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  • NBP makes payment realization mandatory for goods clearance; FPCCI fears delays

    NBP makes payment realization mandatory for goods clearance; FPCCI fears delays

    KARACHI: Payment realization against financial instruments has been made mandatory for clearance of imported goods from August 10, 2020.

    In this regard National Bank of Pakistan (NBP) has issued necessary instructions to its branches receiving duty and taxes, customs clearing agents and other stakeholders.

    While referring to Federal Treasury Rules, the NBP said that it had observed the custom authorized branches of the bank after the introduction of WeBOC system were not adhering to the rules and Goods Declarations (GDs) were being issued against collection of clearing instruments.

    “A further clarification regarding the issue has also been take from State Bank of Pakistan (SBP), and the central bank had also advised to enforce Federal Treasury Rule 79 (1) (a),” the bank said.

    The NBP issued instructions to all its branches to ensure that only preliminary acknowledgement of the receipt of the cheque / payment order should be given on the prescribed form at the time of receipt of clearing instrument. “Posting in WeBOC and issuance of GD will be subject to clearing.”

    Federation of Pakistan Chambers of Commerce and Industry (FPCCI) in a statement on Saturday expressed its concerns over the instructions issued by the NBP and said it would cause unnecessary delays for clearance of consignments and also increase cost in terms of port charges.

    Chairman of FPCCI’s Committee on Customs Shabbir Mansha said that for the past 70 years a system for payment of duty and taxes was operational.

    The sudden change in procedure will cause delay of consignment clearance and business community will pay additional charges for procedural delays.

    He surprised over the implementation of revised procedure especially at a time when trade was badly hampered due to COVID pandemic.

    “The payment procedure will affect international trade and a bulk of containers will be stuck up at ports,” he added.

    He said that the revised procedure was not practical because fluctuation in exchange rate was routine matter in the country. He said that importer make payment through financial instrument on the basis of prevailing of exchange rate and as per revised procedure the on the date of payment realization the exchange rate may be vary on the date of submission of the financial instrument. “In such a scenario the customs authorities will demand payment order for the exchange rate differential amount, he added.

    He lamented that in revised scenario the importer would face huge demurrage and detention charges despite duty and taxes paid through payment order.

    The FPCCI urged Prime Minister of Pakistan and State Bank of Pakistan to intervene into the matter and defer the implementation of revised payment mechanism.

  • Tenure extension request of trade bodies rejected: Razak Dawood

    Tenure extension request of trade bodies rejected: Razak Dawood

    KARACHI: Abdul Razzak Dawood, Advisor to Prime Minister on Commerce and Investment, has said that there is no provision in the law to extend tenure of trade bodies.

    “There is no consideration of extending tenure of trade bodies office bearers and even the law doesn’t allow such proposal,” a statement issued by United Business Group (UBG) on Monday quoting the advisor.

    He was talking to a delegation led by Patron in Chief of United Business Group (UBG) and former Chief Executive of Trade Development Authority of Pakistan (TDAP) SM Muneer.

    Secretary Commerce Salih Farooqui, Former Presidents of Federation of Pakistan Chambers of Commerce & Industry (FPCCI) Zubair Tufail, Abdul Rauf Alam, Khalid Tawab, Sohail Altaf, Zafar Bakhtayari and Malik Sohail Hussain were also present at the occasion.

    Dawood mentioned that office bearers of FPCCI and some other trade bodies have brought the idea to extend the term of their office for one more year in the backdrop of Coronavirus pandemic situation but it was rejected because there is no any provision in the related laws.

    While answering a question asked from the delegation he clearly said that elections of trade bodies would held on the time as the Trade Bodies Ordinance provides one year tenure for the office bearers.

    In the meeting SM Muneer applauded the measure to curb coronavirus taken bay Prime Minister Imran Khan and his team.

    He said that with the grace of Almighty now the spread of infection is under control, however another high spread is feared during Eid ul Adha. “People should follow the SOPs and precautions to avoid any break out,” he added.

    SM Muneer said that gradually the virus spread is lowering down globally and more exports orders were expected.

    He said that this the time to activate related TDAP official and commercial attachés globally to avail the opportunity.

  • FPCCI expresses concerns over grant of huge exemptions to FTAs, PTAs

    FPCCI expresses concerns over grant of huge exemptions to FTAs, PTAs

    KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has expressed concerns over huge amount of exemptions, concessions granted under Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTA).

    The apex trade body urged the government to redesign the FTAs and PTAs with a view to promote the domestic industry of Pakistan, as the government has suffered revenue loss of over Rs45 billion during FY 2019-20 due to these agreements signed with different countries.

    Moreover, the general exemption on imports from China under this agreement has caused revenue loss of Rs 26.86 billion during this period.

    FPCCI President Mian Anjum Nisar suggested that Pakistan should have entered into Free Trade Agreements and Preferential Trade Agreements with only those countries where it has a clear and mutual competitive advantage.

    He recommended the government to include maximum finished goods which can be exported to China on tariff line offered by China to ASEAN countries.

    He demanded that the concerned stakeholders should also be taken on board while framing and finalizing the recommendations in this regard.

    Referring to the data of the Federal Board of Revenue, he stated that the government has suffered revenue loss of Rs 45.020 billion during current fiscal year due to the FTAs and PTAs signed with different countries.

    According to the reports, figures reveal that the general exemption on import from SAARC countries caused revenue loss of Rs 231 million during this period.

    The general exemption on import from SAARC countries under SAFTA Agreement has revenue impact of Rs1.602 billion.

    Similarly, the general exemption on import from SAARC countries under SAFTA Agreement caused revenue loss of Rs 15 million.

    The general exemption on import from China under the FTA has revenue impact of Rs6.911 billion during 2019-20.

    The general exemption on import from Malaysia under PTA caused revenue loss of Rs 2.517 billion during this period. Under the exemption on import from Indonesia under Pak-Indonesia PTA caused revenue loss of Rs3.65 billion.

    Mian Anjum Nisar suggested the government to devise a strategy in the light of impact on domestic industry, convincing other countries to liberalize their import policy by reducing tariff lines and easing sensitive list for Pakistan merchandise.

    He said that during the first phase of FTA with China, Pakistan’s trade deficit had improved from 2.9 billion dollar to over 12 billion dollars over the last decade.

    He suggested that Pakistan should have entered into Free Trade Agreements and Preferential Trade Agreements with only those countries where it has a clear and mutual competitive advantage.

    FPCCI President said that local cost of production is already high on account of high tariff of electricity and gas, coupled with import duties on inputs, making the local production uncompetitive.

    He said that Free Trade Agreements signed with different countries without taking the real stakeholders onboard, are damaging the local industry, as imports of several products under FTA with these countries are subject to zero percent import duty.

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    FBR grants Rs45 billion customs duty exemption under free trade agreements

  • FPCCI advises central bank to bring down interest rate to 5 percent

    FPCCI advises central bank to bring down interest rate to 5 percent

    KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has advised the State Bank of Pakistan (SBP) to bring down the key policy rate at 5 percent considering the prevailing situation due to coronavirus.

    FPCCI president Mian Anjum Nisar on Friday appreciated the SBP for slashing key policy rate by 100 basis points to 7 percent in an unscheduled meeting of Monetary Policy Committee which has so far slashed the key interest rate by 6.25 percent from 13.25 percent since March 17, 2020.

    He said the rate cut is a welcome move, but only 100bps (basis points) cut is not enough. In the prevailing circumstances, interest rate at 7 percent is not feasible for the businesses, he said.

    “FPCCI hopes the central bank will consider the plights of the business community and rates would be brought to 5 percent soon,” he added.

    He said that the businessmen’s apex body welcomes the central bank’s move to cut the interest rates by 1 percent, urging it to bring discount rate to at least 5 percent in line with global financial trend.

    “This is commendable step of the State Bank, as it has now started shifting toward supporting trade and industrial growth and employment generation which is not possible without sizeable cut in key policy rate,” he added. He said that the banks should now also be advised to follow the lines of SBP immediately accordingly.

    “The banks should be instructed to revise KIBOR on a monthly basis instead of quarterly basis to pass on the benefit of lower rates speedily to the trade and industry, which are struggling to survive, Mian Anjum Nisar suggested and added that the impact on banks on their deposits will be insignificant.

    FPCCI President said that the reduction in policy rate by 6.25 percent since March 17, 2020 is commendable step of the government in the present situation that will positively affect cost of doing business and will encourage the investors and industrialists to make new investment in the country.

    The president FPCCI also said that the pandemic COVID-19 has affected the global economy and pushed to the depression resulting contraction in the economic activities and a threat to unemployment.

    He asked the SBP to go the extra mile in these arduous times and leave no stone unturned in providing relief to the financially distressed businesses.

  • FPCCI seeks intervention to prevent Pak Rupee depreciation

    FPCCI seeks intervention to prevent Pak Rupee depreciation

    KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has urged the government to immediately control the depreciation of Pak Rupee.

    FPCCI President Mian Anjum Nisar has urged the government to control surge of dollar against Pakistani currency, as the rupee has dropped to more than two-month low of 167.65 against greenback in the interbank market while it has fallen to 168 versus the US dollar in the open trade.

    FPCCI President, in a statement issued here on Wednesday, observed that the rupee has dropped by Rs1.08 against the dollar in a single session in the interbank market, falling to 167.77, a level last seen in the start of April.

    He said that huge depreciation of Rupee continued to damage national economy, as the cost of deals done by the businessmen with their foreign counterparts has increased manifold due to massive fall of rupee against dollar.

    Apart from increasing exports and controlling imports the government will have to take administrative measures, as a large demand of cash dollars are seen in the market, he suggested.

    He said that the rupee has dropped by 2.8 percent or Rs4.55 against the dollar since the start of June, as it was closed at 163.10 at the end of last month.

    Mian Anjum Nisar appreciated the positive development, related to the imports, which have now started decreasing since the last financial year followed by the government’s initiative of imposing regulatory duties.

    He said that the country would hopefully receive multilateral inflows during this week, which could help strengthen the rupee and the foreign exchange reserves, as the government has signed a $1.5 billion loan agreement with the World Bank, Asian Development Bank and Asian Infrastructure Investment Bank.

    FPCCI President said that excessive government borrowing, absence of foreign flows, lack of foreign investment and the huge current account deficit are the vital reasons for constant depreciation of Pak rupee.

    Terming rupee depreciation against dollar a mysterious development, the leader of business community said that continued fall of rupee is not understandable with a fact that there was no fundamental change in country’s imports during last few months while other economic indicators are also same for a long time.

    He said that the local currency has been under pressure due to falling foreign exchange reserves and increasing outflows amid foreign debt repayments.

    The SBP’s foreign exchange reserves have been under pressure due to external debt repayments recently, which were dropped to $10.1 billion as of June 12 from $12.3 billion on May 8.

    Mian Anjum Nisar was of the view that State Bank of Pakistan and Ministry of Finance will have to remain vigilant in this regard.

    Besides this, the SBP and the government also need to intervene and come up with policy reforms to control depreciation of rupee which is becoming more and more valueless.

  • Conditions for masks import should be relaxed: Khurram Ijaz

    Conditions for masks import should be relaxed: Khurram Ijaz

    KARACHI: Khurram Ijaz, Vice President, Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has urged the authorities to relax conditions on import of face masks and facilitate masses considering the spread of coronavirus.

    In a statement issued on Friday, Ijaz urged Drug Regulatory Authority of Pakistan (DRAP) to take measures for early release of stuck-up face masks at the ports.

    Khurram Ijaz said that the cases of coronavirus was on the rise. This requires that all medical facilities including face masks should be available in huge quantity.

    He said that the procedures of clearance for face mask import should be made easy.

    The vice president said that due to lethargy of DRAP a huge quantity of face masks were stuck up at the ports and it would badly hurt the supply chain, especially in the wake of rising coronavirus cases.

    The delay in clearance will also increase prices of masks in the local market, he added.

    He urged the authorities to consider the urgency and take immediate measures for release of stuck up masks.

  • FPCCI proposes duty free import of used cars for subsequent export

    FPCCI proposes duty free import of used cars for subsequent export

    KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has proposed duty free import of used cars and their subsequent export after repair.

    The apex trade body in its proposals for budget 2020/2021 said that the UAE had developed Export Processing Zone (EPZ) for duty free import of used cars, their repair and subsequent export to different countries especially those of Africa.

    “On similar pattern a ‘Used vehicles EPZ’ be set up in Karachi, Port Qasim or Gwadar and import of both right hand and left-hand drive vehicles may be allowed under this EPZ for their export to different countries. Because of its more feasible sea route to Africa and land route to Central Asian markets, cheap labour, painters and mechanics, the proposed EPZ may turn out to more attractive than the ones in UAE.”

    The FPCCI also highlighted issue of import of stock lot and job lot goods. The apex trade body said that despite the fact that stock lot and job lot goods are available in the world at lower prices, but for the protection of local industry, their import is banned.

    Maintaining the ban for home consumption, permission may be granted for import of stock lot and job lot goods under Export Facilitation Schemes on 100 percent export basis.

    The FPCCI also said that import of used clothing and their exports after sorting, repair, washing and packing is allowed to exporters operating in EPZ.

    However, this facility is not allowed under DTRE scheme and is denied under other Export Facilitation schemes too. If the same is allowed, Pakistan can capture a bigger share because of its cheap labour.

    The FPCCI said that the global warehousing market is more than $ 1.0 trillion and is growing at a very fast pace. The Export Policy Order vide para 9(g) allows export of imported goods in same state – unprocessed form from bonded warehouse and the imported goods already cleared from home consumption.

    The FPCCI said that this is not in line with this global business practice. “Singapore, Malaysia, Sri-Lanka and a number of other countries allows such export, which helps in earning FE and generates employment,” it added.

    The issue is that re-export of imported goods in the same state is allowed but there is no procedure which allows refund of duty and taxes paid, neither such imports are covered under DTRE or any other export facilitation scheme (manufacturing bond, temporary imports, export oriented unit etc).

    No importer can import goods, ware house it and re-export after payment of import duty and taxes. He can re-export to mitigate his loss but cannot adopt it as a business to utilize cheap warehousing in Pakistan.

    It proposed the Ministry of Commerce and FBR to allow import for re-exportation under DTRE Rules subject to value addition of 5percent or 10 percent.

  • Manufacturers demand domestic supplies against FE should be treated as exports

    Manufacturers demand domestic supplies against FE should be treated as exports

    KARACHI: Manufacturers have urged the government to treat goods booked abroad on which foreign exchange (FE) has been transferred should be treated as export.

    Federation of Pakistan Chambers of Commerce and Industry (FPCCI) in its proposals for budget 2020/2021, said that some manufacturers (like Dawlance etc.) are demanding that overseas Pakistanis may be allowed to send foreign exchange to manufacturers through banking channel for delivery of goods to their blood relations / relatives in Pakistan, which may be treated as export.

    Some stores outside Pakistan have contacted the manufacturers for delivery of goods in Pakistan. These stores in foreign countries will make consolidated payment in FE through banking channel to manufacturers in Pakistan.

    They have requested the manufacturers in Pakistan to send samples for booking of orders. The issue is that after payment of duty and taxes the goods made in

    Pakistan become more expensive.

    The Pakistanis expatriates abroad then prefers to purchase smuggled goods from the open market or send goods in baggage (better quality and less cost) declaring it as old and used goods after removing its packing etc.

    Store owners abroad have shown keen interest in booking Pakistani manufactured goods to be delivered in Pakistan.

    “It is, therefore, proposed that such goods, where orders are booked from abroad and foreign exchange is sent in Pakistan through banking channels, may be treated as exported goods and may be exempted from local duty and taxes or partial exemption may be given in the form of fixed duty drawback / rebate of tax to be notified.”

  • FBR advised to allow examination before filing GDs

    FBR advised to allow examination before filing GDs

    KARACHI: Federal Board of Revenue (FBR) has been advised to allow examination/ weighment should be allowed before filing goods declaration (GDs) in order to verify contents of containers.

    Federation of Pakistan Chambers of Commerce and Industry (FPCCI) in its proposals for budget 2020/2021 submitted to the FBR said that as per proviso of para 1 Section 79 of Customs Act, 1969, in case of used goods, before filing of goods declaration, the owner can make a request to an officer of customs to permit the owner to examine the goods and thereafter make entry of such goods by filing a goods declaration.

    “As per KYOTO Convention of WCO guidelines Standard 3.9 “Before lodging the goods declaration the declarant shall be allowed, under such conditions as may be laid by the customs (a) to inspect the goods; and (b) to draw samples,” the FPCCI said.

    The apex trade body proposed that examination / weighment may be allowed before filing of goods declaration, in all cases, where the owner is in doubt about the contents of the consignment, especially in cases of machinery, fabrics, article of plastic and food items etc.

    “Keeping in view the above facts, the weighment / examination before filing of goods declaration may be allowed for all class of goods,” the FPCCI advised.

    The FPCCI also highlighted an issue related to time duration related to decision of cases as heavy demurrages were hampering economic activities.

    The FPCCI said that as per sub-section 3 of Section 179 of Customs Act 1969 (IV of 1969) the cases are required to be decided within 90 days of the issuance of show cause notice or within such period extended by the collector for which reason shall be recorded in writing, but such extended period shall in no case exceed sixty days.

    The FPCCI proposed that the period specified to decide the cases under sub-section 3 of section 179 should be fifteen working days instead of existing period i.e. 90 days and further the extended period of 60 days should be reduced to 07 working days as an estimated cost Rs.15000 to 20000 per day is incurred on a 40 ft container.

    Therefore, to reduce the cost of doing business and trade facilitation the cases should be decided within 15 working days.

  • FPCCI demands elimination of discretionary powers of tax officials

    FPCCI demands elimination of discretionary powers of tax officials

    KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has demanded withdrawal of discretionary powers of tax officials including multiple selection of audit and entering business premises.

    Mian Anjum Nisar, President and Zakaria Usman, Convener, Budget Advisory Council of the FPCCI urged the FBR to withdraw the discretionary powers vested with the tax officials to avoid their misuse, provide relief to the taxpayers, simplify taxation law and restore the diminishing confidence of the assessees in the taxation laws – a pre-requisite for success of any scheme.

    The proposal is made as a part of the FPCCI presentation being made to the concerned quarters including Dr. Hafeez Shaikh, Advisor to the PM on Finance and Revenue, Razak Dawood, Adviser to PM for Commerce, Textile and Investment and Nausheen Javaid Amjad, Chairperson, FBR for incorporation in the forthcoming Federal Budget 2020-2021.

    He added that the FPCCI after identifying a series of such provisions vesting discretionary powers had given concrete proposals to safeguard the interest of the taxpayers against the misuse of discretionary powers.

    Regarding discretionary powers of conducting Multiple Audits / Amendment of Assessment under Sections 177, 214C and 122of Income Tax Ordinance, they elaborated, “Although a return filed, U/S 114 of ITO 2001, within time limit does qualify for Universal Self-Assessment Scheme (USAS) and considered to be Assessment Order deemed to have been passed U/S 120(1) of the Ordinance on the date of filing the return, but even then it may be amended as many times as may be necessary by the Inland Revenue officials within 5 years from the end of the financial year in which the return is filed which results in multiple tax assessments”.

    They therefore, proposed that the power to select the return of income may rest only with the FBR who is already having the powers to select the audit cases randomly through Computer U/S 214C of the Ordinance.

    However, they added, “In case where definite evidence is available with the department then the audit be initiated upto the transaction in question only”.

    These discretionary powers provide sufficient incentives to the Inland Revenue Officials to serve Audit Notices to the commercial importers and other such assessees who have already discharged their tax liability as full and final at the time of clearance of goods at customs stage and as such promote direct contact between a taxpayer and tax officials which is against the government policy as it encourage tax evasion and corruption.

    The FPCCI Chief Mian Anjum Nisar also lamented posting of Inland Revenue Officer at Business Premises under Section 40B of Sales Tax Act, 1990 to monitor production, sales of goods, stock position etc as it is out dated and unnecessary in the modern era of computerization and available methods of monitoring the entire production and supply chain.

    He argued, “It gives a perception of anti-business and anti-investment government policies, creates harassment and tantamount to revival of supervise clearance scheme of Central Excise in Sales Tax Act, 1990”.