents of the ordinance in the business economy interest, equally important for government in terms of goodwill and believe in consultations with private sector.
He further said that the business sector is already facing tight restrictions as per IMF program conditionality, much being agreed amongst stakeholders as originating implementation directions concurred by public sector without any reference to the negotiations with private sector.
The amendments were introduced through the Tax Laws Amendment Ordinance, 2021 issued through presidential Ordinance to amend 76 corporate income tax exemptions and allow tax credit facility from March 24, 2021.
The tax credit facility has been extended to industrial undertakings; charitable organizations and IT export services. Under the Ordinance, 100 percent tax credit would be allowed to the IT services or IT-enabled services after fulfillment of certain conditions including the filing of returns/withholding tax statements.
President FPCCI further stated that withdrawal of exemptions in lieu of extending credit facilities is a measure which gauges the poor performance of FBR up till now and hence the collection targets are finding the only priority and it appears that FBR is running on a bad doctrine that more tax collection will improve the growth of economy, to which we disagree in absolute terms.
President FPCCI Mian Nasser Hyatt Maggo also said that the newly promulgated Ordinance 2021 is also limiting the charitable activities by allowing restricted number of such institutions and placed them under newly introduced 13th schedule for Section 61 of the Income Tax Ordinance.
President FPCCI said that we are not following the successful tax models which are based on reducing the tax rates and extending the facilities to be affecting the increase in tax collections, rightly agreed by the apex body that Laffer curve will result in maximum tax revenue for government by cutting taxes in certain circumstances that would allow governments to cut the taxes and simultaneously increase revenue and economic growth.
President FPCCI said that public sector negotiating with IMF in exclusion of participation of apex body representing private sector trade, industry and service sector is dictatorial impositions of decisions negatively affecting the business and its growth for reducing the fiscal deficits, a prime objective we believe is being asked for by IMF.
He further said that country like US during the period of Ronald Reagan, 40th US President, the tax cuts resulted in doubling the tax from USD 500 Billion to Dollar 01 Trillion. The Georgian politicians and businessmen together in the reforms reduce the number of taxes to 1/3rd and reduce the national tax burden to quarter of a GDP resulted in doubling the percentage of taxes from 13 percent to 25 percent of GDP.
He further said that the case of India is no exemption wherein single GST increase the GST registrations by almost 100 percent.
“We are not learning any lesson from the available examples of tax reforms and what we are marching towards is to hide our inefficiencies in tax administration by withdrawing the exemptions, imposing RDs, ACDs and taking all the measures which has made the whole taxation structure full of the anomalies,” he said, adding that the government should think about that if either the economy will generate taxes or imposition of increase in taxes will generate growth of the economy.
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FPCCI hails speedy customs clearance
KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Wednesday hailed the tax authorities for speedy customs clearance to goods imported by erstwhile FATA/PATA.
Mian Nasser Hyatt Maggo, President and Nasir Khan Vice President of the FPCCI appreciated the FBR for its efforts to improve ease of doing business and trade facilitation by allowing clearance of goods imported by ERSTWHIL FATA/PATA and installations of tracking devices manually to ensure en-route monitoring and tracking till the development of the functionality in the WEBOC system.
They further informed that under this FBR directives the processing of such consignments may be cleared in the system by the respective Collectorate after implementation of the required conditions as prescribed in the CGO and Board instructions.
M/s. TPL Trakker (Pvt.) Ltd. has been assigned for manually installation of tracking devices for consignments.
Control mechanism for clearance of such consignments will remains with the Collectorate while it may get the written confirmation for concerned clearing agents/bonded carriers.
While referring FBR’s Order issued on March 17, 2021 they said that FPCCI have been emphasizing for development of economically deprived regions through enhancement of transit trade by improving trade facilitations.
They further added that the global economic scenario has drastically changed, e-commerce and digitalization has gained significance for international trade therefore, FBR and other stakeholders should also follow and improve their working according to the new technological development in trade.
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FPCCI expresses concerns over falling foreign direct investment
KARACHI: Federation of Pakistan Chamber of Commerce and Industry (FPCCI) has expressed concerns over falling foreign direct investment (FDI) despite incentives granted to foreign investors.
In a statement issued on Saturday, the apex trade body expressed serious concern over the falling trend of foreign direct investment. The FDI fell by 30 percent in the first eight months of FY21, reflecting foreign investors’ poor confidence in the country’s investment environment.
The government has been claiming to endeavor to invite foreign investment in the housing sector but failed to make the sector attractive in this regard. Investment in construction industry has improved at local level but the sector has huge prospects for foreign investors, as the country has been lacking more than 10 million housing units for its 220 million people, observed Mian Anjum Nisar, the FPCCI’s ruling group BMP Chairman.
“We need to prepare the ground for attracting larger FDI flows in the medium and long-terms, making the local environment more attractive for foreign investors. Pakistan should continue to get some FDI under the China-Pakistan Economic Corridor (CPEC) and even accelerate its inflows by gaining wider domestic socio-political support for CPEC projects and by removing procedural bottlenecks that delay their timely implementation,” he added.
He said that faced with a balance-of-payments issue, country urgently needed as much foreign investment as possible keeping in view of limited scope of volumetric expansion in exports and remittances in the short-term.
Mian Anjum Nisar said that Pakistan has been unable to attract any sizeable foreign investment for the last several years despite providing incentives on taxes and assurances for one-window facility to the investors.
Statistics show that the country received $1.3 billion in FDI during July-Feb 2020-21 compared to $1.85 billion in the same period of last year, a decline of 29.9%, indicating that the government has failed to win the confidence of foreign investors in the national economy due to multiple reasons. Moreover, the inflow of FDI in February has registered a steep fall of 44% to $155 million against inflow of $277.5 million in Feb 2020. It is fact that the entire world has been witnessing falling inflows of FDI due to the Covid-19 pandemic.
“The pandemic has eroded the trust of investors in investment, which has an adverse impact on every step of FDI, including input supplies, increasing uncertainties and liquidity constraints for the multinational firms, he said and added there are also other external factors out of the government’s control.”
It is unfortunate that the portfolio investment also presented a dark picture as it noted a net outflow of $256 million during 8MFY21 compared to an outflow of $26.3m in the same period last year.
The State Bank of Pakistan (SBP) data showed that the overall foreign private investment during 8MFY21 dropped by 43% to $1.04 billion compared to $1.83 billion in the same period last year.
The BMP chairman said that the Chinese investment remained at the top of the list of countries invested in Pakistan but the inflows from Beijing also dropped to $493 million during 8MFY21 despite the fact that for last several years China has been the top investor in the country.
While the country is getting extra support from remittances being sent by the overseas Pakistanis, it looks still hard to improve the foreign investments and exports to any significant level.
The FPCCI leader said despite all-out efforts and incentives, exports grew slowly while foreign investment could see a change once the country exited the FATF grey list. The status quo for international investment for Pakistan has always focused on coal and power but the government should tap into the small, growing sectors, such as technology, to see how it can build a more sustainable economic base, even in times of crisis.
Mian Anjum Nisar observed that the government, now in its third year, is trying to take FDI to new heights but its efforts are yielding a moderate success only, as the foreign portfolio investment in equities, too, remained negative in 2018-19 and 2019-20 in continuation of an earlier trend.
The FPCCI former chief said that economic fundamentals are not strong and fast-changing dynamics of geopolitics demand too much from the country if it wants to attain sustainable economic growth and development. These two factors, combined with the Covid-19–triggered recession in major economies, make it difficult to accelerate growth of foreign investment.
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Importers face surcharges on overstayed consignments
KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has discussed the matter of overstayed consignments at warehouses which was causing surcharges on clearance to importers.
FPCCI President Mian Nasser Hyatt Maggo on Thursday said that due to COVID-19 commercial activities are down causing overstay of consignments and subsequently facing surcharge on clearance. During the meeting of the FPCCI Advisory Council on Budget various issues were discussed including period of limitation of warehousing.
The President FPCCI said that the economic slowdown, recession in the market and financial constraints due to COVID-19, importers are unable to clear their consignments in time which has led to a situation where large quantities of warehoused goods have piled up incurring heavy surcharge as no general concession has so far been extended by the Federal Government in this matter. The situation is also impacting substantial amount of revenue.
During the meeting of the Advisory Council headed by Mr. Zakariya Usman former President of FPCCI issue of importers of raw material were presented who are facing problems due to their consignments lying in customs bonded warehouses beyond the period stipulated under section 98 of the Customs Act, 1969. The meeting resolved to approach FBR to consider grant of waiver of surcharge on overstayed consignments in order to alleviate the problems of the importers.
Mian Nasser Hyatt Maggo President FPCCI said that the government under the present difficult circumstances may favourably consider the enhancement of customs bonded warehousing period limitation up 60 days so as to mitigate hardship of importers.
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FPCCI demands restriction withdrawal on input tax adjustment
KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has demanded the tax authorities withdraw restriction on input adjustment under Sales Tax Act, 1990.
A statement issued on Wednesday said that Advisory Council of the FPCCI on budget found various laws and regulations that failed to generate much revenue on the other hand badly affecting ease of doing business ranking of Pakistan.
Mian Nasser Hyatt Maggo President FPCCI in this regards has already communicated to the Prime Minister and other concerned ministries for such impediments that are negatively impacting economic growth.
During the meeting Advisory Council of the FPCCI has decided to extend its full support and cooperation to the government which is struggling to improve economic environment under the adverse conditions created by COVID-19.
The Advisory Committee during its first meeting analysed the hardships being created under section 8B of the Sales Tax Act, 1990, wherein a registered person is not allowed to adjust input tax in excess of ninety percent of the output tax.
“This restriction not only restrains the taxpayer to claim its legitimate input tax but is also affecting the ease of doing business and thereby increasing the cost of business.”
The Advisory Council under the Convenership of Mr. Zakariya Usman former President of FPCCI reviewed the whole scenario and after due diligence unanimously proposed that hardship and discrepancy created by Section 8B of Sales Tax Act should be removed in the adjustment of input and output tax by allowing 100 percent adjustment of input tax.
Amendment in Section-8B of Sales Tax Act 1990 should be made in the coming budget to allow 100 percent adjustment of input tax against output tax to all registered persons in order to remove anomalies.
Mian Nasser Hyatt Maggo President of FPCCI has categorically informed that the present global and domestic conditions are completely different; COVID-19 has changed the world economic situation dramatically as most of the businesses are struggling for their survival.
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Business community hails decision to simplify tax laws
KARACHI: Business community has praised Prime Minister Imran Khan for issuing directives to the authorities for focusing on tax reforms, simplification of tax laws and plugging loopholes in existing tax system, a statement said on Sunday.
Mian Nasser Hyatt Maggo President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) lauded Prime Minister Imran Khans directives to focus on reform in tax regime, simplification of tax laws, plugging existing loopholes, reduction in discretionary powers of tax collectors, automation to bring transparency in tax system.
He said that it is heartening that Prime Minister is equally concerned with the tax reforms for accelerated growth. He said that understanding of Prime Minister in this regard shows his deep insight on the issues that are impeding economic growth with great attachment to the business community of Pakistan.
He further stated that the Prime Minister has rightly taken up the issue of reforms in tax regime. The structure of taxation in our country is regressive, with indirect taxes accounting for major of total federal government tax collection.
Tax collection is also disproportionate; industry being overburdened with tax payment of more than 60 percent against about 20 percent size in GDP. The present tax structure is complex because of overlapping jurisdictions with different laws and frequent policy changes through on almost daily basis by issuance of instructions, clarifications, changes in rules, CGOs, STGOs, ITGOs.
The income tax, GST on goods, customs duties, federal excises is collected by the FBR while GST on Services is collected by provincial Revenue Boards/Authorities which also fragments Pakistan into five business market economies.
The withholding tax regime of over 65 in numbers is also problematic and businessmen have been made withholding agents to deposit the tax for FBR.
The President FPCCI said that the tax returns should be simplified and easily understandable particularly for SMEs and make it single page document. The present system requires almost all the tax returns filing persons to have further burden of associating the service charges of tax consultants and lawyers due to complicated tax operating system.
He also informed that he has already written letter to Prime Minister for considering various suggestions on required tax reforms including complex Income Taxation to change to Flat Rate Taxation, taxation system to induce investments, multiple sales tax to change to single stage sales tax across the Board with exemptions on food, live saving drugs, educational instruments. Further the low rate Custom duties without additional custom duties, regulatory duties are answerable to impeding connived smuggling, mis-declaration. The Appellate tax system should be converted into independent tax judicial system in conformance with the requirement of constitution to increase the trust of businessmen in the taxation system.
Mian Nasser Hyatt Maggo said that taxpayers bill of rights, protection of businessmen against retaliations by tax officials and accountability of tax officials should constitute fundamental to the requirements of tax reforms. The FPCCI has been demanding withdrawal of discretionary powers vested with the tax officials to avoid their misuse as presently FBR has become show-cause generating machinery for existing taxpayers, as are being informed to us at large.
He stated that to wipe-out corruption there is need to improve automation in tax system and develop local software and Apps with simplified system so that interaction of human resource should be reduced and strengthening of information technology system can combat issuance of connived bogus sales tax refunds which not only affect government revenue but also damage business community credibility and trust.
Mian Nasser Hyatt Maggo the President of the federation of Pakistan chambers of Commerce and Industry appreciated that a very good move has been done by present government by separating tax policy unit under Ministry of Finance and not under revenucracy adjustment methods of FBR who are only making tariff rate adjustments and making changes in statutes on compulsions due to observations of High courts and Supreme courts during budgetary exercises.
He said that may be this year the budgetary exercise if is done by tax unit in Ministry of Finance may lead to compliance with directives of Prime Minister on tax reforms.