43 investor complaints were resolved during the month by SECP

ISLAMABAD, November 11: As part of its enforcement and regulatory function, the Enforcement Department of the Securities and Exchange Commission of Pakistan passed 34 orders, fining defaulting companies besides issuance of 37 show-cause notices in October, whereas proceedings against five companies were closed with warnings.

The department imposed an aggregate penalty of Rs9.399 million on listed and unlisted companies in October for non-compliance of various provisions of the 1984 Companies Ordinance. The department also resolved 43 investors’ complaints during the month.

Statement by an IMF Staff Mission on Pakistan

An International Monetary Fund (IMF) staff mission, led by Adnan Mazarei, met with the Pakistani authorities in Islamabad to continue discussions on the fifth review under Pakistan’s Stand-By Arrangement (SBA). Mr. Mazarei made the following statement at the conclusion of the mission today:

“Over the past few days, an IMF staff mission and the Pakistani authorities had constructive discussions which focused on assessing the impact of the floods on Pakistan’s economy, adjusting economic policies to respond effectively to the needs created by the floods, and on the outlook for the rest of the financial year 2010/11.1

“Progress has been made regarding the measures to be implemented in the context of the authorities’ economic stabilization and reform agenda, while protecting the poor. Specifically, we have reached broad agreement on the macroeconomic framework and a revised 2010/11 budget deficit target to help flood victims, and rein in inflation, which hurts the poor most. The authorities consider that the reformed general sales tax is essential to raise revenue to finance relief for flood victims, poverty reduction, and infrastructure reconstruction. Tax reform is also needed to make the tax system more equitable. The authorities recognize the critical importance of energy sector reform. They have initiated reforms aimed at reducing load shedding, which is severely hurting economic activity; curtailing energy subsidies in order to free up budget resources for spending in priority areas; and resolving the issue of circular debt.

“The IMF remains committed to the ongoing dialogue with the Pakistani authorities, and discussions will continue including around the Pakistan Development Forum to support Pakistan’s efforts to strengthen macroeconomic stability and growth and completing the fifth SBA review.”

FBR extends last date for filing of IT returns up to October 15

Federal Board of Revenue (FBR) has extended the last date for filing of Income Tax returns up to 15th October, 2010 in the wake of situation resulting from massive flash floods and other related matters.

The extension has been granted following representations from various business organizations and classes of taxpayers who had sought further extension in time for filing of returns. It has, therefore, been decided to extend the last date for filing of income tax returns/statements for the tax year 2010, in the case of Business Individuals, Salaried Individuals, for Annual Statement by the Employer and for the returns of income by Association of Persons (AOPs) to 15th October 2010, says a press release issued by the FBR.

SECP receives overwhelming response to amnesty schemes

The Securities and Exchange Commission of Pakistan (SECP) have received an overwhelming response to its amnesty scheme for regularization of belated returns and easy exit facility to dormant companies, which was launched on July 1, 2010 for three months.

Under the Company Regularization Scheme (CRS) some 250 companies have regularized their defaults and have filed 700 returns by July 27, 2010. Similarly, under the Companies Easy Exit Scheme (CEES) around 100 companies have applied to avail themselves of the exit facility.

The schemes have been launched for three months from July 1, 2010 to September 30, 2010 (in three phases of one month period each) with different fee schedule. The first phase of the schemes would be closed on July 31, 2010. However, the documents under Phase- I shall be accepted by Monday August 2, 2010 due to holiday on July 31, 2010. As such, only three days have been left in closing of the first phase.

The regularization scheme was applicable to all types of companies other than listed companies, and enabled acceptance of overdue returns and annual accounts by paying only normal filing fees plus one half of the normal filing fee as additional fee without any penalties, during the first month. However, in the second month of the scheme, the fee will increase and the late submission of documents will be accepted by paying of normal filing fees plus one time the normal filing fee as additional fee.

The SECP always facilitates the corporate sector in compliance of law through simplification of procedures. The schemes will increase compliance of law by registered companies and also help weed out the dormant ones.

SECP starts online survey on services provided by Company Registration Offices

Islamabad, July 9: Securities and Exchange Commission of Pakistan (SECP) has started an online survey on its website, entitled ‘Survey on Services provided by the Company Registration Offices’. The survey is available at http://sraposrc/secsurvey/index.php?sid=99227&lang=en

The survey is aimed at eliciting feedback and suggestions from companies, consultants and other stakeholders, on the services extended by the SECP at its eight regional offices called the Company Registration Offices (CROs). The CROs play a vital role as the front offices of the SECP having direct interface with the public. They are located in the provincial capitals and in industrial hubs of the country. They mainly function as corporate registry and are the custodian of corporate records.

Consisting of 25 simple multiple-choice questions, the survey takes only a few minutes to complete. It also includes specific questions on eServices, seeking inputs from the participants, with a view to making it more user-friendly.

The SECP encourages the users of services provided by the CROs, to share their opinions about the existing service delivery system and also to make their suggestions for future improvement. This will enable the SECP to further extend its facilitation and to provide more efficient services to the utmost satisfaction of the stakeholders.

Pak Suzuki enhances car prices from today

The Pak Suzuki Motor Company (PSMC) on Saturday again increased the prices of its various models by Rs 10,000 to Rs 15,000. This is the second time within two months that the popular PSMC has increased its prices, which are applicable from March 29, 2010. Previously, the company had raised its prices by Rs 10,000 to Rs 15,000 on January 26. According to auto analyst it is expected that in the near future prices will further rise. Shafiq Shaikh spokesperson PSMC said that under unavoidable circumstances the company has to pass on a minor production cost to the consumers owing to increase in prices of international steel sheets and increases in wages and utility prices.
He added that still the company is bearing most of the cost pressure despite the depreciating rupee and other inflationary conditions affecting the economy that have pushed up the CKD and the local vendor parts costs. The price tag on all Suzuki Mehran models have been raised by Rs 10,000. Now Mehran VX, VXR, VX CNG, VXR CNG are tagged Rs 4,29,000, Rs 480,000, Rs 474,000 and Rs 524,000 respectively.

Pakistan on path of economic recovery: IMF

Pakistan’s economic growth has started to recover despite security and energy challenges and the country met almost all targets under the International Monetary Fund program, the global financial institution said on Tuesday.

“Pakistan’s program is progressing well,” the Fund said in a statement following ‘constructive discussions’ with Pakistani officials focusing on Pakistan’s recent economic performance, the outlook for the rest of the fiscal year.

Adnan Mazarei, who met with the Pakistani officials in Dubai over the past week to initiate discussions on the fourth review under Pakistan’s Stand-By Arrangement (SBA), noted that Islamabad observed all quantitative performance criteria, except for the budget deficit target, which exceeded by a small margin.

Listing positive trends Pakistan registered in recent months, the Fund said the exchange rate has remained stable at Rs 84–85 per US dollar, and the international reserves position has strengthened (the banking system’s gross foreign exchange reserves, including the State Bank and commercial banks, reached $14.3 billion in mid-February, of this total, the State Bank held $10.5 billion).

The early signs of recovery in some sectors and the improved external position are encouraging, although there are risks and challenges to Pakistan’s economic program.

“Economic growth in Pakistan is starting to recover; large-scale manufacturing output has started to increase, the improvement in the global economy has helped manufacturing exports, and private sector credit growth has picked up to some extent as businesses rebuild their working capital.

The IMF’s package for Pakistan - approved in November 2008- has been extended to $11.3 billion. Looking ahead, the IMF statement said, a resumption of higher growth is needed to raise living standards and will require improvements in the business climate to stimulate higher investment by local and foreign investors.

Emphasizing the need for stepped up donors support for the key anti-terror partner of the international community, the Fund said, early disbursement of donor financing remains crucial to support Pakistan’s stabilisation and reform efforts as well as laying the basis for a sustainable growth.

The IMF mission staff will prepare a report on the fourth review under Pakistan’s SBA, which is scheduled for consideration by the IMF Executive Board in late March.

Annual General Meeting of Pak German Business Forum

The annual general meeting of the Pakistan German Business Forum (PGBF) was held with the agenda of holding the election for a new Board. An announcement here said that the outgoing President, Salahud Din Ahmed, presented the annual report and welcomed the old and new members.

It said that the elections conducted under the supervision of Syed Khurshid Pervez in a very peaceful atmosphere.

The new board consists of Saifuddin Zumkawala of M/s. Allanz EFU insurance, Qazi Sajid Ali of BASF, Masud Akhtar of KSB Pumps, Abdul Baqay Khan of Merck Pakistan, Syed Nadeem Ali Kazmi of Siemens Pakistan, Razzak H.M. Bengali of Baluchistan Wheels Limited, Dr. Islam Hamid of Delta Pharma, Wasim Mirza of Pakistan Specialty Chemicals, Noordin Karim of Shermah Enterprises, Salahud Din Ahmed of Universal Business Equipment, Mian Abrar Ahmed of Cuckoo Industries and Khawaja Jahanzeb of Zeb Travels.

After the election proceedings, the newly elected Board members unanimously elected Saifuddin Zumkawala and Razak Bangali, as President and Vice President respectively.

Saifuddin Zumkawala thanked all the members for their confidence reposed in him and stated that he will try his level best to promote the affairs and aims/objectives more vividly of PGBF amongst in the country and internationally as well.

Federal Board of Revenue identifies 0.5 Million tax evaders

The task force of the Federal Board of Revenue (FBR) on broadening the tax base has identified 0.5 million rich people, who are not ready to come into the tax net. Sources stated that FBR and National and Database Registration Authority (Nadra) are jointly working on actual number of rich people earning huge income, but still out of the tax net. In this regard, the FBR and Nadra officials have convened meetings in recent past to identify such non-filers of income tax returns in all posh areas of Karachi, Lahore, Islamabad and other cities.

Based on risk-profiling of the taxpayers, the Nadra informed the FBR that approximately 0.5 million potential individuals, belonging to elite class, have not obtained the National Tax Numbers (NTNs). The risk-based profiling of un-registered rich individuals has been jointly done by the FBR and the Nadra. The FBR updated database has shown that out of 2.5 million NTN holders there are more than 1.8 million who are not filing income tax returns. Only 0.7 million are actually filing their due income tax returns. The FBR’s task force on broadening the tax base has decided that initially 150,000 (about 5 percent of the 1.8 million including abovementioned 0.5 million) individuals may be sent letters to file returns or explain why they did not file tax returns. These non-filers would be picked randomly through the computerised system to avoid discrimination.

The selection process would be done under the relevant provisions of the Income Tax Ordinance 2001 with the help of data particularly addresses provided by the Nadra. To ensure credibility of FBR, these letters may be prepared by one person and checked by another FBR official before such intimations are issued to the non-filers. This verification process would ensure transparency during the whole exercise. Taking another major initiative, FBR’s task force has also decided that thorough scrutiny of 150 most potential people would be done at the FBR level. The detailed data analysis of their profiles would be done to check their business trends using third party data. Senior officials of the FBR would be involved during this exercise to ensure that those potential taxpayers are selected, who have a high likelihood of being tax evaders. The analysis of 150 big tax evaders would also help to identify similar nature of cases within the same sectors.

Central Bank keeps discount rate unchanged @ 12.5 percent

The State Bank of Pakistan has decided to keep the policy rate unchanged at 12.5 percent. This was announced by the Governor, State Bank of Pakistan, Syed Salim Raza while unveiling the Monetary Policy Statement at a press conference held at SBP, Karachi this afternoon.
Mr. Raza said that macroeconomic stability has proceeded apace, as evident in the considerable decline in average Consumer Price Index inflation – which is the primary objective of monetary policy. In the first half of the current 2009-10 fiscal year (FY10) inflation recorded at 10.3 percent, compared to 24.4 percent during H1-FY09, he said and added that this decline is visible across almost all the subgroups of CPI.
“The inflation outlook for full FY10, nevertheless, remains somewhat vulnerable to the effects of fiscal consolidation efforts and to incipient international commodity price pressures,” he said and added that the State Bank expects the average CPI inflation for FY10 to remain between 11 and 12 percent, still much lower than the 20.8 percent inflation of last year, but higher than the 10.3 percent recorded in the first half of FY10.
Talking about the real economy, Mr. Raza said that the agriculture sector has shown improvement and the wheat crop was good with higher prices stimulating demand for consumer goods, and the cotton crop higher than last year improving textile production and corresponding exports. Modest but consistent recovery in Large-scale Manufacturing (LSM) is also encouraging, he
said and added that the LSM grew by 0.7 percent in November 2009 compared to a low of negative 20 percent in March 2009. “Revival in private sector credit and better-than-expected global recovery should further support economic growth,” he added.
Assuming that the current trend in LSM growth continues, the Governor said and added that the overall real Gross Domestic Product growth is expected to be 3.0 – 3.5 percent in FY10, as compared to 2.0 percent in FY09.
Referring to external current account, Mr. Raza said that progress in the external sector is also encouraging. The external current account deficit has declined to $2 billion during H1-FY10 from $7.8 billion in H1-FY09. A small decline in exports was substantially offset by a higher decline in imports resulting in significant reduction in the trade deficit, he said and added that the sustained flow of workers’ remittances ($4.5 billion during H1-FY10) has further contributed to the reduction of the external current account deficit.
“External current account deficit is projected at 3.4 percent of GDP for FY10 - a significant improvement over last year’s deficit of 5.6 percent and earlier projections of close to 5 percent,” he emphasized.
SBP Governor said that as a result of significant contraction in the external current account deficit, the overall balance of payments has posted a surplus of
$1.4 billion during H1-FY10 compared to a deficit of $4.8 billion in H1-FY09. A
modest increase in foreign portfolio investment, additional SDR allocation, and
SBA flows from IMF, more than compensated for the decline in foeign direct investment, he added.
However, he said sustained improvement in the balance of payments would depend significantly on the timing and scale of projected foreign inflows, especially the official flows pledged in Tokyo by the Friends of Democratic Pakistan. “Assuming the revised financial inflows are realized, the SBP’s foreign
exchange reserves are projected to reach close to $15 billion by the end of FY10,”
On the fiscal front, Mr. Raza said that the Federal Government has continued efforts for rationalizing expenditures, by phasing out subsidies and by adjusting the administered energy prices. “It has also taken in hand the organizational and administrative measures to bolster tax administration and revenue collection,” he added.
Mr. Raza said the State Bank has managed system’s liquidity to both support smooth functioning of the market and to do this consistent with the monetary policy stance. As a consequence, volatility in the interbank overnight money market Repo Rate – the operational target of SBP – has come down substantially and market interest rates have gradually eased in line with reduction in the Policy Rate."
“Integrating projections for balance of payments, fiscal accounts, and credit growth and given their interrelationships with inflation and real GDP projections, the equilibrium M2 growth is forecasted to be around 14.5 percent for FY10,”

While summing up the overall macroeconomic scenario, Mr. Raza said that much has been gained with respect to macroeconomic stability front on a challenging economic and security environment. Difficult decisions have been taken and adjustments were made to address a host of structural constraints, he
said.
“However, work remains to be done to consolidate this stability and set the stage for sustainable recovery. At the short term, we would want to see a reversion of the current inflationary uptick, and a more certain outlook for system’s liquidity,” Mr. Raza asserted.