Thursday, December 24, 2009


President, Karachi Chamber of Commerce & Industry, Abdul Majid Haji Muhammad, while expressing his concern on announced increase of Power Tariffs by 13.5pc effective from next month, stated that in the presence of worst power crisis of history and highest-ever tariffs, in such unpleasant circumstance, the abrupt withdrawal of subsidy for facilitating and meeting the demand, will further aggravate the problems.
Abdul Majid criticized the power increase decision by the concerned quarter of the Government and said that it is an irony that concerned quarters, despite of protest of masses, at several occasion, has previously increased the tariffs on the request of power generating/ distribution companies and now it has further penalized the consumers with its decision to raise power tariffs, as a gift on the dawn of 2010. He commented that no improvement will come in the energy sector if we keep our hands tightened and blame the previous government for the present serious gas and fuel shortages.
Abdul Majid stated that Business Community, especially the export-oriented industry and lifeline consumers will be penalized with the decision. Consumers using less than 100 units would be affected worse and this will prove a last nail in their coffins.
Abdul Majid lamented that no concrete measures have been witnessed regarding improvement in power/ electricity distribution/ transmission infrastructure nor the load-shedding has been controlled.
Abdul Majid commented on the efficiency of KESC and urged cut-down in prolonged unscheduled electricity outages. He said that the increased power tariffs and power outages have crippled the industry to perform at its par and increasing widespread discontentment in business circles.
Abdul Majid said that the Power Distribution Companies, particularly KESC, should take concrete measures to seriously curtail its transmission and distribution losses rather than adding-on different charges to control its financial losses.
The entire business community now demands the government to improve the efficiency of power distribution companies and do not increase the utility tariffs further for the larger interests of the economy and citizens of the country.

Friday, December 11, 2009


Abdul Majid Haji Muhammad, President of Karachi Chamber of Commerce & Industry (KCCI) and Tabish Gauhar, CEO of Karachi Electric Supply Company (KESC) have arranged KHULI KACHEHRI (Open Hearing) on December 17, 2009 at 11:00AM at Majeed Bawany Auditorium-KCCI specifically for the members of KCCI for their pending issues pertaining to KESC.
Members, who are facing any problem from KESC, are requested to kindly forward complaints in writing alongwith supporting documents latest by December 15, 2009 and advised to participate in KHULI KACHEHRI on the above mentioned date and time.

Thursday, October 8, 2009

FBR nets Rs 259 billion revenues in first quarter

Federal Board of Revenue (FBR) collected Rs 259.24 billion of revenues during the first quarter of the current fiscal year, according to provisional figures released by FBR on Monday.
According to the figures, the FBR has collected Rs 98.37 billion during the month of September 2009. Aggregate collection during the first quarter of the ongoing fiscal year thus works out to Rs 259.24 billion. The final revenue collection figures for the month of September 2009 are likely to increase further following the receipt of taxes, including taxes deducted at source, collected from different parts of the country.
The break-up of the tax collection figures for the month of September 2009 is attached for further details.

Wednesday, September 9, 2009

Tarin urges self-reliance to achieve economic stability

Finance Minister Shaukat Tarin Thursday said self-reliance was the only way forward for Pakistan to achieve economic stability and lessen dependence on revenue streams flowing in from donor agencies.

“As long as these revenue streams flow, things work well but once these streams go away, problems re-surface and economic independence becomes a distant dream,” he said in a keynote address to a two-day ‘Conference on Value Added Tax (VAT)’ that started in the capital here under the auspices of Federal Board of Revenue (FBR).

The minister said Pakistan heavily relied on taxes as a major source for government revenues required for socio-economic uplift of the people. Optimum revenues are achieved when an efficient taxation system is in place. Our Government’s vision and strategy of a better Pakistan also rests on a taxation rĂ©gime which is based on equity and fairness, convenience of payment, economy in collection, and simplicity of procedures, he added.

He said reducing poverty through generating additional revenues is an important step towards achieving our government’s vision and that can only be achieved through an efficient taxation system which conforms to the best international practices in revenue collection.

Shaukat Tarin said these best practices were being adopted by countries all over the world and like others Pakistan had also set about modernising its taxation structure through the Tax Administrative Reforms Program (TARP) aimed at achieving greater efficiency and productivity in the tax collecting business processes and tapping new tax resources.

He admitted there were challenges in the way of generating additional indigenous revenues and exercise of discretionary powers by the government, lack of professionalism due to an inadequate capacity building and existence of certain exemptions in our tax regime were issues which needed to be addressed before the introduction of Value Added Tax.

Tarin said the tax managers alone could not do all this and “a lot depends on the policy, planning, vision and commitment of the political and economic managers”. “It is therefore a common responsibility of all the stakeholders to contribute towards achieving an efficient taxation system which can generate additional revenues for the country,” he added.

He also called for collective efforts to achieve a broader and larger goal of better standards of living for the people through better tax collection. This in turn requires increase in tax base by incorporating maximum categories of services into the tax net. While our tax base includes a wide range of goods, services sector, which is a major source of revenue around the world, is largely out of the tax net and it is time we revisited our exemptions, zero-rated items, rate variations and major sources of irritants to business, he added.

The finance minister said Pakistan could also draw on the experiences of other countries for developing a viable model best suited to our economy. He said the Value Added Tax could be considered as an effective tool for proper documentation of economy, widening of tax base and equitable taxation mechanism.

Later talking to media men, Shaukat Tarin highlighted the importance of value addition for taxation purposes on the retail stage as widening of taxation base. At the retail stage it is basically the issue of understanding and tapping the whole supply chain of goods and services. However, enforcement of any such tax on such a stage cannot be adequately done if the tax collecting machinery is not properly aware of the facts and figures regarding the different social segments, documentation of small to medium businesses, their supply chains and financial capacity of the retailers themselves. All this needs to be thoroughly researched, properly documented and comprehensively digitized by the tax machinery.

To another question, he underscored the VAT service delivery and its impact on the lives of our taxpaying community which is the backbone of our economy. FBR should keep in mind that VAT in today’s world is considered as a powerful tool in harnessing funds in domestic markets. These funds can then be used by the developing countries like Pakistan to meet the challenges like increasing mass education, poverty eradication and provision of socio-physical infrastructure.

The minister cited the example of Sri Lanka which at a 15 per cent VAT had been able to increase its tax-to-GDP ratio by seven per cent and if Pakistan could increase its tax-to-GDP ratio by four per cent through the implementation of VAT, it would be able to raise an additional Rs 600 billion, taking us close to bridging the Rs 722 billion fiscal deficit.

Earlier FBR Chairman Mr Sohail Ahmad in his address to the inaugural technical session of the conference highlighted the steps taken by FBR for generating more revenue through massive reforms, re-structuring and business process re-engineering which he said could also serve in the implementation of VAT from July 2010.

He said the government believed the impact of taxes generated through VAT would be significant in covering all those sectors which earlier enjoyed exemptions in one way or the other. He welcomed the participants of the conference which he hoped would be able to come up with a way forward for the implementation of value added tax in an incentive-based, transparent and harassment-free environment.

Saturday, August 15, 2009

SBP cuts interest rate by 100 points

State Bank of Pakistan has slashed the discount rate by 100 basis points, report said on Saturday. At a press conference here Saturday, Governor SBP Syed Saleem Raza announced the monetary policy.

He announced that the SBP has decided to slash the discount rate by 100 basis points. “The SBP has cut the discount rate by one percentage points from the current 14 per cent,” Raza said. The governor said GDP ratio reaches 2.1 pc. He said foreign exchange reserves improved sharply and stood at $9.1 billion. The SBP has cut the discount rate by one percentage points from the current 14 per cent. It had cut the rate by one percentage point in April this year from 15 to 14 per cent.

The central bank also changed the interest rate mechanism to bring transparency in Repurchase Offered (repo) rate as well as reverse repo rate as recommended by the International Monetary Fund (IMF).

Thursday, August 13, 2009

Central Bank wants reforms for entrepreneurial culture

State Bank of Pakistan, Syed Salim Raza Wednesday stressed need for reforms to foster an entrepreneurial culture.
Addressing conference on Entrepreneurship 2009, organized by Memon Professional Forum at local hotel, he said there is ample research available globally, which links entrepreneurship, innovation, growth to encourage policy makers to favour policies fostering reforms.
“In environment of innovative entrepreneurship, dynamic markets, businesses can grow rapidly, ensuring that employment grows and opportunity expands.”
In under-developed states like Pakistan, there is added bonus that such environment is also most poor-friendly and conducive to social mobility, he added.
He said that World Bank 2009 survey of cost-of-doing-business in 181 countries clearly stresses need for continued reforms in critical areas in Pakistan.
He said entrepreneurship encompasses innovative ideas, implementations that change way business is conducted in market. On other extreme, term applies equally well to lowly street vendor, who seeks to set up small stall of his own to provide living to his family, funded perhaps by micro-savings or micro credit, hoping to succeed by dint of sheer hard work and ability to satisfy a small market niche.
He said both definitions of entrepreneurship encompass some common elements: ability to envision an unmet market niche or innovation that can change market; willingness to invest their time, money, effort seeking to bring that vision to life and willingness to assume all resulting risks and rewards.
“It is thus probably no coincidence that most innovation occurs in countries that encourage entrepreneurs the most.”

Monday, July 27, 2009

Govt to improve law, order, power situation to achieve trade targets-Amin Fahim

Federal Minister for Trade Makhdoom Amin Fahim Monday said the law and order situation and power crisis across the country has had a negative impact on the overall trade.

Announcing the new trade policy 2009-12 here, Makhdoom Amin Fahim said the law and order situation will be improved and electricity crisis overcome in order to achieve the set targets.

Earlier today, the Federal Cabinet gave approval to the Trade Policy 2009-12.The Cabinet meeting was presided over by Prime Minister Syed Yusuf Raza Gilani.

The total imports of the country stood at 34.9 billion dollars in the last fiscal. The imports slashed by 13 percent and exports by 7 percent in the previous year.

The global economic growth shrunk by 9 percent as a result of world recession which also had its negative impact on Pakistan’s trade.

Textile exports decreased from 10.1 billion dollars to 9.6 billion while garments exports reduced by 21 percent.

Makhdoom Amin Fahim said exports of engineering goods recorded a 26 percent rise. Exports of gems and jewelry increased from 213 million dollars to 280 million.

He said the government has held consultations with all the stakeholders at a difficult time.

Steps will be taken for the capacity of building of local industries under the new trade policy, he said, adding “technological development be undertaken for enhancement of exports of unconventional goods.”

He announced that investment will be made in 10 sectors under Entrepreneur Fund.

Trade diplomacy will be enhanced through Doha development agenda for gaining better access to international markets including those of the US and Europe.

Wednesday, July 15, 2009

OGDCL wins 6th Annual Environment Excellent Award

Oil and Gas Development Company Limited (OGDCL) has won 6th Annual Environment Excellent Award 2009 on the basis of best environmental track record, services and performance.
Federal Minister for Environment Hameedullah Jan Afridi gave away the award to Managing Director, OGDCL at a function held at Karachi.
This is second time that the state-run Company has bagged this award, the first being in 2007.
This award instituted by NEFEH with support of United Nations Environment Program and Federation of Pakistan Chambers of Commerce and Industry.
The ceremony was attended by government officials, corporate, environmentalists, experts, civil society and media. The Minister said the OGDCL has maintained its position as a key provider of safe energy through indigenous sources by observing highest standards of Health, Safety and Environment in compliance with statutory regulations. Affirming its stand as an environmentally responsible Exploration and Production (E&P) organization, the OGDCL won the Annual Environment

Tuesday, June 2, 2009

KCCI urges registration to safeguard exports

KARACHI: Anjum Nisar, President, Karachi Chamber of Commerce & Industry, in a letter to Suleman Ghani, Federal Secretary, Ministry of Commerce urged for registration of geographical indications (GIs) as Certification Marks by the competent authority.
He drew the Ministry’s attention towards the promulgation of Geographical Indications (GIs) Law, and establishment of GI registry in Pakistan.
In the relevant context, while highlighting that India had previously promulgated GI Law & has established GI registry, he lamented that India had already registered and notified Pakistani well known variety of “Super Basmati” as their own variety of rice.
Besides, many other products / produces were under registration process and may claim internationally these as their own products.
He focused that in Pakistan draft Bill on GIs was still awaited to be promulgated and implemented though it was already approved by the stakeholders, meetings called by the Intellectual Property Organization (IPO).

Monday, June 1, 2009

Petrol, gas and electricity subsidy to end: Shaukat Tarin

KARACHI: Finance Advisor, Shaukat Tarin has said that a decision for putting an end to the subsidy on petrol, gas and electricity has been taken.
Addressing a seminar on ‘IMF role in Pakistan economy’ under the aegis of Institute of Business Administration (IBA), the finance advisor said that the government was facing economic challenges.
He said that the current fiscal year revenue recoveries would amount to Rs1180bn, but yet the recoveries have been crucial problem for the govt and this was the reason that the prices of petroleum products were not reduced.
Shaukat Tarin said that serious notice has been taken of the FBR harassing consumers. He said that the focus for the next year would be to revive the economy after stabilization. He pointed out that attention would also be paid towards the revenue generation. He explained that the tax would not be increased and instead efforts would be made to expand the tax net. This would be carried out administratively and also on the policy basis.
He said that Pakistan’s three national enterprise—Pakistan Steel, Railway and PIA were cumulatively incurring losses of over Rs200 billion annually.
He said that relief would be given to the middle class in the upcoming budget, while the new National Financial Award (NFC) would be presented with the consensus of the four provinces.

Saturday, May 30, 2009

SBP, ICAP agree for greater cooperation

KARACHI: The Governor State Bank of Pakistan Syed Salim Raza visited the Institute of Chartered Accountants of Pakistan (ICAP) here on Thursday and praised the institute for its work in assigned fields. The president of the institute, Asad Ali Shah briefed the governor about the overall progress of the profession and proactive contributions the Institute has made towards economic and fiscal policies of the country. He said that for this purpose, the Institute keeps close liaison with Security and Exchange Commission of Pakistan, State Bank of Pakistan and Federal Board of Revenue and frequent meetings are held with them. Both the institutes agreed for greater cooperation in future. —PR

Wednesday, May 27, 2009


Traders demand Karachi be declared as ‘calamity-hit’ city

KARACHI: All Pakistan Organization of Small Traders and Cottage Industries has demanded of government to give a tax exemption to the traders of Karachi for two years by declaring Karachi a disaster-hit area to compensate huge loss of traders owing frequent strikes, holidays and prolonged load-shedding.
APOSTCI Karachi chapter president Mehmood Hamid, Vice Presidents Ansar Baig Qadri, Abdul Majid and Usman Sharif said traders bear a loss of Rs140 million due to one-day strike in Karachi.
They said 12 to 14 hours of load-shedding have not allowed them to properly run their business even on normal days. Load-shedding is worsening with every passing day in Karachi and people have now become psycho patients, they said.
Traders are facing sever losses, business centers are closed and citizens cannot have a proper sleep in night due to frequent and prolong outages of electricity by the KESC.
They said all appeals for ending load shedding have fallen on deaf ear and in the current situation Karachi traders are not able to pay their taxes; therefore, a two-year tax holiday be given to them by declaring Karachi a calamity-hit area.

Monday, May 25, 2009

Karachi strike cripples trade activities

KARACHI: The continuous wave of terror and violence has badly affected economic activities in the city causing losses of billions of rupees to the traders, Daily Times found out on Saturday.

Violence in the city, which started from Friday night paralysed the whole city and even affected the interior province as well. Fears of further deterioration in the city halted business activities.

Chairman North Karachi Association of Trade and Industry (NKATI) Younus Khamisani while talking to Daily Times said that a city from where 80 percent of exports of various products are made and generate about 70 percent of the country’s total revenue should not be left at the mercy of political groups.

“It seems that the government has no interest in the city’s problems and has left its traders’ community helpless,” he complained and said that the Sindh government is doing nothing to ensure peaceful businesses environment for a better economy.

He said that NKATI has almost 2,000 industrial units that were badly affected by the strike, as less than 40 percent labour and workers could reach factories and the industrial zone had to suffer a loss of Rs 350 million to Rs 400 million on account of the strike.

“This was a total unexpected strike which not only hit the economic activities of the city, but largely affected that of interior Sindh as well,” member of managing committee of Korangi Association of Trade and Industry (KATI) Tariq Malik said. He said that KATI remained paralysed during the whole day, as 70 percent workers were not able to reach their industrial units and the industrial zone had to face substantial losses in terms of production.

President Karachi Chamber of Commerce and Industry Anjum Nisar said that this was the 10th day since July 1, 2008 that the economic activities in the city remained paralysed, and no production was observed during these days in the city.

He said that since July 2008 the country has faced a loss of about Rs 18 billion on account of taxes to the federal government, however almost Rs 25 billion to Rs 30 billion losses were reported in terms of production losses only from Karachi during these days.

Many traders face severe problems of supplying their consignments due to unavailability of transport and absence of peace in the city, besides rampant electricity load shedding has crippled the industrial production, he said.

A single day closure inflicts billions of rupees losses on the country’s exchequer, he said, adding that the country cannot afford such an unserious attitude towards trade and industry. He also criticised the government for not taking appropriate measures to ensure uninterrupted power supply to industries and residents of the city.

Chairman of Alliance of Markets Association (AMA), Muhammad Atiq Mir said that only stable political government could resolve the country’s problems, while the PPP-led government has proved a failure since forming the government.

About 25-30 percent of retrenchment has taken place in small markets in the wake of declining trade activities because of the government’s unfriendly business approach from the first day in the office, he said, adding that any rise in unemployment is likely to further collapse the existing peace in the country.

Friday, May 22, 2009

TDAP recommends PTA to boost exports

KARACHI: Trade Development Authority of Pakistan (TDAP) has recommended the government to enter into preferential trade agreements (PTAs) with other countries to get better access in their markets.
The recommendations approved by the Committee III of Federal Export Promotion Board (FEPB) will be sent to the government for inclusion in the next meeting of the FEPB headed by the Prime Minister of Pakistan.
The meeting was chaired by the Chief Executive, TDAP Syed Mohibullah Shah and attended by the representatives of various trade associations from parts of the country. They gave their suggestions for increasing market share of Pakistan exports in traditional and non-traditional markets.
The committee also suggested the government to continue to seek access to the major markets of the USA and European Union.
The committee recommended to sensitize Pakistani diplomats and commercial officers to the importance of export promotion and trade development issues.
It was also felt that commercial officers should spend two years at TDAP on completion of their foreign postings so that our business people and exporters can benefit from their experience of foreign markets.
The committee felt that some of the important sectors with great export potential like agro-food, minerals and human services should receive much larger credit allocation from banking sector as well as export finance so their potential could be developed and the country could benefit from their increased exports. —APP

Wednesday, March 18, 2009

PFA, MAP sign MoU

Press Release

KARACHI: The Pakistan Food Association (PFA) and Marketing Association of Pakistan (MAP) have signed a Memorandum of Understanding at Karachi recently.
The direction and vision this MoU hopes to create a deep bond of relationship with the great traditions and professional values and standards which the two bodies have promoted and fostered over the years.
Mr. Rafiq Rangoonwala - President PFA and Mr. Farukh Mazhar - President MAP emphasized that both the Association will work together to strengthen professional expertise and values, enhance cooperation, exchange information and experience and provide assistance to each other in achieving their respective objectives.
This would help professional marketers to explore new learning and experience opportunities and would contribute immensely to their academic and professional development.

Friday, March 13, 2009

Hubco Narowal plant to be operational by March 2010

KARACHI: The Hubco Narowal Plant will start commercial operation by March 2010, company announced on Thursday.

Hubco, one of the largest independent power producer in Pakistan is setting up this combined cycle power plant based on reciprocating engines technology with an investment of about $300 million and having an ISO installed capacity of 225MW at District Narowal, Punjab. Tariff structure for the plant has recently been agreed with the National Electric Power Regulatory Authority and the letter of support has also been received from the Private Power Infrastructure Board, Government of Pakistan and all equipment supply and construction contracts have also been finalised. The plant will start supplying electricity to national grid from end of March 2010, thereby helping in reducing the acute power shortage in the country. staff report

Wednesday, March 4, 2009

Businessmen to file petition against NEPRA & KESC

KARACHI: The businessmen community will file a petition in Sindh High Court against National Electric Power Regulatory Authority (NEPRA) and Karachi Electric Supply Corporation (KESC) for their unjust tariff.

The petition will be moved by small traders, industrialist, SME’s and citizens of Karachi, this was decided in a meeting at Federation of Pakistan Chambers of Commerce and Industry (FPCCI), a statement said on Tuesday.

On this occasion, Helpline Trust, Karachi arranged a presentation at FPCCI on the traders anxiety regarding acute shortage of electricity and long hours load-shedding, which has not only left the small industry gasping for breath, but also created a sense of uncertainty in the job market and has badly hurt the businesses of small traders, industrialist, SME’s and citizens of Karachi.

Zakaria Usman, Vice President FPCCI chaired the meeting and has showed great agony over the severe shortage of electricity and withdrawal of subsidy on GST on electric charges, which have spiked the cost of production and resulted in widespread closures of small businesses and job losses.

He emphasised that lack of direction among policy makers is making things worse. He urged the government to reduce power tariffs to pass on the impact to consumers and to instruct KESC to cut down load shedding. He strongly drew the attention of the Government to this important area, which needs immediate review and urgent solution, before it is too late and the small traders loose their patience and come to street and create law and order problem.

He made it clear that the FPCCI cannot be a petitioner, but would provide all assistance if the above petition is filed, and we will continue dialogue with the government and KESC, for removing miseries of consumers of KESC.

Asghar Morawala gave details of steps taken by their committee members in regard to increase in KESC tariff, since October 2008. Zakaria Usman announced a committee who will take technicalities and then recommend with in week, and then Justice (R) Shaiq Usmani will prepare draft of petition, which will be again discussed in the FPCCI, and decision would be implemented.

Tuesday, March 3, 2009

FBR plans to stop tax evasion from wholesale, retail stores

By Muhammad Yasir

KARACHI: The Federal Board of Revenue (FBR) has planned to initiate measures to curb tax evasion from various wholesale and retail stores in major cities of the country, official sources said on Monday.

Sources said that the revenue department has intended to install its own electronic registration system at the counter machines of wholesale and retail outlets of different international and local stores aimed at creating direct taxes from the sector.

The revenue authority, in the beginning of this fiscal year, asked all such stores including groceries and departmental, medicine and healthcare, cosmetics and toiletries, shoes and clothing to set up electronic registration system to sum up their sales so that their income tax could be measured according to the record of digitals machines. However, a significant number of wholesale and retail outlets have not installed electronic price counters or information systems so far and continued to maintain their sales record manually.

Besides, tax official said, the federal revenue collection authority is not satisfied with the collection of income taxes from these wholesale and retail outlets made through existing electronic machines.

Taxmen added that the board would also plan to check sales records of their suspended machines on weekly and daily basis in order to monitor the records of the wholesale and retail shops.

Tax officials were of the view that the revenue collection authorities would take every possible measure to generate taxes from its potential taxpayers’ sectors, and the wholesalers and retailers’ sector is one of them where a handsome tax could be generated by minimising or stopping tax evasion.

The tax department has to achieve tax-to-GDP ratio at 10.2 percent as per International Monetary Fund (IMF) conditions by the end of fiscal year 2008-09, which were recorded at 9.5 percent in 2007-08.

FBR has met a shortfall of Rs 53.48 billion in federal tax collection during the first seven months of the current fiscal year 2008-09. In line with the upward revised tax collection target of Rs 1.360 trillion, FBR is chasing a target of Rs 681.7 billion, however, provisional collection has amounted to Rs 628.22 billion only.

IMF has expressed concern over the revenue collection growth of the country that was predicted to miss the annual financial year’s target, besides other macro-economic targets of the country including GDP growth rate, inflation, tax collection, foreign direct investment, privatisation proceeds and export and import targets. (DT)

Friday, February 27, 2009

RBS up for sale in Pakistan

By By Saad Hasan

KARACHI: As the Royal Bank of Scotland (RBS) on Thursday announced the worst financial loss in British history its office here disclosed the operations in Pakistan are being sold.

In a statement released to the Karachi Stock Exchange (KSE), the bank said there are potential buyers who have expressed interest in its business, which includes the retail and commercial banking segments.

“Current capital constraints on the RBS Group and the need for RBS to reduce the size of its balance sheet means it is unable to provide the investment the business in Pakistan requires to achieve its growth potential,” it said.

The bank neither divulged any details pertaining to potential buyers nor did it say anything about the fate of its employees here.

The RBS exit comes at a time when it was in the process of reorganising the business of ABN AMRO, which it bought at peak of the global financial crisis in 2007.

There were doubts when it started re-branding the 80 branches of ABN AMRO in Pakistan amid deteriorating economic and political situation, industry people say.

“It is only logical for RBS to give up operations in Pakistan,” said an official of another multinational bank. “They came because this country was part of the deal. RBS decision is caused by global reasons but the situation here will make head office of any multinational bank sceptical.”

Economic decline will further pull down profit growth of the banking industry this year and next, as people borrow and deposit less in banks, a banking analyst said.

“Banks are parking their funds in treasury bills as they fear rise in non-performing loans and cut back on lending,” said Farhan Rizvi, an analyst with JS Research. “Industry is in a consolidation phase and there will be mergers and takeovers this year.”

But, he said, it is unlikely that a new foreign bank will come forward to buy RBS in Pakistan at a time when there is financial turmoil in international markets.

And, he said any consortium formed locally to take over RBS would have to be very strong financially. “We are talking about 80-plus branches and over Rs112 billion in assets.”

The chances of RBS being purchased by any foreign bank, which is already operating in Pakistan, are also slim, said A B. Shahid, a banker and commentator.

“With the prevailing political instability and security concerns, it is very unlikely,” he said. “It is unfortunate the turmoil continues and our politicians aren’t able to see the severity of the situation.”

While their role as financial intermediaries is limited, industry people say, foreign banks have brought modern banking practices and products to Pakistan.

Wednesday, February 25, 2009

Pakistan Can Export Ample Milk To Malaysia

KUALA LUMPUR, Feb 25 (Bernama)-- Pakistan, one of the world's largest milk producers, will be able to meet Malaysia's need for milk as it produces more than 34 million tonnes annually, the Pakistan High Commission's commerce counsellor, Majid Qureshi, said today.

The imported milk could either be fresh or in powdered form, he told Bernama on the sidelines of the Business Leaders Meetings in conjunction with the D8 Ministers' Meeting on Food Security conference here today.

Currently, Malaysia imports about eight million tonnes of milk and milk powder annually from other countries, particularly New Zealand and Australia.

Qureshi said Malaysian companies with technical expertise and funds could invest in Pakistan to further develop the sector.

He also said that Pakistan would be able to provide ample Halal meat to Malaysia.

Pakistan, he said, had a huge land bank and cattle heads and manpower to meet the potential needs of Malaysian investors and entreprenuers.

As of last year, Pakistan had 144 million head of cattle, sheep, goats, baffaloes and camels.

He suggested that Malaysians interested in running animal husbandry farms so in Pakistan as the government was very supportive of such ventures.

It provided several incentives such as tax breaks, one-stop approval centre and fast approval and guaranteed protection of investment by an act of parliament, he said.

Tuesday, February 24, 2009

Business community of Great Britain urged to invest in Pakistan

The UK business community has been urged to invest in various promising projects in Pakistan offering high margin profitability and returns.

Speaking at a dinner hosted by UK-Pakistan Chamber of Commerce and Industry in Southall, west London, on Friday, Pakistan High Commissioner to Britain Wajid Shamsul Hasan said the south Asian country is ideally located for export-oriented industries and businesses.

Some of the projects he identified with potential growth and high returns include alternative energy, housing sector, roads building, surgical and sports goods, food processing, gems and jewellery.

The High Commissioner said Pakistan has in place well-established infrastructure and legal systems which are important to attract investment. This include rail and sea links, good quality telecommunications and IT services, modern company laws and long standing corporate culture.

Pointing out that Pakistan currently is an energy deficient country, he said the UK-based Pakistan business community has golden opportunity to either go for joint ventures with their Pakistan-based companies or can wholly establish projects in alternative energy sector such as wind farming, solar and hydro fields.

“You can also participate in housing industry as the Government is keen to provide the people with the low-cost houses whose construction also benefit related vending industry,” he said.

Hasan said poverty can be addressed by generating jobs opportunities through industrialisation and added that for the export-oriented industries and businesses, the Government has established a number of Export Processing Zones in the country with special incentives.

He praised officials of UKPCCI for taking keen interest in the progress and development of their motherland and in enhancing the trade ties between Pakistan and the UK.

The outgoing UKPCCI President Sami ullah spoke of his visit to Expo 2008 in Karachi and said the event provided good opportunity for the UK business delegation to explore business opportunities in Pakistan.

He said apart from potential opportunities in alternative energy sources, food is another area where business prospects are good in term of investing in new technology to boost wheat and other major crop production.

Sami ullah said Pakistan needs to re-group or re-organise to achieve the previous position when the country was exporting wheat but is now importing the commodity.

“Textile sector, food business, carpets, electronics, rice, surgical instruments and hospital supplies, herbal medicines, gems and stones are areas where I would urge all our members to take interest to find potential partners or invest on their own.”

He spoke of his meeting in Lahore with UK Trade and Development Office representative, running overseas market introduction service which undertake market analysis, feasibility reports on products and services and offer services related to market entry strategies.

Sami ullah praised the co-operation of Commercial Secretary Saira Najeeb and Commercial Counsel in Manchester Hamid Ali for their sound advice and building business links with the two countries.

In response to questions from the members of UKPCCI, the High Commissioner said the peace deal in Swat will lead to positive impact in the general situation in the country.

He said the spirit of consensus seen in the course of the Senate elections among the various parties is a good omen which will lead to further consolidation of democracy in the country.

Referring to the objections on high interest rate, the High Commissioner said their concerns will be passed on to the relevant authorities in Pakistan.

He further said the Government is seized of the matter regarding land mafia and has initiated steps to protect investments in property by the overseas Pakistanis.

UKPCCI Director and member, Punjab Assembly, Dr.Ashraf Chohan, informed the guests that he is introducing a private member bill for establishing special courts and a police force to deal with the curse of land mafia in the province.

Director Muzaffar Chaudhry and Secretary Naheed Randhawa spoke on the occasion.

Saturday, February 21, 2009

Over 217 pc more sales tax recovered on petroleum products

KARACHI: Over 217 percent more sales taxes on petroleum products during the current fiscal year July-September were recovered as compared to the same period previous year.

Federal Board of Revenue (FBR) released first quarterly report said that over 203 percent more sales taxes were recovered in July 2008 as compared to July, 2007, while in August 199 percent and in September over 246 percent more sales taxes were recovered.

During the period under review, 167 percent more revenues were recovered on account of sales tax on the use of electricity as against 24 percent in sales tax recovery on gas.

According to the data available, sales recovery on cigarettes remained up by 31 percent, telecommunication by 4.5 percent, cement by 3.3 percent, tin canned items over 63 percent, while sales tax on steel products dropped by 64 percent.

Thursday, February 19, 2009

PSO among the top 100 companies of the Muslim World for 2008

Pakistan State Oil (PSO) ranked 29th among the list of top 100 companies of the Muslim World released here.

US Consultancy, Dinar Standard in their 5th Annual Ranking released the list of 100 top companies of 57 member countries of the Organization of Islamic Conference (OIC), which depicted Turkey�s 23 companies among the list bagging most, while the largest oil company of the world Aramco topped the list.

PSO ranked 29th whose revenue as compared previous year was seen surged by 41 percent. Previous year PSO was ranked at 31st and Sui Northern Gas at 99th.

Monday, February 16, 2009

Housing loans witness visible reduction

KARACHI: The issuance of housing loans has witnessed a marked reduction due to high interest rates coupled with steep construction cost, a State Bank report said.

According to a State Bank’s report on Development Financing, the total volume of house financing registered a nominal rise of two percent to Rs73.60 billions till September 2008.

Interest rates soared due to tight monitory policy, leading to reduction in obtainment of housing loans by private sector.

Thursday, February 12, 2009

Tareen for checking price hike to control inflation

ISLAMABAD: Advisor to PM on Finance, Shaukat Tareen has pinned the inflation control with the price spiral. “There is a need to control price hike through administrative measures at grass root level in order to control inflation through out the country”.
Talking to newsmen in “Good Morning Pakistan” Programme, Tareen said that the government and tax department is framing various policies to enhance the tax ratio of the country to 16 percent in the upcoming years.
He said tax-base policy coupled with introduction of taxation in agriculture, real estate and services sector would help the government to multiply revenue generation of the country. It has been decided to reform the agriculture sector in order to bring it into the tax net by the next two years, whereas small businesses particularly wholesales and retailers should also contribute their part.
He expressed satisfaction over the steady growth of the country’s economy during the past few months and praised the economic team for their attempt and well thought-out policies in stabilizing the country’s overall economic situation and controlling inflation.
He said that short and long-term measures would steer the country out of the current economic challenges and ensure speed development of human resources, health, education, energy and banking sectors. He said that there is demand to make institutions more powerful and give them confidence to safeguard their interests.
The economic measures which would be taken in the next six months, he hoped would further reduce inflation and attract more foreign investment in the country.
The adviser said the government is taking all measures to control inflation and bring the interest rates down to a single digit.
Regarding to a question about Benazir Income Support Programme he said that the government is formulating long-term policies to eradicate poverty from the country and in the next phase, families will get financial assistance.
Besides the income support, the members of deserving families would also be provided technical training, education and health facilities, and it would be expanded he added.

Tuesday, February 10, 2009

Macroeconomic Conditions signal turbulence

By A.B. Shahid
THE recent monetary policy announcement by the new State Bank governor sends a clear message: that there is little in terms of improvement in the state of the economy to warrant the much demanded monetary loosening.

Based on traditional logic, the stance is correct; while fiscal, trade and current account deficits are already high there may be further slippages. First, with Federal Board of Revenue (FBR) collecting only Rs544 billion in first half of FY09, the full-year Rs1.36 trillion tax revenue target may not be met. Impliedly, public borrowing could stay high squeesing credit to the private sector, which won’t help contain the economic downswing.

Second, anticipated decline in trade deficit (courtesy falling imports) may be less than expected since: (i) export growth may decelerate due to global recession and infrastructure bottlenecks causing intermittent power and gas supply shortages; (ii) anticipated decline in oil import bill may turn out to be less than its projection.

Besides, deceleration in Consumer Price Index since September 2008 was moderate relative to Sensitive and Wholesale Price Indices, while Core Inflation Index (the peg for interest rates) remains what the governor called ‘stubborn’. According to him, ‘this signifies that demand pressures have not completely dissipated despite a slow down in economic activity.’

For once, SBP explicitly accepted that accumulation of excess demand since 2004 prepared the slope for inflation to slip uncontrollably, and in 2008 it caused multiple deficits, raised production costs all round, and blunted growth. To limit its fallout, SBP considered it expedient to continue its tight policy stance and to keep its discount rate unchanged at 15 per cent.

The policy highlighted the vulnerabilities (principally high imports) nourished by a stable rupee, that eventually caused sudden widening of the current account deficit after global financial turmoil and Pakistan’s political turbulence triggered a fall in reserves, quick depreciation of rupee, and rapid rise in inflation because exchange rate adjustments weren’t based on inflation differentials and trade deficit.

Beginning 2004, demand for goods steadily overshot supply due to excessive private sector borrowing fuelled by low interest rates. In 2007, government borrowing rose rapidly owing to delayed pass through of fuel subsidies amounting to Rs395 billion out of the fiscal deficit of Rs777 billion, which was sheer bad fiscal management.

Excess credit expansion was reflected in banks’ high loan-deposit ratios; later it led to an unprecedented market ill-liquidity; between July 1 and January 10, deposits shrank by Rs128 billion (3.4 per cent), while bank credit soared by Rs 500 billion (11 per cent) placing a combined strain of Rs628 billion on the system and shrinking its liquidity by 14 per cent, forcing SBP to continue its tight monetary stance.

Denying a relationship between discount rate and lending rates, SBP views the liquidity gap as the counterpart of the Current Account deficit, and believes that such a large drop in liquidity would have raised interest rates regardless of the SBP discount rate level. Indeed, 6-month Kibor eased by 55 bps to 15.21 per cent from 15.76 per cent in November 2008, and 3-month Kibor by 98 basis points.

This is where truth begins to surface i.e. over-simplification of the logic about interest rate rise since SBP also regrets the dismal performance of the large scale manufacturing sector that, for the first time since 2004, fell by 5.6 per cent, as well as falling private sector credit, all during the first five months of current fiscal year that together portray definite weakening of the economy.

Drop in private sector credit doesn’t reflect industry’s reduced funding needs but the fact that interest rates are too high to make an economic activity viable while domestic and foreign markets reflect falling demand as disposable incomes slide. SBP admits these realities as well as the impact of ‘power cuts and long interruptions’ but not that of high interest rates in slowing the economy.

The fallout from economic slow down will be accentuated by relying on macroeconomic indicators with a history of (often wilful) miscalculation. Yet, SBP didn’t realise that while the industry confronts cost escalation due to a host of factors (none resolvable quickly) lower borrowing cost could be the immediate relief; without it more businesses could close and worsen banks’ perception of lending risk.

SBP notes banks’ overzealous participation in T-Bill auctions as well as the fact that banks’ T-Bill stocks ‘over and above the SLR indicate their [banks’] reluctance to extend credit to the private sector’, as also the fact that it is ‘an indication of growing risk aversion’. It also overlooks the fact that Kibor is falling not because banks are lending cheap; they prefer low-yield zero-risk business i.e. investing in T-Bills

According to SBP bulk of the surplus liquidity (that rose from Rs79 billion in end-September 2008 to its current level of Rs325 billion) has gone into T-Bills and ‘has not only pulled down the Kibor rates (i.e. Karachi Inter-bank Offer Rates) but has also reduced the inter-bank spreads between the repo and the call rates’. The term to note here is ‘inter-bank’.

Will the shifting of bulk of the national savings from the private sector to the exchequer yield the desired results in economic growth? A yes to this question implies overconfidence in the bureaucracy’s ability to generate optimum value from wealth placed at its disposal – a phenomenon not witnessed since the late 1960s; it is even less likely now.

SBP offer to provide another Rs25 billion for concessional export re-finance is generous but SBP again failed to note that Part-II (pre-shipment finance) of this scheme is often misused. An imaginative step would have been to offer this amount only for Part-I (post-shipment finance) that rewards real exporters not those investing the pre-shipment finance in speculative ventures.

Finally, the policy seems geared to facilitate government borrowing. While initially SBP announced that it will continue to manage the operational aspect of the auctions without any change in the process as far as the market was concerned, it was subsequently announced that, henceforth, the government will decide the rates of return to be offered on T-Bills and PIBs.

This again reposes excessive confidence in bureaucrats’ ability to respond correctly to the scenario characterised by the inter-relationships between existing stock, demand, and supply of money, and private sector credit needs. What is positive (though more of a hope) is the plan for ‘segregation of debt and monetary management’ and ‘introducing limits on direct government borrowings from the SBP’.

But the promises about prior announcement of the auction calendar for T-bills and PIBs, a volume-based approach to determining the auction result, and quarterly (instead of half-yearly) policy statements, may yield the desired results. (Dawn)

Friday, February 6, 2009

KSE takes back show cause notices against 5 Companis

Karachi Stock Exchange (KSE) has taken back the show cause notices against five companies out of the total of 70 companies under notice.

KSE released notification said that the notices withdrawn against the companies included Tri Star, Mutual Fund, Tri star Muzarba, Prudential and Discount and Guarantee House, Koh-e-Noor Spinning and Chanab Limited. The notification said that these companies have been deleted from the default counter list.

KSE officials said that they have submitted the statements, which earlier in violation of companies’ section they had failed, and now the notices stand withdrawn.

Saturday, January 31, 2009

New FPCCI president to take charge today

KARACHI: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) officially announced its election results on Friday and the new office-bearers would take charge of their respective positions in an official ceremony to be held on Saturday. Sultan Chawla was elected unopposed as President of the FPCCI.
The four vice presidents elected on the basis of associations are Zakaria Usman, Mansha Churra, Aftab Birlas and Hameed Chadda. Of the four vice presidents who were to be elected from each of the four provinces, only two have been elected unopposed so far, who are Mumtaz Sheikh from Sindh and Mohammad Idrees from Punjab.
Vice Presidents from the provinces of Balochistan and NWFP would be elected when the fake associations’ case pending in Sindh High Court is solved and that may not be before the 5th of February, an FPCCI official said.