ECONOMIC TIMES OF PAKISTAN
Trade deficit narrows 35pc to 5.7 bn in q1
Pakistan’s trade deficit has narrowed nearly 35percent to $5.7 billion in the first quarter due to compression of imports but the government must now start worrying about exports that are not picking up despite an Rs80-billion hit on revenues and inflicting a huge cost to the economy.
Trade figures that the Pakistan Bureau of Statistics (PBS) released on Friday showed that exports fell in September over the preceding month but marginally increased on an annual basis despite over one-third depreciation of the rupee against the US dollar.
If first-quarter results are taken as a base for the entire year, the year-end prospects remain bleak. The Pakistan Tehreek-e-Insaf (PTI) government may again miss the annual export target until corrective measures are taken to increase monthly shipments far above $2 billion.
Pakistan receives 1.43pc lower remittances
Pakistan received 1.43percent lower remittances from overseas Pakistanis which amounted to $5.47 billion in the quarter ended September 30, 2019 compared to $5.55 billion in the same quarter of previous year.
The drop should be a cause for concern for economic managers as the remittances help in partly financing the deficit in import payments and foreign debt repayments.
Experts, however, did not give much importance to the slight drop. They believe it is a seasonal fall recorded in the first quarter of current fiscal year 2019-20. They said the growth of 18percent in remittances in September to $1.74 billion compared to $1.48 billion in September last year suggested the uptrend and the year would end with a meaningful gain in remittance inflows. Saudi Arabia, the United Arab Emirates (UAE), the US and the United Kingdom were the top four countries from where Pakistani workers sent comparatively higher remittances.
Govt approves renewable energy policy draft
The federal government has given more representation to provinces to decide on major projects of renewable energy.
The Alternative Energy Development Board (AEDB), in its 46th meeting held on Thursday, under the Chairmanship of Federal Minister for Power Omar Ayub, approved the draft of Alternative Renewable Energy (ARE) Policy 2019 on the basis of consensus of all members.
The new renewable energy policy draft, approved by the AEDB, allows the steering committee, comprising of all provinces and co-opted members, to decide on major projects of renewable energy.
The policy was prepared by the AEDB in consultation with public and private sector stakeholders including provincial government agencies.
Representatives of provincial governments and other board members also provided their input on the ARE Policy 2019 draft. There was a consensus on several inputs and suggestions were given by the provincial representatives in a bid to improve the policy framework.
Ayub stated that the policy aimed to create a favourable environment supported by a robust framework for sustainable growth of renewable energy sector of Pakistan.
The policy is targeted at increasing the share of renewable energy in the energy mix in order to achieve the strategic objectives of energy security, cheaper power generation and environmental protection. He further stated that the policy framework has an all-inclusive approach and stipulates an active role and participation of provincial governments at all stages of renewable energy developments.
Power Division Federal Secretary Irfan Ali apprised the meeting that for the first time, a very ambitious yet workable policy has been created to tap the indigenous resources of the country.
He said that provincial participation has been enhanced in the new draft of the renewable energy policy.
Govt suggests interest rate cut for female borrowers
The government is expected to give the green light to the proposal of slashing interest rate on bank loans provided for female entrepreneurs in an attempt to help them launch their business under the Prime Minister’s Youth Business Loan Scheme.
This will help create opportunities for young females of the country, who will be able to launch their own small business, resulting in job opportunities as well.
Cabinet members, in a recent meeting chaired by Prime Minister Imran Khan, suggested that the government may consider reducing an additional 0.5-1percent of interest on borrowing by females.
UAE to share briefs of properties owned by 500 Pakistanis
The United Arab Emirates (UAE) has agreed to share details of the properties owned by 500 non-Iqama holder Pakistani nationals that will provide valuable information to the tax machinery as it remains unable to effectively utilise the previous offshore information.
Both the countries also agreed to renegotiate the Pak-UAE avoidance of double taxation treaty that would also help remove irritants in cooperation in areas of taxation.
But the issue of sharing details of Pakistani nationals, who also hold UAE residence visa, known as Iqama, under its Residence by Investment (RBI) policy remains unresolved.
Adviser to Prime Minister on Finance Dr Abdul Hafeez Shaikh has already sought the help of the Organisation for Economic Cooperation and Development (OECD) to resolve the Iqama-holder issue.
The Dubai authorities agreed to provide non-Iqama holder Pakistanis’ information during a meeting held between the officials of UAE’s Ministry of Finance and the FBR Directorate General of International Taxes.
ADB, Pakistan ink $200 mn loan agreement
The Asian Development Bank (ADB) and the government of Pakistan on Friday signed a $200-million loan agreement for additional financing to help support the Pakistan’s flagship social protection programme – the Benazir Income Support Programme (BISP).
The agreement was signed by ADB Country Director Xiaohong Yang and Economic Affairs Division Secretary Noor Ahmed while Minister for Economic Affairs Hammad Azhar witnessed the signing ceremony.
BISP is part of a larger government strategy called Ehsaas aimed at reducing poverty and inequality. BISP, primarily funded by the government of Pakistan, supports Ehsaas through cash transfers, poverty graduation programmes and a targeted safety net.
The ADB-financed social protection development project, approved in October 2013, has enabled the enrollment of over 855,000 women beneficiaries in the programme.
The $200-million additional financing will lend support to the initiative and help BISP implement institutional strengthening measures.
“ADB’s additional financing will further support institutional strengthening of BISP,” said Xiaohong. “A policy research unit will be established within BISP to help monitor and improve ongoing programmes and design new evidence-based initiatives such as conditional cash transfers following global best practices.”
She added that the ADB was committed to helping the government of Pakistan implement alternative modalities for social protection and poverty reduction that promoted improved human capital and reduction in intergenerational poverty.
Minister for Economic Affairs Hammad Azhar appreciated the ADB’s commitment to support the government of Pakistan and its people.
“Assistance from the ADB will help further strengthen the national social protection programme and provide support for the poorest segment of the population under the government’s Ehsaas strategy,” he said.
Large retailers to link outlets with FBR by Dec 1
The Federal Board of Revenue (FBR) on Thursday notified December 1, 2019 as the deadline for all large retailers to link their retail outlets with its electronic system aimed at capturing their real income.
In case, the large-sized retailers fail to link their systems with the FBR, they would not be entitled to the reduced 14percent sales tax, according to the FBR’s notification.
The FBR has also brought sales made through social media portals under the scope of sales tax rules and these sales will be subject to 17percent sales tax. The FBR issued the notification to amend the Sales Tax Rules 2006 aimed at tightening the noose around big retailers and fertiliser, sugar and edible oil manufacturers and strengthening procedures to check the issuance of bogus refunds.
The measures, if implemented successfully, have the potential to capture real earnings of the retailers doing business at shopping malls in major cities and also of the certain class of manufacturers that have become monopolistic.
Fertiliser, sugar and cooking oil producers recently made huge profits by increasing prices of their products far higher than the tax imposed by the government of Prime Minister Imran Khan in the budget. The FBR notified the new rules that made it mandatory for tier-I retailers to integrate their retail outlets with the FBR’s electronic system.
Tier-I retailers comprise those that operate a unit of a national or international chain of stores; retailers operating in an air-conditioned shopping mall, plaza or centre, excluding kiosks; retailers whose cumulative electricity bill during the immediately preceding 12 consecutive months exceeds Rs600,000; and wholesalers-cum-retailers engaged in bulk import and supply of consumer goods on a wholesale basis to the retailers as well as on a retail basis to the general body of consumers.
In case the large-sized retailers failed to comply with the deadline of December 1, the FBR said these retailers would not be entitled to the reduced sales tax of 14percent on the sale of finished fabric and locally manufactured finished articles of textile and textile-made-ups and leather and artificial leather. They will then be charged the standard 17percent tax.
“We have only targeted those retailers who are doing business with store chains or in big malls,” said FBR Inland Revenue Member Dr Hamid Atiq Sarwar.
He said the FBR would no longer stick to the 1,000 square feet definition of big retailers as sales of some business, located in small-sized shops, were in millions of rupees.