Category: Industry

There has been a heated debate on the future of oil refineries since the recent shutdown proposal from Farooq Rahmatullah, a member of the Energy Expert Group of Economic Advisory Council (EAC). In the recent proposal, Rahmatullah had suggested that Pakistan Refinery Limited (PRL), National Refinery Limited (NRL), and Byco Petroleum Pakistan Limited should be shut down as they have become obsolete and contribute heavily to air pollution.

The top management of the refineries came into action after the proposal and comments of Farooq Rahmatullah. They made accusations that the proposal was biased and in favor of the oil-importing lobby.

A national daily reported that in the letters written to the government, the management criticized Rahmatullah, claiming that he did not have any understanding of the strategic importance of the oil refineries.

The top management of the refineries further argued that oil refineries create value-addition by saving billions of dollars, and they also provide employment directly or indirectly to thousands of people.

Zahid Mir, the Managing Director (MD) and Chief Executive Officer (CEO) of PRL, told the national daily that it would take at least 7-8 years for any green-field deep conversion refinery to produce a total of 275,000 barrels per day, which the three refineries are currently producing.

The CEO also pointed out that Farooq Rahmatullah had been the Chairman of the PRL board of directors from 2005 to 2017. However, during his tenure, he had never advocated closing down the refineries due to outdated technology.

In his defense, Farooq Ahmed revealed that the claims that he was biased towards the oil-importing lobby were false as Shell had closed 35-40 refineries in the different parts of the country.

Source: Pro Pakistani

Traders are discontented with the government’s recent decision of setting a minimum price for the export of onions.

They claim that the government should not be involved in setting the values of goods as it will lead to their products becoming uncompetitive in the international market.

Patron-in-Chief of the All Pakistan Fruit and Vegetable Exporters, Importers and Merchants Association, (PFVA), Waheed Ahmed told Express Tribune that even though there has been a bumper yield of onions this year, the set exports targets cannot be met due to such barriers.

Ahmed said that the government’s rate of $400 per ton for exports is unrealistic and it is leading to a great amount of loss for the traders. He added that the excessive yield of onions this year caused their local rates to fall by Rs. 20 per kg.

The Patron-in-Chief revealed that he had written letters to the Ministries of Commerce and National Food Security and Research suggesting that the government should take advantage of the surplus crop this year, and opined that the realistic price for the export of onions is $300 per ton.

He also highlighted how the onion industry is suffering because of the shortages of reefers and containers.

There is also an excess supply of onions in the Karachi market which Ahmed expects to increase soon and lead to an excessive supply in the local market that will result in losses for the growers and traders.

Source: Pro Pakistani

The fertilizer industry sold 5.1 million metric tonnes of urea in the first ten months of 2021, up from 4.6 million metric tonnes during the same period of 2020.

In doing so, it met the rising domestic demand by selling 10 percent more urea than it had in the previous year.

The demand for fertilizers grew as the government provided urea at a discount of 83 percent under the Fertilizer Policy 2001, bringing the price of urea down by Rs. 8,500 per bag.

The Executive Director of the Fertilizer Manufacturers of Pakistan Advisory Council (FMPAC), Sher Shah Malik, said that Pakistan’s fertilizer industry is committed to maintaining an adequate supply of urea at affordable rates.

However, providing urea at a heavy discount as compared to international prices allows dealers to manipulate the markets.

“The urea industry’s MRP is currently at Rs. 1,768 per bag, but farmers are being sold urea at Rs. 2,000 per bag in various parts of the country. As a result, abnormal gains are being pocketed by dealers,” Malik explained.

Commenting on the supply of urea, Malik highlighted that there is an incorrect perception of an inadequate supply of urea in the market. The fertilizer industry sold over five million metric tonnes of urea in the first ten months of the year, which is the highest ever sales volume in a decade.

He added that the fertilizer sector can satisfy the full-year demand of 6.3 million metric tonnes of urea on the strength of better farm economics because of the continuing operation of RLNG units and acceptable inventory levels.

Source: Pro Pakistani

The Federal Board of Revenue (FBR) suffered a blow to its tax-to-GDP ratio in the fiscal year 2021 as the economy slowed down due to the pandemic.

FBR’s new report puts the tax-to-GDP ratio at 9.9 percent. However, the Board took timely short- and long-term decisions to mitigate the negative effects of COVID-19.

Provinces made a meager contribution of 1.0 percent only, pushing the tax-to-GDP ratio to around 11 percent in the fiscal year 2021. The tax-to-GDP is expected to grow in the fiscal year 2022 due to an improvement in revenue collection during the first half of the ongoing year.

According to the report, provincial tax-to-GDP is around 1 percent for the previous eight years.

Analysis of breakdown of tax-to-GDP ratio highlights the sales tax and direct taxes are the primary contributors, after smaller shares from custom revenues and FED.

Reasons for the low tax-to-GDP ratio can vary from country to country. However, some of the general variables that play a key role in increasing the tax-to-GDP ratio include transaction documentation, sensible economic policies, efficient taxation structure, targeted fiscal policies, automation, and effective use of IT.

Similarly, improved taxation, along with efficient expenditure management, are critical for the economic growth and stabilization of a country, according to the World Bank.

Further, in the long term, governments must rely on an effective tax system to satisfy the demands of the public sector. Another research emphasizes a significant relationship between effective governance, a thriving economy, and tax revenues, concluding that governance is important in increasing tax revenues.

Source: Pro Pakistani

The Central Depository Company has launched Pakistan’s first Professional Clearing Member in collaboration with the Pakistan Stock Exchange and the National Clearing Company of Pakistan Limited under the Regulatory Impetus of the Securities & Exchange Commission of Pakistan.

Around 25 Trading Only Brokers have signed up for the services of the new Professional Clearing Member (PCM). The new regime will be completely implemented by December and all the Trading Only Brokers will start using the PCM’s services by shifting their clearing, settlement, and custody functions to the PCM.

The new PCM regime has been successfully implemented after the introduction of a relevant regulatory framework by the Securities & Exchange Commission of Pakistan (SECP) and capital market infrastructure entities, leading to the launch of EClear Services Limited (ESL).

The SECP had tasked all the three SROs (the CDC, the PSX, and the NCCPL) in the Capital Market with implementing this novel concept in Pakistan, and the CDC was assigned with leading the implementation as Project Manager.

Also known internationally as the General Clearing Member (GCM), the PCM is an international best practice of ‘Third Party Clearing’ service provider whereby an entity (normally not a trading member of the Exchange), provides clearing and custodial services to the trading members of the Exchange, who either voluntarily or by virtue of the Regulatory framework do not act as Clearing Members of the Clearinghouse.

The SECP introduced the new Broker Regime under the Securities Brokers (Licensing & Operations) Regulations in 2020 to categorize securities brokers into three categories: Trading & Clearing, Trading & Self Clearing, and Trading Only. One of the major requirements for the implementation of the new Broker Regime was the introduction of an independent third party Custodial, Clearing & Settlement service provider for the clearing and settlement of the trades executed by Trading Only Brokers.

This hi-tech solution will bring automation, efficiency, and transparency for the existing market players and will pave the way for newcomers in Pakistan’s capital market as brokerage service providers and investors.

This initiative will also expand the investor base of the Pakistan capital market as it will provide investors with a completely new and digital experience of the capital market while giving them the confidence of asset protection by a reliable and independent third-party service provider. Hence, with the implementation of this regime, Pakistan’s capital market is poised to stand on par with the established markets, particularly in terms of investor protection and ease of doing business.

Source: Pro Pakistani

The Finance Division, Government of Pakistan, has rejected a news report, published in a section of the press, titled, “Consumer Confidence Declines in Third Quarter of Current Calendar Year” and declared it as contrary to the facts.

In a clarification issued on Wednesday, the Finance Division referred to a survey conducted by Dun & Bradstreet and Gallup Pakistan and said it was in line with the current macroeconomic situation of Pakistan. As highlighted in “Monthly Economic Update & Outlook Pakistan”, a publication of the Division, the economy is heading in the right direction, as the growth is all set to achieve the 4.8% target; tax collection is above target; exports have picked up; the fiscal deficit in the first quarter is better than the last year; and, above all, the remittances are sustaining.

According to the clarification, the Consumer Confidence Index Survey (Q3 2021) is highlighting the same economic picture as communicated by Finance Division whether it is a quarter-on-quarter or year-on-year comparison.

Below is the factual brief outcome of the survey conducted by Dun & Bradstreet and Gallup Pakistan:

• Is the country heading in the right direction? The survey reported ‘yes’ for the last three months.

• Top personal concerns of public unemployment, inflation, increase in electricity prices, tax burden, and increasing poverty: People voted unemployment, inflation, and increase in electricity concern decreased from last year. But they are concerned over additional tax burden and indifferent to increasing poverty.

• What is the personal financial situation? As per the survey, it has improved.

• Economic situation: People are indifferent to this question as few believe it improves and few believe it gets weaker.

• Job security: The majority feels confident about job security.

• Investment climate: People are more confident in investing than last year.

• Purchasing durables: More people are confident of purchasing durables like cars and houses than last year.

• Purchasing household items: More confident than last year.

• Global Consumer Confidence: It has improved a lot from last year. But there is more room for improvement.

Lastly, the Finance Division claimed that the government efforts to create job opportunities were bearing fruit. It said that the growth was broad-based and witnessing in all segments, i.e., agriculture, exports, industry, and IT services. It added that the government was doing its level best to reduce the trade gap and implement policies to bring price stability.

Source: Pro Pakistani