Category: Industry

The National Assembly’s Standing Committee on Finance met earlier today under the chairmanship of PTI MNA Faizullah Kamoka and received a briefing on the trade ties between Pakistan and Azerbaijan.

During the meeting, Deputy Governor State Bank of Pakistan (SBP) Dr. Murtaza Syed apprised the committee that trade between the two countries takes place through Iran and traders are facing a lot of challenges ever since sanctions were imposed on Iran.

JUI-F MNA Muhammad Yaqoob Sheikh suggested to the Deputy Governor that Afghanistan and Turkmenistan can be used as alternative routes for trade with Azerbaijan until the ease of sanctions on Iran.

PML-N MNA Qaiser Ahmed Sheikh said that SBP hasn’t done anything to explore alternative trade routes to Azerbaijan which is why traders are beset with difficulties.

PTI MNA Jamil Ahmed Khan lamented that there was only one branch of the National Bank of Pakistan (NBP) in Kyrgyzstan that has been shut down as well.

PTI MNA Munaza Hassan said that Azerbaijan wants to supply oil and gas to Pakistan on deferred payments but SBP hasn’t done anything in this regard.

The committee directed Deputy Governor to present suggestions to ensure uninterrupted trade between Pakistan and Azerbaijan through alternative routes within 15 days. It also ordered him to brief about the trade between Pakistan and Iran at the next meeting.

Source: Pro Pakistani

Pakistan has surpassed China in denim apparel exports to the United States (US), as per international media reports.

According to an analysis of Apparel Resources – an India-based textile trade publication – Pakistan’s annual exports of cotton-made clothing to the US touched the $276 million mark ($275.89 million) from January-September 2021, surpassing China’s $274.63 million worth of exports.

This is a 63.40 percent increase compared to the corresponding period of last year when Pakistani shipments to the US accounted for $168.85 million against China’s $238.75 million.

These dominating export figures have also reduced the gap with Vietnam’s denim exports to the US worth $278.69 million during the same period.

Bangladesh remained the top supplier to the US, with its shipments crossing $520.16 million – a 31.40 percent yearly increase.

Mexico followed closely with $471.78 million worth of denim supplies to the US, recording an annual growth of 46.53 percent.

This has been possible due to the business-friendly policies of the Biden administration despite the constraints caused by the COVID-19 pandemic.

According to OTEXA data, during the first nine months of 2021, the US market has imported denim clothing worth $2.54 billion, noting a 28.56 percent surge on a year-on-year basis.

Source: Pro Pakistani

The federal government is considering paying maximum dividends to shareholders from the profit made by state-owned companies listed in the Pakistan Stock Exchange (PSX).

The proposal is being considered with an aim to bring down the soaring circular debt and boost the stock market that has underperformed for several years.

Speaking in this regard, the Adviser to Prime Minister on Finance and Revenue, Shaukat Tarin, said that if energy companies are unable to pay dividends to shareholders due to circular debt, they can use higher dividends received from state-owned entities and reduce the circular debt.

The circular debt stands at Rs. 2.5 trillion. If this strategy can help pay off the circular debt of around Rs. 300-400 billion, then it will be deemed a successful strategy.

He added that the government doesn’t need the dividend income and energy companies can use it to decrease the circular debt. The government will still earn higher dividends regardless of whether it transfers the dividends to the exchequer or uses this money to reduce the circular debt.

The state is the biggest beneficiary of the profit that state-run companies make because it is the majority shareholder in almost all of these firms listed in the PSX.

It was forced to cut down dividends of other shareholders due to circular debt and liquidity crunch. This made the shares of state-run companies unattractive, not only bringing down their stock prices but also crashing their market valuation.

For instance, Pakistan Petroleum Limited (PPL), a state-owned petroleum company, used to give 55% of its profit in dividends to shareholders several years ago. However, PPL is only offering 18% of its profit in dividends to shareholders now.

This strategy not only will increase the market valuation of these companies that are considered heavyweights in the stock market but will also encourage investors to increase their stakes in these companies.

Commenting on this development, Chairman Arif Habib Limited (AHL) Arif Habib lamented that the state lowered the dividend payment to shareholders of state-run companies, adding that a higher dividend payment can certainly ease the circular debt.

He added that low dividend payments caused the stock prices of state-owned companies such as the Oil and Gas Development Corporation Limited (OGDCL), Pakistan State Oil (PSO), and the National Bank of Pakistan (NBP) to plunge to a historic low.

Source: Pro Pakistani

Commerce Ministry informed a National Assembly Panel that Pakistani’s Basmati rice exports to Saudi Arabia, United Arab Emirates (UAE), and Kenya have taken a hit due to various reasons and highlighted steps being taken by the government to revive the exports.

While briefing the National Assembly panel headed by Shandana Gulzar, Director General Ministry of Commerce, Dr. Syed Kausar Zaidi, informed that Pakistani’s Basmati rice exports to Saudi Arabia, United Arab Emirates (UAE), and Kenya have taken a hit due to various reasons and highlighted steps being taken by the government to revive the exports.

Zaidi expressed hope that the Prime Minister’s recent visit to Saudi Arabia will have a positive impact on the export of rice. He pointed out that Saudi Arabia is primarily relying on India for the import of rice. He further told that several Saudi investors have set up rice mills in India that export rice to Saudi Arabia, which has dented Pakistan’s export of rice.

Highlighting the reasons for the struggling basmati rice exports, he said that exports to Kenya and UAE have also declined, while China and the Philippines are big markets for Pakistan, but they don’t import basmati rice. Zaidi also briefed the panel on the status of the rice containers that were held in France and Belgium and said that the issue has not been resolved.

He told that Sri Lanka has also requested Pakistan for an additional quota of 0.2 million tons of rice. This will be in addition to the quota already assigned under the Free Trade Agreement (FTA).

The panel was informed that the government is undertaking a number of initiatives to revive the export of Basmati rice.

Zaidi highlighted that to boost the exports, the Ministry wants to give rice the status of industry but the Ministry of Industries and Production (MoI&P) has shown reluctance in the matter as it is a provincial subject.

During the meeting, lawmaker Nawabzada Shazain Bugti raised the issue of the non-availability of water in Dera Bugti and said that the area is ideal for the growth of rice.

The panel will submit its report to the Special Committee of the National Assembly on agriculture products headed by the Speaker National Assembly.

Source: Pro Pakistani

The textile sector of Pakistan makes a contribution of only 3.4 percent to the country’s total gross domestic product (GDP) and it is considerably low as compared to different other countries.

According to a report titled, “Global Value Chain [GVC], Development Report 2021 – Beyond Production” by the Asian Development Bank (ADB), the textile sector accounts for 3.4 percent of Pakistan’s GDP as compared to the sector’s contribution of 7.5 percent to GDP in Bangladesh, 5.1 percent in Sri Lanka, 12 percent in Cambodia and 3.5 percent in Turkey.

The report further reveals that the textile sector accounts for 54.7 percent of Pakistan’s gross exports and 3.4 percent of its GDP compared to 79.7 percent and 7.5 percent for Bangladesh, 31.3 percent and 5.1 percent for Sri Lanka, 52.8 percent and 12 percent for Cambodia, and 17.5 percent and 3.5 percent for Turkey respectively.

It has been noted in the report that Bangladesh is a curious case which, despite stellar 10.5 percent annual growth in indirect exports over 2010-2019, remains a laggard in the GVC participation, appearing near or at the bottom for both rates. One explanation is that its GVC trade is highly concentrated in a particular sector, i.e., textiles and garments. This sector accounts for 79.7 percent of Bangladesh’s gross exports and 7.5 percent of its GDP, the highest and the second-highest respectively, out of the 62 economies.

For textiles and garments, Bangladesh’s participation is actually above the world average, beating Pakistan and Sri Lanka. This is because of a development strategy that is based on wise use of Bangladesh’s abundant pool of cheap, low-skilled labor that allows it to achieve an average real GDP growth rate of 7.4 percent over 2015-2019 and to be among the few economies to grow in 2020.

The report further notes that Bangladesh’s textiles and garments industry remains confined to relatively low-value-added segments like cutting and sewing and its cost advantage may have been gained at the expense of labor welfare.

GVCs not only transmit shocks within domestic economies but also play an important role in cross-country transmission. When suppliers in source countries are affected by disasters, it is not uncommon for firms to report production delays and profit losses as their suppliers fail to provide parts and components on time, it added.

Most of the researches on GVCs focuses on manufacturing production, in other words, on the breaking up of production processes into many discrete steps with a resulting explosion of trade in parts and components. Nonetheless, there are aspects of GVCs that go beyond manufacturing processes. In fact, value-added and employment generation in GVCs are depending less on manufacturing production.

Source: Pro Pakistani

The Federal Board of Revenue (FBR) has decided to select over 50,000 income tax cases of the tax year 2019 for audit, reflecting an extraordinary increase of 36,000 cases as compared to more than 14,000 cases it had picked for the tax year 2018.

The FBR will make a formal announcement of the selection of over 50,000 cases for audit after computer balloting during November 2021.

According to senior FBR officials, the policy of making a major increase in the number of cases for audit is to create an environment of enforcement, compliance, and deterrence among the taxpayer community to make correct declarations.

When asked about the FBR’s capacity to conduct such a huge number of cases for audit in one go, officials said all these cases would be outsourced to the chartered account firms and external auditors. They added that these audits would not be conducted by the FBR’s Inland Revenue officials in the field formations. Therefore, the officials asserted, the FBR was confident that the audits would get completed as per the timelines given by the FBR.

It is to note here that the FBR had selected 14,154 cases of income tax, sales tax, and federal excise duty (FED) for audit through electronic balloting for the tax year 2018. Through the risk-based selection of cases for audit, the FBR had selected 477,374 income taxpayers for balloting, out of which 10,982 or 2.3% cases were selected for audit. Likewise, out of 124,004 or 2.5% sales tax cases, 3,116 cases were selected through balloting, whereas out of 725 cases of FED, the FBR had selected 56 cases for audit.

Source: Pro Pakistani