Panel directs to refer 14 privatisation cases to NAB
A parliamentary panel directed the privatisation ministry to send 14 cases to the National Accountability Bureau (NAB) for recovery of Rs82.3 billion worth of outstanding dues from various parties including the Dubai-based Etisalat group.
The National Assembly Standing Committee on Privatisation made the recommendation after Privatisation Secretary Irfan Ali briefed that Rs82.32 billion remained outstanding, some of the amount for more than 25 years, in 14 transactions.
Out of 14 cases, Rs81.3 billion is outstanding against Dubai-based Etisalat group that bought 26% stake in Pakistan Telecommunication Company Limited (PTCL) in 2005. Etisalat had bought shares with management control at a price of $2.6 billion. After coming to know the second lowest bid was actually $1.4 billion, the UAE-based firm tried to backtrack from the offer.
“The privatisation ministry should send all the 14 cases to NAB to recover the outstanding amount,” directed Standing Committee Chairman Syed Imran Ali Shah. The committee also asked the privatisation ministry to fix responsibility in the case of misusing Pakistan Steel Mills employees’ gratuity and pension funds.
Powerful groups like Schon Group and Etisalat are among those that bought the entities but did not fully clear their dues.
The privatisation secretary said that all the 14 cases were at various stages of litigation and recoveries. He said that a Etisalat team was in town for negotiations over the recovery of $800 million in outstanding dues.
He said that except in case of Etisalat, the government will recover principal and mark-up from the 13 other parties. “The Sale Purchase Agreement with Etisalat does not allow recovery of markup from the buyer,” said Ali.
He hoped that some headway will be made in talks with the Etisalat team. The secretary said that out of roughly 3,500 properties, Pakistan cannot transfer 33 and this has been conveyed to the buyer. He said that the government long ago shared the valuation of these 33 properties but Etisalat has not shared its valuation with Pakistan.
Ali said that one of the reasons for not getting the $800 million from Etisalat was that the buyer made an exceptionally high bid. The secretary said the employees of PTCL have also filed two petitions against the privatisation and Etisalat is also making this as an excuse.
The secretary said that he was particularly focusing on three entities that were bought by the Schon Group but it’s not paying outstanding dues. The Schon Group bought National Fibers Limited, Pak-China Fertilizers Limited and Quaidabad Woolen Mills for Rs1.3 billion. The privatisation ministry documents showed that the group still owes Rs319.3 million to the government of Pakistan.
The privatisation secretary said that the government has won the cases at the arbitration stage and even offered a settlement to Schon Group. After initially agreeing to the settlement plan approved by the Privatisation Commission Board, Schon Group has not submitted the bank guarantees of the due amounts, said the secretary.
“We have now decided that either recovery cases will be pursued aggressively or cases will be sent to NAB against Schon Group,” said Ali.
The other entities where dues are outstanding are Pak PVC Limited, Sindh Alkalis Limited, National Motors Limited, Balochistan Wheels Limited, Dandot Works of National Cement Limited, Haripur Vegetable Oil Processing Industries, Crescent Factories Vegetable Ghee Mills, Siranwali Rice Mills, Dhaunkal Rice Mills and Mubarakpur Rice Mills Limited.
The secretary said that the government has a plan to privatise PIA after the PC Board approved a resolution, asking the government to amend the law to allow sale of majority stakes along with management control to private parties.
The privatisation ministry will soon send a summary to the federal cabinet for approval to initiate the process to amend the PIA law, said the privatisation secretary.
Parliament had blocked PIA’s privatisation bid two years ago and instead amended the law to end the option of selling 51% stake to the private bidders.
China enlarges tax rebate for electric cars, hybrids
China will extend a tax rebate on purchases of so-called new-energy vehicles (NEV) until the end of 2020, a boost for hybrid and electric car makers amid a shift by policy-makers away from the traditional internal combustion engine.
The finance ministry said in a statement on Wednesday the tax exemption, which was set to expire at the end of this year, will run from January 1, 2018 until December 31, 2020 for electric, plug-in petrol-electric hybrid and fuel-cell powered vehicles.
The extension comes as automakers in China brace to meet strict NEV quotas starting in 2019 that are sparking a flurry of electric car deals and new launches of electric and hybrid models.
Amid the shift, some global automakers have called on China to maintain financial support for the market, citing concerns consumer demand alone will not be sufficient to drive sales without state-backed incentive schemes to lure buyers.
The Ministry of Finance said the extension would help “increase support for innovation and development in new energy vehicles”, an area where China is hoping it can catch up – and even overtake – more established global automaker rivals.
Local firms like NEV specialist BYD are now jostling with global names such as Ford Motor and Nissan Motor in the race to develop successful “green” vehicles for the Chinese market.
China’s auto market, the world’s largest, has slowed sharply this year, but new-energy vehicles has been a bright spot. NEV sales in January-November jumped 51.4 per cent and are on track to hit a target of 700,000 NEV sales this year.
Need emphasised to unlock Pak-Russia trade potential
Pakistan and Russia are equally important for each other and both countries should strengthen cooperation in all economic sectors for mutual interests, said Lahore Chamber of Commerce and Industry (LCCI) President Malik Tahir Javaid.
Talking to the Embassy of Russian Federation in Pakistan Trade Representative Yury Kozlov, Javaid spoke highly about the importance of the China-Pakistan Economic Corridor (CPEC) and highlighted the trade opportunities and economic potential of Pakistan.
He said that Russian expertise in energy and engineering can help Pakistan grow in these sectors.
The LCCI president also said that Russia helped Pakistan in establishing Pakistan Steel Mills, which played a crucial role in the development of the country.
Financing for SMEs is pathetic: President
Following the State Bank of Pakistan’s (SBP) launch of its policy for promotion of SME finance, the All Pakistan Business Forum (APBF) has urged commercial banks to improve access for the sector that contributes around 40% to the country’s GDP.
“It is unfortunate that banks are always reluctant to finance small and medium enterprises, as their financing continued to show negative growth despite record reduction in policy rates by the central bank,” said APBF President Ibrahim Qureshi.
He said that a small section of public sector and Islamic banks and few DFIs are active in extending funds to the SME sector. Despite significantly contributing to the GDP, exports and employment generation, the financing percentage of SMEs remains pathetic in the overall financing to customers of various levels, Qureshi lamented.
Pakistan Cotton Ginners Association opposes cotton import from India
Pakistan Cotton Ginners Association (PCGA) warned on Wednesday that tax-free import of cotton from India through the Wagah border would destabilise Pakistan’s economy and would have serious repercussions on next year’s crop.
Addressing a press conference, PCGA Chairman Haji Muhammad Akram along with other officials said that 1.623 million bales of cotton are lying at ginneries as unsold stock and textile millers are reluctant to purchase it.
They said that there was no justification for lifting an ‘undeclared’ ban on imports of ginned cotton from India or any other country at the cost of local growers.
He said that the ginneries had sufficient stock of cotton lint available so there was no justification to import the commodity from India, while deploring that the government did not fix the support price for cotton, leaving growers at the mercy of textile millers.
Canada gives soft visa regime for Pakistani tech start-ups
Pakistani start-ups and entrepreneurs will be provided greater access to the Toronto-Waterloo region, often referred to as the Silicon Valley of the North and home to thousands of tech start-ups and international companies, according to a new visa programme offered by the Canadian government.
A representative of Accelerator Centre, based in the Canadian Silicon Valley, unveiled features of the visa programme for Pakistani tech start-ups and entrepreneurs at the Momentum Pakistan 2018, said Momentum Pakistan founder Amir Jafri.
The Canadian government is open to providing a 52-week work permit or permanent residency to Pakistani tech start-ups. The mega event – Momentum Pakistan 2018 – is bringing the digital world’s giants like Facebook, Amazon Web Services, IBM, Microsoft and several others to Karachi on February 19 and 20 where their representatives will engage in mentoring and support Pakistani entrepreneurs and start-ups professionally and financially.
Apart from this, premier Pakistani and international companies will discuss sharing their APIs (Application Programming Interface) with other start-ups.
With international tech companies reaching out to Pakistani start-ups, the Canadian government’s visa programme seems like a boon for the start-ups to develop brand and build their businesses in international markets.
“The start-ups need not relocate to Canada at all,” Jafri said, quoting Cam Wind of the Accelerator Centre’s Startup Visa Programme. The Canadian incubator’s representative is likely to attend the Momentum Pakistan 2018 event in Karachi to interact with and support the start-ups. Its officials will also address Pakistani start-ups’ concerns about the visa programme once a month through a video session using the Momentum Pakistan 2018 platform.
High court halts reduction in taxes on cigarettes
The Peshawar High Court on Tuesday issued a stay order against the federal government’s decision to reduce taxes on tobacco products and directed the respondents to submit their response in the case.
The lawsuit was filed by Hameed Khan, a resident of Chota Lahore, Swabi through his counsel Babar Khan Yousafzai who argued in the court that the reduction in taxes would make tobacco products cheap in the country and create health hazards.
It would also result in the closure of local tobacco companies, he said.
“Some 3,000 employees have lost their jobs over the last four months due to closure of some tobacco units,” the petitioner argued. “They have not taken the stakeholders on board before introducing the third tier of taxation through the Statutory Regulatory Order (SRO).”
The court accepted his petition for hearing, issued a stay order against new taxation rules for the tobacco industry and directed the respondents to submit their replies.
Aiming to combat massive duty evasion and illicit trade in cigarettes, the Federal Board of Revenue (FBR) issued the SRO in June to introduce a third tier in the taxation structure of the tobacco industry. The decision, the petitioner feared, would lead to a reduction in cigarette prices and increase demand.
The plaintiff asked the PHC to issue an order for revoking the recent SRO and apply tax at the rate of Rs33.4 per pack.
“The introduction of the third tier, which has incomplete restriction and minimum pricing, has resulted in almost 33% reduction in tax collection,” said the petitioner. He added that the low tax coupled with a two-layer system has already made cigarette prices lowest in Pakistan within the South Asian region and now the introduction of the third tier will further reduce prices and lead to a massive increase in consumption.
The petitioner argued that there are ulterior motives behind the tax decision, accusing multinational companies of lobbying to secure their interests.
Giving the example of Australian government, he said it has announced an increase of 12.5% in taxes on tobacco every year from 2017-2020 which will push up cigarette prices by A$45 per pack.