Open Market Comments | Forex, Pakistan Pakistan Forex Rate - Prize Bond Draw Result - Pakistan Open Market Rates, forex currency rates, Forex Rates, Exchange Rate, Gold rate, Currency Rates, International Rates, Get forex conversion rate from PKR to GBP, USD, Euro. Wed, 24 May 2017 04:18:01 +0000 Joomla! 1.5 - Open Source Content Management en-gb Economy shrinks by Rs600 billion In an intriguing development, the size of Pakistan’s economy has decreased by Rs600 billion during the outgoing financial year as it stood at Rs22.909 trillion compared to the earlier official projection of Rs23.5 trillion in the aftermath of rebasing of economy from 1999-2000 to 2005-06, revealed official statistics available with The News.

{loadposition content_adsense300}Official statistics prepared by the government for Adviser to Prime Minister on Finance Dr Shahid Amjad will be made public in the coming days.

Per capita income went up to $1,380 in the current fiscal 2012-13 from revised estimates of $1,323 in the last financial year, up 4.3 percent only, suggested the figures.

The government took population of 183 million for the fiscal year under consideration.

The gross national product (GNP) at market price rose to Rs24.01 trillion in FY13 compared to Rs21.126 trillion in FY12, up 13.7 percent.

The gross domestic product (GDP) deflator increased by 7.53 percent in 2012-13 from the estimated 5.31 percent in 2011-12 and 19.54 percent in 2010-11.

However, certain distortions have been surfaced in calculation of GDP growth that not only resulted into decreasing of the economy size from earlier projections but also jacked up the GDP growth figure to 3.59 percent for the outgoing fiscal year after treating power sector subsidies below the line contrary to the past practices. This also made power subsidies of Rs391 billion part of GDP for the last fiscal year.

“The GDP growth rate cannot be increased beyond 3.2 percent for 2012-13 rather than official figure of 3.59 percent released by the government if distortions created through changed methodology are removed,” an independent economist said.

About the reasons of the GDP size reduction, Chief Statistician of Pakistan Bureau of Statistics Asif Bajwa said that there was a need to understand a difference between projection and actual figures.

The actual size of the GDP has been calculated to the tune of Rs22.909 trillion on the basis of nine-month figures from revised estimates of Rs20.090 trillion for last financial year.

With change of methodology, certain changes were made that created ripples within the economic ministries as earlier factor cost was used to determine cost of production, then indirect taxation was included and subsidies were excluded to come up with GDP at market price.

By changing methodology, the base price mechanism was also used as indirect taxes were added only in shape of customs duty paid but input adjustments were done on export oriented sectors.

This mechanism does not fully reflect all indirect taxes. Another flaw mentioned by experts is that the government treated power sector differential subsidy as below the line item as determined price of electricity per unit stood at Rs12 but notified tariff stood at Rs9.

Therefore, the difference of Rs3 was borne by the government in shape of tariff differential subsidy. Earlier, the whole subsidies were added for calculating GDP growth but now it was treated below the line.

The government also took Federal Board of Revenue budget figure of Rs2,381 billion but there is a shortfall of Rs200 to Rs300 billion.

Dr Ashfaque H Khan, who is currently serving as Dean Nust Business School (NBS), said that the purpose of rebasing of economy was to record all those economic activities, which were either under reported or unreported in the past.

“When we rebased our national economy from 1981 to 1999-2000, the size of GDP went up by 20 to 22 percent. The GDP size must go up as result of rebasing of economy,” he added.

]]> (Shumaila Ahmed) Open Market Comments Wed, 08 May 2013 06:37:23 +0000
Inflation: Index down 0.04% during week

The Sensitive Price Indicator (SPI), for the week ended May 2 has registered an decrease of 0.19% over the previous week for the lowest income group.

The SPI for the week under review for the above mentioned group was recorded at 185.40 points against 185.76 points registered in the previous week, according provisional figures from the Pakistan Bureau of Statistics.

The SPI for combined groups was down by 0.04%; down from 191.58 points in the previous week to 190.91 points this week. Compared to the corresponding week last year, the SPI for combined groups inflated 4.15%.

During the week under review, average prices of indexed items changed as follows: 14 items registered a decrease, 12 items increased and the remaining 27 items’ prices remained unchanged.

]]> (Shumaila Ahmed) Open Market Comments Sat, 04 May 2013 05:42:35 +0000
Customs registers nominal revenue growth Revenue collection by Pakistan Customs has added disappointment to the efforts of the Federal Board of Revenue (FBR) in achieving target as the duty and taxes on import and exports registered a nominal rise of Rs238.28 billion in the first nine months of the current fiscal year.

{loadposition content_adsense300}According to the collection figures of the Model Customs Collectorate (MCC) of PaCCS and Appraisement, revenue collection inched up by 3.28 percent to Rs238.28 billion during July-March 2012-13 as against Rs230.72 billion in the corresponding period last fiscal year.

Lower revenue collection by the customs has also dragged down the FBR collection at the national level to a provisional Rs1,346.26 billion during the three quarters of the current fiscal year as compared to Rs1,280.39 billion in the same months last fiscal year, posting a growth of 5.14 percent.

The FBR officials said that further deterioration in the revenue collection from the customs side would widen the existing shortfall in the total revenue collection. The FBR collected Rs1,883 billion in the last fiscal year and it was assigned to get an ambitious target of Rs2,381 billion with the growth of 26.44 percent for the current fiscal year.

The actual revenue collection target, however, reportedly revised downward twice and it is hovering around Rs2,126 billion.

In a bid to bridge the revenue shortfall, the FBR issued a number of statutory regulatory orders (SROs) with the start of 2013. The FBR officials said that these SROs had significant revenue impact but the duty and tax collection at the import and export stages remained stagnant.

According to the data of MCC PaCCS and Appraisement, the customs duty collection registered 8.96 percent growth to Rs86.9 billion from last year’s Rs79.81 billion.

Customs officials said that the amnesty scheme launched by the government had failed to yield desired results. The FBR launched Vehicle Amnesty Scheme on March 5 to legalise the smuggled and non-duty paid vehicles.

The collection of sales tax by the customs department fell by 6.37 percent to Rs104.69 billion from last year’s Rs111.81 billion. However, the income tax posted nine percent increase to Rs38.05 billion from Rs34.9 billion.

Customs officials said that measures introduced through last year’s federal budget, including customs duty rationalisation, reduction in the sales tax and changes in income tax on importers resulted in nominal growth in the revenue collection by the customs.

]]> (Shumaila Ahmed) Open Market Comments Sat, 20 Apr 2013 10:02:21 +0000
Next government must tax untouched sectors The next democratic government has to generate revenue from the pampered segments of the society, said concerned circles, adding that the electorates would become edgy even on slightest additional pressures on their pockets. They added the government will perhaps enjoy a shortest honeymoon period.

{loadposition content_adsense300}“There are corrupt practices and under-filing of tax returns in manufacturing sector, while the salaried class is contributing handsomely towards national exchequer,” said senior economist Naveed Anwar Khan.

He said the malpractices in these sectors should be strictly checked. Some prominent segments should be brought under the tax net.

“Agriculturists, doctors, engineers, lawyers, architectures, stock players, etc. are earning billions of rupees without paying taxes or with paying nominal taxes,” he added.

He further said the most crucial issue of our economy is deficiency in revenue generation despite its having potential.

Energy crisis, he added, needs investment, which is to come from revenue sources. Interest rate will come down, if the government makes up for its expenditures through revenue generation. And, inflation will be contained only if the black money circulating in the economy is reduced by prudent and fair taxation, he said.

Construction and property sectors also need deep scrutiny, said economist Faisal Qamar. He said these sectors have minted money in last five years. Construction sector’s tax contribution is equal to 25 percent of cost.

However, these taxes are indirect paid in form of sales tax by makers of, for example, cement, tiles, steel, cables, electrical switches, sanitary, etc.

He said property developers and small contractors living lavishly on construction-related income hardly pay any tax.

Qamar said that investment in energy sector is to come from private sector. He said the sector’s wherewithal is dependent on income originating from its sole buyer, government.

He said the reason that successive governments in Pakistan operated comfortably on low tax to GDP ratio was that the public sector losses were under control.

He said the Pakistan International Airlines (PIA) started suffering losses a decade ago; Railways was viable at the turn of this century; and the Steel Mill was in profit five years ago. The power sector managed its finances comfortably till the dissolution of government in 2007, he commented.

He said the matters deteriorated in last five years with PIA, Steel Mills and Railways becoming totally dependent on government dole-outs, the power sector burdening the national exchequer by Rs1.4 trillion and government resorting to uncalled-for borrowing that multiplied the debt servicing burden. “Address these ills and revenues are still adequate to run the country,” he added.

Certified Public Accountant Asif Ali Shahid said it is imperative to increase tax to gross domestic product to at least 15 percent to spare sufficient resources for development.

He said a stock market with book value of over $50 billion is of no use to the economy if the players benefiting from stock trades do not pay taxes or if those having black money are allowed to buy stocks without any questions being asked. “By doing this, we are making thieves as partners in our listed companies,” he added.

]]> (Shumaila Ahmed) Open Market Comments Thu, 18 Apr 2013 11:35:48 +0000
Zero-rated apparel textile sector disapproves two percent sales tax Zero-rated apparel textile sector doubts whether Federal Board of Revenue (FBR) consulted with the Ministry of Textile Industry, Ministry of Commerce and Ministry of Industries on the two percent sales tax imposition. Pakistan Hosiery Manufacturers and Exporters Association (PHMA) dispatched letters to the Ministry of Textile Industry, Ministry of Commerce and Ministry of Industries, showing wonder at whether the FBR has consulted with these ministries on the relevant SRO.

{loadposition content_adsense300}The association said regretfully, "It is surprising that the genuine stakeholders were also not taken on board," and they feared "the imposition of the subject SRO will no doubt ruin the Textile Export Sector". Addressing the secretaries of the ministries, the PHMA invited their attention towards the already "adverse" factors striking the value-added textile sector, saying that the entire sector is undergoing financial troubles.

" A huge amount of Sales Tax Refund Claims; Customs Rebate Claims; FED Claims and DLTL Claims are causing the severest ever liquidity crunch coupled with severest load shedding of Gas and Electricity; high costs of doing business etc," it said. The pertaining SRO is feared to worsen the financial position for the sector, it said, adding that textile exporters' profit began shrinking as their margin reached only four percent to five percent. "Many old established bank borrowing exporters' units have closed down," said the PHMA.

Central Chairman PHMA, Javed Bilwani said that the continuation of the zero-rating regime for apparel sector will help save billion of rupees for the nation. The regime will keep the "unscrupulous" elements out of business and help the country overcome corruption through tax refund claims, he suggested in the letters. He urged all three concerned ministries to take up the matter to reverse the regime to zero-rate, suggesting tax should be imposed on 10 percent to 15 percent local consumers textiles market.

]]> (Shumaila Ahmed) Open Market Comments Thu, 28 Mar 2013 07:42:00 +0000
SPI inflation increases by 0.12pc The Sensitive Price Indicator (SPI) for the week ended on March 15 for the lowest income group up to Rs.8, 000, registered increase of 0.12 per cent as compared to the previous week.

{loadposition content_adsense300}The SPI for the week under review in the above mentioned group was recorded at 186.59 points against 186.36 points registered in the previous week, according to provisional figures of Pakistan Bureau of Statistics.

As compared to the corresponding week of last year, the SPI for the combined group in the week under review witnessed increase of .12 percent. The weekly SPI has been computed with base 2007-2008=100, covering 17 urban centers and 53 essential items for all income groups and combined.

As compared to the last week, the SPI for the income groups from Rs.8001-12,000, 12,001-18,000 and 18001-35,000 increased by 0.12 percent, 0.13 percent and 0.12 respectively while the SPI for the income group above Rs.35,000 increased by 0.12 percent. During the week under review, average prices of 11 items registered decrease, while that of 15 items increase with the remaining 27 items' prices unchanged.

The items which registered decrease in their prices during the week under review included tea, onion, egg, rice IRRI, Bananas, tomatoes, Mutton, Curd, mashed Pulsed washed, Moong pulsed washed, milk fresh, sugar and masoor Pulse washed. The items that witnessed decreased are LPG, potatoes, chicken live, Gram pulse, Red chilies, veg Ghee, Garlic, Gur, wheat, Mustard oil and wheat flour bag. 27 items that remained unchanged are bread plain, beef, milk powered, cooking oil, salt powered loose, cigarettes, long cloth, kerosene oil, firewood, energy savor, washing soap, petrol and petrol.

]]> (Shumaila Ahmed) Open Market Comments Mon, 18 Mar 2013 05:00:20 +0000
SECP takes punitive measures against companies' high-ups The Securities and ExchangeCommission of Pakistan (SECP) has issued show-cause notices to thedirectors and auditors of twenty-six companies for failing tocomply with corporate laws and accounting standards.

{loadposition content_adsense300}According to a statement of the Commission issued here onMonday, these notices were issued by the enforcement department ofthe SECP in January 2013. The enforcement department also initiated proceedings againsttwenty-three companies on complaints received from shareholders. The complaints were pertaining mainly to jeopardizing theshareholders' right of receiving the dividend warrants, right/bonusshares and non-transfer of right shares.

The SECP, as part of its mandate monitors listed and non-listed companies to safeguard investor interest and takesappropriate punitive action. These enforcement actions were taken in view of the breachesof statutory requirements noticed during the inspection of auditedaccounts of listed and non-listed companies. In January, the enforcement department concluded twentyproceedings against directors and auditors of companies by imposingpenalties and issuing the warning letters. On account of recommendations made by the enforcementdepartment, the SECP also initiated an investigation into theaffairs of a listed company.

Moreover, the SECP also granted extension for organizing theAnnual General Meetings (AGM) to two companies and also allowed acompany to change the place of its AGM, while, four companies weredirected to hold overdue AGM in due course of time. Furthermore, three companies were allowed to place theirquarterly accounts on their website while nine companies wereallowed to change their websites addresses.

]]> (Shumaila Ahmed) Open Market Comments Tue, 19 Feb 2013 05:22:42 +0000
Sales tax on all purchases: WHT to be deducted at 1/5th of applicable rate All companies - foreign/public limited, trusts and exporters - have been declared as sales tax withholding agents and would be required to deduct withholding tax at one-fifth (1/5th) of the applicable rate of sales tax on all purchases from February 14, 2013. In this regard, the FBR has amended Sales Tax Special Procedure (Withholding) Rules, 2007 through a notification issued here on Thursday.

{loadposition content_adsense300}Sources said that 20 percent of the 16 percent sales tax would be deposited by all companies and exporters on their purchases where sales tax is involved. All companies defined under Income Tax Ordinance 2001 have now been declared as sales tax withholding agents. This is a revenue generation measure which would also effectively check claims filed by fake/dummy companies on basis of fake invoices.

As per definition of the Income Tax Ordinance 2001, company means a company as defined in the Companies Ordinance, 1984; a body corporate formed by or under any law in force in Pakistan; a modaraba; a body incorporated by or under the law of a country outside Pakistan relating to incorporation of companies; a trust, a co-operative society or a finance society or any other society established or constituted by or under any law for the time being in force; a foreign association, whether incorporated or not, which the Board has, by general or special order, declared to be a company for the purposes of Income Tax Ordinance; a provincial government; local government or a small company. All such categories of companies have been declared as sales tax withholding agents, they added.

Through this notification, the Board has declared all companies as defined in Income Tax Ordinance, 2001 as are registered for sales tax, FED or Income Tax as withholding agents and would deduct withholding tax at one-fifth (l/5th) of the applicable rate of sales tax on all purchases. The FBR has also announced that the persons registered as exporters are also now to be subjected to withholding tax of one-fifth (l/5th) of the applicable rate of sales tax on all purchases from registered persons from February 14, 2013.

Through this SRO, the FBR has extended the Sales Tax Withholding Regime through its notification SRO 98(1)72013. The said SRO says that all companies as defined in Income Tax Ordinance, 2001 as are registered for sales tax, FED or Income Tax, shall be subjected to Withholding tax at one-fifth (l/5th) of the applicable rate of sales tax on all purchases.

Furthermore, the persons registered as exporters are also now to be subjected to withholding tax of one-fifth (l/5th) of the applicable rate of sales tax on all purchases from registered persons. Earlier, from corporate sector only LTU registered person was required to withhold 1 percent Sales Tax of the value of taxable supplies from persons registered outside LTU and all companies are required to withhold sales tax. This amendment is effective from 14, February 2013.

Following is the text of the SRO.98(I)/2013 issued on Thursday:- In exercise of the powers conferred by sub-section (6) and sub-section (7) of section 3 and sub-section (4) of section 7 of the Sales Tax Act, 1990, read with section 71 thereof, the Federal Government is pleased to direct that the following further amendments shall be made in the Sales Tax Special Procedure (Withholding) Rules, 2007, namely:

In the aforesaid Rules,-

In rule 1, sub-rule (2),

(a) for clause (d), the following shall be substituted, namely:-

"(d) companies as defined in the Income Tax Ordinance, 2001(XLIX of 2001), which is registered for sales tax, federal excise duty on income tax:" and

(b) in clause (e), for the full stop, at the end a semicolon and word ";and" shall be substituted and thereafter the following new clause shall be added, namely:-"

"(f) persons registered as exporters,"; and

(2) in rule (2),-

(a) in sub-rule (2), the words "a person in jurisdiction of Large Taxpayers Unit and" shall be omitted;

(b) sub-rule (3B) shall be omitted; and

(c) in sub-rule (4), in clause (a),

(i) in sub-clause (i), for the expression "Member (Sales Tax), Federal Board of Revenue", the expression "Chief Commissioner, Regional Tax Office, Islamabad" shall be substituted; and

(ii) in sub-clause (iii), for the expression "Member (Sales Tax), Federal Board of Revenue", the expression "Chief Commissioner, Regional Tax Office, Rawalpindi" shall be substituted, it added.

]]> (Shumaila Ahmed) Open Market Comments Fri, 15 Feb 2013 05:19:19 +0000
Pakistan losing out on EU kinoo market Pakistan is losing the kinoo market in the European Union due to excessive seeds but authorities appear unbothered about upgrading fruit quality to enhance exports, said exporters participating in Fruit Logistica, the world largest fruit and vegetable exhibition, held from February 6 to 8 at Messe Berlin.

{loadposition content_adsense300}“The excessive seeds in mandarin (kinoo) are not attractive in EU markets as buyers seek seed-free fruit for easy eating,” said Yasir Shaikh, a leading Pakistani fruit exporter. “The Turkish kinoo has captured the EU market because of the lack of seed,” he added.

The exporters at the exhibition said that Pakistan is the best kinoo producing country but suffers from a lack of value addition and support from the government and the private sector.
“Neither the government nor the association have taken measures to educate the farmers about the latest techniques for producing fruits,” said Shaikh. He added that Pakistani growers should learn from their Turkish counterparts.

The exporters also said that the packable ratio of fruits from Pakistan is among the lowest in the world.

“Pakistan has only 25 percent packable yield of fruit,” said Arsalan Amdani at Tesco Fresh Fruit Company. He said that the private sector is independently endeavoring to boost the Pakistani fruit.

“Pakistani kinoo is less expensive and is of class one quality,” said Amdani. The authorities would do well to display and market products, he said. He stressed the need for training in the drip irrigation system.

“Presently Pakistan has a yield of 8,000 kilogram per acre of land while it is 16,000 to 20,000 kg per acre as per world standards,” he added.

The exporters said that by using latest technology Pakistan could enhance its exports of fresh fruit. The All Pakistan Fruit and Vegetable Exporters, Importers and Merchants Association (PFVA) appears less interested in adopting the latest technology.

“The fruit produced in Pakistan has the best quality and the exports depend on the time of order,” said Jehanzeb Khan, who is a member of the association. “The seed-less kinoo is not a big deal for Pakistani exporters because they have found other avenues for exporting the product,” he added. Officials of the Trade Development Authority of Pakistan (TDAP) and Pakistan Horticulture Export Development Board (PHEDB) were not available to comment.

]]> (Shumaila Ahmed) Open Market Comments Wed, 13 Feb 2013 05:18:32 +0000
Microfinance witnesses robust growth in Pakistan Contrary to the other parts of the world, microcredit sector has witnessed a robust growth in Pakistan, which has been ranked by the Economic Intelligent Unit among top countries for offering conducive environment for microfinance sector growth.

{loadposition content_adsense300}According the latest report of Microcredit Summit Campaign, just about 13 million world's poorest families received access to microcredit and other financial services in 2011. The report titled "Vulnerability: The State of the Microcredit Summit Campaign Report 2011" however observes that microcredit sector has registered a considerable progress in Pakistan. As a sector developer, Pakistan Poverty Alleviation Fund (PPAF) is in the driving seat to control the trajectory and disbursed over Rs 14 billion during the year under review resulting in an increase of Rs 2,545 million in the outstanding loan portfolio and contributing almost 76 percent of the total increase witnessed by the microfinance sector in Pakistan.

PPAF is the strategic and exclusive partner of Microcredit Summit Campaign for reporting and in terms of realizing its aims and objectives.Since its inception, PPAF has disbursed more than $850 million through 5.2 million microcredit loans.

Currently, almost half of Pakistan's microfinance market share is financed by PPAF through over 50 microfinance banks, microfinance institutions and other civil society organizations in 92 districts across the country. It is for the first time since 1998, when the Microcredit Summit Campaign began tracking this data, the total number of clients andnumber of the poorest families reached has declined. The total number of clients was reported to have fallen from 205 million to 195 million and the sub-set of families living in extreme poverty, defined as less than $1.25 a day, from 137 million to 124 million.

According to the report, most other parts of the world saw moderate or slowed growth, with the exception of 1.4 million new clients in Sub-Saharan Africa. Despite this reverse in 2011, microfinance institutions still provided microloans to more than 124 million households living in extreme poverty.

Assuming an average of five persons per family, this means that more than 621 million people were affected; this is twice the entire population of the United States. The report argues that getting the industry back on track will require a new understanding of clients' needs, preferences and aspirations as well as designing new tools for delivering products and services at lower costs. The Microcredit Summit Campaign's continued examination of innovative ways to reach underserved communities, like the potential of digital technology combined with appropriately designed products and services will be critical in accelerating financial inclusion. The Microcredit Summit Campaign is a project of RESULTS Educational Fund "a US-based advocacy organization" committed to creating the will to eliminate poverty.

The Campaign brings together microfinance practitioners, advocates, researchers, investors, donors and stakeholders to promote best practices in the field, stimulate interchange of knowledge, work towards reaching 175 million of the world's poorest with microfinance and help 100 million poorest families lift themselves out of severe poverty.

]]> (Shumaila Ahmed) Open Market Comments Thu, 07 Feb 2013 04:52:45 +0000