State-owned companies: Balochistan’s demand for shares turned down

The federal government has rejected a Balochistan government demand for one-fifth shares of three major state-owned oil and gas companies at their ‘face value’. The provincial government had asked the Centre to allow it to buy 20% shares of the Pakistan Petroleum Limited (PPL), Oil and Gas Development Corporation Limited (OGDCL) and Sui Southern Gas Company Limited (SSGCL).

Balochistan had first placed the ‘concept note’ to this affect to Prime Minister Nawaz Sharif and later moved a summary before the Council of Common Interests (CCI) at its February 10 meeting.

The provincial government constituted its case on the basis of Aghaz-e-Haqooq-e-Balochistan (AHB) package announced in 2010, which promised extraordinary incentives to the restive but resources-rich province.

“The package – consisting of 40 clauses – provides for multifarious incentives in the constitutional, administrative and economic spheres. In terms of Clause-27 of the package, the provincial government has been allowed to purchase up to 20% shares of the PPL, OGDCL and SSGCL, when offered in the open market,” said the concept note placed before the prime minister who chairs the CCI.

The issue was discussed in detail at the CCI, the highest forum where decisions on matters among the provinces and between the federation and its federating units are made.

“On the issue of purchase of 20% shares of the PPL, OGDCL and SSGCL at their face value under the Aghaz-e-Haqooq-e-Balochistan package, the prime minister directed the Finance Division to hold detailed consultations with the provinces,” said the official handout issued after the meeting the same day.

A top official of the Privatisation Commission told The Express Tribune that the demand was unrealistic and was rejected outright. According to the official, there was no clause in the AHB to substantiate the demand.

The officials said the federal government advised the provincial government that instead of demanding these shares on their face value, it should take part in the open bidding, in which the federal government would invite international bids.

“We will be open for bidding when the shares of these entities go under the hammer. Anyone including the provincial governments can take part in the open bidding and file their bids. The successful bidder will be handed over these shares,” the official said.

The provincial government in its concept note said that if the federal government agreed to the proposal the incentive from the deal would cast a positive impact on the federation-province relationship combined with allaying public concerns about province’s age-old deprivation.

“The incentive would further augment the ongoing efforts of the government of Balochistan towards attaining a certain level of fiscal stability and redirecting the resources for social uplift, and it will supplement provincial role in terms of resource sharing of the federal entities operation in Balochsitan in the field of oil and gas sectors,” the note said.

The official said that the federal government agreed to the fringe benefits of the demand but the proposal was illogical due to its financial implications. He said if the federal government agreed to such demands of the provinces, it would need to make another review allocation to provinces under the NFC award.

“In such a case we would have to first review the NFC award and reformulate the share of provinces from divisible pool,” the official added.

He said the officials of the finance division would discuss these points in detail in the subsequent meetings with provinces on the directions of the premier. He said Sindh also had similar proposals on some entities.

Published in The Express Tribune, February 23^rd, 2014.

President calls for increased trade volume with China

President Mamnoon Hussain has called on the business community of Karachi and Shanghai to play an active role in bolstering Pak- China bilateral trade from the current volume of over $12 billion to $15 billion by 2015.

Hussain said this during his meeting with the Communist Party Secretary Hang Zheng in Shanghai. Minister for Planning and Development Ahsan Iqbal, Minister of State for Foreign Affairs Tariq Fatemi, along with ambassadors of the two countries were present during the meeting.

Welcoming the president to Shanghai, the party secretary assured that it will contribute majorly to the development of Pak-China Economic Corridor. He also lauded the role of the leadership of the two countries for anchoring relations on solid foundations.

The president said that fruitful discussions with Chinese leadership would help further deepen bilateral trade and economic cooperation. He expressed his delight to be in Shanghai during the celebration of the 30th anniversary of the establishment of their sister-city relationship.

In connection with anniversary celebrations, the president invited the party secretary to visit Karachi along with a business delegation. “This will help bring the two commercial cities closer and boost bilateral trade and commercial ties to new heights besides exploring new avenues of trade and investment,” he said.

Hussain expressed belief that with active involvement of the businessmen and entrepreneurs from Shanghai and Karachi, the trade target of $15 billion set by the two countries can be easily achieved.

He also thanked the party secretary and the Shanghai government for the warm hospitality extended to him and the accompanying delegation during his stay in Shanghai.

Published in The Express Tribune, February 23^rd, 2014.

Illicit trade: Tea smuggling shaves Rs8.7b off potential tax revenues

Karachi: One in every three cups of tea consumed in the country is tax-evaded and a product of illicit trade, which doesn’t only benefit smugglers with higher profit margins against legitimate brands but also costs the national exchequer more than Rs8.7 billion or $84 million a year in tax revenues.

Being one of the world’s largest importers and consumers of tea, Pakistan is a big market for tea traders. The country’s estimated total consumption stands at approximately $610 million as of calendar year 2013, according to Pakistan Tea Association (PTA).

In what can be described as a major strain on the cash-strapped economy and the profits of legal brands, illicit tea business accounts for more than a third, half by some estimates, of the total market.

According to data compiled by Pakistan Bureau of Statistics, the country imported 122,000 tons or Rs35.6 billion worth of tea in fiscal year (FY) 2012-13 – the number did not include 112,000 tons of tea smuggled and consumed in the country.

“Through repeated market research, we know that per capita consumption of tea in Pakistan is 1.17 kgs per year,” Unilever Pakistan Limited, one of the major players in the market and a member of PTA, said in response to queries.

“Based on an approximate population of 200 million, this amounts to 234,000 tons [234 million kg]. Thus, almost half the tea is smuggled in mainly through misuse of the Afghan Transit Treaty,” the company said quoting PTA. Based on their findings, the illicit tea business comes to about 48% of the total market. Explaining the challenges facing the legitimate industry, the maker of Lipton Yellow Label Tea said anti-smuggling measures taken so far have been short-lived and have a negligible impact.

“Business operations and profitability of legitimate commercial importers and packers have been severely curtailed,” it said, adding, “smugglers enjoy an unfair advantage of approximately Rs70 per kg.”

Due to high taxes, the lower-income groups are sold tea adulterated with harmful dyes, pigeon’s blood, sawdust to name a few, it said.

While the smugglers are benefiting at the cost of legitimate industry, the damage to the national exchequer in terms of revenue loss is equally significant.

The import duty levied on tea has remained unchanged at 10% for the past several years while general sales tax (GST) was raised from 16% to 17% in the last budget. If the tax rate is applied to 112,000 tons of smuggled tea, it translates to a potential revenue loss of Rs8.7 billion for FY2013.

Moreover, an estimated 100,000 tons were imported through non-duty-paid channels in 2013, resulting in a total revenue loss of Rs11 billion, Unilever said quoting PTA.

The government’s version on the subject has been covered in a separate report of the same edition. The industry, however, suggested what can be done to curb this menace.

Quantitative limits, lower tax

The Pakistani arm of the Anglo-Dutch foods and consumer goods giant said the government should improve procedures for Afghan transit trade and place quantitative limits on the volume of tea that is allowed access through Pakistan.

Afghanistan is a nation of only 25 million – predominantly green tea drinkers – but they are importing nearly the same quantity of black tea as Pakistan, a nation of nearly 200 million, it said.

The government’s support via policy decisions or reduced taxation can create a more level playing field by reducing the cost of branded tea for consumers, Unilever said. “In June 2012, sales tax on black tea was reduced from 16% to 5% to create a more level playing field. However, the decision was reversed in nine months due to revenue pressure,” it said.

However, the window in that case was too small for any significant impact on the infrastructure and modus operandi of the informal sector, the consumer goods giant said.

“Policy decisions must be given due time to demonstrate impact on tea smuggling, which has been a practice for decades. Smuggling can be eliminated gradually and with patience through mutual cooperation between the government and tea manufacturers,” it said.

Published in The Express Tribune, February 24^th, 2014.

Sail through: Hajj ship service to be launched, says minister

LAHORE: The Ministry of Ports and Shipping has decided to run a ship service to provide economical transport to pilgrims going to Saudi Arabia for Hajj and Umrah and also to visitors of religious places in Iran.

Kamran Michael, the federal minister for ports and shipping, told Daily Express that the Hajj service will only charge Rs25,000 to Rs30,000 to take the pilgrims to the holy land. The service will begin from the next Hajj season after the prime minister’s approval, he announced.

He said that it costs about Rs300,000 for a Pakistani pilgrim to perform Hajj, which is difficult for a common person. “Therefore, the government has decided to economise the holy journey,” he explained.

He said the ministry was acquiring fast-moving craft from Europe that will get Hajj service passengers to Saudi Arabia in six days. The service will also provide food to the pilgrims.

The minister said the plan includes cargo service to and from the Middle East and negotiations with immigrations and customs is in progress to execute the idea.

He said that after the Hajj service becomes operational, the ministry will then start an additional service for the devotees going to Iran, which will help some people avoid travelling through Balochistan. The pilgrim route via Balochistan has come under attack recently.

‘Missing’ containers

Michael said the theft of containers scandal also surfaced soon after he took charge and the Supreme Court has set up an investigating commission after taking a suo motu notice.

The ministry is planning to introduce an IT database system at all the ports of the country so that the theft of containers can be curbed. A tracking chip will be attached to every container that landed on the port, he explained.

Industrial zone

An industrial zone has been set up at Port Qasim where 3,000 industrial units will be established. A coal plant will be built that will produce 500 MW of electricity and make Port Qasim self-sufficient in electricity.

Published in The Express Tribune, February 24^th, 2014.

Imported Cars

KARACHI: Imports of used cars up to 1,000cc plunged sharply to 4,974 units in July-October 2013 as compared to 10,174 units in the same period last year.

All Pakistan Motor Dealers Association (APMDA) Chairman H. M. Shahzad attributed the big drop to the cut in age limit of used cars to three years from five years in December 2012, followed by another cut in depreciation limit to two years from three years.

He said the importers/dealers of used cars are getting depreciation of two years but the cars being imported are of three years age limit. Used car prices of three-year-old are higher as compared to five-year-old cars.

Shahzad said that consumers had a wide choice for purchasing used cars, particularly of lower engine power vehicles when imports were thriving. They now have limited options while the local car industry offers decades-old models of Suzuki Mehran and Suzuki Cultus at very high prices.

He suggested that importers should get three years depreciation which would improve imports and revenues.Figures provided by the APMDA reveal that import of cars from 1,001 to 1,300cc stood at 14 units as compared to 1,079 units while from 1,301cc to 1,500cc only 783 units arrived as compared to 6,236 units.

Arrival of 1,601 to 1,800cc vehicles shrank to 661 units from 1,279 units. However, import of jeeps (4x4) went up to 388 units from 275 units.

Based on the above figures, the total imports of cars up to 1,000cc to 3,000cc and (4x4) jeeps fell to 6,842 units in July-Oct 2013 (Rs3 billion customs duty) as compared to 19,129 units (Rs6.6bn customs duty) in same period last year.

Meanwhile, the Pakistan Bureau of Statistics (PBS) data showed 58 per cent drop in car imports, which went down to $58 million in July-October 2013 from $136m the same period last year. The PBS figures did not mention number of vehicles imported in the last four months.

Shahzad recalled that when five years old cars were allowed, almost 80 per cent imports comprised of 660cc to 1,000cc vehicles of different models.

The government is in the process of finalising the new auto industry policy (AIP) and has invited all the stakeholders to give their feedback including used cars dealers.

The APMDA chief urged the government to bring used cars/vehicles under the ambit of commercial import with a five to 10 years age limit by amending Sr.No.10 of Appendix-C of Import Policy Order 2013. “This would generate more revenues,” he said.

He also suggested the government to allow certified members of APMDA to import the used vehicles on commercial basis for the sake of transparency of the trade.

The import of used cars permitted under various schemes to facilitate overseas Pakistanis should continue but most the vehicles are being imported under transfer of residence and personal baggage schemes.

He said all ad hoc schemes such as the ‘infamous amnesty scheme’ should be banned for ever. “Smugglers should be dealt with under the law instead of giving amnesty,” he said.

Automotive Industry

The Automotive industry has been an active and growing field in Pakistan for a long time, however not as much established to figure in the prominent list of the top automotive industries, having astable annual production 100-170 thousands only. Despite significant production volumes, transfer of technology and localization of vehicle components remains low, and only a few car models are assembled in the country while customers have a very small variety of vehicles to choose from. The lack of competition in the local auto industry due to the presence of just three assemblers -and only one small car assembler- has resulted in technological stagnation of the industry; small cars produced by Paksuzuki, the country's largest auto assembler, in the country are globally retired models utilizing obsolete technology and not offering any safety features. Currently some of the major world automakers have set up assembly plants or are in joint ventures with local companies these include Toyota, General motors Honda, Suzuki, Nissan Motors. The total contribution of Auto industry to GDP in 2007 was 2.8% which is likely to increase up to 5.6% in the next 5 years. Auto sector presently, contributes 16% to the manufacturing sector which is predicted to increase 25% in the next 7 years. Many cars in the country have dual fuel options and run on CNG which is more affordable and cheaper than petrol in the country.

According to Ministry of Industries, Pakistan produced its first vehicle in 1953, at the National Motors Limited, established in Karachi to assemble Bedford Trucks. Subsequently buses, light trucks and cars were assembled in the same plant. The industry was highly regulated until the early 1990s. After deregulation major Japanese manufacturers entered in the market thereby creating some competition in this sector. Assemblers of HINO Trucks, Suzuki Cars (1984), Mazda Trucks, Toyota (1993) and Honda (1994) in particular, entered once deregulation was introduced. Assembly of Daihatsu and Hyundai cars (1999) and various brands of LCVs and range of mini-trucks commenced recently.

From 1953 to 2011, the journey of auto industry has been rough, tough and sometime very smooth. Car industry saw boom in 2006-2007 when sales touched record peak of 180,834 thanks to rising car financing up to 70-80 per cent by banks due to low interest rates and rising rural buying. Since then the industry has been surviving hard to reach the same sales level amid high interest rates and Yen appreciation against the rupee but high farm income is giving much support to car sales. Good crops this year will keep the car sales brisk despite increase in prices.

The car industry has invested over Rs 20 billion in the last four to five years to meet growing demand. The direct employment in car industry hovers between 5,500-6,000 persons.Motorcycle production hit the country's record level of over 1.5 million units in 2010-2011 by the effort of Pervaiz Musharraf Government's decision that opened bike market to low cost Chinese bikes. Auto sector now employs 192,000 people directly and around 1.2 million indirectly and has Rs 98 billion of investments and contributes Rs 63 billion as indirect tax in the national exchequer.

Auto Sector remains the second largest payer of indirect taxes after the Petroleum Sector. In Pakistan's context there are 10 cars in 1,000 persons which is one of the lowest in the emerging economies which itself speaks of high potential of growth in the auto sector and more so in the car production. Rising per capita income with changing demographic distribution and an anticipated influx of 30 to 40 million young people in the economically active workforce in the next few years provides a stimulus to the industry to expand and grow (Source AUTOMARK Magazine).

There has also been a recent interest towards hybrid and electric cars among educated Pakistani buyers however there unavailability remains a problem.

Economy of Pakistan

The economy of Pakistan is the 27th largest in the world in terms of purchasing power parity (PPP), and 44th largest in terms of nominal GDP. However as Pakistan has a population of over 183 million (the world's 6th-largest), thus GDP per capita is $3,056 ranking 140th in the world. Pakistan is a rapidly developing country^[18][19][20] and is one of the Next Eleven, the eleven countries that, along with the BRICs, have a high potential to become the world's largest economies in the 21st century.^[21] However, after decades of war and social instability, as of 2013, serious deficiencies in basic services such as railway transportation and electric power generation had developed.^[22] The economy is semi-industrialized, with centres of growth along the Indus River.^[23][24][25]

Pakistan ranks as the 15th largest trader of goods in the world, ranking above Spain and Australia, while it is the worlds 6th largest trader of services. Major industries includes textiles (garments, bed linen, cotton cloth, yarn), chemicals, food processing (mainly sugar, salt, wheat, rice, fruit), agriculture, fertilizer, cement, dairy and rugs. Growth poles of Pakistan's economy are situated along the Indus River;^[24][26] the diversified economies of Karachi and major urban centers in the Punjab, coexisting with lesser developed areas in other parts of the country.^[24] The economy has suffered in the past from decades of internal political disputes, a fast growing population, mixed levels of foreign investment.^[22] Foreign exchange reserves are bolstered by steady worker remittances, but a growing current account deficit – driven by a widening trade gap as import growth outstrips export expansion – could draw down reserves and dampen GDP growth in the medium term.^[27]Pakistan is currently undergoing process economic liberalization with includes privatization of all government corporations, aimed to attractforeign investment and decrease budget deficit.^[28]

source(wiki)

Cops to be on duty for Musharraf today

ISLAMABAD: The capital police are expecting to receive former president retired Gen Pervez Musharraf in Islamabad on Tuesday for his first appearance before the special court seized with his high treason trial.

“Although there is no signal from the former military ruler, he is likely to appear before the court today (Tuesday). There are 90 per cent chances,” a senior police officer told Dawn.

Gen Musharraf’s counsel Faisal Hussain Chaudhry told Dawn that the defence team did not intend to file an application for his exemption from appearance and he would come to the court on Tuesday.

Asked that Anwar Mnsoor Khan, another defence counsel, had given an undertaking to the court about his appearance, he said it had no legal value.

Police are prepared to provide security and escort him from the Armed Force Institute of Cardiology (AFIC) to the National Library, where the special court has been set up. Gen Musharraf was rushed to the AFIC after he complained of heart problems while going to the special court on Jan 2.

“Two alternative routes have been selected for smooth and hurdle-free movement,” the police officer said, adding that Rangers personnel would also perform their duty at the court premises.

“All arrangements have been made, but it is up to the former president whether he will appear before the court or not,” he said.

According to police sources, the inspector general of Islamabad police, superintendent of security branch, assistant superintendent (route) and ASP traffic (industrial area) are on leave. The IG and the ASP traffic would, however, join their duty on Tuesday morning, they added.

Another police officer said SSP Malik Matloob, who also holds the acting charge of traffic, was assigned the duty at Kural Chowk to receive the former president and escort him to the special court. A superintendent of police will travel with the former president’s cavalcade from the AFIC to the court. The officer said that under the standard operating procedure (SOP), security arrangements like route duty, escort duty and deployment and duty rosters were made a day before of a VVIP movement. Rosters were also made to provide box security, route duty and venue security for Gen Musharraf in the court, he said, adding a police team would be sent to the AFIC in the morning.

The box security includes a 12-vehicle cavalcade, a bullet-proof car, pilot vehicles, an ambulance and a fire engine.

The officer said about 1,200 policemen, anti-terrorist squad personnel and commandos would be on duty and over 400 personnel would be deployed at the court premises.

Pakistan (WIKI)

Pakistan

Pakistan, (ⁱ/ˈpækɨstæn/ or ⁱ/pɑːkiˈstɑːn/; Urdu: پاكستان‎ ALA-LC: Pākistān IPA: [pɑːkɪst̪ɑːn] ( listen)) officially the Islamic Republic of Pakistan, (Urdu: اسلامی جمہوریۂ پاكستان‎ ALA-LC: Islāmī Jumhūriyah-yi Pākistān IPA: [ɪslɑːmiː d͡ʒʊmɦuːriəɪh pɑːkɪst̪ɑːn]) is a sovereign country in South Asia. With a population exceeding 180 million people, it is the sixth most populous country and with an area covering 796,095 km²(307,374 sq mi), it is the 36th largest country in the world in terms of area. Located at the crossroads of the strategically important regions of South Asia, Central Asia and Western Asia, Pakistan has a 1,046-kilometre (650 mi) coastline along the Arabian Sea and the Gulf of Oman in the south and is bordered by India to the east, Afghanistan to the west and north, Iran to the southwest and China in the far northeast. It is separated from Tajikistan by Afghanistan's narrow Wakhan Corridor in the north, and also shares a marine border with Oman.

The territory of modern Pakistan was home to several ancient cultures, including the Neolithic Mehrgarh and the Bronze Age Indus Valley Civilisation. The territory has been the home to kingdoms ruled by people of different faiths and cultures, including Hindus, Persian, Indo-Greek,Islamic, Turco-Mongol, Afghan and Sikh. The area has been ruled by numerous empires and dynasties, including the Indian Mauryan Empire, the Persian Achaemenid Empire, Alexander of Macedonia, the Arab Umayyad Caliphate, the Mongol Empire, the Mughal Empire, the Durrani Empire, the Sikh Empire and the British Empire. As a result of the Pakistan Movement led by Muhammad Ali Jinnah and India's struggle for independence, Pakistan was independent in 1947 as an independent nation for Muslims from the regions in the east and west of India where there was a Muslim majority. Initially a dominion, Pakistan adopted a new constitution in 1956, becoming an Islamic republic. A civil war in 1971 resulted in the secession of East Pakistan as the new country of Bangladesh.

Pakistan is a federal parliamentary republic consisting of four provinces and four federal territories. It is an ethnically and linguistically diverse country, with a similar variation in its geography and wildlife. A regional and middle power,^[11][12] Pakistan has the fourth largest standing armed forces in the world and is also a nuclear power as well as a declared nuclear weapons state, being the only nation in the Muslim world, and the second in South Asia, to have that status. It has a semi-industrialised economy with a well-integrated agriculture sector, her economy is the26th largest in the world in terms of purchasing power and 45th largest in terms of nominal GDP and is also characterized among the emerging and growth-leading economies of the world. Pakistan's post-independence history has been characterised by periods of military rule, political instability and conflicts with neighbouring India. The country continues to face challenging problems, including overpopulation, terrorism, poverty,illiteracy and corruption but regardless of that it ranks among the countries with most income equality^[13] while has among the worlds mosthappiest citizens.^[14] She also ranks among worlds most powerful countries. It is a founding member of the Organisation of the Islamic Conference (now the Organisation of Islamic Cooperation) and is a member of the United Nations, the Commonwealth of Nations, the Next Eleven Economies, SAARC, ECO, UfC,D8, Cairns Group, Kyoto Protocol, ICCPR, RCD, Group of Eleven, CPFTA, Group of 24, the G20 developing nations and CERN^[15].

source:Wiki