ECONOMIC TIMES OF PAKISTAN
NTC seeks exemption from 8pc turnover tax
National Telecommunication Corporation (NTC) has approached the government, seeking exemption from 8percent minimum tax on turnover.
The Ministry of Information Technology and Telecommunication, in its request, informed the government that NTC was established under Section 41 of the Pakistan Telecommunication Re-Organisation Act 1996 in order to provide telecommunication services to the armed forces, defence projects, federal government, provincial governments or any other government agency or institution as the federal government may determine.
Initially, in accordance with Section 41 (18) of the Act, NTC had been granted tax exemption for a period of three years. NTC, being a company in terms of Section 80 (2)(b)(ii) of the Income Tax Ordinance 2001, has been paying income tax as per applicable rules.
Secondly, it was paying 1.25percent of turnover (revenue) as minimum tax as per Section 113 of the Income Tax Ordinance 2001.
Govt notifies 11 paisa / unit increase in power tariff
The government has notified an increase of 11 paisa per unit in electricity prices in a bid to apply a uniform tariff to all categories of consumers, except for domestic consumers.
The tariff increase has been notified on account of periodic tariff adjustment for the first-quarter (Jul-Sept) of fiscal year 2019-20, as determined and recommended by the National Electric Power Regulatory Authority (Nepra).
Earlier, the power-sector regulator had decided to transfer the burden of Rs14.780 billion on to consumers on account of power purchase price adjustment for the first quarter of FY20.
Nepra notified an increase of 14.56 paisa in the power tariff on account of power purchase price adjustment for the quarter.
According to Nepra officials, the tariff has been increased by 26 paisa per unit for commercial and industrial consumers. However, domestic consumers consuming less than 300 units per month are exempt from this hike while the domestic consumers using more than 300 units will be charged seven paisa per unit.
Consumers of the privatised K-Electric are also exempt from this tariff increase.
The quarterly tariff adjustment will be applicable from December 1 for the next 12 months. Under this adjustment, the government would collect around Rs15 billion over the 12-month period. The Power Division has issued a notification in this regard.
PKR getting strong, likely to hit 150 to dollar
Pakistani rupee is strongly expected to maintain its uptrend in the short run and peak out at around 150 to the US dollar over the next three to four months, which will provide an opportunity to the central bank to build the country’s foreign currency reserves by absorbing excess supply of the greenback in the market.
An economist at a leading bank, a currency dealer and a textile exporter, in different conversations, told that the continuously strengthening rupee would peak out at around 150 to the US dollar by the end of March 2020.
Later, the rupee is anticipated to return to its depreciation phase around the fourth quarter (April-June) of the current fiscal year.
“The rupee may return to 164-165 by the end of FY20,” the economist said on condition of anonymity.
So far, the rupee has regained 5.52percent of its value or Rs9.07 in around past six months to 154.98 to the greenback on Thursday compared to the all-time low close of 164.05 in the inter-bank market on June 27, 2019, according to the State Bank of Pakistan (SBP).
“The recovery of the rupee came following a significant increase in the supply of dollars in the market and drop in demand amid a notable reduction in imports, improvement in exports and steady inflow of worker remittances,” the economist said.
The import of petroleum oil on deferred payments worth $3 billion per annum from Saudi Arabia since July, accumulation of dollars from the retail market by the central bank and receipt of loan tranches from multilateral and bilateral lenders including the International Monetary Fund (IMF) and the Asian Development Bank (ADB) also played a pivotal role in strengthening the rupee.
Moreover, the foreign investment of over $1.2 billion in the government sovereign papers, mostly treasury bills, since July, gradual return of foreign investors to the stock market and improvement in foreign direct investment (FDI) in different sectors of the economy like oil and gas exploration, power and agriculture also improved dollar supply and helped strengthen the rupee.
To recall, the central bank made a major change to the rupee-dollar exchange rate regime in May. It ended state control of the rupee and made it partially free. Market participants, mostly banks, determine the rupee-dollar parity, considering the supply and demand of dollar in the inter-bank market.
E-Commerce policy focuses on SMEs
The e-commerce policy of Pakistan will focus on the development and promotion of SMEs for making Pakistan a significant player of the regional and global digital economy, said Joint Secretary (WTO) at the Ministry of Commerce Aisha Humera Moriani.
While addressing a seminar on the e-commerce policy of Pakistan, organised by the Islamabad Chamber of Commerce and Industry (ICCI) in collaboration with Ministry of Commerce and Textiles, she said,
“E-commerce sales in Pakistan were over Rs20.7 billion, which grew by 93.7percent in 2018 reaching Rs40.1 billion, which show that Pakistan’s businesses have great potential to grow through digital sales.”
She said that such a policy will contribute towards achieving higher exports through enhanced activities from e-platforms, promote small e-businesses and create employment opportunities through digital connectivity for empowering the youth, especially in remote areas.
She emphasised that SMEs should use e-commerce platforms to connect with online markets across the globe in order to promote trade.
Also speaking on the occasion, State Bank of Pakistan (SBP) Deputy Director Sharoon Rasheed highlighted the role of the central bank in promoting e-commerce. He said the SBP would speed up its work on a nationwide micropayment gateway and will further facilitate accessibility to international payment gateways.
FBR to start implementing deal reached with traders
Federal Board of Revenue (FBR) Chairman Shabbar Zaidi has announced that the FBR will start implementing the deal with traders while notifications for establishing committees comprising business representatives from across the country will be issued next week.
“The FBR and traders will partner to ensure the registration of traders who are outside the tax net,” he said.
On the other side, the traders’ association, while dismissing the FBR announcement, has refused to comply with the deal until all terms of the agreement are enforced.
All Pakistan Traders Association (APTA) President Ajmal Baloch clarified that the traders would only accept the agreement if it was implemented in full.
“It is not possible for the traders to cooperate if only half the agreement or one point is implemented. If the government abides by all the terms of the agreement made with the traders, the union will proceed with its decision taken after consultation with businessmen from across the country,” he added.
Responding to a question, Zaidi said the deal would come into force from January 2020 following which the FBR would facilitate the traders in getting them registered while remaining outside the tax net. Until then, all other terms of the agreement would also be implemented, he said.
The FBR chairman tweeted that implementation of the agreement with traders would begin next week.
In a first, Sindh Govt to auction solar power project
Pakistan is entering into a new era of attracting power projects through competitive bidding to provide cheaper electricity to end-consumers, as Sindh government is all set to auction the first-ever project through the bidding process by March 2020.
To date, the country has attracted power projects by offering incentives to investors under the cost-plus tariff formula, which ensured a fixed internal rate of return (IRR) to investors.
The achievement of surplus installed capacity of power production in recent times allowed authorities to make a shift towards new power projects through the tariff-based competitive bidding.
“We are set to auction the first 50-megawatt (MW) solar power project at Manjhand (district Jamshoro) through competitive bidding by February-March,” Sindh Solar Energy Project (SSEP) Project Director Mehfooz A Qazi told on Friday.
The 50MW project is part of the planned 400MW solar power park in Sindh that is estimated to attract new investment of around $250 million. “We aim to auction all the potential 400MW solar power projects by 2021 and start supplying electricity to the national power grid within the next five years (2023-24)” he said.
The World Bank is providing financial and technical support for establishing the solar park. “Word Bank has provided an assistance of $100 million for four different solar power projects, including $30 million for establishing the 400MW solar park,” he said.
In this backdrop, the Energy Department of the government of Sindh appointed a consortium of foreign and local advisers to auction the 400MW power projects on Friday.
Ambassador vows to promote direct trade with Oman
Pakistan’s Ambassador-designate to Oman KK Ahsan Wagan has emphasised that he will promote direct trade and commercial relations between Pakistan and Oman as most of the Pakistani products are usually landing in Oman’s market via Dubai.
Exchanging views with Karachi Chamber of Commerce and Industry (KCCI) Senior Vice President Arshad Islam during his visit to the chamber, the envoy said, “Trade and commercial relations remain very close to my heart, therefore, I will try my best to fully facilitate business-to-business interaction between Pakistan and Oman business communities.”
He was of the opinion that forging strong trade and commercial linkages was very important and a key issue for all the Pakistani diplomats working in different countries around the world.
“Economic diplomacy is very crucial because its effects are on the society, community and people of the country. If exports rise, these will in turn bring foreign exchange, generate massive employment opportunities and reduce poverty in the country,” he added.
Assuring full support and cooperation to the KCCI members who were keen to enhance trade with the business community of Oman, Wagan said they would be fully assisted in all their initiatives for improving relations with their counterparts in Oman.
Wagan, who is currently deputed in Niger and will soon be assuming the charge in Muscat, saw a huge potential for Pakistani products in the African region where all the major players including the United States, China, India, Turkey, France and many others had established their diplomatic missions on a wide scale.
“Unfortunately, we never look towards the African market as only 15 Pakistani missions are working in this important region against 53 missions of China, 48 of India, 46 of Turkey, 44 of the United States and 42 of France,” he said.
Punjab seed council accepts Pakistan’s first-ever quinoa variety
The Punjab Seed Council has approved the first-ever quinoa variety, a super food titled Q7, which was developed by the University of Agriculture Faisalabad (UAF) scientists.
This was announced by UAF Vice Chancellor Muhammad Ashraf at a Memorandum of Understanding ceremony between UAF and Shandong Normal University China (SDNU) to establish Quinoa Breeding Centre in both universities.
Speaking on the occasion, Ashraf said that quinoa is one of the world
’s most popular health foods. He said quinoa is gluten-free, high in protein, fibre, vitamin B, iron, potassium, calcium, phosphorus, vitamin E and various beneficial antioxidants.
According to the agreement, adaptability trials of each other
’s quinoa germ plasm will also be carried out. It was also agreed that faculty and students exchange programs would be initiated in the project, in addition to exchange of scientific materials, publications, and other information.
“Pakistan-China agriculture ties will help combat daunting issues including low productivity, post-harvest losses, value additions and farm machinery, meant to ensure food security and alleviate poverty.”
He said that the UAF and Chinese universities are jointly working on the different projects including heat-tolerant cotton and wheat varieties.
He said that China has adopted a model of small scaled implements for small farmers, which was a hallmark step.
SBP reserves jump $121mn to $9.23bn
The foreign exchange reserves held by the central bank increased 1.32percent on a weekly basis, according to data released by the State Bank of Pakistan (SBP) on Thursday.
Earlier, the reserves had spiralled downwards, falling below the $7-billion mark, which raised concern over Pakistan’s ability to meet its financing requirements. However, financial assistance from the United Arab Emirates (UAE), Saudi Arabia and other friendly nations helped shore up the foreign exchange reserves.
On December 6, the foreign currency reserves held by the SBP were recorded at $9,233.6 million, up $120.7 million compared with $9,112.9 million in the previous week.
According to SBP data, such levels were last seen on April 26, 2019.
“During the week ending December 6, SBP made a repayment of Pakistan International Sukuk of $1 billion,” the central bank stated. After accounting for multilateral and other official inflows during the week, SBP reserves increased by $121 million, it added.
The central bank also received inflows worth $1.3 billion from the Asian Development Bank on December 9.
“These funds will be part of the SBP weekly reserves data as of December 13, 2019, to be released on December 19,” the statement added.
Overall, liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $16,048.1 million. Net reserves held by banks amounted to $6,814.5 million.
Pakistan received the first loan tranche of $991.4 million from the International Monetary Fund (IMF) on July 9, which helped bolster the reserves. Previously, the reserves had jumped on account of $2.5 billion in inflows from China.
Jul-Nov fy20: Pakistan’s trade deficit shrinks 33pc to $9.7bn
Pakistan’s trade deficit shrank one-third to $9.7 billion in first five months of the current fiscal year on the back of compression of imports as growth in exports remained tepid, which may again result in missing the annual target.
Trade figures that the Pakistan Bureau of Statistics (PBS) released on Wednesday showed that exports fell in November over the preceding month and average increase in exports in July-November was less than 5percent. The Pakistan Tehreek-e-Insaf (PTI) government may again miss the annual export target until monthly shipments are increased to $2.5 billion in the remaining seven months of the current fiscal year.
Official data showed that on average monthly exports stood at $1.9 billion from July through November. Around $2 billion in monthly exports did not correspond with the hype created by the government about improvement in exports.
Cumulatively, the exports grew 4.8percent or just $436 million to $9.54 billion in the July-November period of the current fiscal year, reported the PBS. Overall, the trade deficit, which stood at $14.5 billion in first five months of the previous fiscal year, shrank to $9.7 billion in the same period of current fiscal year. In absolute terms, there was a reduction of $4.8 billion in the trade deficit and 91percent improvement came from the import side.
Imports during the period under review dropped 18.4percent to $19.2 billion, according to the PBS. In absolute terms, imports contracted $4.3 billion, which provided some relief for the government that was struggling to enhance exports. The International Monetary Fund (IMF) has projected that the trade deficit of Pakistan in the current fiscal year would narrow down to $24.8 billion. The projection is based on 8.2percent increase in exports and 4.7percent contraction in imports.
ADB approves $1.3bn loan for Pakistan
The Asian Development Bank (ADB) on Friday approved $1.3 billion budgetary support loan for Pakistan, including $1 billion in crisis response facility to shore up low official foreign exchange reserves.
It was for the first time in Pakistan’s history that any political or military government availed the crisis response facility to repay its foreign debt and build foreign currency reserves.
Unlike other long-term relatively cheaper ADB loans, the crisis response $1 billion debt has been taken for seven years at an interest rate of London-Interbank Offered Rate plus 2percent, which will bring its total cost to around 4percent.
In addition to that, the ADB also approved $300 million policy loan for the energy sector reforms. Compared to crisis loan facility, the $300 million energy sector reforms loan has been secured at 2percent per annum interest rate that will be paid back in 20 years.
The ADB board of directors, which met in Manila, approved the $1 billion “in immediate budget support to Pakistan to shore up the country’s public finances and help strengthen a slowing economy”, according to an official handout of the lending agency.
The ADB will disburse the $1.3 billion next week, which will increase the official foreign currency reserves from its current level of $7.9 billion.
The lender has attached conditions of fiscal consolidation, strengthening of social safety nets, prudent debt management, a flexible exchange rate regime and comprehensive energy sector reforms in return for the $1-billion emergency lending, according to a concept clearance note of the emergency loan.
The crisis response facility is offered by the ADB as part of its international rescue efforts to help nations meet foreign payment obligations and build the reserves.
The PTI government on Wednesday told the National Assembly that it borrowed $10.4 billion from August 2018 to September 2019 to repay debt and build reserves. These include expensive foreign commercial loans worth $4.8 billion.