Pakistan Economy - News & Updates - Archive

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Pak-Brunei MoU on double taxation​

21 Nov 2008

ISLAMABAD: Pakistan and Brunei have signed a Memorandum of Understanding (MoU) on avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income.

Pakistan’s High Commissioner to Brunei, Major General (rts) Syed Haider Jawed on behalf of Pakistan and Permanent Secretary Finance, Awg Haji Bahrim bin Haji Abdullah of Brunei representing the Sultanate of Brunei, signed the MoU in Brunei Darussalam last night.

Talking to media after the signing ceremony, Pakistan’s High Commissioner to Brunei said the agreement was an important step in consolidating and diversifying existing relations that existed between the two countries in the fields of trade and commerce.

Syed Haider Jawed said various steps were underway to diversify bilateral trade relations. He referred to the Joint Study Group between Pakistan and Brunei, that provided an institutional framework for a comprehensive economic partnership between the two countries.

The High Commissioner said Pakistan and Brunei had also established a Joint Investment Company, as a result of MoU signed between Pakistan and Brunei in 2005. The Company provides forward thrust to bilateral commercial cooperation in industrial manufacturing and non manufacturing sectors, financial services and marketing of production in Pakistan and abroad.

The Company was also mandated to establish subsidiary companies to carryout particular projects.

The High Commissioner said Pakistan had huge reservoirs of skilled workforce and expressed his country’s interest in providing skilled workforce to Brunei.

 

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Sales of basic industrial items down 13pc over 2 months ​

FBR figures, however, show a 32pc yoy rise in GST collection on these items​

Saturday, November 22, 2008

ISLAMABAD: After the closure of 1,588 major industrial units out of 44,976 operating in Pakistan only 11 months ago, another shock report has come from the market players that sales of essential products and materials used in industrial production and value addition faced a decline of at least 13 per cent over the past two months.

Nearly 45,000 industrial and commercial units were registered as operational by end-2007 another 27 had been launched at the beginning of this year.

Despite a 32 per cent increase in the domestic sales tax collected by the government from trade and industry in July-October 2008 over the same period of last year, the actual sales of essentials and materials slumped from September to mid-November by nearly 13 per cent.

Most of these goods are those attracting no domestically applicable GST or lower rate of tax. Medicines, food preparations, clothing, hosiery, construction materials, auto and hardware parts, sewing machines and telephone sets, motorbikes and stationery top the list of such items facing slump.

Both the Statistics Division officials and traders said the slump was unusual as a downswing never occurred in sales in the September-November period. They were unanimous in pointing out that sales increased in these months as wholesale and retail purchase of clothes, appliances and materials always increased in this period.

The Federal Board of Revenue (FBR), however, compiled figures on domestically collectible GST, showing an increase in GST collection this year in the July-October period. Last year in the same period the DCGST amounted to Rs49.2 billion whereas in the same period this year this totaled Rs74.7 billion.

Since these deposits are collectible on local sales, The News asked a senior FBR official to explain the fall of 13 per cent in actual sales and the increase of 32 per cent in the collected GST.

Member Media and Reforms Mehmood Alam said the DCGST figures covered the entire period of July-October, but there had been a slowdown for the past two months (September-October).

On the industrial side, nearly 1250 units that operated as major taxpayers in this period deposited 95 per cent of the total tax paid this year. The rest of nearly 32,000 units faced an acute downslide in sales, as per reports complied by relevant officials at the Pakistan Revenue Automation Limited (PAL). “It is alarming for us to see such a downslide”, said a senior PRAL official. But he pointed out that recession was an international phenomenon and it might cause further downslide in coming months.

 

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‘Govt providing Rs117bn subsidy to facilitate power consumers’​

Saturday, November 22, 2008

ISLAMABAD: Water and Power Minister Raja Pervaiz Ashraf on Friday said the government was providing Rs117 billion per annum as subsidy to facilitate the consumers in the power sector.

Talking to journalists at the parliament house, the minister said despite generating power on higher prices, the government had returned Rs47 billion to the consumers. “We are concerned about the plight of the poor and for this reason we keep taking steps to facilitate the poor masses. Despite the fact that country is passing through financial crunch situation, we have taken steps to facilitate the poor,” he remarked.

He said besides Bhasha Dam construction, the government was focusing on minor dams which would help produce power on cheap price. “With the advent of more thermal and hydel power projects, we would be able to provide cheaper electricity. We would also lower the rates of electricity with reduction in furnace oil prices,” he added. To a query, Ashraf said the government had a plan to privatise DISCOs, however, he said any future decision would be taken keeping in view the experience of privatisation of Karachi Electricity Supply Corporation (KESC).

 

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China, India to help devise strategies for Planning Commission​

Saturday, November 22, 2008

ISLAMABAD: The government will exchange experience with India and China in the field of devising effective planning mechanism.

A top level official in the Planning Commission told The News on Friday that they have signed Memorandum of Understanding (MoU) with Planning Commission of India and China in order to facilitate exchange of information for devising effective planning and strategy to overcome existing problems in shape of energy deficiency and in others fields.

The Gilani government is making efforts to make the Planning Commission a think tank for generating ideas rather than focusing only on project related planning and its execution.

“Indian Planning Commission members are scheduled to visit Pakistan during the first week of next month to share experience with Pakistani authorities,” the official informed.

“Chinese Planning Commission high-ups have also invited Deputy Chairman Planning Commission Salman Farooqi for visiting Beijing in January,” said the official.

Pakistan would also like to get experience from China in construction of dams, energy and infrastructure and would learn a lot by using modern technology to build better in all relevant fields.

During the tenure of former Prime Minister Shaukat Aziz, the Planning Commission was mainly dominated by the engineers and they did not bother to even appoint any Chief Economist after removing Dr Pervez Tahir unceremoniously from this slot during the financial year 2004-05.

The so called ‘restructuring process’ was initiated during the Musharaff-Aziz tenure that brought engineers and former military generals in the Planning Commission, failing to bring any desired change in the professional work of the Commission. It only resulted into re-employment of high-ups after their retirement on lucrative salaries.

The PPP government appointed Salman Farooqi as Deputy Chairman Planning Commission, which initially raised many eyebrows on this appointment.

The incumbent Deputy Chairman really changed this perception when he made all out efforts to give extension to Planning Commission’s Secretary Sohail Safdar who is considered as man of integrity among the top bureaucrats. It shows that the incumbent Deputy Chairman seems serious in doing his assignment.

This government, the official said, will put in place a mechanism under which the Planning Commission would regain its lost importance and weight in the devising of effective policies as well as playing its role to implement them in its true letter and spirit.

“We will have to wait for a while to witness whether it is only lip service or the government takes practical steps for achieving the desired results in months ahead,” said the sources and concluded that the next five to six months would exactly determine the authenticity of claims being drummed by the close associates of the high-ups of the Planning Commission.

 

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Italy offers technology transfer ​

Saturday, November 22, 2008

KARACHI: The Trade Commissioner of Italy, Dr. Marco Pintus said that Italy has world-class technology to offer to Pakistan.

He said that the Pakistani authorities have identified sectors that need to be developed.

During a meeting with KCCI members of Friday, he added that in order to diversify the export base, boost employment and middle-sized businesses, create economic opportunities in remote areas Karachi will have to play a leading role in such development.

He said that Italy and Pakistan have always enjoyed friendship to develop the vast scope for economic cooperation between the two countries: for sectors having big potential in Pakistan, like agriculture and food processing, marble and granite quarrying and processing, gems and jewellery manufacturing, tanning and leather manufacturing, textile, construction, power generation, etc.

On the other hand, Italy is a big market of about 60 million people that overall have significant purchasing power. Pakistan textile and clothing; products, leather goods as well as other items on a smaller scale, have succeeded in entering our quality-conscious market as an increasing number of Pakistani companies have made huge strides kin improving their standards and streaming production processes and facilities.

Needless to say, Karachi’s skilled trading community and the strategic position that makes this city a logistic hub in South Asia are instrumental in fostering increasing trade volumes with Italy.

The Italian Trade Commission enjoys wonderful relations with the local business community. He said that he always encouraged Pakistani companies to refer to his office for any business query they may have.

President KCCI, Anjum Nisar briefly described the strength of relations existing between Pakistan and Italy and invited participation of Italy in the events of My Karachi Exhibition arranged by KCCI with spirit of promotion of trade and business between the two countries, which would help to promote products of both the countries and access to market as well.

He added that there are ample opportunities exist in Pakistan for trade, business and investment by Italy in the sectors like leather, sports, engineering, textile, foods and technical know-how for gem industry.

 

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ADB gives $600m for setting up Sindh Bank ​

Saturday, November 22, 2008

KARACHI: Sindh government has received $600 million fund from Asian Development Bank (ADB) for setting up Sindh Bank in the province.

This was stated by the Prime Minister’s Advisor on Petroleum Dr Asim Husain during a presentation of Nazim Karachi Syed Mustafa Kamal to President Asif Ali Zardari at the Governor House here on Friday about the completed, on-going and future development projects in Karachi.

Dr Asim said the City District Government Karachi (CDGK) and Sindh government have 50 per cent share each in the bank. He said $600 million will be used as seed money of the Sindh Bank while both these organisations will put in their share in the bank. Dr Asim said the Chief Minister will be chairman of the bank while City Nazim will be vice-chairman. He said the company will be registered with Security and Exchange Commission of Pakistan (SECP).

 

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Balochistan to continue receiving preferential treatment, says Sherry ​

Saturday, November 22, 2008

ISLAMABAD: Minister for Information and Broadcasting Sherry Rehman on Friday said the PPP-led coalition government’s policies were aimed at benefiting and mainstreaming the people of Balochistan, which will continue to receive a preferential treatment.

Talking to a delegation of editors that called on the minister here, she said the government was committed to resolving the issues of each and every sector of the province. “The president and prime minister have repeatedly emphasised that Balochistan deserves special attention and affirmative action so that the issues of the region must be addressed on a priority basis,” she added.

Sherry said the province needs to be seen beyond the prism of its resource-rich structure. “For our government, Balochistan is an important region that must be brought into the mainstream because it is an integral and vital part of Pakistan.”

She said all these years of confrontation with the province was not only fruitless, it also caused immense damage to the cause of a united federation, adding that all our development and policy efforts for the province were initiated from the perspective of benefiting its people.

Sherry assured the editors’ delegation that her ministry would address their issues at its earliest. She accepted the delegation’s invitation to visit the province. “It would be an opportunity to personally interact with media representatives of the province, and understand their problems, and present the federal government’s viewpoint.”

She added that all high-level visits to the region, including those of the president and PM to Balochistan, were aimed at strengthening people-to-people contacts with the province. The minister hailed the release of Mir Abdul Nabi Bangulzai and said the release of all political prisoners, including Sardar Akhtar Mengal, Safdar Sarki and Mir Shahzain Bugti, was part of the PPP government’s reconciliation move.

“We are determined to close the chapter on the culture of political victimisation. The government has also removed the FC checkpoints from the area, in response to a longstanding demand of the people of Balochistan, who have complained of harassment at the hands of FC troops,” she said.

Sherry said the prime minister had allocated a significant sum from his discretionary grant for the development projects of the province, which was a special priority for the federal government. “We are committed to going the extra mile for the development of the province,” she added.

The minister said preparations were on for convening an All Parties Conference for the resolution of the issues of the province. The Balochistan Reconciliatory Committee formed by the president is actively working to restore the environment of trust and political mainstreaming of the Balochistan population, she said.

 

[Neo]

Meeting today: CDWP likely to take up 59 projects worth Rs 151.008bn​

ISLAMABAD: The government has revised the Central Development Working Party (CDWP) agenda and is likely to recommend/ take up 59 developmental projects worth Rs 151.008 billions with foreign exchange component (FEC) worth Rs 24.639 billion.

Deputy Chairman Planning Commission, M Salman Faruqui will preside the meeting in projects for 10 sectors including; transport and communication, water resources, energy, Physical Planning and Housing (PP&H), Higher Education Commission (HEC), Social Welfare and Women Development, Mass Media, Health, Industries & Commerce and Governance.

The CDWP can only approve projects costing up to Rs 500 million and the projects costing above this limit must be approved by the Executive Committee of the National Economic Council (ECNEC), so the CDWP will recommend to ECNEC for further approval if a project cost is above Rs 500 million.

The revised CDWP agenda, obtained by Daily Times here on Friday shows that the Transport and Communication sector has 11 projects worth Rs 20.260 billion with FEC Rs 2.567 billion, the Water Resources has 4 projects worth Rs 70.962 billion. The Energy sector consists of 17 projects worth Rs 28.979 billion including Rs 8.509 billion as FEC.

The PP&H has 11 projects with total cost of Rs 9.290 billion with Rs 751.342 million. The revised agenda further reveals that the HEC has 3 development projects with total cost of Rs 1.430 billion including Rs 267.154 million.

The Social Welfare and Women Development sector has 5 projects worth Rs 2.352 billion. Mass Media has single project namely “Up-Gradation of 10 KW to 100 KW Transmitter at Larkana worth Rs 63.150 million. The Health sector has 4 projects worth Rs 4.522 billion with Rs 1.544 billion as FEC, Industry and Commerce sector has 2 projects worth Rs 326.579 million and the governance sector has single project namely “Procurement/ Installation of non-intrusive vehicle X-ray inspection system (NVIS) worth Rs 12.822 billion including Rs 10.896 billion as FEC.

Some of the national importance projects in the revised CDWP agenda are; “Procurement/Installation of Non-Intrusive Vehicle X-ray Inspection System (NVIS) worth Rs 12.822 billion with Rs 10.896 billion as FEC”, “Lining of distributaries and minor in Sindh province worth Rs 6.278 billion”, “Manufacture of 530 New Design Bogies Wagons including brake vans worth Rs 4.589 billion”, “Construction of Sibbi-Dhadar section of National Highway N-65 including 2 bridges Rs 1.008 billion”, “Power distribution enhancement project phase-I STG-ELR-DOP Rehabilitation capacitor installation and system modernization (FESCO) worth Rs 1.392 billion with Rs 363 million FEC”.

Other important projects are; “Power distribution enhancement project Phase-I STG-ELR-DOP rehabilitation capacitor installation and system modernization (ISECO) worth Rs 2.610 billion with Rs 145.97 million as FEC”, “Power distribution enhancement project Phase-I STG-ELR rehabilitation, capacitor installation (HESCO) worth Rs 3.057 billion with Rs 1.729 billion as FEC”, “Power distribution enhancement project Phase-I STG-ELR-DOP rehabilitation, capacitor installation and system modernisation (QESCO) worth Rs 2.283 billion”, “Power distribution enhancement project Phase-I STG-ELR-DOP rehabilitation capacitor installation and system modernization (LESCO) worth Rs 3.281 billion with Rs 424.630 million as FEC”, Development of under developed area of Sindh province worth Rs 4.721 billion with Rs 1.363 billion as FEC”.

 

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Pakistan wants greater access for its goods in EU market: FM​

ISLAMABAD: Pakistan wants greater access for its goods to the European Union (EU) market, Foreign Minister Shah Mehmood Qureshi said on Friday.

According to a Foreign Office statement, Qureshi was addressing EU ambassadors at a dinner hosted by the French ambassador on behalf of heads of Mission of EU member states.

Qureshi discussed the growing relations between Pakistan and the EU and said it was important to increase high-level interactions.

He briefed the EU ambassadors about recent developments in Pakistan, including the presidential election, the political and economic situation, and the Friends of Pakistan forum. The Pak-Afghan mini-jirga, senior European officials’ visits to Pakistan, counter-insurgency operations, and Pakistan’s relations with its neighbours were also discussed in the meeting.

The foreign minister, while appreciating the EU’s consistent political and economic support to Pakistan, stated that Pakistan attached the highest importance to its relations with the EU, which constituted its largest trading, investment and development assistance partner. The French ambassador, whose currently holds the EU Presidency, said the EU considered Pakistan as an extremely important country, especially in the context of peace and stability in the region.

He reiterated the EU was a close friend of Pakistan and was committed to a stronger and stable Pakistan - politically, democratically and economically.

 

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Worst-ever power crisis feared: Country to face about 4,000 megawatts shortage from December​

ISLAMABAD (November 22 2008): The country will be experiencing its worst-ever power crisis, starting next month as indigenous sources of energy, ie water and gas, will be unable to meet demand of power generation industry, well-informed sources in the Federal government told Business Recorder on Friday.

In recent months, the government faced severe criticism due to power load shedding throughout the country and in several cities, people came out on the streets to protest against non-supply of electricity for 18 hours a day.

"Pakistan will face up to 4000 MW power shortage from next month (December) and those ministers, who are taking credit for narrowing the gap between demand and supply of energy, will no longer be in a position to defend the government policies," the sources added. It is predicted that rural areas will have to face up to 15 hours of load shedding per day in winter, whereas cities will remain dark for six to eight hours a day.

Sources said the Indus River System Authority (Irsa), which regulated water releases from dams, had conveyed a very dismal picture of water in December to the Water and Power Development Authority (Wapda) with the advice that the utility should prepare an alternate power generation plan, using other sources. "We will start gradual reduction in releases from the last week of November and in mid-December, there will be complete closure," the sources added.

Irsa estimates that in January, outflows from Tarbela and Mangla reservoirs will be around 5000 cusecs each, which effectively means that hydel power generation will be at a low level. A couple of months ago, Irsa projected 35 per cent shortfall in water availability in December, January and February. An official from the Petroleum Ministry told Business Recorder that Pakistan Electric Power Company (Pepco) had already been informed that the gas companies would not be able to supply gas to dual fuel power plants in winter.

Minister for Water and Power Raja Pervez Ashraf had blamed the Musharraf regime for not inducting even a single unit in the power generation system, but two days ago the Ministry of Water and Power in a written reply to the National Assembly refuted the claim of its own Ministry. The ministry conceded that 2200 MW power had been injected in the system during the last seven years.

According to the Ministry of Water and Power, the total quantity of electric power installed capacity in the country is 19,671 MW, with hydel 6444 MW, thermal 4840 MW, IPPs (thermal) 6196 MW, IPPs (hydel) 30 MW and rental power plants 285 MW. Raja Pervez Ashraf informed the National Assembly that 650 MW electricity would be added to the national grid by December 2009.

 

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Biological diversity: Pakistan to sign Cartagena Protocol on Biosafety convention​

ISLAMABAD (November 22 2008): Pakistan is to ratify Cartagena Protocol on Biosafety convention on biological diversity after which it will be able to have modified products like BT cotton, bio-fertiliser, virus-free seed and potato etc. The issue had been placed before the cabinet a couple of weeks ago, which questioned the officials of Environment Ministry for proposing a pact, which has not even been signed by the United States.

The ministry informed the cabinet that Pakistan imported many food items and agricultural products from different sources. However, no system presently existed to differentiate normal products from Living or Genetically Modified Organisms (LMOs or GMOs), which were developed through genetic engineering techniques.

Although the imported products have advantages like improved yields, protection from pests and diseases etc, yet they could pose serious and irreversible impact on health and environment like spread of new toxins and allergens in foods, spread of diseases etc the cartagena protocol established a system that provided for trans-boundary movement of LMO for direct use as food or feed, or for processing their movement through web-based biosafety clearing-house.

The ministry claimed that proposed ratification of the protocol would place Pakistan in a better position to access international market for sale of its genetically modified products like BT cotton, bio-fertiliser, virus free seed, potato, etc that have been field tested in Pakistan. Besides assistance from the United National Environment Programme (UNEP), Global Environment Facility (GEF) would become available for capacity building.

Environment had proposed that the Ministry of Food and Agriculture (Minfal) be designated as Competent National Authority (CNA) for performing administrative functions, while the Ministry of Environment may be designated as National Focal Point (NFP) responsible for liaison with the secretariat of the protocol.

The sources said that the cabinet debated on the relevance of Ministry of Science and Technology, vis-à-vis Ministry of Food, Agriculture/ Pakistan Agricultural Research Council, and concluded that the Minfal was more relevant and better equipped to act as Competent National Authority (CNA).

The protocol is linked with food, plants and seeds and, therefore, the Minfal was supposed to be the most appropriate ministry. The Environment Ministry's apprehension that the protocol might put restrictions on Pakistan's exports was unfounded. It was clarified that the protocol was WTO compatible.

It was also apprised that an elaborate control regime would be developed and put in place once the protocol was ratified. The query regarding the United Nations' ratification of the protocol was replied in negative, but it was clarified that it would not affect Pakistan's export. The ministry also explained that delay in developing the proposal was caused by the lengthy process of consultations with a wide range of stakeholders.

 

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Inflation surges by 29.02 percent​

ISLAMABAD (November 22 2008): The Inflation measured through SPI has surged by 29.02 per cent on week ending November 20 over the same period of last years on the back of rising prices of 17 essential commodities, according to Federal Bureau of Statistics. The data released on Friday showed that combined SPI has surged from 27.91 per cent from last week to 29.02 per cent on November 21, showing 0.92 per cent increased during the week.

With this increase in the SPI, the dearness for the low income group of Rs 3000 monthly income was recorded 29.33 per cent, followed by 29.74 per cent for families of Rs 3001-5000 monthly income. The dearness was 30.06 per cent for monthly income of Rs 5001-12000 and 28.56 per cent for above Rs 12000 income group.

The data on SPI released by the FBS showed an increase in the prices of 17essential commodities, decline in 18 whereas prices of 18 commodities remained stable during the period under review. The price of kilogram tomatoes have increased during the week to Rs 35.71 from Rs 31.57, onions per kilogram to Rs 25.02 from Rs 22.34, chicken (Farm) Kg. to Rs 98.22 from Rs 92.33.

Electric charges 1-100 unit to Rs 3.22 from Rs 3.07, telephone local call to Rs 2.42 from Rs 2.31, egg hen (Farm) doz. to Rs 65.83 from Rs 64.22, tea packet 250 gram. to Rs 106.47 from Rs 104.71, Electric bulb 60wats each to Rs 13.91 from Rs 13.74, bread plain mid size each to Rs 23.97 from Rs 23.68, potatoes kg to Rs 27.53 from Rs 27.22, firewood 40 kg to Rs 265.06 from Rs 263.98, mash pulse washed kg to Rs 74.82 from Rs 74.59, bananas doz. to Rs 31.86 from Rs 31.78.

Shirting meter to Rs 79.06 from Rs 78.91, mutton kg to Rs 256.51 from Rs 256.20, beef kg to Rs 142.20 from Rs 142.13, Masoor Pulse Washed kg to Rs 129.28 from Rs 129.26. According to the FBS, the prices of 18 essential commodities remained stable during the week. However, a comparison with the same period of last years showed that majority of them increased in double digit.

 

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Pakistan offers special package for investors: Waqar​

ISLAMABAD (November 22 2008): Minister for Investment Waqar Ahmed Khan said on Friday that the government was preparing a comprehensive and multi-pronged investment strategy for enhancing foreign and domestic investments in the country. The minister said that Pakistan offers investment friendly environment for the investors with tremendous potentials in various fields of the economy.

"Pakistan also offers incentives to the foreign investors specially in oil and gas sectors", he added.

 

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Foreign investors withdraw $4.434 million​

KARACHI (November 22 2008): The outflow of portfolio investment from the country's equity market continued as the foreign investors withdrew another $4.434 million during the outgoing week ended November 21. "The offshore investors remained cautious over the deteriorating economic condition and uncertainty over removal of price floor mechanism and opted to offload their holdings", analysts said.

Due to unavailability of buyers at current levels, off-market trading also continued with an average discount of around 25 per cent during the week. According to the National Clearing Company of Pakistan data, the cumulative outflow of portfolio investment has increased to $8.761 million in the current month from November 01 to November 21.

The cumulative figure of this mod of investment was recorded at negative $354.220 million in the period from January 01, 2008 to November 21, 2008. The week started on a negative note and an outflow of $272,471 was witnessed on the first day of the week. This trend continued as the foreign investors withdrew another $2,018,232 on Tuesday. An inflow of only $60 was witnessed on Wednesday. The foreign investors once again opted to offload their holdings and an outflow of $1,565,989 was witnessed on Thursday and $550,606 on Friday.

 

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China gives $500 million to Pakistan: envoy​

ISLAMABAD (November 22 2008): China has handed over $500 million to Pakistan, a private TV channel reported on Friday. Talking to a private TV channel, Chinese Ambassador in Pakistan said $500 million have been handed over to Pakistan to stabilise its foreign exchange reserves.

He said Pakistan and China enjoys deep and friendly relations and China would take more steps in future to maintain the same relations. He said China has provided $1.5 billion to Pakistan since 1998.