• Saturday, March 23, 2019

Exports surge by 1.7pc, trade deficit shrinks by 5.6pc in six months

Discussion in 'Pakistan Economy' started by Norwegian, Jan 11, 2019.

  1. Norwegian

    Norwegian ELITE MEMBER

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    Exports surge by 1.7pc, trade deficit shrinks by 5.6pc in six months
    By
    Arshad Hussain
    -
    January 10, 2019


    [​IMG]

    KARACHI: The country’s exports have surged by 1.7pc in the first half of the current fiscal year (July-Dec 2018-19) and stood at $11.186 billion as compared to $11 billion in the same period last year. However, it surged by 4pc to $2.06 billion in December 2018 as compared to November 2018.

    After a 5.6pc depreciation in the trade deficit, the total deficit stood at $16.940 billion in July-Dec 2018-19, as compared to $17.939 billion in the same period last year.

    Prime Minister Imran Khan, ever since taking charge of the government in August last year, has been formulating various strategies to overcome the rising import and current account deficit, which had touched $18.9 billion in 2017-18.

    The central bank had received $2 billion from Saudi Arabia in the head of financial assistance, while $1 billion is expected to be received this month. The Saudi government had promised to give $6 billion to Pakistan, including $3 billion oil on deferred payments for the next three years. Meanwhile, the Chinese government and the United Arab Emirates (UAE) had also promised financial support to Pakistan.


    Pakistan team, headed by Finance Minister Asad Umar, is also negotiating with the International Monetary Fund (IMF) to get $6-$7 billion.

    The State Bank reserves stood at $7.048 billion, which are less than the import bill of two-month. Total reserves of the country stood at $13.597 billion.

    The imports of the country have gone down by 2.8pc to $28.126 billion in July-Dec 2018-19 as compared to $28.941 billion in the same period last year. On yearly basis, it decreased by 8pc to $4.493 billion in December 2018, as compared to $4.910 billion in same period last year. On a monthly basis, it increased by 3pc.

    The import bills had touched $55.8 billion in 2017-18, which were more than double of the total export inflows of $24.772 billion
    https://profit.pakistantoday.com.pk...trade-deficit-shrinks-by-5-6pc-in-six-months/

    Pmln propaganda busted
    @Zibago @Imran Khan @Imad.Khan @Path-Finder @PakSword @Indus Pakistan @BHarwana @koolio @war&peace @Dubious @Stealth @graphican
     
  2. Imad.Khan

    Imad.Khan SENIOR MEMBER

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    Its still minuscule difference. Economic situation is still very dire
     
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  3. Norwegian

    Norwegian ELITE MEMBER

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    I agree. But Pakistan is put on the right trajectory. Under pmln we got only ballooning deficits in every sector.
     
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  4. Maxpane

    Maxpane SENIOR MEMBER

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    hope for the better
     
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  5. ziaulislam

    ziaulislam ELITE MEMBER

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    In 6 months no policy change has yet happened
    This month we had first relive of low power and gas notified..also we started refunds yet 120b rupees Pending...devaluation wiped out quiet a bit value behind refund as well..
    I dont expect exports to puck up this year..next yr is bright but competition is stiff in this cut throat domain

    ---
    Govt needs quick refunds, enough liquidity, raw material (end all duties on impot of cotton) and grantee utility provision to exports...
    Ease for new industries
     
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  6. Norwegian

    Norwegian ELITE MEMBER

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    Pakistan is not yet a high tech, high skilled competitive economy. Almost every sector of economy is making huge losses except real estate. New government must change that and divert profit making investments to other sectors of the economy. This should attract foreign capital as well.
     
  7. pzfz

    pzfz FULL MEMBER

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    the result of the leech and rent-seeking economy Pak has become thanks to democracy and retirement of generals. Real estate, retail, insurance and the like are leech sectors because they are based on hype, credit, and provide no benefits to the productivity of a country. Tax the crap out of them, including land holdings and estate taxes , and watch the oppressive housing society phenomenon and its associated complexes disappear.

    I'm encouraged that the PTI-led government is aware of the situation and taking steps (at least of the steps they're going to take) to remedy it. Needs to happen much faster and at a greater scale.
     
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  8. Norwegian

    Norwegian ELITE MEMBER

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    Taxing real estate in Pakistan is the only solution but who will implement it? It is the only source of wealth remaining after all the other sectors of economy have been destroyed
     
  9. pzfz

    pzfz FULL MEMBER

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    There is good wealth and bad wealth. Real estate holdings in Pak are bad wealth for the country because people that are only looking to make a quick buck and then emigrate to canada. It has stifled internal investment (forget FDI) into this speculative and corrupt-laden sector and robbed much needed tax revenue. Not saying to tax the poor farmers or kachi abadi wallas. Tax the housing societies and take away the right of purchasing land for every public sector organization that indulges in this mafia act. Land reforms. Have an actual urban policy. And watch cities turning into actual cities that are dynamic, productive, and provide for the citizenry.

    CJ can also have his dam(s) much faster this way!
     
    Last edited: Jan 11, 2019
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  10. ziaulislam

    ziaulislam ELITE MEMBER

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    Treating the symptoms...
    We must ask why money went to real estate..
    Because other sectors were destroyed in pppp and than comperely bulldozed in PMLN era
    Pakistan has highest co operate tax in THE WHOLE WORLD TWICE AS MUCH AS BANGALDESH!

    Govt cant do much because of lack of fiscal space
    You exepect govt to settle 2 trillion rupees in adjustment and also decrease taxes...thats half of the taxes !
    PPPP is very abusive short sighted party with respect to its fiscal policies but PMLN turned out to be an insane party !!!!
     
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  11. Norwegian

    Norwegian ELITE MEMBER

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    That's what I said. Tax the real estate and remove taxes from other sectors
     
  12. ziaulislam

    ziaulislam ELITE MEMBER

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    Govt needs a two miracles
    1. Increase taxe collection while cutting down corperate taxes
    2. Solving energy and state institutions loses
     
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  13. Norwegian

    Norwegian ELITE MEMBER

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    In Norway filthy rich land and real estate owners are maximum taxed while corporate taxes are less than income taxes. Explains why we are successful
     
  14. pzfz

    pzfz FULL MEMBER

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    Those are not miracles. Doable and will happen out of necessity.
     
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  15. Norwegian

    Norwegian ELITE MEMBER

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    Of course it's doable. My original question was whether government has the will to tax the most profitable sector in Pakistan

    Looooooool

    Booming real estate sector contributes just Rs23 billion in taxes
    [​IMG]
    Incoming PTI govt may appoint FBR chief from private sector to improve revenue
    By shahbaz rana

    Aug.15,2018

    ISLAMABAD: The tax contribution by Pakistan’s booming realty sector, where most of the untaxed money is parked, stood at only Rs23 billion or less than 0.1% of the size of national economy in the previous fiscal year.

    To tackle such challenges posed by a weak tax administration and a culture of tax evasion, the Pakistan Tehreek-e-Insaf (PTI) government may appoint the Federal Board of Revenue’s (FBR) chairman from the private sector.

    The realty sector, where huge black money is parked, paid slightly over Rs23 billion in the last fiscal year 2017-18. This included tax collection under an amnesty scheme for the sector announced by the last Pakistan Muslim League-Nawaz (PML-N) government.

    Tax contribution by the booming real estate sector was not even equal to 0.1% of the size of national economy. Some of Pakistan’s big names do business in real estate, which is also one of the reasons for the weak implementation of tax policies.

    Real estate can never be an alternative for entrepreneurship

    The insignificant tax contribution from the real estate market has highlighted the challenges the PTI government will face in bringing the sector under the tax ambit. PTI’s likely finance minister, Asad Umar, is thinking of bringing new FBR chairman from the private sector to meet such type of challenges, reveal sources who are aware of the development.

    So far, Umar has approached Aziz Nishtar – a law graduate from Harvard University and a former officer of the Inland Revenue Service, and Shabbar Zaidi – senior partner of AF Ferguson chartered accountancy firm.

    When contacted, Nishtar confirmed that he met with Umar and they discussed future strategy for the FBR. Zaidi was also approached, but he has not yet disclosed his future strategy.

    The law allows the government to appoint FBR chairman from the private sector through a competitive process. According to officials, in case the PTI decides to bring new chairman from the private sector, current chairperson Rukhsana Yasmeen may be asked to continue till the new appointment is made.

    It could be a risky decision to bring the chairman from the private sector as FBR’s services have in the past created hurdles in the way of people inducted from the private sector.

    Although FBR officers in general do not enjoy good reputation, there are still some people with known integrity. Some of them are in grade-22, but they were sidelined by the PML-N government.

    In the last fiscal year, the FBR collected Rs5.2 billion in taxes on the sale and transfer of properties. It was 14% higher than the preceding year. The FBR generated another Rs13.2 billion in withholding taxes on the purchase of properties.

    The legalisation of black money parked in the real estate sector also continued during the year. In the process, the FBR collected Rs4.4 billion in taxes by charging a 3% differential between the FBR’s determined property rates and deputy collector’s rates.

    Tax collection from the realty sector’s amnesty scheme increased 84% in the last fiscal year.

    Bad governance in tax system hurting revenue collection

    Collecting taxes at fair market value of the properties has become a challenge. The PML-N government introduced fair market prices for federal tax collection, but the government had to give in to the pressure from traders. Yet it could not win 2018 general elections.

    Former prime minister Shahid Khaqan Abbasi had taken a courageous step and introduced a concept that the government would buy the property that is declared at a value lower than the market price. But the FBR has not yet issued a notification to give effect to the scheme.

    It has also not appointed director general for immovable properties.

    Real estate values are formally recorded at about 30% of market prices, primarily due to the extremely low deputy collector’s rates for the collection of stamp duty.

    The government’s wrong tax policies are also to be blamed for the parking of black money in the realty sector.

    At present, there are three types of property valuation rates for tax purposes. One is the actual market value that no one declares, second is the FBR’s determined rates and third is the provincial deputy collector’s rates.

    A key reason for the low tax collection from the realty sector is that all big housing societies do business without recording the transactions, according to market experts.

    The FBR has also not been able to collect due taxes from the builders and developers. Tax collection from the builders and developers stood at a mere Rs232.7 million in the last fiscal year. It was still better than the preceding year when the FBR collected Rs190.3 million.

    Published in The Express Tribune, August 15th, 2018