ECONOMIC TIMES OF PAKISTAN
Gold price touches fresh peak at pkr 78,100 per tola
The price of gold surged and touched a historic high at Rs78,100 per tola (11.66 grams) on Friday, following a surge in prices of the precious metal to a six-year high in the international market due to escalation in tensions between the US and Iran.
All Sindh Saraf and Jewellers Association (ASSJA) announced an increase of Rs800 per tola after gold price shot up $13 to $1,394 per ounce in the London market on Friday.
“Jewellers have not only passed the increase in international gold prices on to domestic consumers, but they have also incorporated the impact of rupee depreciation against the US dollar into retail prices,” an officer-bearer of ASSJA said.
“Gold has surged around $100 per ounce in the past 20 days in the world market,” Rays Commodities Chief Operating Officer Adnan Agar told.
“A notable gain out of the surge of $100 per ounce was recorded since Monday when Iran shot down a US drone and the US central bank left interest rate unchanged at 2.5%,” he said.
“People always relocate investment to gold whenever international political tension escalates and the US dollar weakens against a basket of other world currencies.”
Pakistan, which is a small gold market, largely depends on imports as it does not produce the metal locally. Other factors that the local gold pricing committee incorporates into the retail price include dollar price in domestic and international markets and demand and supply of the commodity in the local market.
|Petrol Price In Pakistan (22/06/2019)|
|High Speed Diesel||126.82/Ltr|
|Light Speed Diesel||88.62/Ltr|
Government quietly offers tax amnesty to realty sector
The Pakistan Tehreek-e-Insaf (PTI) government has quietly given another perpetual tax amnesty to the realty sector in the budget by allowing it to legalise tax-evaded money at just 4% of the property value.
The new tax amnesty is hidden in the 10th Schedule of the proposed Finance Bill 2019 which, in its current form, allows real estate investors to pay 4% of the transaction value in taxes, keep the source of investment secret and remain outside of the tax net, showed the Finance Bill 2019.
The original idea of the 10th Schedule is said to be very noble – end the tax evasion culture and bring people into the tax net by ending the concept of non-filers of income tax returns.
The unannounced tax amnesty, overall second by Prime Minister Imran Khan, will allow realty-sector investors to save Rs660 million on Rs1 billion worth of property due to the 10th Schedule, according to sources in the Federal Board of Revenue (FBR).
PM Imran’s first tax amnesty scheme will end on June 30, but it has failed to yield desired results. As of Tuesday, less than 250 people had opted for the first tax amnesty scheme.
Before the insertion of the 10th Schedule, the concealed income was to be charged at 100% of the maximum rate of due taxes. This means at 35% maximum income tax, the property buyer would have been penalised with a total penalty of Rs700 million on Rs1 billion worth of investment.
Now, he will pay Rs40 million only and the FBR will be barred from questioning the source of income on the basis of the 10th Schedule.
Rule 2 of the 10th Schedule states, “in making the provisional assessment under sub-rule (1), the commissioner shall impute taxable income on the amount of tax deducted or collected under rule 1 by treating the imputed income as concealed income for the purpose of clause (d) of sub-section 1 of Section 111.”
|Consumer Financing In Pakistan (Rs Billion)|
|Description||July-March (Flows)||Growth (%)|
|1) For house building||15.1||8.3||24.9||10.0|
|2) For transport i.e. purchase of car||34.6||17.7||23.0||9.1|
|3) Credit cards||4.7||4.0||15.7||10.6|
|4) Consumers durable||1.0||3.2||56.9||116.9|
|5) Personal loans||1.8||9.8||1.2||6.1|
|Source: State Bank of Pakistan|
Government mulls SEZ for electric vehicle manufacturing
The government is planning to set up a Special Economic Zone (SEZ) dedicated to electric vehicle manufacturing with assistance of the Pakistan Air Force (PAF), said Adviser to Prime Minister on Climate Change Malik Amin Aslam.
Addressing a meeting with electric vehicle manufacturers from China on Friday, he said, “There is plenty of skilled to semi-skilled workforce available in Kamra (Attock), the proposed site for the SEZ.”
“Electric vehicles will not only bring reduction in environmental pollution but also minimise Pakistan’s oil import bill.”
Currently, Pakistan has more electricity supply than demand while the government is paying power producers in terms of capacity. This makes the situation conducive for introducing electrical vehicles in the transport sector.
“The ministry had also negotiated for installation of electrical charging infrastructures with oil marketing companies whereas their response was encouraging,” he added.
A delegation comprising of JW Forland, manufacturers of Foton vehicles, and Daewoo Pakistan visited the ministry and expressed its willingness to set up electric bus manufacturing facility in Pakistan.
The visit of the delegation came subsequent to Prime Minister Imran Khan’s visit to China where he visited JW’s manufacturing plant in Beijing and invited the company to set up a similar facility in Pakistan.
“JW Forland is anxiously waiting for Pakistan’s electric vehicle policy and the company has been encouraged by the new government’s plan to catch up with the pace of the world for moving towards electric vehicles,” JW Forland General Manager Overseas Gary Gao said during the meeting.
The Chinese delegation was of the view that electric vehicle market was newer to the world and it expressed pleasure that Pakistan’s government was eager to benefit from it.
World bank approves $171mn for K-P agriculture
The World Bank approved $171 million for the support of agricultural productivity in Khyber-Pakhtunkhwa (K-P) by improving irrigation, strengthening small farmers’ skills and supporting farmers in adding value to their products.
According to a World Bank statement, the farmers in K-P face challenges of low water-use efficiency and lack of modern technology, skills and knowledge for engaging in high-value agriculture value chains. This results in an underdeveloped rural economy with high vulnerability to climate changes.
The K-P Irrigated Agriculture Improvement Project will help address these challenges by rehabilitating community watercourses, establishing water users’ associations, introducing high-efficiency irrigation systems and laser land levelling, strengthening farmers’ technical skills and filling knowledge gaps on agricultural market opportunities and constraints.
“Agriculture accounts for a fifth of Pakistan’s economy and employs nearly half the labour force in the country,” said World Bank Country Director for Pakistan Illango Patchamuthu.
“This project will boost the rural economy in Khyber-Pakhtunkhwa by benefiting millions of small farmers to diversify crops, improve productivity and increase household incomes.”
PKR stable against $
The rupee remained stable against the dollar at Rs156.8/157.3 in the inter-bank market on Friday compared with Thursday’s close of Rs156.8/157.3, according to forex.pk. Recently, the State Bank of Pakistan (SBP) let the rupee depreciate massively in the inter-bank market after finalising an agreement with the International Monetary Fund (IMF) for a loan programme on May 12. The rupee has weakened Rs9.04 or 6.11% since June 3. The IMF has asked Pakistan to end state control of the rupee and let the currency move freely to find its equilibrium against the US dollar and other major world currencies. Also, the World Bank, which finances some of the infrastructure and social safety net projects in Pakistan, has supported the idea of leaving the rupee free from state control in a bid to give much-needed boost to exports and fix a faltering economy. Cumulatively, the rupee has depreciated almost 49% since December 2017, according to the central bank. Earlier, the central bank said it “will continue to closely monitor the situation and stands ready to intervene in case of any unwarranted volatility in the foreign exchange market.”
Senate rejects most clauses in finance bill
In a moral defeat for the government, a Senate panel on Thursday rejected all clauses of the Finance Bill 2019 that affect the common man and also recommended that the exchange rate should be fixed at Rs151 to a dollar and the interest rate be brought down to single digit.
The Senate Standing Committee on Finance rejected most of the clauses of the Finance Bill 2019 with a majority vote amid boycott by treasury members. The Senate, which has a tradition of adopting the report of the standing committee, is also expected to reject the Finance Bill.
It would be a rare case if the Senate committee and the upper house of parliament rejected the entire Finance Bill. But the Senate’s recommendations are not binding on the National Assembly in case of the Finance Bill.
However, the treasury members proposed that the government should fix the exchange rate at Rs151 to a dollar by floating dollars in the market and slash the interest rate from 12.25% to 9%. Both these proposals are against the agreement signed with the International Monetary Fund (IMF).
The development came amid Prime Minister Imran Khan’s refusal to provide concessions to industrialists on the issue of 17% sales tax at the manufacturing stage and the requirement to get Computerised National Identity Card (CNIC) number of unregistered buyers by the manufacturers.
Government set to go public with data of 53 mn people
In a bid to capture real incomes of people, the government announced on Friday to make the ‘treasure trove’ of 53 million persons public, but it has not yet transformed the data into actionable information that may minimise the chances of its effective utility.
The information about 53 million people will be available on the web portals of the Federal Board of Revenue (FBR) and National Database and Registration Authority (NADRA), said FBR Chairman Shabbar Zaidi.
The nature of data available on the NADRA website is different from the information available on FBR’s website. NADRA has not been granted access to the bank accounts of the citizens, as it does not have such mandate. But the FBR has got information of about 50 million bank accounts that it wants to use to assess the real incomes of the people.
Due to FBR’s capacity constraints, it will not be able to go after all the people. FBR Member Inland Revenue Policy Dr Hamid Atiq Sarwar said that next month, FBR would go after 50 people. Sarwar added that the government wanted to utilise the information to enhance tax base from less than two million to four million by the end of fiscal year 2019-20.
Zaidi had to face questions about the legality of involving NADRA into tax matters, as the data registration authority does not have legal mandate to venture into such areas that were deemed to be ‘confidential’ and also related to taxation.
To a question, Zaidi also admitted that NADRA’s data was “not actionable” and it largely comprised of travel details and certain business transactions. NADRA does not know whether the money that is used for conducting a transaction is tax-free or not, as is the case with the agriculture income.