Pakistan Economy - News & Updates - Archive

[Neo]

Rs 1.251 trillion revenue target set for fiscal year 2009 ​

ISLAMABAD (June 12 2008): The federal government has fixed Rs 1.251 trillion revenue target for financial year 2008-09, which is Rs 35 billion higher as compared to the revised target of Rs 990 billion target of outgoing fiscal year. The Federal Board of Revenue (FBR) is expected to reach Rs 1 trillion mark by the end of current financial year.

Taxation measures on the sales tax and income tax side would enable the FBR to meet the target of Rs 1.251 trillion in the fiscal 2008-09. According to the break-up of target, direct taxes receipts have been projected at Rs 496 billion against revised target of Rs 388 billion, higher by Rs 108 billion for the on-going fiscal year. The original target of direct taxes was Rs 408 billion, which was brought down to Rs 388 billion during 2007-08.

The share of indirect taxes has been projected at Rs 755 billion that shows Rs 138 billion increase compared to the previous year's figures of Rs 617 billion. The original target of indirect taxes was Rs 622 billion during outgoing fiscal year, which was scaled down to Rs 617 billion.

The government has estimated income tax collection at Rs 477 billion during 2008-09 against the revised target of Rs 367 billion giving tax managers the task of generating Rs 110 billion to bridge the gap.

Further break-up shows that customs duty was projected at Rs 170 billion, as compared to Rs 148 billion revised estimates for the year 2007-08. On the basis of massive tariff rationalisation, the customs authorities have been assigned to generate Rs 22 billion more in upcoming fiscal year.

The sales tax target has been enhanced to Rs 472 billion from Rs 375 billion as per revised estimates of 2007-08. This indicates that the sales tax wing will have to collect Rs 97 billion more in the new fiscal year.

The share of the federal excise duty (FED) has been fixed at Rs 112 billion against the revised target of Rs 92 billion for the outgoing fiscal year. The board has to collect Rs 20 billion more in fiscal 2008-09 from excisable commodities/services.

Out of total direct taxes target of Rs 496 billion, the target of capital value tax (CVT) has been projected at Rs 6,500 million against last year's estimates of Rs 5,700 million. The CVT target showed a substantial increase of Rs 800 million from different areas liable to the levy.

The estimate of Worker's Welfare Tax (WWT) has been projected at Rs 3,500 million against last year's revised projection of Rs 2,400 million, depicting an increase of Rs 1,100 million. The target of Worker's Participation Tax (WPT) has been fixed at Rs 9,000 million as compared to the revised target of Rs 9,600 million.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Inflation at all-time high of 19%​

KARACHI: Inflation reached all-time high of 19.27 percent in May, mainly because of growing prices of food items.

The coalition government has already hinted at missing of inflation target of 6.5 percent in the Economic Survey released Tuesday and believed the average inflation settling over 11 percent by the end of financial year 2007-08.

Analysts, however predict the average inflation will be closing at 12 percent or slightly above that in the fiscal year, which will end June 30, 2008.

Data released by the Federal Bureau of Statistics Wednesday showed that food inflation, measured through the Consumer Price Index (CPI), swelled to record 28.48 percent in May, highest in over three decades.

In the food basket, price of non-perishable food items witnessed an increase of 33.13 percent and perishable items 1.09 percent in the month under review.

The food items including rice, onions, potatoes, besan, pulse gram, pulse masoor, maida, sugar, gur, wheat flour, pulse moong, beverages, gram whole, fresh fruits, cereals, wheat, readymade food, spices, mustard oil, sweetmeat and nimco, milk fresh, vegetable ghee, pulse mash, milk products, milk powder etc saw major increase in their prices during the month under review.

The figures shows CPI inflation surged by 11.11 percent during July-May period of current financial over the corresponding period whereas on month on month basis, it also increased by 2.69 percent in May over the preceding month of April.

The economic survey cited the high global prices of food, fuel and other commodities driven by a weaker rupee, import costs and gradual removal of fuel, food and power subsidies and monetary overhang on account of excessive borrowing from the SBP to finance the fiscal deficit have been major factors in pushing the prices to new highest during the current fiscal.

These factors will continue to exert pressure on overall prices in the next two to three years. The longer the high inflationary pressure persists, the greater is the chance for wage-price spiral to gain firm hold, it added.

The other components of CPI basket also posted substantial increase in the month of May. House rent surged by 12.05 percent, transport and communication by 19.14 percent, medicare by 14.06 percent etc.

Sensitive Price Index (SPI) also increased to 29.92 percent in May 2008 whereas the Whole Price Index (WPI) surged to 28.24 percent in the month under review.

This year's inflation started with 6.4 percent in July 2007, but kept increasing by reaching the all time high of 19.27 percent in May 2008. Similarly, food inflation, having 40 percent weightage in CPI basket also began the year at 8.5 percent but it also shoot up unprecedently to 28.48 percent, which was highest increase since 1974-75 when it touched 27.8 percent.

Daily Times - Leading News Resource of Pakistan

 

[Neo]

Defence allocation hiked to Rs 296 billion ​

ISLAMABAD (June 12 2008): Pakistan on Wednesday hiked defence spending by close to seven percent to Rs 296 billion for the fiscal starting next month. The estimated allocation for 2008-09 budget compares to Rs 277 billion actual expenditure for the ongoing financial year ending on June 30. An amount of Rs 275 billion was originally earmarked for defence for the fiscal 2007-08.

Presenting the budget to the parliament, Finance Minister Naveed Qamar said Pakistan could not be oblivion to its defence and wanted to maintain a minimum deterrence. The increase is still not enough to counterbalance the impact of inflation during the year that has cruised to double digit.

The defence budget was raised by more than nine percent last year, a figure slightly above the rate of increase in prices. Prime Minister Yousuf Raza Gilani on Monday told the National Assembly that Pakistan new civilian government would freeze defence spending and called for a similar response from India.

INDIAN DEFENCE BUDGET: But India forthrightly rejected the appeal, saying the country's defence budget - with an annual allocation of less than two percent of the GDP - is amongst the "lowest" in the world, an Indian daily reported on Tuesday.

"Despite our economic boom, our defence expenditure is less than 2 percent of the GDP. Our neighbours spend about 3 percent of their GDP (on defence)," Indian Defence Minister A K Antony said, while speaking to media persons in New Delhi.

The Indian government in February raised the defence expenditure for fiscal 2008-09 by 10 percent of what it was the previous year to (Indian) Rs 1, 056 billion ($26.5 billion) and promised even more funds if required. Financial year in India starts from April 1.

Pakistan and India are engaged since early 2004 in what both sides called composite dialogue process to remove differences on burning disputes including the core one of Kashmir. They have fought four wars since the partition of Indian Sub-Continent into two states. Despite thaw in relations, the nuclear-armed South Asian neighbours continued to focus on military build-up.

REVISED FORMAT: Some specific details of defence budget were presented to the parliament for the first time in Pakistan's history. The budget document gave some classified information on the overall expenditure under major heads.

Previously, respective governments used to present defence budget to the parliament as one liner, giving total allocation and its comparison to last year. According to a break-up, of the total allocation a major chunk (Rs 294 billion) will go for military defence and a nominal (Rs 1.17 billion) has been earmarked for defence administration.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Speed up work on gas pipeline projects: experts​

ISLAMABAD: The Japan-SAARC Symposium on Energy and Connectivity was held at the Institute of Strategic Studies, Islamabad (ISSI) Wednesday under the joint auspices of the Government of Japan and the ISSI.

Energy experts and government officials from Bangladesh, India, Maldives, Nepal, Pakistan, Sri Lanka, Japan and SAARC Energy Centre, as well as audiences invited from various sectors in Islamabad attended the symposium.

During the two day symposium, various aspects of the energy issues in the region were discussed in the sessions titled "Global Energy Trends: Addressing Energy Shortages in South Asia", "Energy Policy of South Asian Countries and Environmental Issues", and "Energy Infrastructure Development in South Asia and Promotion of Connectivity", which included the current situation, possible policy options and cooperation within the SAARC as well as in the Japan-SAARC framework.

Experts urged the parties engaged in the current projects for constructions of gas pipelines connecting one or more SAARC countries to external energy sources in the region should urgently address outstanding issues related to such projects.

SAARC Member States for this purpose should continue to make use of the technical assistance from bilateral and multilateral sources for capacity building, technology transfer, energy efficiency and specific project formulation. SAARC member states should mutually share information on their own progress, technical know-how, identify their needs, barriers and possible solutions.

Japan and SAARC member states continue dialogue for possible means and cooperate where appropriate to improve regional connectivity in energy sector in the SAARC region through expansion of energy infrastructure, development of both conventional and non-conventional energy resources and technologies. Efforts should be made for fostering private and public partnership, R&D, and cooperation with academics, civil society and the media. To this end, the consideration must be made on economic and social cost-benefit analysis keeping in mind the specificities of each State.

Priority areas of energy cooperation in the SAARC region may include: energy infrastructure development, regional trade of energy, sharing of hydroelectric resources and demand side management including sharing and promoting efficient and cleaner energy technologies, promotion of renewable sources of energy and human resources development.

Programs and activities of SAARC Energy Centre for advancing energy cooperation in the SAARC region should be strongly supported through provision of human, financial, infrastructural, technical and material resources.

Concluding the Japan-SAARC Symposium on Energy and Connectivity, Ismail Qureshi, Secretary Water and Power, Government of Pakistan, said that energy sources of SAARC region and its neighbours are huge, unevenly distributed and undeveloped. Cross border investments in energy and promotion of regional energy trade are essential for achieving economic growth of the SAARC countries. The factors curtailing such regional cooperation are political tension, poor infrastructure and poor operational efficiency.

Daily Times - Leading News Resource of Pakistan

 

[Neo]

Increase in salary income to be taxed at 20-50pc​

ISLAMABAD, June 11: The government has introduced a concept of marginal tax relief for the salaried persons to cater for the negative impact of taxation under the present flat tax rate system.

Finance Ordinance 2008 proposed that under the new system the marginal increase in salary income is proposed to be taxed at the rates not exceeding 20 per cent to 50 per cent allowing sufficient relief in tax payable.

The value of accommodation provided to the salaried persons in small cities is proposed to be taken at 30 per cent instead of 45 per cent of the minimum time scale of the employees for the purpose of taxation.

The pensioners, senior citizens and widows, who are exempt from withholding tax in respect of profit from pensioners benefit scheme and Behbood Fund, would now be charged to tax at a rate not exceeding 10 per cent of such profit.

The rates of advance tax, collected at the time of renewal of registration of private motor cars, are proposed to be rationalised by making about 30 per cent to 40 per cent increase in withholding tax rates.

From the next financial year, withholding tax on purchase of locally manufactured motor car or jeep is proposed to be collected by a motor vehicle registration authority at fixed rates depending on the engine capacity.

In the case of a small company, if turnover exceeds Rs250 million, the income attributable to the turnover exceeding the said limit, is proposed to be charged to tax at progressive slab rate of 25 pc, 30pc and 35pc, so that the company is able to progress still retaining its status of a “small company”.

Minimum tax payable on the declared turnover at the rate of 0.5 per cent is being proposed to be withdrawn.

Association of persons and individuals having annual turnover of Rs50 million, respectively, are proposed to be made withholding tax agents for the purpose of tax deduction on payments relating to sale of goods, services rendered and execution of contracts.

Profit transferred by a branch of foreign company out of Pakistan are proposed to be treated as dividend and chargeable to tax at the rate of 10 per cent as final tax, the limit of donations eligible for tax credit in the case of individual/association of persons and companies presently admissible at the rate of 30 pc and 15 pc, respectively, are proposed to be reduced to 10 pc of the taxable income.

It has been proposed that reinsurance premium paid to overseas insurance companies may be subjected to withholding tax at the rate of 5 per cent as final tax, withholding tax on cash withdrawal from banks presently collected enhanced to 0.3 pc from 0.2 pc with no change in limit of withdrawal.

The facility of reduced tax rate to a cooperative society or a finance society is proposed to be withdrawn and would be treated at par with the company for the purpose of taxation.

Exemptions from income tax available under the other statutes are proposed to be withdrawn.

Any payment made through a foreign currency account and exchange companies proposed to be included in the payments requiring deduction of withholding tax unless the commissioner of income tax has allowed otherwise as provided under section 152 of Income Tax Ordinance, 2001.

Thin capitalisation rule is proposed to be made applicable to branches of foreign companies operating in Pakistan. The tax collected from the members of stock exchange on sale as well as purchase of shares in lieu of commission income and trading of share is proposed to be made a minimum tax on income of such members/ brokers.

In future instead of tax holidays, First Year Allowance in the shape of accelerated depreciation at the rate of 90 per cent is proposed to be allowed to the industrial undertakings established in the specified rural and undeveloped areas.

At present inter corporate dividend in respect of companies entitled to group relief under section 59AA is exempt from tax. The facility is proposed to be extended to the companies eligible for group taxation under section 59B. And the exemption on capital gains on share extended to June 30, 2008.

To encourage amalgamation of banking companies, modarabas and insurance companies the facility of carry forward of “accumulated loss” is proposed to be allowed for a period of six years in the case of amalgamated or amalgamating companies.

Rice Exporters Association of Pakistan (Reap) is proposed to be allowed the facility of reduced withholding tax rate of 1 per cent instead of 1.5 per cent in respect of payments payable for supply of rice to Utility Stores Corporation.

Income derived by a project approved by Designated National Authority (DNA) from transfer/sale of CDM emissions credit i.e. Certified Emissions Reduction etc is being proposed to be exempt from income tax.

In the case of banks no CVT is proposed to be charged on General Power of Attorney unless it is used into force the mortgage of property offered as collateral against a loan, income shown as unrealised gains in the case of non-life insurance companies would be excluded from the taxable income and not charged to tax.

Proportionate relief is proposed to be allowed in the amount of penalty imposed in tax evasion cases where the appellate authorities reduce the quantum of concealed income and tax charged thereon and a scheme for waiver of additional tax and penalty etc. is proposed to be introduced where the taxpayer is able to pay the principal amount of tax within a certain period.

Increase in salary income to be taxed at 20-50pc -DAWN - Business; June 12, 2008

 

[Neo]

Rs 24.6 billion allocated for education ​

ISLAMABAD (June 12 2008): The government has allocated Rs 24.6 billion for education. In the budget 2008-09, for the on-going and new projects of Higher Education Commission (HEC) an amount of Rs 18 billion has been allocated while an amount of just Rs 6.2 billion has been allocated for primary and secondary education.

The budgetary allocation for HEC has always been higher than that for the primary and secondary education, which is depicting an increase of 66 percent against the last year.

The government has announced to allocate Rs 6308.3 million for 2008-09 for Basic and College Education projects that is four percent more than the total amount of Rs 6546.9 million allocated in 2007-08.

For the coming fiscal, Rs 62, 629.6 million have been allocated for projects of Ministry of Education, Rs 23.2 million for projects of school /college education in cantonments and Garrisons under Ministry of Defence and Rs 15.2 million under Cabinet division for Center of Excellence for Urdu Informatics and production of reading material in national language.

An allocation of Rs 1,275 million has been allocated for Education Reforms Sector (ERS) specific programs, which include education for all (EFA), adult literacy program, revamping of science education at secondary level and establishment of polytechnic institutes at district level.

An allocation of Rs 416.6 million has been made under Canadian debt swap for capacity building of teacher training institutes and training of elementary school teachers all over the country.

For 2008-09 an amount of Rs $259.2 million has been allocated for Science and Technology sector. Out of which Rs 3015.4 million for Ministry of Science and Technology, Rs 137.2 million for Pakistan Metrology Department, Rs 625.2 million for Pakistan Atomic Energy Commission and Rs 481.4 million for SUPARCO.

During 2007-08 Rs 4829 million was allocated to Science and Technology sector, including Rs 3600 million for Ministry of science and Technology (MoST), Rs 580 million for Pakistan Atomic Energy Commission (PAEC), Rs 627 million for SUPARCO and Rs 21 million for Pakistan Meteorology Department.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Rs1.5bn can’t bring white ‘revolution’​

KARACHI, June 11: The allocation of Rs1.5 billion to bring “white revolution” through promotion of livestock sector in the budget 2008-09 is very insufficient keeping in view $300 million (about Rs20 billion) of foreign exchange being spent on importing powdered milk annually to meet the demand of the urban areas.

Finance Minister Syed Naveed Qamar in his budget speech told the National Assembly on Wednesday that Rs350 million had been set aside for milk collection/processing and dairy production and development programme.

According to the minister Pakistan is the fifth largest milk producer in the world, but its dairy sector has been neglected by the successive governments. The country is surplus in milk production despite having lowest per cattle yield in the world.

Talking to Dawn Sindh Abadgar Board Chairman Majid Nizamani said that due to lack of proper planning, collection and distribution facilities, a major portion of the total milk production was consumed by the producers in the far-flung areas.

He said the country’s tremendous potential to increase its milk production had so far remained unexplored due to the inactivity of the departments concerned.

The milk production, despite its lowest yield in the world, is even far ahead of the major cash crops of wheat, cotton, rice and sugarcane.

In Pakistan only 3 to 4 per cent of the total milk is processed and marketed through formal channels whereas the remaining reaches consumers through an extensive, multi-layered distribution system of middlemen.

The unprocessed milk passes through the middle persons before it reaches the urban retailer. The price of milk increases by one rupee per litre at every stage of sale.

Pakistan can successfully harness to its advantage if due attention is paid to this sector as there is huge demand of both powdered and packed milk in Iran, the UAE, Saudi Arabia, Malaysia, and Philippines.

It is estimated that presently only about 22 per cent of milk production is processed in Pakistan, about 57.5 per cent is supplied to urban areas in raw form in most unhygienic conditions causing real health hazards. Rest is consumed by the farmers especially in the far-flung areas for lack of proper facilities to take it to deficient areas.

About 75 per cent of the total production of raw milk is produced in Punjab, 14pc in Sindh 10pc in the NWFP and only one per cent in Balochistan. In Punjab there are more buffalos than cows in about 60-40 ratio, in Sindh it is 50-50, in the NWFP 20pc buffalos and 80pc cows. In Balochistan there are mostly cows.

Rs1.5bn can’t bring white ‘revolution’ -DAWN - Business; June 12, 2008

 

[Neo]

POL products, electricity and food items: Subsidies reduced to 2.4pc of GDP​

ISLAMABAD: The government has allocated a subsidy of Rs 295.204 billion on petroleum products, electricity and food commodities in the 2008-09 budget to facilitate consumers.

According to a federal budget document made available to Daily Times, the government has reduced the total subsidy to 2.4 percent of the gross domestic product (GDP) in the budget estimates of the 2008-09 financial year, as compared to 3.9 percent of the GDP in the current 2007-08 financial year.

The previous government had estimated that a subsidy of Rs 113.92 billion would be required for petroleum products, power tariffs, wheat, fertiliser and other items in 2007-08. However, the allocation reached Rs 407.485 billion due to increased subsidy payments to oil marketing companies’ price differential claims, imported wheat, electricity and fertilisers.

For electricity consumers, the new government has allocated Rs 88.412 billion subsidy in the 2008-09 financial year due to higher prices of oil used for thermal power generation. The government has also allocated Rs 74.612 billion subsidy for the Water and Power Development Authority (WAPDA), against 2007-08’s allocation of Rs 52.893 billion. It has also reduced the subsidy on WAPDA general sales tax payment of consumers to Rs 3.018 billion, against the Rs 24.893 billion allocation for 2007-08.

However, in the 2008-09 budget, the government has reduced the allocation for the Karachi Electric Supply Company (KESC) to Rs 13.8 billion against the 2008-09 allocation of Rs 19.596 billion. This has been reduced because of a projected reduced tariff differential payment in 2008-09 to Rs 12 billion, against the Rs 15.796 billion that was paid in the current financial year 2007-08.

Similarly, to control food inflation, the government has increased the subsidy to Rs 26.6 billion for the Trading Corporation of Pakistan (TCP). The government has also allocated Rs 6.3 billion subsidy for sugar imports in 2008-09, against Rs 7.5 billion in 2007-08. Rs 2.7 billion subsidy has also been allocated for the Utility Stores Corporation in 2008-09, against the Rs 1.8 billion that was allocated in 2007-08, to provide ghee, pulses and flour at subsidised rates.

The incoming budget also provides subsidy of Rs 672 million to the Pakistan Agriculture Storage and Service Corporation for miscellaneous expenses and the export of wheat; Rs 81 million for the Pakistan Dairy Development Company; Rs 195 million for the sale of wheat in FATA; and Rs 606 million for the sale of wheat, salt and sugar in Gilgit Agency.

Rs1.5bn can’t bring white ‘revolution’ -DAWN - Business; June 12, 2008

 

[Khalsa]

Foreign currency reserves depleting fast

Friday, June 13, 2008
By Mehtab Haider

ISLAMABAD: Pakistan’s precious foreign currency reserves are depleting and have touched $10.953 billion. Owing to increasing prices of petroleum products and failure of the incumbent regime to generate the additional envisaged resources of $3 billion during the outgoing financial year.

The foreign currency reserves stood at $11.178 million on May 31, 2008, which fell to $10.953 billion on June 7, 2008 as the reserves depleted by around $225 million in just a one week period.

The country’s reserves are rapidly depleting because of growing imports, especially the surge in oil prices, and dwindled to $10.953 billion, according to data released by the State Bank of Pakistan (SBP) on Thursday.

Out of the total $10.953 billion reserves, foreign reserves held by SBP stand at $8.386 billion, while net foreign reserves held by banks other than SBP are $2.566 billion. “This is an alarming situation because forward liabilities are also rising, so the real foreign reserves position is not comfortable,” said sources.

Official sources confided to The News that on one side the external debt was increasing and touched a new peak of $45.9 billion, while on the other hand the hard-earned foreign reserves showed a huge drop in recent months, making the national economy extremely vulnerable.

According to the Economic Survey 2007-09, the government has projected reserves position standing at over $12 billion in April 2008, which has now reduced to $10.953 billion on June 7, 2008, registering a decrease of over one billion dollars in the last two months.

The foreign investment attracted by Pakistan in the last fiscal year was over $8 billion, which included privatisation proceeds. But the investors would go out of the country with almost doubled dividends against their invested money. Thus, the investment also creates liabilities in one sense and there is a need to ensure an increase in foreign reserves for meeting future liabilities.

Pakistan’s foreign debt also swelled up by around $10.5 billion in the last six years, as it now climbed up to $45.9 billion at a time when the reserves are also depleting fast.

According to the SBP, the foreign currency reserves stood at $14.08 billion on Feb 15, 2008. The reserves position was much better a few months back as it stood at around $16.4 billion during October 2007. This shows that the reserves declined by around $6 billion in the last few months.

Sources also raised questions over the alleged ‘flawed policy’ being continued by the central bank for managing the precious reserves. According to them, Pakistan has parked a certain portion of its reserves, around $2.5 to $3 billion in international banks, on which the country is charging approximately 0.5 per cent interest rates.

While on the Eurobond and other papers launched by Pakistan in recent years, the country is paying 6 to 7 per cent interest rates to its subscribers. “There is no economic justification for this policy,” said the sources and added that Pakistan is a net loser of millions of dollars in the forex market.

Pakistan’s current account deficit widened in the outgoing fiscal year, resulting into growing pressure on foreign currency reserves. Official circles believe that there is an expectation of some inflows pouring into Pakistan before June 30, 2008, which will help improve the reserves position during the outgoing fiscal year.

 

[Neo]

PS capacity to increase to 3mT by 2012 ​

Friday, June 13, 2008

ISLAMABAD: Pakistan Steel Mills’ (PSM) production capacity would inch up to 1.3 million tonnes per year by the end of this fiscal from the current level of one million tonnes.

In the second phase of its expansion plan, by the end of 2010, the capacity will increase to 1.5 million tonnes. After the completion of third phase in 2012, the total capacity of PSM will reach 3 million tonnes.

This was told by PSM officials in a detailed briefing to Mian Manzoor Ahmad Wattoo, Adviser to Prime Minister for Industries and Production.

Wattoo said that expansion in capacity is required to make Pakistan Steel Mills (PSM) more economic and financially viable and to meet the increasing demand of steel in the country.

While chairing a meeting on PSM here on Thursday, he directed the PSM management to work out a comprehensive expansion plan and to generate its own resources to fund this expansion plan. The meeting was also attended by Secretary Industries and Production Shahab Khawaja and Chairman Pakistan Steel Mills Moeen Aftab Sheikh.

He instructed the management of PSM to increase its dependence on the local raw material in its expansion plans and other routine operations. There were many iron ore and coal reserves in different parts of the country which should be utilised to save the foreign exchange and decrease dependence on imported raw material.

Mian Manzoor Ahmad Wattoo also chaired a briefing on PASDEC (Pakistan Stone Development Company). Ehsanullah Khan Chairman PASDEC gave a detailed briefing about the various projects of PASDEC. He noted that PASDEC is working on 43 different projects which include the development of marble cities, model quarries, upgradation of existing quarries, Common Facility and Training Centres (CFTC), etc. He informed that one model quarry established by PASDEC, has started working in Khuzdar (Balochistan) and two marble cities, one in Risalpur (NWFP) and the other in FATA are ready for ground breaking. The Chairman further stated that 120,000 direct and 500,000 indirect employment opportunities will be generated under various Projects of PASDEC. He also revealed that due to the efforts of PASDEC, marble export from Pakistan increased from $14 million in the last year to $23 million in the current year, which is an increase of 43pc.

Wattoo observed that Pakistan is rich in natural resources and marble and granite is abundant in different areas of the country. “We need to do more to exploit these resources to the maximum”, said Wattoo adding that “there was a large scope for development of mines in Balochistan.” He also directed the PASDEC and officials of the MOI&P to work out the possibility of Italian investment in Pakistan’s marble and granite sector.

PS capacity to increase to 3mT by 2012

 

[Neo]

'No question protection' for remittances from foreign exchange accounts withdrawn: step aimed at curbing under-invoicing menace ​

KARACHI (June 13 2008): In order to check the menace of under invoicing of imported goods, all those sending remittances from foreign currency accounts will be required to file an 'M' Form with the State Bank of Pakistan certifying the reason for the remittance being undertaken. This change is meant to check rampant under-invoicing of imported goods.

It is said that importers of goods, specially from China, remit the under invoiced amount through letter of credit opened by a bank and the balance amount is remitted through forex accounts, after purchase of foreign exchange from a money changer or an exchange company and depositing the same in individual forex accounts.

FBR in consultation with SBP has devised a mechanism that seeks to disallow non-deduction of withholding tax on foreign exchange paid to non-residents for import of goods, unless a certificate from tax department, is obtained whenever the title of goods, passes outside Pakistan. To obtain the exemption certificate filing of supporting import documents will now be mandatory.

This will ensure proper utilisation of foreign currency for import of goods, says FBR. Further, it will check misuse of foreign currency purchased from open market and its remittances abroad under the garb of imports or otherwise.

Payments to non-residents including remittance from foreign currency account and exchange companies applicable to such transactions would also need to provide on explanation for the remittance.

In order to overcome operational difficulties for enforcement against misuse of telegraphic transfers for under invoicing of imports, the overriding clause of Protection of Economic Reform Act (PERA) 1992 over Foreign Exchange Regulation Act (FERA) 1947 to this extent is being deleted from the purview of section 3 of PERA 1992.

The Finance Bill also empowers SBP to impose penalties on banks and exchange companies for violation. Hitherto, SBP could only suspend or cancel the licence. SBP would announce the penalty tariff against various violations in due course.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Iran to help Pakistan combat energy shortage ​

Friday, June 13, 2008

ISLAMABAD: Pakistan and Iran have identified certain areas for cooperation including electricity as Tehran has agreed to extend its all-out assistance for overcoming energy deficiency being faced by Islamabad.

Maa’shallah Shakri, the Iranian Ambassador in Pakistan, called on Finance Minister Syed Naveed Qamar here on Thursday.

The finance minister apprised the Iranian ambassador about the government’s pre-budget preparations and post-budget legislative debate in parliament along with other development-related economic initiatives. Both sides discussed the institutional economic framework of their respective countries.

The finance minister stated that Pakistan is currently passing through the most challenging time since the democratic government took over and special measures are under way to reform the national economy. Pakistan would continue to be a priority in the Iranian government’s regional and global economic preferences, he said.

Earlier, the Iranian ambassador said Iran and Pakistan need to work closely on all fronts, especially in the field of economic cooperation.

Pakistan and Iran could foster their ties through working together via Joint Ministerial Commission in all fields of bilateral interest, both sides agreed. The Iranian ambassador identified more than 50 areas for joint project-based cooperation focusing on railways, communications, roads, shipping, trade, infrastructure, etc.

The forthcoming visit of Pakistan’s finance minister to Iran was also discussed in terms of agenda and development-related prospects beneficial to both countries.

Additional power generation and meeting Pakistan’s rising electricity demand is another sector identified for mutual cooperation.

In the end, the finance minister hoped that Iran and Pakistan are two brotherly Muslim countries sharing each other’s concern in all sectors of national and regional development and would continue to work to further strengthen bilateral relations.

Iran to help Pakistan combat energy shortage

 

[Neo]

Warid plans $1bn investment to improve services​

Chief technical officer says Pakistan not ready for 3G services​

Friday, June 13, 2008

KARACHI: The tele-density in Pakistan is said to be more than 50 per cent but it is actually around 40 per cent, Warid Telecom International Group Chief Technical Officer Marwan Zawaydeh said in an interview with The News.

Tele-density is calculated on the basis of sales data that can be misleading as active connections are much less than the sales’ figure, Marwan said.

He said there is room for further growth in the telecom industry and it could further contribute to the GDP of the country. “Though Warid and Telenor entered the market almost together, it is true that our competitor has acquired more market share because Telenor captured the market in under-served rural areas whereas we focused more on urban centres. We were left behind in market share but not in quality of service.”

He said Warid has recently re-launched itself and has come up with value-added services. Its focus is on untapped areas.

This month, Warid will launch Blackberry and in the near future many more services are likely to come. The company plans to invest $1 billion in the next three years.

At present, he said, the company has no plan to get listed on the Karachi Stock Exchange. The business environment in Pakistan is very good as there is a lot of room for the telecom business to grow since customers are interested in new technologies, new services, etc. The main drivers of business in Pakistan are the youth.

Warid is cooperating with the government in fulfilling the requirement of registering sales of SIM cards and verifying customer details with the NADRA. “We are following the instruction of the government and cooperating with it, but this is an uphill task and will take time. We have asked the government to give us some time to update the customers’ record. Otherwise, by and large, there is no such issue which hinders business in Pakistan,” he said.

He said Pakistan is a low profit market and generates very low revenue per customer. Besides, the tariffs are already low and the industry cannot afford to further reduce them.

To compete in the market, he added, Warid has to come up with some different qualities as rates of all competitors are low.

“Our top priority is provision of quality service besides uncompromising attitude on quality,” he said. “It’s a challenge for cellular companies to survive in an environment where Average Revenue Per User (ARPU) is very low.

That is why Warid has re-launched and has come up with an aggressive marketing strategy to capture untapped areas. To stay in the market we have to differ in quality service besides an improved network. We also need to offer more new packages and services.”

He said Warid is also in the process of infrastructure sharing with all cellular companies like Mobilink, Telenor, China Mobile and Ufone.

He said there are already five active operators and there is no room for other cellular operators. He said Pakistan is not yet ready for 3G technology since it is too early for this country to go for 3G technology. He said the EDGE technology is required more but people have not yet fully grasped it.

The 3G at present is very expensive, first because the licence fee is very high, the 3G compatible handsets are very expensive and there is not high demand for it as yet in the market. May be the situation will change in the coming years, he said.

He said mobile handset rates are lowest in Pakistan because there is no taxation on it while the operators pay activation tax. He said there should be tax on the import of the mobile phone handsets and the supplier should share the burden of the tax; and that will help in manufacturing handsets locally.

Pakistan has an excellent skilled manpower and all of the team of the Warid working here are Pakistani. The young people of Pakistan are well educated, motivated and hard working.



Marwan Zawaydeh has been associated with Warid Telecom International since June 2004 as Group Chief Technical Officer and Executive Committee Member of the Board.

Marwan is an electronics engineer with more than 28 years of experience in telecommunications, including fixed network, GSM and 3G mobile networks.

Marwan has held senior positions in UAE-based telecom operator Etisalat including the office of Senior Executive Vice President of Engineering Department from 1996 to 2004. Marwan’s contributions at Warid Telecom include the launch of Warid’s GSM network in Pakistan, Bangladesh, Congo and Uganda.

Warid plans $1bn investment to improve services

 

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Pakistan's foreign exchange reserves fall by $224.8 million ​

KARACHI (June 13 2008): The total liquid foreign exchange reserves declined by $224.8 million to $10,953.5 million in the week ending June 12, 2008 as compared to $11,178.3 billion recorded on June 5, 2008, the State Bank of Pakistan (SBP) said on Thursday.

Reserves held by the SBP declined by $.297.7 million to $8,386.9 million from $8,684.6 million a week earlier, while those held by commercial banks rose by $72.7 million to $2,566.6 million from $2,493.7 million.

Business Recorder [Pakistan's First Financial Daily]

 

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Hybrid Bt cotton project launched​

ISLAMABAD, June 12: After achieving phenomenal acclaim from the developing world in Basmati rice variety, a local business group has now launched a research project involving Pakistani and Chinese scientists to evolve a hybrid Bt cotton variety, claimed a company executive.

Shehzad Ali Malik, director (marketing), Guard Group producing agricultural as well as auto-related products, said the company plans to establish 1,200 such facilities at CNG stations in three years, a TV channel reported on Thursday.

Shehzad Malik promised to carry out demand-based research on cotton to evolve varieties that meet the requirements of the textile industry.

He said this sector still imports seed with qualities like long staple, etc, while hybrid Bt cotton being developed by the company will meet all requirements and will be CLVC-resistant to solve the problem affecting cotton growers for decades.

He said that rice was being exported to 38 countries and had earned $700 million per annum.—APP

Hybrid Bt cotton project launched -DAWN - Business; June 13, 2008