Pakistan Economy - News & Updates - Archive

[Owais]

Revenue collection swells to Rs 710 billion in fiscal year 2006

ISLAMABAD (July 14 2006): The revenue collection has crossed Rs 710 billion in July-June (2005-06) against the annual target of Rs 690 billion, reflecting an increase of Rs 20 billion. Sources told Business Recorder on Thursday the collection has surpassed Rs 710 billion as per latest available data.

The reconciliation of revenue receipts between the CBR and the Accountant General of Pakistan Revenue may also improve revenue collection.According to the updated figures, the CBR has collected over Rs 710 billion during 2005-06 against Rs 588.1 billion in July-June (2004-05), showing an improvement of Rs 121.9 billion.

The updated collection in June 2006 has crossed Rs 99 billion against Rs 87.362 billion in the corresponding period last fiscal year, depicting an increase of Rs 11.638 billion.

 

[Owais]

Pakistan foreign exchange reserves decline by $71 million

KARACHI (July 14 2006): Foreign exchange reserves declined by $71 million to $13.040 billion in the week ending July 08, 2006 the State Bank of Pakistan (SBP) said on Thursday. Reserves held by the SBP declined to $10.672 from $10.760 billion a week earlier, however those held by commercial banks rose to $2.368 from $2.350 billion.

 

[Owais]

Palpa offers Ifalpa's services for Fokker crash probe


KARACHI (July 14 2006): The Pakistan Airline Pilots Association (Palpa) has offered the services of an International Federation of Air Line Pilots Association (Ifalpa), UK, Accident Analysis Team (AAT) for impartial investigation of the fatal F-27 accident at Multan.

Palpa President Captain Khalid Hamza, in a letter on June 12, has forwarded 10 observations of the professional body on the accident to the director general, Civil Aviation Authority (CAA), which, according to him, "may be of paramount importance during the investigation."

Copies of the letter have been sent to the President, other related departments, Ifalpa officials, Defence Secretary, Special Assistance to the Chairman PIAC, Secretary, National Security Council, Senate investigation committee, and others.

Since the Civil Aviation Authority, being the regulatory authority, is conducting the investigation, Palpa's observations may help in enhancing the flight safety in the country in general and airlines in particular by correctly pinpointing the fault.

FOLLOWING OBSERVATIONS/QUESTIONS HAVE BEEN RAISED BY PALPA:

(i) Was the captain of this flight asked to operate the flight after availing minimum rest of 10 hours? This 10 hours of rest is applicable for a subsequent flight and not for planning purposes flight.

(ii) Under what circumstances/ obligations/studies, minimum rest period of 12 hours as per Air Navigation Order (ANO)-3 of November 2, 2005 was reduced to 10 hours in the ANO-3A issued on May 25, 2006.

(iii) When was the weather reporting equipment at Multan checked/calibrated last?

(iv) If the weather reporting was correct, did the operator load the aircraft correctly, according to the temperature, etc?

(v) It is evident that the aircraft experienced engine fire/power loss/propeller feathered/after take off as per the preliminary investigation reports. If it was so, then why the aircraft did not sustain flight on remaining engine.

(vi) When was the said aircraft's, F-27 PK-688/100706, Aircraft Performance Deterioration (APD) factor revised last? ie fuel and performance. The said aircraft had a history of engine-related problems, according to Palpa.

(vii) A representative from Palpa should be included in the investigation team to make the report acceptable to the international standards. It is an international practice to include representatives of all the stakeholders in the investigation team.

(viii) Palpa said it has learnt through reliable sources that PIA had approached the CAA to reduce post and pre-flight rest for Long-Range (LR) flights, operating to/from North America/Canada.

(ix) The Association has also pointed out that, at present, PIA is operating LR flights according to the recommendations of Ifalpa, duly approved by the CAA Pakistan.

Palpa explained that Ifalpa sponsored AAT which, it has suggested is duly certified by the International Civil Aviation Organisation (ICAO), Federal Aviation Administration (FAA) and National Transport Safety Board (NTSB), USA.

ON REST PERIOD, ANO 3 READS AS UNDER: "Regular Air Transport (RPT) Air Operator shall provide each flight crew member of an aircraft with a minimum rest period before each flight duty period which shall not be less than twice the duration of the duty period of previous flight and not less than 12 hours, and shall provide a rest period of not less than 24 hours after availing his/her rest period of last flight in each period of seven consecutive days or shall provide rest periods as directed by the Director General CAA."

THE NOTE TO ANO 3 READS: "To avoid inconvenience to passenger on subsequent flight minimum rest period may be reduced to 12 hours with the consent of each flight crew member provided that the crew member does not feel fatigued and feels in good physical/mental condition to operate a flight."

THE NOTE TO ANO-3A READS: "To avoid inconvenience to passenger on subsequent flight minimum rest period may be reduced to 12 hours on international sectors and 10 hours on domestic sectors with the consent of each flight crew member provided that the crew member does not feel fatigued and feels in good physical/mental condition to operate a flight."

 

[Owais]

Stock market ends on positive note

KARACHI (July 14 2006): The share market closed on a positive note on government's plan to sell OGDC share by September and President Pervez Musharraf's statement blaming former SECP chairman for the 2005 market crash that boosted sentiment.

The KSE-100 Index closed at 10014 levels up 94.00 points from the previous closing of 9,920. Volumes in the ready market were 243 million shares compared to 209 million shares recorded on Wednesday. However volumes in the future market were 59.50 million shares against 49.26mn shares recorded in the previous trading session.

The market opened on a positive note and remained positive throughout the day. The trend was led by the Oil Sector on the back of higher international oil prices and OGDC's GDR related news. Positive sentiment was further enhanced by President Musharraf's statement blaming former SECP chairman for the March 2005 crisis, in an interview with a local news channel and newspaper.

Ahsan Mehanti, chief executive officer of Shahzad Chamdia & CO., said that though the values at the up saw some profit taking, but the encouraging portent for the market was the improvement in volumes. The rise in business indicates that retail investors are entering the market. Investment in CFS is also gearing up which endorsed our view that interest has been ignited.

The upcoming results from the companies also bodes well and consolidation from this level might boost confidence of financial institutions and general investors at large.

Hasnain Asghar from Aziz Fidahuesin said that buying in Oil and Gas stocks led the show followed by Cement and Banking stocks. The under valued stocks inspired buying interest by the retailers as well, update on privatisation and issuance of OGDC GDR's allowed the sector to stage a recovery after major adjustment towards the end. The increasing Oil prices on going privatisation and upcoming corporate announcements will allow the sector to lead the show, a midday adjustment on Friday can however be awaited to take fresh positions.

Technically the index continues to find support around 9870-9877 while over head resistance stays at 10125-10132, ability of the index to close above 10053-10059 will allow the index to continue the upward drive.

The market managed to maintain its recovery drive for the third day in a row. The KSE-100 index closed above the psychological barrier of 10,000 points after 14 sessions. The market remained firm throughout the session with the index gaining 206 points to mark the 10126 point level intra-day high. However, the gain was trimmed due to profit taking in notable scrips. OGDCL, PPL and POL closed 1.7 percent, 1.8 percent and 1.04 percent lower from their intra-day highs. On the other hand, cements performed well with Fauji Cement and Maple Leaf Cement closing limit up for the second consecutive day while D.G. Khan Cement and Lucky Cement depicted 2.7 percent and 1.2 percent respective increments. Leading banking scrips closed in the red on profit taking as NBP, MCB, BoP and Faysal Bank posted 3.1 percent, 4.0 percent, 3.3 percent, and 2.1 percent declines from their intra-day highs.

 

[Owais]

LSE pretty erratic

LAHORE (July 14 2006): Share prices moved erratically on Lahore Stock Exchange (LSE) on Thursday while last-minute profit-taking forced the index shed most of morning session gains to finish with a reduced gain.

The LSE-25 index ended at 4382.07 points as compared to previous day's 4340.84 points, posting a rise of 41.23 points (1-percent). Turnover also slightly improved to 46.826 million shares from 43.697 million, increasing by 3.129 million shares (7.16-percent).

There was no change in overnight trading pattern and the market played fairly well, under the lead of oil and gas sector. In first half of the session, people witnessed an aggressive buying, particularly in petroleum sector that lifted the index up to 200 points, at one stage. However, later profit-taking emerged which forced the index to end with a reduced gain, brokers said, adding the sentiment was bullish and the market tone was aggressive throughout the day. In last minutes, the market lightened weight; therefore, investors are expected to indulge in fresh buying on Friday. However, people may again opt for profit-taking in the last session due to weekend, they pointed out.

After two days' bullish spree, the market took a short-breather in second half of the session on Thursday following profit-taking, but managed a positive closing, analysts said. According to them, the market showed wild movement in last couple of days and totally ignored news of arrival of foreign experts to probe the KSE crash as well as Mumbai train blasts.

About movement in petroleum sector, they said that oil prices had reached US $76 per barrel in international market which brought a positive impact on the oil sector shares in the market. They further said that President Musharraf's statement on a private TV channel, in which he put the responsibility of the market crisis on ex-SECP chief Dr Tariq Hassan, pleased the brokers. Now brokers feel that the government has found a scapegoat in the form of Dr Hassan to hold him accountable for the market crisis, they pointed out.

Moreover people expectations are very high about the corporate results, especially they are expecting good result of cements and oil sector. Due to these reasons, the market may remain in positive column and the KSE index may touch 11,000 level by mid of August, they observed.

Of total 89 traded scrips 20 improved in worth, 26 landed in minus column while 43 stayed pegged to their previous levels. Among key gainers, Pakistan Oilfields was up Rs 6.00, PPL Rs 5.00, Adamjee Insurance Rs 3.75, OGDC Rs 1.50 and DG Khan Cement Rs 1.45.

Major losers included National Bank, which lost Rs 5.60, MCB Bank Rs 5.35, UBL Rs 2.90, PSO Rs 2.55 and Bank of Punjab Rs 1.60. National Bank and OGDC were the leaders in terms of volume with 8.032 million shares and 3.452 million shares, respectively.

 

[Owais]

Bulls dominate ISE proceedings

ISLAMABAD (July 14 2006): Bulls dominated the proceedings at the Islamabad Stock Exchange (ISE) where major player and bargain hunters injected fresh investment in trend-setters amid increase in index. ISE Ten index showed an improvement of 67.84 points, as the index moved from 2,569.94 to 2,637.78 points.

The horizon of trade expanded from 115 stocks to 129 companies. 92 gainers outclassed 36 losers, while one company remained pegged to its overnight levels.

The turnover of OGDCL was 242,100 shares as compared to previous volume of 68,200 shares. The volume of Pakistan PTA was 200,000 shares. The turnover of Pakistan Petroleum was 41,700 shares as compared to previous volume of 34,400 shares.

 

[Neo]

BEIJING (July 14 2006): President Pervez Musharraf underlined the need of translating the existing Sino-Pak deep-rooted diplomatic bonds of friendship into a strong and vibrant economic partnership.

Pakistan is currently engaged in preparing a comprehensive plan to attract Chinese investment in the country and giving boost to their bilateral trade ties, the president said in an interview published this week by the Shanghai-based World Market Magazine.

In its cover-page report, the magazine highlighted the future prospects of Sino-Pak economic co-operation in various sectors.

The president stressed for reinforcing Sino-Pak commercial interactions, stating, "Our economic and trade relations are not commensurate with the excellent political and strategic partnership." He hoped that the private sector would work more aggressively, exploiting the available opportunities to serve the economic interests of their people.

Referring to a Framework agreement singed during his visit to Beijing in February this year, he said it provided a strong base for enhancing and deepening their economic and trade co-operation. He said Pakistan was actively working on a plan to set up Pak-China industrial and high technology zones in the country for attracting investment and joint ventures from China.

"We are also preparing an incentive package to make these zones as a center of win-win co-operative partnership for both the countries," he said.

President Musharraf stressed that Pakistan should be destination of choice for Chinese investments because of their great traditional friendship, close geographical proximity and Pakistan's strategic geo-political and geo-economic relevance. His government, he added, would also take steps to actively encourage relocation of Chinese manufacturing units in Pakistan, specially in the textile sector. To a question, the president hoped the on-going negotiation for Free Trade Agreement between the two countries would be completed by the end of this year. This would be a major step-forward expanding their trade ties, he added.

 

[Neo]

SIALKOT (July 14 2006): Economic and Commercial Officer of US Embassy to Pakistan, Megan Selmon said that adequate efforts were being made for to further accelerate pace of trade activities with Pakistan. Pakistan is an important country of the region and playing an instrumental role for peace and in weeding out terrorism she said.

Addressing the members of Sialkot Chamber of Commerce and Industry (SCCI) here on Thursday she said that under "Bilateral Investment Treaty" (BIT) both Pakistan and US could expand and enhance trade activities and under this programme more American investment would come to Pakistan.

The dialogues on energy, science and technology and education between the two countries were underway resultantly Pakistan will be benefited she added.

Megan Selmon said that aim of visit to this export-oriented city of Pakistan was to promote commercial and economic relations between Pakistan and US.

The Sialkot Chamber of Commerce and industry (SCCI) is most entrepreneurial chamber of Pakistan and render laudable services for the promotion and strengthening the relations with America she said.

President Bush had announced a five-year assistance programme for Pakistan for economic and military relations and under the programme US 300 million dollars economic aid would be provided in next five year Megan Selmon revealed.

The US Economic and Commercial Officer said that under reconstruction opportunities, US would extend all possible co-operation and assistance for the development and promotion of industrial sector in less developed areas like Balochistan, NWFP and Azad Kashmir areas.

President Sialkot Chamber of Commerce and Industry (SCCI) Faisal Mahmood Khan said on the occasion that exchange of trade delegations on regular basis, participation in trade fairs and exhibition in both countries including single country exhibition and regular exchange of information on foreign trade regime and other publications through the respective trade offices and other relevant organisations would be supportive for the improvement of trade between the two countries.

Faisal Khan on this occasion called upon the US investors to come forward and invest in Sialkot Export Processing Zone (SEPZ), which is second biggest zone of Pakistan.

 

[Neo]

ISLAMABAD (July 14 2006): President General Pervez Musharraf has said privatisation forms a core of Pakistan's economic strategy and an integral element of FDI, which along with exports and remittances helps balance out trade deficit.

He declared in an interview with Business Plus aired on Thursday evening that the privatisation of state-owned enterprises like PTCL has been transparent, fair and successful as privatised organisations including banks have been performing much better in the private sector.

"I want to assure the nation that privatisation process has been transparent and fair," he stated.

Musharraf pledged to turn the current trade deficit into surplus but remarked that increased import of machinery and equipment will ultimately benefit the economic growth and contribute to higher industrial growth.

The privatisation of loss-incurring companies would save billions of rupees to the national kitty, he remarked.

On the Supreme Court verdict on Pakistan Steel Mills sell-off, he said the SC is independent and "we must honour its observation and rectify."

At the same time, the President expressed the hope that it would not affect the privatisation process of the country as Pakistan wants greater inflow of investment into various sectors for its continued economic growth.

Musharraf said Nawaz Sharif was on board on Kargil plan and had attended a briefing on it by senior Army commanders on February 5, 1999 in Kel sector and rejected the former prime minister's claim as false that he came to know about it from his Indian counterpart.

The President also presented pictures during an interview, which showed Nawaz Sharif attending a briefing by the Corps Commander Lieutenant General Mahmood. Pictures also showed Sharif addressing the troops sitting on heaps of snow.

There was no purpose of visiting Kel which is south of Kargil Sector during such an adverse weather condition other than knowing the operational details first hand, Musharraf said.

These pictures, he said, belie Nawaz Sharif's claim that he had come to know about Kargil from his Indian counterpart Vajpayee.

Continuing his reply to the question, Musharraf said a prime minister is not worth his salt if he is being informed about such issues by his Indian counterpart.

Replying to a question about Karachi Stock Exchange crisis in March 2005, the President said having reviewed all aspects of the issue he has concluded that former chairman SECP, Tariq Hassan, is to blame for this.

"Because it was SECP which had the responsibility to regulate and Tariq Hassan was its chairman-why did he allow this to happen, so he is to blame and nobody else," he added.

He also referred the report of a committee constituted to look into the reasons of KSE crisis and added that the committee did not blame the government.

Musharraf strongly rejected allegations against Prime Minister Shaukat Aziz vis a vis the stock exchange crisis.

"The Prime Minister has no hand in the Karachi Stock Exchange crisis, I know it," he stated categorically.

The President added that he would be the last man to absolve a prime minister involved in something which damages the nation.

He said the opposition is trying to malign the prime minister and the government through such unsubstantiated allegations in view of next year's elections.

Musharraf expressed the hope that progressive forces will join to defeat retrogressive forces in the year 2007 "very important" elections, which he vowed would be fair, transparent and impartial.

"Let progressive forces join to defeat retrogressive forces," he stated when asked about his hope about the elections.

Commenting on the allegations levelled by the opposition vis a vis government policies, the President said he does not take dictation from any foreign quarter on Pakistan's national issues.

"All my policies are in accordance with Pakistan's interest-nobody is dictating me on democracy, nuclear or extremism and terrorism issues - everything we are doing is in Pakistan's interest - there is no pressure whatsoever on me."

Quite the contrary, foreign leaders express admiration for Pakistan's policies and its role internationally and are more interested in continuity of policies, he stated.

He categorically stated that no foreigner would be allowed to interrogate Dr A Q Khan and added that only Pakistani investigators look into any evidence brought to the country's notice.

 

[Neo]

LAHORE (July 14 2006): Federal Information Minister Mohammad Ali Durrani has said that the government is going to launch a mega 'self-employment project' under which 1.8 million people would get jobs in next five years while 400,000 people would be provided jobs in next financial year. He was speaking at the Lahore Chamber of Commerce and Industry (LCCI) on Thursday.

LCCI President Mian Shafqat Ali, Senior Vice-President Abdul Basit, Vice-President Aftab Ahmad Vohra, former LCCI President Iftikhar Ali Malik, Chairman PIAF Mian Abuzar Shad and former Senior Vice President Sohail Lashari were also present on the occasion.

The Federal Information Minister who spoke at length on various issues said that special initiatives are being taken to provide relief to the masses, as the government is well aware of the fact that the high utility prices are affecting the common man's life. He said that the price-control mechanism had already been activated and in coming days people would see the results for themselves. The government would use the media aggressively to control the escalating prices of essential items in the country, he added.

About load-shedding, Durrani said that a solid strategy had been evolved to cover up electricity shortage in the country and in this regard the government was seeking help of the private sector. "Now from onwards there would be no load-shedding and if need arises it would be made with the understanding of private sector," he added.

He further said that the private sector was playing a very crucial role for the economic well-being of the country for which the Federal government is highly indebted to the Lahore Chamber.

He said nobody would be allowed to disrupt the process of reforms initiated by President Pervez Musharraf, as continuity in policies was a key to the success. He said that there would be no Martial Law in future, as the democratic institutions have gained enough strength in the country. "No country could afford U-turn after a short period," he added.

He said in future the elections would be held in free and fair manner, and assured that all the future governments would complete their tenures of five years. He admitted that law and order situation was the biggest challenge and the government was taking necessary steps in this regard.

According to him, the government would establish first Media University of Islamic World in Pakistan; so that in future the country could play leading role in this region. He said the present government has ensured freedom of press and it has nothing to hide. Now every type of defence purchase is taking place after the approval of the Cabinet.

While talking to newsmen, the minister said that the world is facing the challenge of terrorism and Pakistan is also one of the affectees. He said that the challenge has to be tackled with comprehensive policies rather than pointing fingers on other countries.

On Wage Board Award, he said that the Information Ministry has planned a meeting with the APNS, which would be held soon. He claimed that the present government has taken steps for the welfare of workers.

Talking about the recent statements of the opposition leaders sitting outside Pakistan, he said that they are non-elected and irresponsible politicians, and are giving irresponsible statements, which is damaging their creditability among the people. The purpose of such statements was to draw media attraction, he added.

He further said that Maulana Fazl-ur-Rehman is an experienced politician and knows the weakness of the opposition leaders sitting abroad; it is right of him to play with their weakness.

About the political stability in the country, he said that under the leadership of Pervez Musharraf, Shaukat Aziz and Chaudhry Shujaat Hussain the country is politically stable and the system is working smoothly, which continue in future as well.

On Chaudhry Aitzaz Ahsan's statement of 'surprise', Durrani said that there is no room for surprise in politics; it only happens in novels, dramas and movies. However, they would get a surprise in the next elections, he added.

Speaking on the occasion, LCCI President Mian Shafqat Ali said that the government should take steps to reduce trade deficit which is now touching the figure of 12 billion dollar. He also urged the minister to help bring the prices of utilities down, as the same are leaving Pakistani goods non-competitive in the global market hence the country was losing its due share.

He said Pakistan's economy had posted a growth of 6.6 percent in its GDP during the year 2005-06 against the last year's growth of 8.6 percent. "The growth in agriculture was 2.5 percent against 6.7 percent, manufacturing 6 percent against 12.6 percent and in commodities producing sector 4.3 percent against 9.2 percent. The only sector, which posted higher growth in 2005-06, was the services sector, which grew by 8.8 percent against 8 percent last year.

This shows that the economy has not been able to sustain the momentum of growth experienced during 2004-05. The government should think seriously as to why manufacturing and agriculture sectors have missed their targets and come out with some package to achieve the growth next year," he added.

The LCCI President said that the rule of law is one of the most essential pre-requisites to keep the businesses flourishing in the country. "Unfortunately despite heavy investment by the government to improve the situation, there is no improvement in the law and order situation in the country," he pointed out.

Earlier, the Federal Minister inaugurated the LCCI Production House.

 

[Neo]

ISLAMABAD, July 13: The Central Board of Revenue (CBR) has issued new income tax rules for application of initiation of mutual agreement procedure (MAP) to facilitate Pakistani nationals residing abroad in case of having any complain against the host country taxation authority.

The new rules 19A were notified through an income tax notification SRO714 of 2006 issued here on Thursday by amending the Income Tax Rules 2002, which could only be applied in case of those countries with home Pakistan has signed an agreement for the avoidance of double taxation.

The CBR has also prescribed a form in this connection to make an application to the CBR seeking to invoke the provision of the MAP, if any, provided therein, in the Form prescribed in rule 19C. The application would be processed following having satisfaction that the taxpayer has reasonable grounds to justify CBR assistance; the application has been made within two years from the date of notification of the cause of grievance; and the double taxation or other impending grievance is more than a mere possibility; shall cause to take up the matter with the Competent Authority of the country concerned and endeavour to resolve the matter through consultative measures.

In case the CBR decides not to intervene in the matter, it will inform the taxpayer applicant, within 30 days of the receipt of the application, of its decision and grounds thereof in writing.

If during the course of mutual agreement proceedings, the competent authority of the other country requires any clarification, verification of facts, or guarantees, that shall be communicated to the applicant taxpayer, and after the receipt of the same shall be passed on to the competent authority of the other country.

At any time, if the terms and conditions of the impending resolution are not satisfactory to the taxpayer, he may withdraw from the MAP proceedings and pursue any right of appeal under the normal course available.

The CBR would communicate the outcome of the MAP proceedings taken up with the other country to the applicant taxpayer in writing.

Almost a similar kind of rules were notified through the same notification as 19B for taking action on an application received through the competent authority of a treaty partner country.

Where a reference is received from the competent authority of a country outside Pakistan under an agreement with that country with regard to any action taken by any income-tax authority in Pakistan, the CBR shall call for a report from the Commissioner concerned and, if required, examine the relevant records, and shall endeavour to arrive at a resolution of the case on unilateral basis in terms of the liberal interpretation of the legal provisions applicable.

But certain conditions were also notified in case of which no action would be taken on complaint received from the other country.

 

[Neo]

KARACHI, July 12: Except for 42 per cent decline in sales of buses, the entire auto sector gave a robust performance marked by increase in car sales by 22.2 per cent followed by rise in motorcycle sales 24 per cent, trucks 27.7 per cent, light commercial vehicles (LCVs) 27.4 per cent and farm tractors by 88 per cent in 2005-06 as compared to 2004-05.

According to figures compiled by Pakistan Automotive Manufacturers Association (PAMA), a total of 155,514 cars were sold in 2005-06 as compared to 127,309 units in 2004-05, thanks to sustainable ‘artificial’ demand, triggered by the auto financing introduced by banks and leasing companies, despite rise in car financing rates.

The import of used cars stood at 45,479 units in July-June 2005-06 as compared to 11,877 units in 2004-05 but it has failed to give a real jerk to the high demand of locally assembled cars like Suzuki Alto, Suzuki Mehran, Suzuki Cultus, Toyota petrol version and Honda City. However, import of used cars, jeeps and sports utility vehicles (SUVs) had given a tough time to Toyota Altis, Toyota Diesel, Honda Civic, Daihatsu Cuore and Hyundai Santro in terms of very thin advance booking orders in the last six months.

Interestingly, the demand for both imported used cars and locally produced cars have remained very hot during the last fiscal. It means that there is a big vacuum in demand and supply estimated at 30,000-40,000 units.

However, the rising used car imports have led to bottoming out of high premiums being charged on locally made cars by the authorised dealers. Besides, delivery period has shrunk due to import of used cars coupled with rising production capacities by the car makers, but in high demand vehicles the delivery period still ranges between two to four months.

Abdul Azeem of Invest Cap says that interest rates, although slightly higher than before, are still low enough to encourage car financing. Introduction of new models and overall economic growth have also boosted the auto demand during 2005-06.

He says that the outlook for auto sales remains robust for 2006-07. Even though the leasing rates have started to edge up due to rising interest rates the demand and supply gap still remains large enough for auto assemblers to post impressive sales performance in the new fiscal.

Pak Suzuki holds 52 per cent market share followed by 29 per cent by Indus Motor Company, 18 per cent by Honda and five per cent by Dewan Farooqui Motors.

Sales of motorcycles by PAMA members have surged to 516,640 units from 417,066 units and if non-PAMA members’ sales are included then the total figures crossed over 700,000 units in 2005-06.

The entry of Chinese bikes in the market has proved a sheer benefit for the low income people who appear crazier for the Chinese bikes because of price difference of Rs19,000--20,000 from Honda CDI 70cc bike. However, Honda still holds 50 per cent market share with sales of 360,000 units in 2005-06 out of total sales of 700,000 units. Now over 40 Chinese bike-makers compete with Honda in 70cc segment.

Motorcycle is still considered as the cheapest mode of transport, especially in rural areas for its price tag as well as for low petrol consumption.

Increased economic activity, resulting in cargo movement of both import and export items in the country, has pushed up sales of trucks (mainly Hino, Nissan, Isuzu and Master) to 4,273 units in 2005-06 from 3,345 units. However, sales of Dong Feng remained depressed as it could only sell 16 units as compared to 27 units in the last fiscal. Similarly, sales of LCVs surged to 31,922 units from 25,056 units.

Increase in import of used buses in the last fiscal year coupled with investors’ least interest in buying locally assembled buses for urban transport scheme, made a dent in the sales of locally assembled buses (Hino, Nissan, Dong Feng, Master and Isuzu), falling to 927 units from 1,605 units in the last fiscal.

Farm tractors’ sales (Fiat New Holland and Massey Ferguson Millat) rose to 48,802 units as compared to 43,578 units.

 

[Neo]

Friday, July 14, 2006

* Govt signs agreement with ADB in this connection

ISLAMABAD: The Asian Development Bank and the government of Pakistan launched on Thursday a $24 million Agribusiness Support Fund (ASF) to develop agribusiness in Pakistan.

The Fund is part of the ADB Agribusiness Development Project, which aims at corporatizing the agriculture sector and help formulate National Agribusiness Policy and Provincial Horticulture Policies to meet international agriculture products’ standards.

Peter Fedon, ADB Country Director in Pakistan, and Hashim Khan Hoti, on behalf of the government of Pakistan, signed the agreement. The ASF will provide farmers with technical and managerial services on a grant basis to improve their productivity and competitiveness in horticulture, livestock, dairy production, processing and marketing.

Mr Fedon said improved agribusiness is essential to maintain and expand export markets for agricultural produce/products and it will certainly contribute to increased economic growth and rural employment.

This agreement is part of the ADB Agribusiness Development Project, which focuses on increased agricultural productivity and improved marketing for the agriculture sector.

The ASF is a non-profit company, which is being executed by the ministry of food, agriculture and livestock. It is a public-private partnership that is primarily financed by the ADB. The Fund will be based in Lahore and it is expected to begin granting funding by September this year.

The project will cover all areas of Pakistan and about 2,000 agribusinesses in both formal and informal sectors are expected to benefit over the next five years. The ASF will help access to agribusiness finance and revise and update the agribusiness regulatory framework, update testing and certification facilities for seed, nurseries, crops and strengthen technical training. As a result of technical assistance provided, some financial institutions are expected to develop dedicated agribusiness financing functions. These could benefit an additional 10,000 agribusinesses, including 12,500 farmer entrepreneurs by improving access to finance and providing sufficient jobs and income-generating opportunities, conservatively estimated at 100,000 permanent jobs.

Agribusiness enterprises range from micro-scale village-based operations to large-scale nationally recognized companies. Such small and medium enterprises employ about 1.5 million people in rural areas.

 

[Neo]

KARACHI: Cell phone subscriber base grew by over 170 per cent during 2005-06 as continued popularity of mobile phones outperformed almost six-decade-old fixed telephone by more than 500 per cent in its 15 years of operations. Currently, there are six million fixed line users in the country.

Latest figures compiled by Pakistan Telecommunication Authority (PTA) suggest cellular phone connections stood at over 34 million by June 2006, which were around 12 million by the end of 2004-05.

“By June 30, 2006 total number of cellular subscribers was registered at 34.50 million (34,506,557),” said a senior PTA official. “By the end of 2004-05, there were 12.48 million (12,489,173) subscribers in the country.”

In 2005-06, he said, total 21.7 million (21,735,354) new cell phone connections were sold by the six mobile phone companies on the back of cheaper offers due to increased number of service providers.

“So there is a growth of 170.20 per cent in cellular subscriber base during 2005-06 compared to 2004-05,” said the PTA official. “Almost all the four major companies ñ Mobilink, Ufone, Al Warid and Telenor ñ achieved comparatively better subscriber base from July 2005 to June 2006.”

The figures gathered by the telecom watchdog show by June 2006 Mobilink led the market with 17.20 million subscribers, followed by Ufone, which was serving 7.48 million people across the country.

With the arrival of UAE-based Al Warid Telecom and Norwegian Telenor, both competition and subscriber base grew at a much faster pace, as the new entrants attracted 4.86 million and 3.57 million subscribers respectively by the end of 2005-06.

The PTA data says by June 2006 Paktel, which offers both AMPS (advanced mobile phone system) and GSM (global system for mobile communications) services, enjoyed 1.04 million subscribers and the only AMPS service Instaphone had a share of 336,696.

“The increased number of subscribers has also pushed mobile density rate from 8.30 in 2004-05 to 22.21 in 2005-06,” said the official.

He appeared optimistic the competition among cellular companies would result in further cut in tariff for the consumers during 2006-07, in order to attract major market share.

Analysts say the growth in cellular subscribers was in line with expectations, but add in the new fiscal the companies may not witness such a phenomenal jump in customer numbers, which have already reached a higher level.

“The growth is likely to remain slow in percentage terms during 2006-07,” said Anwaar Ahmed Khan, a telecom analyst at Capital One Equities. “The companies may enter into those areas, where they have not yet initiated services and it will need network expansion and investment.”

He said cut-throat competition was expected among the operators during the current fiscal, after mobile number portability (MNP) service, under the PTA regulation, was implemented by all the six cellular operators across the country.

“The MNP will decide the real market leader,” said Khan. “After the MNP implementation, the companies must have to improve their service quality to keep their subscribers intact.” The MNP is a system, which enables a mobile phone subscriber to have the same number while switching the mobile operator. The project requires Rs600m investment.

 

[Owais]

CBR to be made 'Federal Board of Revenue'

ISLAMABAD (July 15 2006): The government has decided to convert the Central Board of Revenue (CBR) into an independent entity as 'Federal Board of Revenue' (FBR), enhancing its financial and operational autonomy for smooth functioning, with additional powers to take decisions on taxation/reforms related matters, and to authorise it to demand taxpayer's related information from any department/bank/financial institution/housing society to maintain a 'national database'.

Sources told Business Recorder on Friday that the CBR has drafted 'Federal Board of Revenue (FBR) Act, 2006' which would repeal the 'Central Board of Revenue (CBR) Act, 1924'. The FBR would have provisions to override any other government law.

The 'FBR Act' would set up an 'Advisory Board' comprising Minister of Finance or Advisor to Prime Minister on Finance and Revenue; Chairman CBR and three other members from the public/private sector. The 'Advisory Board' would be a supervisory body to monitor the functioning of 'FBR' and independently make annual budget allocations.

FOLLOWING ARE THE PRIMARY REASONS FOR CONVERTING CBR INTO 'FBR':

1. The independent board would give legal sanctity to the ongoing reform process.

2. It will enhance operational and administrative autonomy of the CBR.

3. The 'Board' will take decisions with minimum interference from the Ministry of Finance.

4. It will meet human resource management (HRM) requirements needed for the reformed units.

5. It will help in meeting the international obligations under bilateral treaties/implement international regulatory frameworks.

6. The 'FBR' will meet the requirements of CBR's vision and mission to make it a modern tax-friendly organization.

7. It will give protection to the taxation structure/tax administration under the reform agenda.

8. It would collect taxpayer's information from any government department for compiling a 'national database'.

9. It will set up an 'employees welfare fund' with an initial capital of Rs 500 million.

10. The 'Federal Board of Revenue Act, 2006' will have provisions to override all other government laws.

Sources said that the tax officials would present the proposed 'Federal Board of Revenue Act, 2006' before the Ministry of Finance after analysing all legal aspects of the new structure.

The 'Federal Board of Revenue' would create database to ensure proper charge, levy and imposition of taxes, duties, fee, additional tax and surcharges to achieve fair distribution of burden of taxes. The information collected in the database would be kept confidential and would not be disclosed except for purposes authorised by or under any law.

The tax officials would be empowered to collect information about taxpayers from government divisions and attached departments or corporations, provincial government departments and corporations, State Bank of Pakistan (SBP), banks, investment companies, or other companies, commissions, regulatory bodies, societies including housing societies registered under any law for the time being in force, or any authority, including Wapda or its subsidiary companies, Nadra; utility companies, corporations and withholding agents, and from the tax and duty streams within or outside the purview of the 'Board'. It would also protect 'intellectual property rights'.

The 'Board' may prescribe any reasonable penalty for non-compliance by concerned department. The 'Board', on decision by the 'Board in Council', may provide information required by any public sector entity, to the extent that only would serve the purpose of the entity, and is in conformity with the mandate given to it.

The 'Federal Board of Revenue' may by notice call any person acquainted with the facts and circumstances of the case to appear before an authorised investigating officer. Such person would be examined orally and any statement made by him during the examination would be recorded in writing.

The 'Board' would be empowered to prosecute any person, who allegedly commits an offence under Customs Act 1969, Sales Tax Act 1990, Federal Excise Act 2005; or any other offence under Prevention of Corruption Act 1947 or National Accountability Ordinance.

The 'Board' may authorise any member or employee to take decisions pertaining to legal proceedings before a Tribunal, High Court or Supreme Court including decisions to withdraw any pending matter or to give a statement in the interest of the 'Board'.

The 'Board' would have the powers to implement through administrative, legislative or enforcement measures international commitments and obligations on the Government of Pakistan under bilateral treaties, multilateral treaties, applicable resolutions of international organisations, proposal of professional bodies etc. It would comply with international regulatory frameworks, safety measures etc as recommended by international bodies.

According to the draft 'FBR Act 2006', the CBR would continue to operate, without interruption, as 'Federal Board of Revenue' and regulate fiscal, investment and policy matters; administration management, imposition and collection of Federal taxes, duties, levies, on national level and for connected or ancillary matters.