Day: November 24, 2021

The GDP [Gross Domestic Product] growth of Pakistan is expected to stay within the range of 4-5 percent in the fiscal year (FY) 2021-22, according to the annual State of the Economy report of the State Bank of Pakistan (SBP) for 2020-21.

The report highlights that a broad-based recovery in real GDP growth was recorded. Led by the favorable supply and demand dynamics as well as a low base effect from the Covid-led contraction in FY20, large-scale manufacturing posted a 14.9 percent increase in FY21.

Though the growth in agriculture was slightly lower than in FY20, the production of wheat, rice and maize rose to historic levels. The cumulative increase in the production of these crops offset the decline in cotton production. The improvement in the commodity-producing sectors and a surge in imports led to a sharp recovery in wholesale and trade services in FY21.

The report also notes that the economic rebound was achieved without a worsening of macroeconomic imbalances, as the overall policy mix was still prudent. The current account deficit reduced substantially amid record-high workers’ remittances and export receipts and contributed to the US$ 5.2 billion increase in the SBP’s foreign exchange reserves during the year.

The country also retained access to sizable external financing, with inflows received from the International Monetary Fund (IMF) and other multilateral and bilateral creditors, the issuance of Eurobonds after a long hiatus and deposits and investments from non-resident Pakistanis via the Roshan Digital Accounts.

The report expects the economic recovery during FY21 to gain further momentum in FY22. The recovery is evident from the significant increase in machinery and raw material imports, continued expansion in consumer financing, and strong uptrend in domestic sales as seen from high-frequency demand indicators.

This year-on-year (YoY) improvement is likely to surface owing to the accommodative monetary policy stance, the pro-growth measures outlined in the FY22 budget, the government’s focus on revival of the construction industry under the “Naya Pakistan Housing Scheme”, and the mandatory housing finance targets by SBP.

The SBP expects the sharp expansion in development spending to give a push to construction and allied industries. Similarly, the extension in the social safety envelope under Benazir Income Support Program is expected to smoothen consumption patterns of the economically vulnerable segments.

The report says that for businesses, tax and duty incentives for raw materials and capital goods, and the availability of power subsidies, are likely to enhance economic activities and support private investments.

The agriculture sector is also projected to further benefit from the support packages for the Kharif and Rabi crops, which would, in turn, cast a positive effect on the services sector as well.

In the fiscal sector, the government plans to continue with the adjustment measures, which are projected to reduce the deficit to 6.3 percent of GDP, from 7.1 percent in FY21. The fiscal deficit, the report adds, could be within a range of 6.3 to 7.3 percent of GDP for FY22.

According to the report, the Corporate Income Tax (CIT) reforms announced in March 2021 are likely to support the Federal Board of Revenue (FBR) tax collection by eliminating various income tax exemptions and normalization of tax rates.

The sustained turnaround in sales of petroleum products is also expected to increase collection from the petroleum development levy.

Despite pressures emerging from the import side, SBP expects that the current account deficit to be within the range of 2.0 to 3.0 percent of GDP during FY22. Imports are expected to remain between $62.5 billion and $63.5 billion by the end of the financial year.

A part of the expansion in the import payments is projected to be financed through a consistent increase in the workers’ remittances and export receipts. The central bank expects remittances inflows in the range of $30.5 billion to $32.5 billion by the end of the current financial year. Similarly, exports receipts of the country will remain buoyant in the range of $26.5 billion to $27.5 billion.

The national consumer price index (CPI) inflation is expected to remain within a range of 7.0 to 9.0 percent. The report expects better commodity management practices, especially the build-up of reserves for wheat and sugar, to contain supply-side pressures from seeping into the inflation during FY22.

 

 

Source: Pro Pakistani

Digital transformation can help Pakistan unlock up to Rs. 9.7 trillion ($59.7 billion) in annual economic value by 2030, equivalent to about 19 percent of the country’s GDP in 2020, according to a new report commissioned by Google.

The report—released at the Google/P@SHA online event, “Unlocking Pakistan’s Digital Potential”—finds that Pakistan has a thriving technology sector. The country is home to more than 300,000 IT professionals, produces over 25,000 IT graduates annually, and has nurtured over 700 tech start-ups since 2010.

Technology exports have grown 15 percent per year since 2020 and are expected to reach $3.5 billion in 2022. Pakistan’s online population has grown rapidly, and the internet penetration rate is reaching 54 percent in 2021.

Despite these many achievements, Pakistan can go further in its digital transformation journey. The report, prepared by economists at AlphaBeta, identifies three main pillars of action Pakistan could take to reach the projected growth opportunity. This includes developing infrastructure to support the local tech ecosystem, continuing to create a conducive environment for IT export, and promoting innovation and digital skills in the country.

There are eight key technologies that hold transformative potential for businesses and workers and can create significant economic value for Pakistan. These include the mobile internet, cloud computing, big data, AI, fintech, IoT and remote sensing, advanced robotics, and additive manufacturing.

Farhan Qureshi, Regional Director Pakistan, Bangladesh, and Sri Lanka, Google, believes that despite the setbacks caused by the pandemic, the future for Pakistan’s digital economy is bright.

“Digital transformation is vital for Pakistan to address the long-term implications of the COVID-19 pandemic and build long-term resilience and growth. At Google, we aim to play our part by equipping Pakistanis with helpful products and tools, tech know-how, and online safety skills. Going forward, we will continue working with partners like P@SHA and the various government agencies to help fulfill the Digital Pakistan Vision” said the Country Director.

Qureshi continued, “In order to be effective, digital transformation has to be inclusive. It is essential to make digital training opportunities accessible also to underrepresented communities and vulnerable groups. We recently launched a pilot program with the National Rural Support Programme to equip more Pakistanis with online safety skills and digital literacy and reached more than 1,000 students in just two months. Our Grow with Google programme has trained over 5,500 SMEs on how to leverage digital tools to support the development of a digitally skilled workforce.”

Dr. Arif Alvi, President of Pakistan, added, “I was encouraged to see AlphaBeta’s finding that digital transformation could create Rs. 9.7 trillion in annual economic value in Pakistan by 2030. Realizing this goal and the vision of Digital Pakistan will require a whole-of-nation approach, from both the public and private sectors. The efforts of groups like Google and P@SHA will be key. It is heartening to note that, according to AlphaBeta’s report, over 410,000 jobs are supported in Pakistan’s economy through the use of Google’s products.”

Badar Khushnood, Chairman Pakistan Software Houses Association (P@SHA) for IT & IT-enabled Services (ITeS), also shared, “P@SHA represents thousands of technology companies and has been at the forefront of the #DigitalPakistan revolution. Our industry has seen record-breaking growth over the last few years, and we strive to take it to the next level. P@SHA envisions unleashing the potential of the IT and ITeS industry in Pakistan from all perspectives! To stay true to our vision, we focus on leading the industry narrative.

From policy advocacy to ecosystem enablement and in-depth research and insights, P@SHA interventions have had a significant impact over the last two decades.”

He further said, “P@SHA continues to work closely with relevant public and private sector stakeholders to not only accelerate growth in software and services exports but also fast-track digital transformation in domestic sectors of the economy as well. Google and P@SHA’s relationship continues to grow, and we look forward to further strengthening this win-win synergy for Pakistan’s brighter and more vibrant digital ecosystem.”

Krinza Momin, former GDSC Lead & Jr. Data Scientist at Afiniti, also joined the event to share her views about the Pakistan developer community. She remarked, “With the efforts that Google is plugging in for Pakistan, I am glad that we have platforms such as Google Developer Student Clubs, Google Developer Groups, Women Techmakers, and Google Developer Experts to be a part of. These programs enabled me and many others to have conversations with industry experts in Pakistan and worldwide which also created global avenues for us to learn from. Pakistan can truly position itself around startups and innovation to fuel economic prosperity and efforts like this event by P@SHA and Google make the destination one step closer.”

 

 

Source: Pro Pakistani

The news of a strike by petroleum dealers has become a matter of great worry for motorists across Pakistan. However, Shell has announced that it will also keep all of its Company-Owned-Company-Operated (COCO) filling stations open during the strike from 25 November onward.

The company has issued the following statement regarding the development:

“We are not part of the strike call by the Petroleum Dealers Association on 25th November 2021. Shell Pakistan would like to inform you that all our Company Operated retail sites will remain open to serve you.”

 

Shell has 35 COCO filling stations across Pakistan. The list of these filling stations is as follow:

With the Federal Minister for the Economic Affairs Division and the head of the Economic Coordination Committee (ECC), Omer Ayub Khan, currently out of the country, the revision in the profit margins for petroleum dealers won’t be taking place anytime soon.

This means that the dealers association will proceed with the countrywide strike, which could hinder access to fuel for the public in the coming days. Currently, however, PSO and Shell Petroleum Limited are the only two Oil Marketing Companies (OMC) that will remain open during the strike.

 

 

Source: Pro Pakistani

The telecom industry recorded a decline in revenue stream by 4.1 percent to Rs. 541.4 billion in FY21 according to the State Bank of Pakistan (SBP).

The SBP in its Annual Report 2020-21 on the State of Pakistan’s Economy, stated that the communication subsector contracted during the fiscal year 2021, despite the improvement in telecom indicators.

It further stated that according to the Pakistan Telecommunication Authority (PTA) Annual Report 2020, telecom operators had cut prices to facilitate the public, which resulted in lower revenues. Moreover, it was also reported that many high-value enterprise users such as schools, universities, hotels, restaurants, and offices – requested a temporary suspension of services, rebates, discounts, or payment holidays, amid liquidity challenges due to Covid-19 pandemic.

Moreover, the saturation in the telecommunications sector also contributed to depressed demand for the flat-steel industry.

The telecom sector increased its long-term borrowings in the fiscal year 2021, albeit at a slower pace than last year. The sector’s borrowings were mainly concentrated in the last quarter of the fiscal year 2021, when two of the leading cellular firms operating in the country borrowed long-term loans for their network expansion.

Within Withholding Tax (WHT), major contributors were telecom services, imports, bank interest and securities and contracts. The increased usage of telecom services due to online educational activities and virtual meetings during the pandemic helped increase the collections from telecom services. Similarly, the rebound in construction activities increased saving deposits and a surge in imports shored up WHT receipts.

The report noted that Sindh’s revenue performance remained strong during the fiscal year 2021. The recovery in imports and the telecom sector mainly explains the increase in the collection from GST on services in Sindh during FY21.

Apart from these global factors, the lower foreign direct investment (FDI) inflows to Pakistan in FY21 also reflected some indigenous factors. First, in the wake of no major telecom spectrum issuance or license renewals, FDI into the telecom sector dropped quite sharply from last year’s elevated levels.

In FY20, the government had received license renewal fees from 3 major cellular service providers in the country. Telecom firms tend to take intercompany loans from their foreign sponsors to make such payments, and these loans had pushed up the FDI inflows into the telecom sector in FY20.

The FDI into Pakistan is lately being driven by sector-specific activity in a few segments of the economy for many years now, and is primarily dependent on progress on CPEC-related projects. For telecom, this includes spikes in FDI whenever the government conducts auctions of telecom spectrums or when license fees of cellular firms become due.

Meanwhile, since the advent of the China Pakistan Economic Corridor (CPEC) in FY16, sizable investments into the power sector have primarily originated from China. As such, there is a need to actively pursue the second phase of CPEC, while also utilizing the opportunities presented by the upcoming special economic zones to attract FDI from China.

In addition, a further enabling in the policy environment, including by simplifying and easing relevant regulations, may attract foreign investment into more dynamic sectors of the economy, such as Information and communication technology (ICT).

 

 

Source: Pro Pakistani

A parliamentary panel on Wednesday expressed serious concerns over the huge taxes levied on mobile users and directed the Pakistan Telecommunication Authority (PTA) and the Federal Board of Revenue (FBR) to formulate a comprehensive strategy for the benefit of consumers.

The National Assembly Standing Committee on Cabinet Secretariat met with Kishwar Zehra in the chair summoned the Chairman PTA and Chairman FBR. Besides, the panel also called the Chairman National Database & Registration Authority (NADRA) and the head of Federal Investigation Agency (FIA) to the next meeting to give their response on the issuance of fake SIMs.

 

The issue was referred to the committee by the National Assembly as it had reservations over the taxes levied on mobile cards. The committee showed its annoyance with the FBR for not investigating the veracity of tax returns filed by mobile companies showing them in deficit.

The NA panel observed that the taxes levied on mobile cards were very high and the withholding tax was also imposed on the consumers who did not fall under the ambit of filing tax returns. It noted that the consumers living in the areas exempted from taxes by the government also paid taxes on mobile cards.

 

The PTA and FBR officials presented their viewpoint, however, they could not satisfy the committee members with their responses. The committee expressed dissatisfaction over the responses given by PTA and FBR regarding the facilities provided to mobile users; the taxes levied on mobile cards; and the issuance of fake SIMs. Further, the committee summoned Chairman PTA, Chairman FBR, Nadira, and FIA to the next meeting.

 

In his response on behalf of PTA, Member PTA Khawar Siddique Khokhar informed the committee that the imposition of tax on mobile cards fell under the purview of FBR, while the PTA issued licenses to mobile phone companies and oversaw if they ensured uninterrupted service delivery to customers. He said mobile phone service in areas where mobile companies could not function was provided under the USF fund.

Explaining FBR’s response on the taxes levied on mobile phones, the FBR spokesperson said that 16 percent federal excise duty was levied on consumers of mobile phone cards in the federal area while 19.5 percent tax was levied in the provinces. In addition, withholding tax was also levied.

 

Member National Assembly Murtaza Javed Abbasi, who raised the question of the heavy levies, said the mobile users were subject to 11 percent withholding and 19.5 percent general sales tax. He regretted that taxes were also being collected from those who did not come under the tax net. PTA has not protected the rights of mobile users, he remarked. He added that mobile users got a balance of Rs 61 on loading a Rs 100 card.

 

The Member PTA claimed that Pakistan had the lowest mobile tariff in the region. He said that 10 percent withholding tax and 19.5 percent sales tax on mobile balance were being deducted. He maintained that the federal excise duty was 16 percent. General sales tax and federal excise duty were also deducted on mobile balance usage. It is the prerogative of government and FBR if taxes are to be reduced, stressed the Member PTA.

The FBR official informed that sales tax was collected by the provinces and federal excise duty was collected by the federation. As per law, mobile companies are subject to profit tax, but no mobile company is profitable, he remarked.

 

Abbasi asked how could the companies in deficit were operating. He said that taxes were being taken from the consumers while the companies were not paying any tax and workers were being taxed. Companies do not pay any tax, said Abbasi, adding that mobile companies do not show their profits. He emphasized summoning Chairman PTA to present a solution to the problems being faced by consumers.

 

Mohsin Dawar expressed annoyance that despite the requirement of biometric verification, people had five SIMs registered in their name while they did not know it. To this, the PTA official said that anybody could check how many SIMs were in his/her name by sending an SMS to 668.

To a question from the NA committee members about tax collection from mobile phone companies, the FBR spokesperson said that according to the tax returns submitted by the companies, all the companies were in deficit and only consumers were taxed. The committee expressed dissatisfaction that the tax returns submitted by the mobile companies were fake and the FBR also did not investigate the tax returns of these companies.

The committee also discussed the Civil Servants Amendment Bill, 2001, and adjourned the proposed bill till the next meeting. A bill by MNA Ali Gohar Khan which was sent to the committee by the National Assembly was also discusssed in addition to the bill pertaining to the Federal Employees’ Benevolent Fund and the Group Insurance Amendment Bill 2021.

 

Minister of State for Parliamentary Affairs Ali Muhammad Khan and NMAs Saleem Rehman Sahib Ali Nawaz Awan, Ms. Azmi Riaz, Rasheed Ahmed Khan, Rana Iradat Sharif Khan, Ms. Shahnaz Saleem Malik, Ms. Seema Mohi-ud-Din Jamili, Raza Rabbani Khar, Syed Mahmood Shah, Mohsin Dawar, Movers; Alia Kamran, Sher Akbar Khan Sahib Murtaza Javed Abbasi Sahib Ali Gohar Khan Naveed Amir Jiva were present in the meeting

 

 

Source: Pro Pakistani