Pakistan Economy - News & Updates - Archive

[Neo]

IMF condition not met: Govt borrowing from SBP Rs 153bn higher than target​

ISLAMABAD: The government borrowed Rs 411 billion from State Bank for budgetary support from July 1 to December 13, although the International Monetary Fund (IMF) had asked it to limit the budgetary borrowing at Rs 258 billion for the full fiscal year.

Sources in Ministry of Finance told Daily Times, “IMF Stand-By-Arrangement (SBA) target to limit State Bank of Pakistan financing of the budget at the level of Rs 258 billion till June 2009 has been exceeded by Rs 153 billion.”

“The government may find it difficult to keep its borrowing from SBP at the level decided by IMF,” source said on Saturday.

The government had agreed with the IMF authorities that SBP financing of the budget would be kept at the level of Rs 258 billion.

This is the sad beginning of the IMF programme as the government has failed to achieve the most important target, said an analyst based in Karachi. If government wants to meet the IMF target then by December 31 it has to retire Rs 153 billion to SBP, which appears to be an impossible task.

Meeting the key targets is important, as this would determine country’s future relations with IMF and other multilateral financial institutions. This is also important for the credit rating of the country. Pakistan is expecting few hundred million dollars assistance from a donor country by 31 December 2008. If this assistance is used for financing government expenditure, then the IMF target could be met, otherwise, it would be missed.

The government has an opportunity to reduce this gap between Rs 258 billion to Rs 411 billion to meet performance target by arranging required financing from other options, the sources added.

According to the Letter of Intent (LOI) of the IMF, “the targeted reduction in the fiscal deficit in 2008-09 will help eliminate SBP financing of the budget. The government is committed to limiting SBP financing of the budget to zero on a cumulative basis during 1 October 2008 to 30 June 2009. During this period, the fiscal deficit will be fully financed by available external disbursements (which have already been committed), the acceleration of the privatisation process, the issuance of treasury bills, and other domestic financing instruments, including Pakistan Investment Bonds, Ijara Sukuk, and National Savings Scheme (NSS) instruments”.

Pakistan’s privatisation programme is moving ahead at a snail pace with no major achievement during July-December period of current fiscal year. Similarly, due to the strong opposition from workers and opposition parties the privatisation of major entities like OGDCL, PSO, PPL and electricity distribution companies would be difficult in second half of the fiscal year, the sources explained. The government is continuously increasing the profit margins on the investment to be made in National Saving Schemes (NSS), but these schemes would not be instrumental in generation of required non-inflationary financing within stipulated period. Other options like treasury bills, Pakistan Investment Bonds, Ijara Sukuk have not been fully availed.

According to LOI, the fiscal deficit (excluding grants) is targeted to decline to 4.2 percent of GDP (Rs 562 billion) in 2008-09, from 7.4 percent in 2007-08. This fiscal effort is necessary to help reduce the external current account deficit, move toward a sustainable fiscal position, and eliminate SBP financing of the government. To achieve the 2008-09 target, the government will increase tax revenue by 0.6 percentage points of GDP and reduce non-interest current expenditure by about 1.5 percentage points of GDP, mainly through the elimination of oil subsidies by December 2008 and electricity subsidies by June 2009. At the same time, domestically financed development spending will be reduced by about one percentage point of GDP through better project prioritisation.

 

[Neo]

Rupee depreciated by 27 percent during 2008​

KARACHI: The sharp depletion of country’s foreign exchange reserves and widening trade deficit caused the rupee to depreciate by 27 percent against the dollar during 2008.

The dollar was being sold at Rs 62.04 against rupee on 1 January 2008. During the year it lost Rs 16.86. It closed at Rs 78.50 on December 26.

The greenback touched its highest-ever level of Rs 84 in inter-bank and Rs 87 in open market during this year.

According to analyst the major factor that caused rupee depreciation was the depleting reserves throughout the year. Before the recent IMF aid of $3.1 billion the foreign exchange reserves were declining continuously and were down by more than 50 percent from this year peak of $15.5491 billion on 05 January 2008 to $6.596 billion on 22 November. The country had been losing, on average, $400 million every week for past few months owing to extremely high trade and current account deficits.

The $3.1 billion inflow was part of the $7.6 billion loan approved by IMF for Pakistan as a 23-month standby arrangement. Pakistan would be receiving the remaining amounts in quarterly installments and the amount is to be repaid with an interest of 3.51 percent to 4.51 percent between 2011 and 2016.

This inflow helped the central bank restrict the depletion in foreign exchange reserves and the national currency to recover. The national currency lost 0.31 percent during the 2007 financial year, however, the rupee depreciation by 27 percent during the year showed a mixed trend vis-à-vis US dollar. The rupee depreciated heavily in first three quarters of the year but showed little recovery in the last quarter of 2008.

In the first half, the widening trade deficit drove the rupee depreciation, while in the last quarter, improved market related inflows helped the rupee to regain some of its lost ground.

Analysts believe that the national currency could further regain its strength in future if some of friendly countries of Pakistan would provide aid.

The depreciation of rupee against dollar during the year has already bogged down the business class, which seems perturbed about future prospects and now all hopes are pinned on the government to unveil some bailout package to stabilise the economy.

The depreciation of the currency has also multiplied the cost of doing business and badly affected the industrial, manufacturing and agriculture sectors as Pakistan has to import fertilizers, food items and industrial raw material.

 

[Neo]

PIA suffers $182.33m loss as other airlines mint profit​

ISLAMABAD: Despite other airlines of the industry minting record profits during the year 2007, the Pakistan International Airlines (PIA) suffered a massive loss of $182.33 million, due to high number of employees per aircraft, and absence of implementation of any financial improvement plan.

This was revealed in the Auditor General of Pakistan Audit Report 2006-07, tabled at National Assembly.

It is pertinent to mention here that almost all airlines operating in the region earned good profits.

Air Blue, which is considered the main domestic competitor of PIA, earned a profit of $1.28 million, whereas the competitors on international routes; Emirates Airlines, earned profit of $941 million, Royal Jordanian Airline $28 million, Malaysian Air Lines $265 million, Egypt Air Lines $1,143 million, which is a record.

The Auditor General report rejected PIA pleas for blaming increased fuel prices and other challenges the airline industry faced during the year 2006-07 for the losses.

All the airlines were exposed to rising fuel prices and other challenges, however, they managed to earn profit, but on the other hand PIA could not even manage to break-even and sustained a loss of $182.33 million in year 2007, the report said.

The number of employees in the national airline has always been criticised.

A large number of employees have been inducted in the PIA on political basis moreover, the airline has also been experimented by adopting different management models on ad-hoc basis, the PIA sources says.

The report pointed out this over staffing and said that the ideal employee to aircraft ratio ranges between, 1:130to 170, whereas in PIA, the employee to aircraft is 1: 418.

It further explained that as compare to the number of employee to air craft ratio in the region, PIA has highest number of employees. There are 17,966 employees in PIA for the fleet of 43, whereas, in Japan Airlines, there are 17,925 employees for a fleet of 241, with a ratio, 1: 74, In US airways, the number of employees are 37,675 for a fleet of 357, with a ratio, 1:106, and in Indian Airlines the number of employees are 18, 492, for a fleet of 67, with a ratio, 1:276.

The AGP observed that the analysis shows that other airlines are able to achieve better output from minimal workforce, whereas PIA has over employed for its current fleet strength, resulting in an increase in overheads

The report also observed that financial improvement plans were not prepared in PIA, on regular basis. However, it said, a structure plan of PIA was first prepared on June 06, 2001, where in PIA had succeeded to borrow Rs 20 billion against Government of Pakistan (GoP) guarantee to settle its liabilities and repayment installments amounting to Rs 4.863 billion and payment of purchase of Boeing 777-ER, and 777-200 LR. The report also said that PIA committed to the GoP that with the help of this financial assistance they would become profitable.

The report also pointed out that the corporation has been continuously sustaining losses after 2004. At the close of year on 31 December 2006, the accumulated losses stand at Rs 24.563 billion.

 

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'Fuel Ethanol Policy' ready: failed petrol blending project to be revived​

MUSHTAQ GHUMMAN
ISLAMABAD (December 29 2008): The government has prepared a new 'Fuel Ethanol Policy', according to which the Oil and Gas Regulatory Authority (Ogra) will be assigned the task of regulating market-based pricing mechanism, in consultation with all stakeholders, for blending ethanol with motor gasoline, sources in Planning Division told Business Recorder.

This project is being revived after Pakistan Sugar mills Association (PSMA) was reported to have convinced President Asif Ali Zardari that the use of the by-product of sugar fermentation, ethanol, with petrol would help the government reduce its oil import bill, besides benefiting sugar industry.

The Shaukat Aziz government had launched a pilot project of mixing ethanol with petrol. However, the price of petrol at the time was lower than ethanol, and the pilot project failed after six months. The PSMA is now reportedly working closely with the Presidency to revive the project.

Sources said that the Planning Division has prepared a summary for approval by the Cabinet, likely to be considered in the next meeting.

There were reports that Petroleum Ministry and one of PSMA's representative, Haroon Akhtar, had developed serious differences over the fixation of compressed natural gas (CNG) price after initiation of ethanol blending with petrol, said an official who witnessed this development at a meeting in the ZTBL headquarters.

The Planning Division has proposed (a) retail price of E-10 at 15-20 percent less than motor gasoline consumer price, (b) provide for calorific value of fuel ethanol (motor gasoline 1100 mmbtu and E-10 700 MMBTU); (c) fuel ethanol purchase price for oil marketing companies (OMCs) to be determined to prevent windfall profits due to international market price volatility; (d) the price for fuel ethanol will be indexed to free on board (fob) price of molasses, where the floor and ceiling may be determined; (e) producers of fuel ethanol dedicating their production to enable E-I0 will be guaranteed 15 percent rate of return on investment in case of additional investment on distilleries for production of fuel ethanol; and (f) indexation mechanism will involve allocating weights to the parameters for which a specific economic formula willbe structured by Ogra, in consultation with the Planning Commission, Ministries of Finance, Petroleum , Industries and Federal Board of Revenue (FBR).

Sources said that Ogra will be directed to develop a mechanism to ensure quality, standard, and safety measures, and initiate action to obtain advantages of carbon credits and shall ensure to pass on these advantages to the retailers and consumers.

According to the summary, initially, the Pakistan State Oil (PSO) will be given the task to act as the lead player to develop blending facilities at its depots located in proximity of fuel ethanol distilleries to achieve fast track outcome.

This facility will be provided to the consumers within three months, without any additional investment by the government. PSO will meet the cost of ethanol blending out of its existing distribution margin of 4 percent allowed to OMCs for the purpose.

They said that PS0 will launch a sustained media campaign to create public awareness of E-10, and communication in national and regional languages will be ensured.

OMCs will be encouraged to participate in the initiative led by PS0. However, after one year of implementation of the scheme by PSO, it will be mandatory, under the policy, for OMCs to market E-10 at their outlets as well, sources added.

They said that a five-year duty exemption will be allowed on import of machinery and equipment for ethanol production dedicated for fuel and will be exempted for local manufacturing of equipments which will be reviewed after five years.

Sources said that the Ministry of Industries, in collaboration with Alternative Energy Development Board (AEDB) and Ministry of Petroleum, will make best efforts to develop a strategic plan for fuel ethanol whereby E-l00 (100°6 fuel as ethanol) is introduced during the MTDF plan period 2010-15. This would entail encouraging automotive manufacturers (cars and buses) to match the enhanced market demand of production to ethanol-fired engines by 2030.

The facilitation package for automotive manufacturer ie exemptions from import duties on dedicated engines and ancillary automotive components and income/corporate tax relief will also be considered.

Sources said that fuel grade ethanol will be declared as blending component with petroleum products. Ogra will amend necessary rules at federal and provincial levels by taking into confidence all stakeholders for the ethanol component only, which is used in blending as fuel.

Distilleries will transport de-natured ethanol to the designated depots of OMCs transportation cost of which will be payable to distilleries out of OMCs' existing distribution margin (4 percent).

Experts, however, are of the view that the economics of ethanol blending would have a negative impact at this time, when Pakistan is shifting from costly petrol to cheaper alternative motor fuels, such as CNG, LPG and LNG. Petroleum Ministry, which is now being run by Dr Asim and HDIP, had earlier contested sugar industry's arguments during Cabinet meetings, saying that PSMA's idea was not workable.

 

[Pk_Thunder]

7-20 percent increase in drug prices allowed​

RECORDER REPORT
MULTAN (December 29 2008): The Federal Health Ministry, after a gap of 7 years, granted permission to local pharmaceutical companies to make an upward revision in the prices from 7 to 20 percent on 240 locally manufactured drugs. The increase came into affect after persistence appeal by the Pakistan Pharmaceutical Manufacturers Association (PPMA).

An official of the PPMA informed that increase in rates of 240 locally manufactured medicines out of total 47,000 produced in the country was necessary, as their cost of manufacturing had exceeded, prices making it virtually impossible for the related pharmaceutical companies to produce them. As a result, shortage of these medicines caused immense hardship for a large number of patients.

Federal Secretary Health and DG Health also attended the meeting besides other high officials of the health department. Members of the delegation informed the minister about static rates of medicines during the last 7 years despite steep rise in inflation, devaluation of the Pakistani rupee and increase in the input price of the pharmaceutical sector, which forced the industry to face worst ever crises.

Massive increase in raw and packaging material rates, majority of which was imported from abroad for catering to the requirement of indigenous industry was also brought to the notice of the minister.

However, despite presentation of all facts and figures, response of the Federal Minister was unfavourable as he failed to give patient hearing to the problems faced by the pharmaceutical industry in the country. He told them plainly that the government would not hesitate importing medicines from India if the local pharmaceutical industry shuts down their businesses.

 

[Pk_Thunder]

SPI inflation surges to 23.61 percent​

ZAHEER ABBASI
ISLAMABAD (December 28 2008): The inflation measured through SPI surged to 23.61 percent during the week ended on December 24 over the same period of last year. However, it declined by 1.15 percent during the week, according to the Federal Bureau of Statistics (FBS). Official figures released by FBS on Saturday showed a slight decline in the SPI inflation during the week and came down to 23.61 percent.

The inflation was recorded 24.76 percent during last week. Further analysis of the data showed that dearness for low income group increased by 23.36 percent over the same period of last year, followed by 23.89 percent of Rs 3001-5000 income group and 24.63 percent for Rs 5001-12000 income group. The dearness above Rs 12000 was recorded 23.61 percent.

The SPI bulletin, based on data of 53 items collected from 17 urban centres showed increase in the prices of 14 essential commodities, decline in 11, while the prices of 28 commodities remained stable during the week, but were higher as compared to last year.

The prices of per kg tomatoes increased to Rs 27.71 from Rs 24.48, LPG (11 kg cylinder) each to Rs 707.59 from Rs 682.06, mustard oil kg to Rs 141.22 from Rs 139.28, electric bulb 60 watts each to Rs 14.31 from Rs 14.25, bananas doz to Rs 33.55 from Rs 33.41, wheat average quality kg to Rs 24.75 from Rs 24.66, masoor pulse washed kg to Rs 128.01 from Rs 127.62, gur kg to Rs 38.59 from Rs 38.52, gram pulse washed kg to Rs 57.37 from Rs 57.31, garlic kg to Rs 43.52 from Rs 43.48, mutton kg to Rs 257.94 from Rs 257.72, firewood 40 kg to Rs 268.05 from Rs 267.90, beef kg to Rs 142.58 from Rs 142.53, mash pulse washed kg Rs 75.59 from Rs 75.58.

The prices of following commodities declined during the week: potatoes kg to Rs 17.56 from Rs 19.71, egg hen (farm) doz to Rs 71.42 from Rs 74.96, chicken (farm) kg to Rs 86.73 from Rs 90.40, rice Irri-6 kg to Rs 36.70 from Rs 37.30, sugar kg to Rs 34.68 from Rs 35.17, wheat flour average quality kg to Rs 26.01 from Rs 26.37, rice basmati broken kg to Rs 45.33 from Rs 45.94, onions kg to Rs 27.27 from Rs 27.52, red chillies kg to Rs 137.73 from Rs 138.54, moong pulse washed kg to Rs 48.41 from Rs 48.54, and vegetable ghee loose kg to Rs 90.36 from Rs 90.51.

 

[Pk_Thunder]

SSIC spending Rs 257 million on uplift schemes​

KARACHI (December 28 2008): Sindh Small Industries Corporation (SSIC) will spend Rs 257 million on various development schemes during 2008-09. Sindh Small Industrial Estate Karachi has been set up on 100 acres of land and total cost of its development has been estimated at Rs 462 million out of which Rs 299 million have been spent so far and ballotting of plots already done on May 10 this year.

According to SSIC sources, payments for supply of gas and electricity has been made to concerned organisations and some amount also paid to KWSB in advance for water supply, while remaining would be paid during the year. This year Rs 160 million are being spent on development and the project is expected to be completed during 2008.

Sindh Minister for Industries and Commerce Rauf Siddiqi has already announced that desirous persons, who wish to set up units immediately, can get possession of plot by making full payment. According to the Minister, an industrial estate is being developed on 50 acres of land under expansion plan of Hyderabad Small Industrial Estate which is estimated to cost Rs 82.80 million and so far Rs 50 million have been spent.

He said development work is going on apace and the scheme will be completed during 2008 and applications for allotment of plots already received through banks and sent to Nadra in few days for computerised ballotting. He said a 15 percent quota of plots has been kept for local people of Hyderabad.

Rauf Siddiqi said an another industrial estate on 50 acres land also being set up under expansion plan of Sukkur Small Industrial Estate at a cost of Rs 23.60 million and so far Rs 21.60 million have been spent. He said development work has completed and applications for allotment of plots will soon be invited.

According to him new industrial estates are also being established in Ghotki, Mithi and Naushehro Feroz on which cost of Rs 14.80 million, 23.50 million and Rs 23.50 million will be incurred respectively.

Minister said that a new scheme has been approved to promote power loom industry in Hyderabad on 500 acres of land and will cost Rs 200 million. He said efforts are underway for acquiring land and once it is acquired, development work will be taken up immediately.

Rauf Siddiqi has announced that investors desiring to set up factories in Thatta, Badin and Sanghar would be handed immediate possession of plot on payment of 20 percent of price and remaining amount would be recovered on easy instalments in 10 years. He said these plots would be non-transferrable.

He made it clear that people benefitting from this scheme will have to start work on the plot within one month of handing over of possession and show industrial production within 2 years.

He said in case of non-fulfilment of these conditions, the plot allotment will be cancelled. He has asked people whom plot was allotted more than 5 years back and have not yet set up factory or unit, should start work within one month or else otherwise, their allotment will be cancelled.

 

[Pk_Thunder]

Traders launch movement against lawlessness, kidnapping and price hike​

ABDUL QADOOS
PESHAWAR (December 28 2008): The trading community of Peshawar has started protest movement against lawlessness, and particularly the growing incidents of kidnapping for ransom in the city, and price hike and massive power load shedding. The campaign would be formally launched under the banner of Traders' Alliance--an amalgam of three different trade organisations--with the staging of a two-day protest camp at Chowk Yadgar.

The camp would be attended by all organisations of the trading community and activists of civil society. In this connection, All Pakistan Clerks Association (APCA) had already announced support to the trading community.

The two-day protest camp at Chowk Yadgar would be followed by such camps on University Road, Saddar Road, Charsadda Road and other important junctions of the city. Before the formal launching, all components of the alliance were due to hold meetings of their bodies.

The meeting of Anjuman-e-Tajiran was due at Sarafa Bazaar, while the action committee of the traders was scheduled to meet at Haleem Tower on G T Road in Nishterabad. The deteriorating law and order and particularly the growing trend of kidnapping for ransom has become a matter of great concern not only for the trading community, but also for the general public.

"We had waited for the measures of the government for last four months, but no practical step was taken so far to arrest the menace," said Mohammad Afzal, a leader of Anjuman-e-Tajiran, at Peshawar Press Club on Saturday.

He said that the government had announced giving free hand to police in dealing with the incidents of the kidnapping for ransom, but people were still awaiting practical step in this regard.

Although the kidnapping for ransom has been going on since long as a booming industry in the province, the kidnapping of a 32-year old woman along with her three-year old minor daughter had sent the waves of shocks and concern among all residents of the city and its adjoining rural areas.

"The new trend adopted to kidnap daughters and sisters of people has no precedent in our tradition and the trading community has come out to tackle it with the support of the people of all walks of life," announced Haleem Jan, president of Traders Action Committee, Peshawar.

About negotiations with the government, he said that so far they had neither been invited by any functionary of the provincial government nor they were in mood for it. However, he said he was hopeful that visit of a senior functionary of the government in the protest camp may prove seriousness of the government. The trading community also sought co-operation and participation of the journalist community in the war against kidnapping for ransom. The journalist community, who themselves are victims of the menace, extended full support to them. Those who visited the press club were Zahid Hussein, Ghufran Ahmad and Mujeeb-ur-Rehman.

 

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Deal signed for Rs 20 billion 'Market Opportunity Fund'​

AHMED MALIK
KARACHI (December 29 2008): An agreement was signed on Sunday among the participants for creating a Rs 20 billion 'Market Opportunity Fund' (MOF) regarding government guarantee, it is learnt. The fund will be managed by National Investment Trust (NIT).

Sources said that the fund would be used to start buying shares at the Karachi stock market in the next few days, after settlement of outstanding CFS shares issue.

Sources said that National Bank of Pakistan (NBP), State Life Insurance Corporation of Pakistan (SLICP), Employees Oldage Benefit Institutions (EOBI) and a consortium of six banks will provide Rs 5 billion each in the proposed fund.

In the consortium of banks, HBL, MCB, UBL and ABL will contribute Rs one billion each, while Bank Al Falah will provide Rs 750 million and the Royal Bank of Scotland Rs 250 million in the said fund. They said that the consortium will provide the amount at the rate of KIBOR+1.

Sources said that the fund will be buying the shares of only eight government owned listed companies including Oil and Gas Development Company (OGDC), Kot Addu Power Company (Kapco), Pakistan Petroleum Limited (PPL), Sui Southern Gas Company (SSGC), Sui Northern Gas Pipelines (SNGPL), Pakistan State Oil Company (PSO), National Bank of Pakistan (NBP) and Pakistan Telecommunication Company (PTCL).

 

[Pk_Thunder]

FBR mulling to replace GST with VAT​

MUHAMMAD ALI
KARACHI (December 29 2008): The Federal Board of Revenue (FBR) is mulling to completely replace the general sales tax (GST) with the Value Added Tax (VAT), likely by the end of 2009. Sources in the Regional Tax Office (RTO) told Business Recorder on Saturday that this was suggested by a member of IMF delegation led by Masood Ahmad, Director, Middle East department, in his speech.

They said that tax offices were presently collecting the General Sales Tax (GST) at flat rate of 16percent in general and added that GST was not in the mode of VAT, which had to be moved towards it for substantial increase in the revenue collection.

They said that there was ample need of complete adoption of VAT regime to enhance the revenue collection because in GST-based system, the revenue collection could only be increased after imposing special tax or increasing GST rate, which were not beneficial.

Therefore, the government of Pakistan has fully agreed to implement VAT law with minor exemptions of sales tax and income tax for sufficient revenue generation, they maintained.

Furthermore, they said the tax was deducted on the basis of value in VAT law however, in GST, it had been fixed, no matter what was the actual value of a product. They said that VAT regime would improve the tax reform progress and hoped that it would increase tax revenue by over 3 points of GDP.

Expert expected that board has intended to abolish special rules notified for different sectors. He said the government could further enhance its revenue collection, if zero-rating was removed and termed it as a major hurdle in VAT effective implementation. He said the FBR has zero-rated major export sectors including textile, leather, carpets, sports, surgical, dairy, stationary, poultry etc.

 

[Pk_Thunder]

Immediate recovery of arrears of all taxes directed​

SOHAIL SARFRAZ
ISLAMABAD (December 29 2008): The Federal Board of Revenue (FBR) has ordered immediate recovery of arreares of sales tax, federal excise duty, income tax and customs duty from the registered persons, for improving revenue collection in the second half (January-Jun 2009) of 2008-09.

In cases where recovery is pending due to disputes involving legal interpertion of tax laws, expert opinion of FBR Legal Wing would be taken to devise viable strategy for pursuing the case at the judicial fora.

Sources told Business Recorder on Sunday that the decision was taken in the last board-in-council meeting for recovery of pending tax arrears. The council had directed that the pending recoveries should be expedited by Member Sales Tax, Member Income Tax and Member Customs without delay. These Members should also consult FBR Member Legal to expedite disposal of cases in which recovery was held up due to litigation proceedings, the directive said.

Explaining the nature of pending recoveries, tax experts opined that the collectors of customs have to check whether there is any accumulation of customs duty arrears at the newly established reformed Model Customs Collectorates or not. The board had already issued instructions to the collectors of customs to pursue recovery of arrears. Similarly, the board had empowered the customs officials to write off irrecoverable arrears under SRO 1070(I)/2007. Through this procedure, business community can obtain waiver of irrecoverable arrears pertaining to customs duty, surcharge/fee, service charges, fine, and amount under bonds/guarantees over Rs 10 million.

In case of sales tax and federal excise duty, if demands have been raised against the taxpayers through order-in-origional during adjudication proceedings, it would also result in recovery of taxes. The recovery of pending sales tax and federal excise duty under the relevant provisions of Sales Tax Act, 1990 and Federal Excise Act would also be done.

In case of income tax , pending recoveries also include assessment orders; appeal orders and ractification orders pertaining to previous fiscals. If the Directorate General of Inspection and Internal Audit has detected negligence on the part of tax officials, the recovery could be made from the concerned unit for recovery of un-paid tax. As far as detections made by the DG Inspection and Internal Audit are concerned, no action is taken against the involved tax officials, but recovery proceedings are to be made against the concerned unit, experts said.

 

[Pk_Thunder]

Marriott reopens with better facilities​

RECORDER REPORT
ISLAMABAD (December 29 2008): The luxury Marriott hotel in Islamabad was reopened on Sunday, 98 days after it was destroyed in a devastating suicide truck bombing, one of the worst attacks in Pakistan. In the reopening ceremony, besides local people from different walks of life, US ambassador to Pakistan Anne Patterson, ambassador of Saudi Arabia, ambassador of Lebanon and officials from different embassies were present in the newly furnished luxurious hotel.

However, there was no presence of any government high ups. The re-furnished hotel surrounded by a bomb proof wall, was operational with more modern technology, extra service facilities, bullet proof rooms and new search rooms with modern devices to detect any explosive.

Sadruddin Hashwani, the owner of the Marriott and chairman of Hashoo Foundation had committed immediately after the attack for rebuilding the 289-room hotel within three months, making it even better place than it was before.

The hotel has been made functional with the re-opening of all eight restaurants, coffee shops and the conference rooms. At present, 60 rooms, which have been readied for guests would be functional from January 2, 2009, as hotel management has decided to test all the fixtures before allowing guests to stay.

Talking to media on the occasion, Sadruddin Hashwani was thankful to media for its co-operation and support. He said that the new hotel has been built like a fortress making it even stronger than before. The hotel's new bombproof wall, which is 14 feet high and 15 feet thick is capable of absorbing the shock of even a massive explosion like the one in September, he added.

Visitors will have to pass through a bombproof room within the wall in order to gain access to the hotel, which will feature sophisticated scanning equipment, he said.

Except head of the state, there will however be no parking at the hotel even vehicles carrying VIPs to the Marriott will have to deposit guests at the front gate and drive on. To a question, Hashwani said that he was neither supported by the government nor any insurance company and the hotel was furnished with his own resources.

He regretted that he had requested the government for allotting the adjacent plot for parking of the guests, but the government did not respond so far.

He said that he has full sympathy for those who sacrificed their lives while saving Marriott and he would support the widows and children of all the Marriott employees, who lost their lives. For the purpose, he said, his daughter Sara Hashwani has established Sahara fund for the support of 560 dependants of Marriott employees who either lost their lives or received injuries in the bomb blasts.

He said that he had rebuilt the hotel as per his commitment and his commitment was unconditional. "I am the son of this soil and would continue serve for this", he added.

Zulfiqar Malik GM Marriott said that the hotel was rebuilt by spending Rs 1 billion and the cost would increase after full completion of the reconstruction. He added that the security staffs of Marriott have been fully trained during last two moths by imparting them with professional training.

 

[Pk_Thunder]

Saleem Raza to become SBP governor​

RECORDER REPORT
ISLAMABAD (December 29 2008): The Chief Executive of Pakistan Business Council (PBC) Sayed Saleem Raza is scheduled to meet the prime minister Syed Yousaf Raza Gilani on Monday upon his appointment as Governor State Bank of Pakistan, it is reliably learnt.

Raza played a long inning in Citigroup and retired in a couple of year back to take up the assignment in Pakistan. He is a member of Economic Advisory Council to the prime minister and was associated with the Advisor on Finance Shaukat Tarin to draw proposals seeking to pull out Pakistan from the financial crisis due to abnormal rise in food and oil prices internationally.

 

[Neo]

Economy needs effective policies, reforms to regain stability: SBP report​

KARACHI: December 29, 2008: Pakistan needs effective policies and implementation of reforms in fiscal year 2008-09 (FY09) to regain macroeconomic stability and meet economic challenges, says SBP report.

SBP first Quarterly Report for FY09 released, here on Monday, however pointed out that the sense of crisis gripping the country's economy in the initial months of FY09 has visibly eased by November 2008, as the Government moved to address the most immediate risks, and entered into a macroeconomic stabilization program to support medium-term reforms under the aegis of the International Monetary Fund.

said the disbursement of the first tranche of dollars 3 billion by end of November 2008 under the program meant that any immediate risk of default on external obligations receded, with a substantial improvement in foreign exchange reserve adequacy indicators. Also, export growth has strengthened and import growth moderated somewhat. This lent strength to the rupee, reducing the impact of an important generator of inflationary pressures, it added.

The Report said the gain on the external account was helped by a sharp decline in international commodity prices that is expected to substantially lower the country's import bill, offering the possibility of a decline in the country's very large current account deficit, and lower inflation.

This supply-side improvement has been reinforced by the reasonably good performance of crops during kharif FY09 cropping season, it said and added these factors appear to have already halted the persistent uptrend in inflationary pressures in the economy. Together, they could also help support a very modest improvement in the growth outlook for FY09.

There is also substantial progress on containing fiscal imbalances, with the government moving bravely to reduce subsidies, contain growth in other spending and increase revenues, the Report said. The result has been an encouraging improvement in some fiscal indicators, including a sharp fall in the fiscal deficit from 1.5 percent of GDP during first quarter of FY08 to 1 percent of GDP in Q1-FY09. This figure appears consistent with the annual target embedded in the macroeconomic stabilization program framework.

However, it added ,notwithstanding the relative positives, there is no room for complacency, the report asserted. While many of the country's macroeconomic indicators may no longer be worsening, the imbalances are nonetheless still quite large. Resolving them will require disciplined efforts over an extended timeframe.

This challenge is all the greater because of the difficult international economic environment, which has restricted the country's ability to tap international capital markets and carries risks for other external receipts (exports, remittances, FDI, etc.), it said.

The Report said that real Gross Domestic Product growth is likely to be significantly lower than the annual target and inflation will breach its target with a wide margin. On a positive note, however, both fiscal and current account deficits are estimated to improve iin FY09, it added.

 

[Neo]

Chinese companies may set up plants for cell-phone sets ​

ISLAMABAD (December 25 2008): Government is negotiating with Chinese companies to set up manufacturing plants for cell-phone sets in Pakistan. Federal Secretary for Information and Technology Hifz-ur-Rehman informed the media persons after workshop conducted by SAS here on Tuesday.

He said that government is negotiating Chinese cell-phone companies including Zong, China Mobile and Hawavay to set up manufacturing plants of handset in Pakistan.

He said that President Asif Ali Zardari during his visit to China had taken up the issue of setting up manufacturing plants of cell-phone handsets in Pakistan. He said that Pakistan was spending $500 million to $800 million annually on the import of mobile sets and manufacturing plants in Pakistan could result in saving valuable foreign exchange. He said that duties on mobile sets had been imposed to enhance revenues.

Mazhar Hussain, Country Manager, SAS Pakistan delivering a keynote address said that SAS had the programmes that could help identify the terrorists and patrolling borders of the country. He said that its programmes could also help forecast the requirements of country regarding oil, gas and electricity based upon past data. He said that SAS has also developed software that could enable the banks to prevent robberies. Achieving these goals requires faster and improved decision-making ability across the entire organisation, he said. He noted that unfortunately in many organisations, departments continue to operate in information isolation. Existing enterprise systems are often not linked and software packages are not integrated. Decision-makers have difficulty getting consistent and accurate information that they need to make informed decisions quickly", said Mazhar Hussain.

SAS, the leader in business analytics and the largest independent vendor in the business intelligence market, helps executives at 45,000 sites make better decisions faster. SAS has shown significant growth over a short span of time in Pakistan by serving leading Banks, Telecoms, educational and government institutions. SAS's innovative business applications supported by an enterprise intelligence platform, have given customers an ability to increase their market share, reduce operational costs and enhance performance.