Chinese project financing will dip to $906mn in fy 2018-19
Project financing from China is expected to dip by more than half to only $906 million during the next fiscal year due to completion of work on some major China-Pakistan Economic Corridor projects and a snail’s pace progress on other schemes.
“As against revised estimates of slightly over $2 billion Chinese project loans for CPEC and non-CPEC projects in the outgoing fiscal year, the government has estimated receiving only $906 million in the next fiscal year,” said sources in the finance ministry.
The estimates for FY2018-19 are $1.12 billion or 55.4% less than the receipts in the outgoing fiscal year.
Some major projects of CPEC are almost near completion while there are problems in other schemes, said the sources in the Finance Ministry.
One of the main projects that is at the verge of collapse is up-gradation of Pakistan Railway’s Existing Mainline-1 (ML-I) project, the sources said.
The mainline project’s initial cost of $8.2 billion was part of $60 billion total CPEC investment and loans.
For the next fiscal year, the government has expected receiving only $34 million for the mainline project, suggesting that the project is unlikely to kick-start next year as well.
Pakistan and China have not yet been able to resolve the dispute over the exact cost of the scheme and financing modalities. China’s cost estimates are far higher than the ones worked out by Pakistani authorities.
Thumb verification to cost 150pc more
The country’s top database authority continues to make its services expensive for general public.
After a recent hefty increase in its fee structure for the computarised national identity card, the National Database and Registration Authority (Nadra) has now announced a whopping 150% rise in the thumb impression verification fee.
Nadra used to charge Rs10 for verifying thumb impression on one vote. Now, the fee has been increased to Rs25 with the approval of the Nadra Authority Board.
The fee raise will affect election candidates, applying to Nadra for verification of voters’ thumbs over suspicion of rigging in their respective constituencies. The candidates will now have to pay 150% more than whey they had hitherto paid.
For example, in 2015, Pakistan Tehreek-e-Insaf chief Imran Khan had paid Rs1.83 million for verification of thumb impression in NA-122. Khan had lost the election in the constituency to Ayaz Sadiq of the Pakistan Muslim League-Nawaz.
Later an election tribunal ordered thumb verification in NA-122. As many as polled 183,000 votes were verified by Nadra in the constituency. If the polled votes remain the same, a candidate would have to pay Rs4.57 million for the same exercise.
Nadra had earned millions of rupees through vote verification by processing the election material in some 43 disputed cases related to the national and provincial assembly constituencies on the directions of election tribunals formed to resolve disputes between winner and runner-up candidates.
Budget 2018-19: K-P seeks 10-year tax break for its energy firms
The government of Khyber-Pakhtunkhwa (K-P) has asked the federal government to exempt provincial oil and gas holding companies from income tax payment for 10 years and allow provinces to impose excise duty on crude oil production in their territories in the upcoming budget for 2018-19.
“Provincial holding companies, incorporated after the petroleum policy of 2012, can play a pivotal role in bringing rapid economic stability and energy security in the country through fast-tracked exploration and production of oil and gas reserves,” said the K-P administration in a letter to the central government.
“Provincial governments have very rightly pleaded the federal government to strengthen all the provincial holding companies.”
It emphasised that while the provincial governments were gathering every available penny to strengthen the holding companies to bring economic prosperity to the country through energy security, the federal government should exempt these companies of all provinces from income tax for 10 years.
The province pointed out that the exemption would be viewed as prudent investment of the government that would result in much greater tax revenues after 10 years and would be a win-win proposition.
It cited similar exemptions granted to a number of other sectors and companies such as the 24-year tax exemption for venture capital companies, 23-year tax exemption for Chinese companies and even to their contractors and sub-contractors working at the Gwadar Port.
Other instances included 20-year tax exemption for the Khalifa coastal refinery, 10-year tax exemption for all industrial undertakings in the Larkana industrial estate, 10-year tax holiday for all industrial concerns in Gwadar, 10-year exemption for all industrial units in special economic zones, lifetime exemption for power companies, lifetime exemption for a coal mining project in Sindh supplying coal to a power project and five-year exemption for LNG terminal operators and owners.
Punjab province unveils milk vending machine
Pakistan’s first automated dispenser unit is going to launch next month for the provision of pure and cheap milk, said Punjab Livestock and Dairy Development Board Chief Executive Officer Saira Iftikhar.
While talking to members of the Agriculture Journalists Association (AJA) on Tuesday, Saira said that this automated milk dispenser unit was manufactured in the country at a cost of Rs600,000. The idea behind introducing this machine is to encourage dairy farmers to sell milk through the vending machine. The current distribution scenario in the country is raising several questions and demand interventions by the public sector to introduce new dairy businesses as pilot.
Elaborating details, Iftikhar said that around 2,000 litres of milk being produced from the Sahiwal cow breed at Khizerabad farm near Sargodha would be sold through the automated dispenser unit at one of Lahore’s markets in the Township area. It will be available at Rs75 per litre.
“Consumers can themselves see the milk being packaged after paying the amount,” she said, adding the milk comes from local-elite cow breed being reared at green pastures, while seasonal fodders along with corn silage and other healthy minerals without any impurity or harmful substance like aflatoxin are being fed to these animals.
Senate panel gives approval to tax amnesty programs
In a surprising move, the opposition-dominated Senate panel on Finance approved on Tuesday the offshore and domestic assets’ amnesty schemes, as the country’s top taxman pleaded that an escape route has to be given to beleaguered Pakistani citizens who own assets abroad.
Headed by Senator Farooq H Naek of the PPP, the Senate Standing Committee on Finance approved all the four Bills including two that were implemented thorough the Presidential Ordinance to give effect to the tax amnesty schemes. The schemes are already in place since April 10 to legalise domestic and offshore hidden assets.
The Senate Panel’s stamp gives a major boost to the government that had just a day ago suffered a defeat in the ruling party-dominated National Assembly Standing Committee on Finance on the same issue. However, NA Standing Committee on Finance Chairman Qaiser Ahmad Sheikh explained that the government bills were defeated due to absence of treasury members. Sheikh said that he personally was in favour of the schemes.
The president promulgated Foreign Assets Declaration and Repatriation Ordinance 2018, Pakistan Economic Reforms Protection Act Amendment Ordinance 2018, the Voluntary Declaration of Domestic Assets Ordinance 2018 and Income Tax Amendment Ordinance 2018 to implement the schemes.
PTI’s Senator Mohsin Aziz actively participated in the discussions on the amnesty schemes during the meeting and even proposed to increase the tax rates for non-repatriation of offshore assets. However, at the end Senator Aziz said that in principle he would vote against the amnesty bills. The Senators from all other parties including PPP and Independent voted in favour of the scheme. The standing committee also relaxed the requirements of opening offshore assets tax cases through an amendment in the government bill. Against the government’s decision to open offshore tax assets cases as old as 18 years, the committee amended the Income Tax Ordinance 2018 to the extent of allowing only 10-year old cases.
Budget 2018-19: what bold steps should you predict to see this year
This would be the first time that a government elected for a term of five years would actually present six budgets. It has already triggered a debate over the legality of the government’s action.
It will also be for the first time that an unelected person, Adviser to Prime Minister on Finance Dr Miftah Ismail, would deliver the budget speech. Historically, budgets are announced by the elected Member of the National Assembly or Senate.
After the 18th Amendment in the Constitution, an adviser to the prime minister can also announce the budget, says Ismail.
Another significance of the budget is that it would be presented nine weeks before the close of the ongoing fiscal year. Consequently, announcements of past performance would be based on seven to eight months of data, increasing the chance that estimates would be off by a wide margin.
The budget will be presented three months before the next general elections, which has raised hopes that the masses would be offered huge relief. In the single largest wage-boosting measure in Pakistan’s history, Prime Minister Shahid Khaqan Abbasi has already announced to increase the income tax exemption threshold by three-fold to Rs1.2 million, and cut the maximum individual income tax rates by 57% from July 1.
Economy isn’t really better off than it was in 2013
The question many want an answer to is whether the Pakistani economy is better or worse off than it was in 2013 when the Pakistan Muslim League-Nawaz (PML-N) was elected into power.
With the budget due to be announced this week and elections around the corner, it is the right time to judge whether or not the PML-N made Pakistan a stronger economy.
Unlike its first two terms, when the party was ousted before completing its tenure, the PML-N is now at the end of its five-year term. Thus, the excuse that it failed to deliver because it was prematurely ousted cannot be used.
Since the elephant in the room has been addressed, one can go ahead and judge its performance objectively on two parameters.
The first would be the PML-N’s election manifesto, and the second would be the 11th Five Year Plan 2013-18 it announced after assuming office five years ago.
High taxes a hurdle to rapid growth of telecom services
Pakistan has taken remarkable steps over the past five years that will be helpful in accelerating digitisation which is the modern and faster way of socio-economic development, but that does not mean there is no room for improvement.
The country needs a road map to run the society on modern lines and create its space in the fast changing world which is getting more digitised.
In a major stride, the government in its first year held the 3G/4G spectrum auction in April 2014, which over the next four years pushed broadband subscribers to over 54 million in early 2018 from just three million at the time of the auction.
An industry expert revealed that Pakistan Telecommunication Authority (PTA) had made all preparations for the auction during the tenure of previous Pakistan Peoples Party (PPP) government, but the credit went to the current Pakistan Muslim League-Nawaz (PML-N) administration.
Though the auction was called a paradigm shift on the digital landscape, it was criticised because of a higher base price that did not allow smaller companies to win the licence.
The base price was so high that the government could not get more than that in the spectrum auction. “It was not an auction actually,” commented Parvez Iftikhar, an information and communications technology (ICT) consultant that advises governments in Asia and Africa on ICT policy and regulations.
Agri sector continues to get incentives
The annual budget presentation in national and provincial assemblies has two main features – one concerns tax proposals to generate revenues mainly from the developed, well-performing and high-earning sectors of the economy and the other is related to allocation and distribution of resources among varying sectors to help develop and support them in running their affairs.
The vibrant agriculture sector of Pakistan, which is called the backbone of national economy and is mainly run by landlords, many of whom are elected to parliament – has got much attention in successive budgets and during the course of a year.
No government can afford to ignore the sector that provides vital input to many industries, food crops to feed the populace and livelihood to millions of peasants. Its below-par performance may harm the overall national economy as well as many industries, particularly textile, that primarily depend on farm input.
Almost every government has announced incentives and financial packages for the agriculture sector in a bid to ensure food security and win over voters. Agriculture areas remain a huge vote bank for the political parties and the elected landlords (not peasants and farmers) dominate parliamentary affairs.
Following in the footsteps of previous governments, the current PML-N administration has also announced incentives for the agriculture sector.