RECORDER - Pakistan Textile Mills Association

BUSINESS
RECORDER
Tuesday, 26th August, 2014
Textile Policy (2014-19)
APTMA suggests overall revision of ST regime
TAHIR AMIN & SOHAIL SARFRAZ
All
Pakistan
Textile
Mills
Association
(APTMA)
has
proposed overall revision of sales
tax regime under new Textile
Policy (2014-19), including zero
percent sales tax on all items
mentioned in SRO.1125(I)/2011,
'no sales tax-no refund regime',
extension of zero-rating facility on
diesel/other fuels for exportoriented units, audit selection only
through computer balloting and
prior approval of the Federal
Board of Revenue (FBR) before
initiating proceedings against
active
textile
units.
Sources
told Business
Recorder on Monday that APTMA
has communicated suggestions
to the Ministry of Textile under
five-year plan for the new Textile
Policy (2014-19). APTMA has
given input on the said policy
suggesting total revamping of the
sales tax regime and key
amendments
in
various
provisions of the Sales Tax Act,
1990.
APTMA sought special treatment
for
units
having
large
manufacturing set-up, public or
private limited firms. In the recent
past unusual exercise of powers
to arrest has been witnessed,
irrespective of the nature of
allegations, past history of the
taxpayers
and
industrial
infrastructure set up by them. A
person having investment in the
shape of industry cannot fly over
night to avoid trial. To curtail
discretionary powers of tax
officials,
promotion
of
industrialisation
and
businessmen-friendly
environment, Persons having
large manufacturing setup, public
or private limited firms should not
be arrested without prior trial.
The APTMA has also suggested
amendments in the Sales Tax Act
to reduce discretionary powers
and prior approval of the Board is
provided for initiating proceedings
against registered persons, who
are on Active Tax Payers List of
the Board. Under section 40-B
and 40-C, a Sales Tax Officer can
be posted to the premises of a
registered person or monitor his
business
activities
through
electronic tracking system. This is
against the government policy to
minimise direct contact between a
tax collector and taxpayer as it
may result in corruption and tax
evasion. Further, it totally negates
the concept of self assessment,
which forms the basis of whole
sales tax scheme. To minimise
chances of corruption and direct
contact between tax collector and
payer the provision be removed
from the statute or it can only be
exercised after completion of due
process of law including issuance
of
show
cause
notice.
APTMA suggested that after
amendment of SRO 1125(I)/2011
through 154(I)/2013, the facility of
zero-sales tax rate on local
supplies of export oriented
sectors has been replaced with
charge of reduced rate of 2% on
such
supplies.
There
is
apprehension that either the
aforesaid reduced rate would be
enhanced or normal sales tax
rate would be made applicable.
The reduced rate of 2% was fixed
after
due
deliberation
and
diligence and ought to be
continued. There are some other
irritants as well such as supplies
within the five sectors when the
rate of tax is 2 percent
irrespective that whether the
buyer is a registered person or
otherwise. The manufacturer has
no means to ascertain that the
buyer is from the specified sector
or not. Since the textile products
have almost no use outside the
sector therefore the condition
needs to be suitably amended so
that there are no disputes on the
issue
with
the
department.
To facilitate exporters to avail
maximum benefit from GSP plus
status and to eliminate corruption,
non accrual of bogus refunds and
promotion of exports, it is
proposed that all items listed in
Table-1 of SRO 1125(i)/2011 be
chargeable to Sales Tax @ 0
percent within registered supply
chain of five export sectors. Sales
Tax @ 2 percent be charged on
supplies made to unregistered
person of the same sector and
introduction of no sales tax - no
refund
regime.
It suggested that due to heavy
load-shedding of electricity and
non-availability of same for most
of the time, the manufacturers are
forced
to
adopt
substitute
resources, ie, self-generation
through diesel/petrol generators.
For this handsome amounts are
being spent on purchase of fuel
and the manufacturers are forced
to pay sales tax as well on such
procurement which defeats the
whole idea of making the
manufacturer-cum-exporter
comfortable with little incidence of
input
tax.
It is therefore suggested that in
line with availability of zero-rating
on electricity/gas connections for
export-oriented
manufacturing
units, they may also be allowed to
procure diesel/other fuels at 0%
of sales tax. In order to achieve
transparency in tax audits,
powers for selection of audit
should rest with FBR only through
parametric
or
computerised
selection as the Taxpayers suffer
from uncertainty, mental torture
and undue harassment due to
discretionary powers of selection
of cases for audit. To induce
transparency in audit selection
and
discourages
use
of
discretionary powers explanation
inserted through amendment in
BUSINESS
RECORDER
Tuesday, 26th August, 2014
section 25 vide Finance Act, 2013
for calling information, record etc,
for other than audit, be deleted.
Taxpayers should be selected for
audit through computer balloting
only. The list of selected cases
will be placed on website along
with reasons for selection. In case
of any irrationality, taxpayer may
take up issue of such selection to
panel/committee,
it
said.
It suggested that the existing
sales tax return contains some
complicated and unnecessary
annexures, which are time
consuming and require plenty of
professional staff. Annex 'F' and
Annex 'H' pertaining to stock
details are difficult to fill-in
properly each month. As reporting
of stock detail in each and every
month is neither practicable nor
necessary. Such compliance only
causes hassle to trade and
genuine taxpayers. The condition
for filing unnecessary annexure
should be curtailed at maximum
level to achieve simplification and
such details if essentially required
can be made part of annual sales
tax
return.
As amended by SRO 682, the
rate of Sales tax for the items
included in the Schedule 1 &
Schedule 2 of the Notification are
subject to three different rates.
Finished products of textile and
leather are subject to Sales Tax
@ 5%, raw material of all five
export-oriented industrial sectors
are subject to Sales Tax @2% if
sold within these five sectors and
17 percent if sold outside of these
five sectors. All items included in
Schedule 1 & 2 of the notification
are only those items which have
minimum use (70 percent or
more) in these five sectors. Sale
of these items is allowed @2
percent sales tax to registered as
well as unregistered persons
dealing in these five sectors. It is
very difficult to ascertain that
whether
the
registered/unregistered
buyers
are dealing in these five sectors
as these items are more than
70% consumed in these five
sectors therefore, rate of 17% is
restricted to the extent of
registered buyer not dealing in
these five sectors, it suggested.
The amendment made in Sales
Tax
Special
Procedure
Withholding Rules through SRO
98(I)/2013, whereby withholding
liability has been placed on all the
corporate
taxpayers
and
exporters in respect of supplies
from the unregistered persons as
well. Whereas nominal purchases
of parts etc from the unregistered
person is a business exigency
and has to be made in compelling
circumstances. Withholding of
sales tax from such suppliers
increases the cost of doing
business as the purchases
become costly as per decade old
market
practice.
It is therefore proposed that
Special Procedure be amended
to provide for that the textile
sector is in the list of exclusion
wherein withholding rules would
not be applicable. Alternate
proposal is that either sales tax
withholding @ 1 percent be
withdrawn or it may be given
treatment of input tax in line with
the analogy of VAT to set-off
burden of additional sales tax.
Taxpayers should be selected for
audit through computer balloting
only. The list of selected cases be
placed on website along with
reasons for selection. In case of
any irrationality, taxpayer may
take up issue of such selection
before
panel/committee.
It
suggested
that
vast
discretionary
powers
under
section 37 of the Sales Tax Act
1990 are a constant irritant for the
textile sector through which every
compliant and leading industrial
undertakings
are
implicated
across
the
country
while
conducting inquiries against local
suspected
units.
Repeated
notices/summons and that too on
frivolous basis is misuse of
authority
against
compliant
taxpayers. The section 37 and 38
are suitably amended to reduce
discretionary powers and prior
approval of the Board is provided
for initiating proceedings against
registered persons who are on
Active Tax Payers List of the
Board.
The section 8B of the Sales Tax
Act 1990 restricts adjustment of
input tax in excess of 90% of
output tax during a tax period.
There are some exclusion
considering
special
circumstances in terms of SRO
647(i)/2007. However in-spite
frequent amendments in sales tax
law, provisions for exclusions are
not
revisited.
For
Simplification
of
law
exclusions from section 8-B given
under notification 647(I)/2007 be
revisited. Commercial importers
and exporters/persons operating
under reduced rate regime to be
added in exclusion provided
therein. The FBR has recently
issued SRO 450(I)/2013 through
which tax credit on construction
material is made inadmissible.
Disallowance of input tax on the
pretext that these are not directly
used in manufacture of taxable
supply is an invalid argument. No
business activity can be initiated
without capital investment. To
provide incentive for promotion
and
establishment
of
new
business set-up, input tax credit
should be made admissible on all
items
directly
or
indirectly
required for business activities,
APTMA
added.
BUSINESS
RECORDER
Tuesday, 26th August, 2014
APTMA volunteers team to probe discrepancies
in Crest
RECORDER REPORT
All
Pakistan
Textile
Mills
Association
(APTMA)
has
strongly criticised the working of
the Computerised Risk-Based
Evaluation of Sales Tax (CREST)
system of the Federal Board of
Revenue (FBR) and proposed
constitution of teams comprising
APTMA and tax officials for
investigating discrepancies in any
CREST action against the
defaulting
units.
Sources
told Business
Recorder here on Monday that
APTMA has proposed changes in
the CREST system of the FBR as
part of the new Textile Policy
(2014-19). The association has
strongly criticised the role of the
CREST system in detecting
discrepancies in the sales tax
returns filed by the textile sector.
The suggestions pertaining to the
CREST have been conveyed to
the Ministry of Textile Industry for
necessary
action.
The APTMA suggested that the
deficiencies in the design of
CREST system are causing great
hardships for the concerned
taxpayers especially that of textile
sector. It is the department that
has failed to update the "Tariff
Information" in the Sales Tax
Registration Numbers (STRNs) of
the taxpayers and the result is
that even such units which are
known to exist in textile sector
confirmed
by
dozens
of
government agencies are not
regarded a textile unit by the
CREST and, resultantly, its
associates are put to question
regarding the supplies involving
such
units.
It is proposed that instead of
issuing threatening notices on the
basis of CREST discrepancies
team comprising APTMA as well
as
department
official
be
constituted to first consider the
matter and if cleared by the
committee, department could take
legal action against the defaulting
taxpayer (It is practically shown
that forming of committees, to
review the audit selection made
by
the
FBR,
having
representatives of the Business
Chambers, is a very judicious and
litigation
reducing
measure).
SBP warns against currency speculation
RECORDER REPORT
State Bank of Pakistan (SBP) has
asked banks to avoid speculation
in the interbank market and make
fair dollar transactions aimed at
keeping the exchange rate stable
at a reasonable rate. Sources in
the banking sector told Business
Recorder that State Bank on
Monday convened an emergent
meeting of the Presidents and
Treasurers of commercial banks
to discuss the exchange rate,
which is unstable for the last ten
days because of growing political
uncertainty in the country.
Greenback is out of control in
interbank market for the last few
days; it touched the level of Rs
103.25 on Monday. Later, the
announcement of SBP meeting
with banks eased the market
sentiment, which led to trading of
dollar at Rs 102.70 in the
interbank market. The interbank
market is volatile for the last two
weeks as dollar value against
Rupee soared to Rs 102.70 from
Rs 98.70 growing uncertainty in
the
country.
Sources
said
that
Ashraf
Mehmood Wathra, governor SBP,
chaired
the
meeting
and
discussed the surge in dollar
rates. "State Bank is not happy
with banks on appreciation of
dollar against Pak rupee and
asked banks to avoid speculation
in the interbank market and
ensure fair transactions," a
banker said. "The big banks with
huge reserves of dollar have
been warned, albeit indirectly,
against causing speculation, he
said.
He said that State Bank is making
all-out efforts to handle the
unbalanced situation in the
interbank market and as part of
these efforts SBP also injected
greenback in the market to stable
the exchange rate. However,
despite positive measures taken
by SBP, the exchange rates
continue to worsen in interbank
and open currency market.
During
the
meeting,
SBP
informed the banks that billions of
dollar inflows are scheduled
during this fiscal and there is no
shortage of greenback in the
domestic
market.
BUSINESS
RECORDER
Tuesday, 26th August, 2014
Power import from Iran
Ministry seeks government nod to extend
contract
MUSHTAQ GHUMMAN
The Ministry of Water and Power
has
reportedly
sought
the
government approval to extend
contract with Iranian company
M/s TAVANIR for 74 MW
electricity import for Balochistan,
sources close to Secretary Water
and
Power
told Business
Recorder. The sources said
Wapda and Power Generation &
Transmission
Management
Company
Iran
(TAVANIR)
entered into a contract for 30
years for sale and purchase of 32
MW electricity on November 6,
2002 at 3 cents per unit for an
initial period of three years to
meet the demand of Makran
Division,
Balochistan.
Quantum of electricity import from
Iran was subsequently enhanced
to 39 MW and 74 MW. The
electric network of M/s TAVANIR
for supply of 74 MWQ was
energised on February 16, 2012.
Tariff of 39 MW power supplied
was fixed at 5 cents per unit for a
period of three years up to
December 31, 2008 which was
further revised and enhanced to
6.25 cents per unit with effect
from January 1, 2009 to
December 31, 2010. The tariff
effective from January 1, 2011 to
December 31, 2013 was linked to
the formula given in amendment
2 and it remained in practice.
For re-fixing the electricity tariff for
another term and to discuss other
issues, a meeting was held in
Tehran
between
Pakistani
delegation and representatives of
M/s TAVANIR on March 17-18,
2014. As per minutes of the
meeting it was agreed that tariff
would remain the same for the
period with effect from January 1,
2014 to December 2014 as per
the formula of amendment 2.
According to official documents,
tariff will be Rs 2.5+0.07xP.
Electricity price will be payable in
cents. 2.5 cents per unit for fixed
portion of the delivered electricity
cost. The monthly average price
of barrel of Opec basket crude oil
in $65. Notwithstanding the
above-mentioned formula, the
price of delivered electricity will
remain within the limits of 7 to 10
cents
per
unit.
The revised tariff will be
incorporated in the contract
through an amendment 3 which
be signed accordingly not later
than April 30, 2014. Both sides
agreed to meet each other in
August/September 2014 with the
aim to discuss and agree upon
the revised tariff effective from
January 1, 2015 onwards. The
Board of Directors (BoD) of NTDC
has already approved the agreed
tariff. NTDC will seek Nepra's
approval of the agreed tariff as
per regulatory requirement but
before making power acquisition
request to Nepra, approval of
GoP is necessary. "As we get
approval from the government,
NTDC will submit a petition with
Nepra for determination of tariff,"
the
sources
concluded.
Levy, collection of Sindh ST
Enforcement held in abeyance
SOHAIL SARFRAZ
The Sindh Revenue Board (SRB)
has held in abeyance the
enforcement
of
levy
and
collection of Sindh sales tax on
the
services
of
"transportation/carriage of goods
by road" for the time being till the
Sindh Government decides the
issue. It is learnt here on Monday
that the SRB has informed the
Karachi
Goods
Carriers'
Association about the suspension
of sales tax on goods transporters
for
the
time
being.
According to the SRB, the said
association's request for review of
sales tax on the services of
"transportation/carriage of goods
by road" (tariff heading 9836.0000
of the Second Schedule of the
Sindh Sales Tax on Services Act,
2011) is under consideration of
the government. Meanwhile, the
enforcement
of
levy
and
collection of Sindh sales tax on
the aforesaid taxable services
have been kept in abeyance for
the time being till the Sindh
government decides the issue. As
regard association's request for a
meeting with SRB, it has been
told that it can always meet the
concerned officials in SRB, on
any issue concerning Sindh sales
tax on services, SRB added.
BUSINESS
RECORDER
Tuesday, 26th August, 2014
$200 billion
MoF-FBR team in Switzerland?
RECORDER REPORT
A team of senior officials of
Ministry of Finance and FBR
reached here on Monday for talks
with Swiss officials for the return
of 200 billion dollars stashed n
Swiss
banks
by
Pakistani
nationals. Formal talks between
Pakistan and Swiss officials
would be held today (Tuesday)
for avoidance of double taxation
and return of the plundered
money
from
Pakistan.
The Pakistani officials would be
able to get information from Swiss
banks under amendments made
in Swiss laws after pressure from
the United States and some other
major European powers. Sources
said that Pakistan has sent its
delegation to Geneva after some
positive assurances by the Swiss
government.
Lingering political turmoil hitting economy:
TDAP chief
N H ZUBERI
Chief
Executive
of
Trade
Development
Authority
of
Pakistan (TDAP), S. M. Muneer,
has emphasised the need for an
early resolution of the current
political crisis, or else it would
badly
affect
the
country's
economy. Addressing members
of the Site Association of Industry
(SAI), he said that a political
party's advice to the overseas
Pakistanis that they should send
their money through Hundi will
not only create economic anarchy
but would also have devastating
impact on the country's foreign
currency
reserves.
Voicing his concern over the
current political turmoil, he said
that the crisis had already
affected exports, business and
industrial
activities
whereas
foreign delegations were reluctant
to visit Pakistan. Moreover,
business community has been
facing immense difficulties in
getting visas due to closure of
embassies in Islamabad, he
added.
Urging overseas Pakistanis to
remit foreign exchange through
legal channels, he said that
though the present government
has taken a number of measures
for improving the country's
economy, long marches and sitins have created chaos and
uncertainty in the industry and
business circles. He said that
foreign and local investors have
been monitoring the situation and,
at present, they are not willing to
invest or establish industrial units
in
the
country.
The TDAP chief said that
although the GSP Plus status had
helped Pakistan in getting its
exports increased by three per
cent, exports of other items
witnessed a decline due to power,
gas, water shortages and law and
order situation. He said that
Prime Minister Nawaz Sharif was
evincing keen interest in resolving
issues being faced by local and
foreign
investors.
He said that the present
government with a view to
overcoming the energy crisis was
working on several projects to
increase power generation by
exploiting all available resources,
he said. Vowing to eliminate
corruption from the TADP, he
said that he was trying his best to
convert the institution in to a true
business organization, besides
all-out efforts were afoot to make
the TDAP a world class
organization.
Referring to ban on the import of
gold, he said that the government
had to take such a measure
because some unscrupulous
elements smuggled gold to India
after importing it in an unlimited
quantity. "However, it was on my
intervention that the Finance
Minister allowed the import of
gold up to 10 kg," he added. He
assured his full co-operation to
the participants of the meeting
and urged them to bring the
TDAP-related issues into his
knowledge.
At the outset, he said that TDAP
would work for enhancing the
image of "Made in Pakistan" logo.
Businessmen Group's (BMG)
Chairman and Karachi Chamber
of Commerce and Industry's
(KCCI) former president, Siraj
Kassim Teli said that business
community was highly perturbed
over the prevailing uncertainty in
the country. He also highlighted
the issues of the industrialists and
exporters and assured his full cooperation to S. M. Muneer in
getting
the
TDAP
policies
implemented in letter and spirit.
He demanded of the TDAP chief
to take concrete measures for the
promotion of trade and exports.
SAI Chairman Younus M. Bashir
said that his Association would
extend its full support to the
TDAP
chief
for
increasing
exports.
BUSINESS
RECORDER
Tuesday, 26th August, 2014
PAD sets cotton production target at 10.5
million bales
RECORDER REPORT
Punjab Agriculture Department
(PAD) has set the cotton
production target of 10.5 million
bales for the current season in
the province. According to a
spokesman of the PAD, growers
should avoid loss caused to
cotton crop during the picking
process to bringing it to ginning
factories. He said that the country
bears loss of billions of rupees
during the phases of picking from
the fields to bringing the crop to
ginning
factories.
PAD spokesman advised the
growers to start picking up their
crop only after its complete
maturity so as to avoid tainted
cotton because of immaturity or
facing hardships during the
ginning process because of
moisture. Similarly, he said that
picking
process
should
immediately be stopped during
rain and restart only after cotton
dries completely. The spokesman
also advised the growers to clean
cotton from all foreign elements
before storing in godowns while
transport cotton to ginning
factories in specially designed
trolley
by
the
Agriculture
department. He also advised for
observing care to save cotton
from any adulteration during this
transportation.
Cotton market
Prices firm amid strong demand by mills
RECORDER REPORT
Stability prevailed on the cotton
market on Monday as mills
continued buying to cover forward
buying, dealers said. The official
spot rate gave up week-end fall,
recovering Rs 50 to Rs 5,500,
they added. In ready session,
over 17,000 bales of cotton
changed hands between Rs
5450-5650, they said. In Sindh,
prices of seed cotton were higher
by Rs 125 to Rs 2650 and the
good type was up by Rs 50 to Rs
2700 and in Punjab prices,
however, were down by Rs 50 to
Rs 2550 and Rs 2600, they said.
According to the market sources,
persisting demand by mills
helping the rates to sustain the
present levels. The exporters
were on the sidelines due to
higher
rates,
they
said.
Fortunately, the rates were
matching with the ginners'
psychological levels, selling to
keep themselves save from future
losses,
they
added.
Naseem Usman, cotton analyst,
said that dollar's rise is also a vital
behind the firmness in the cotton
rates. If dollar's surge continued,
the prices may go up in the near
future,
he
added.
The following deals reported:
2000 bales from Mirpurkhas, 800
bales from Kotri at Rs 5450-5550,
1000 bales from Hyderabad at Rs
5450-5500, 2200 bales from
Shahdadpur at Rs 5500-5600,
2000 bales from Tando Adam at
Rs 5500-5600, 2400 bales from
Sanghar at Rs 5450-5500, 400
bales from Nooriabad at Rs 5500,
600 bales from Sanghar at Rs
5450-5550, 600 bales from
Burewala at Rs 5550-5600, 200
bales from Mamo Kanjan at Rs
5575,
400
bales
from
Chichawatni at Rs 5575, 200
bales from Pir Mehal at Rs 5600,
400 bales from Haroonabad at Rs
5600, 400 bales from Kabirwala
at Rs 5600, 1000 bales from
Hasilpur at Rs 5600, 200 Pattoki
at Rs 5600, 200 Garh Maharaja
at Rs 5600, 400 Bahawalpur at
Rs 5600, 200 bales from
Deepalpur at Rs 5600, 200 bales
from Arif Wala at Rs 5640 and
1000 bales from Khanewal at Rs
5650,
they
said.
THE FOLLOWING ARE THE KCA OFFICIAL SPOT RATES FOR 2013-14 FOR LOCAL
DEALINGS IN PAK RUPEES FOR BASE GRADE 3 STAPLE LENGTH 1-1/32"
MICRONAIRE VALUE BETWEEN 3.8 TO 4.9 NCL
Spot Rate
Difference
Rate
Ex-Gin
Upcountry
Spot Rate
Ex-Karachi
Ex-Karachi in
For
Price
Expenses
Ex-Karachi
As on 20.08.2014
Rupees
37.324 Kgs
5,500
150
5,650
5,650
+50
Equivalent
40 Kgs
5,894
160
6,054
6,054
+53
BUSINESS
RECORDER
Tuesday, 26th August, 2014
Cotton futures little-changed
RECORDER REPORT
ICE cotton ended little-changed
on Monday, paring the day's
losses as support at key technical
levels and buoyant equities
markets offset pressure from
weak grains markets. Fibre fell in
sympathy with tumbling grains
markets, with corn and soybean
futures down on expectations of
record output. Cotton competes
with corn and soybeans for
acreage in the United States.
The benchmark December cotton
contract on ICE Futures US
closed down 0.03 cent, or 0.05
percent, at 66.15 cents a lb after
sinking near the key support level
65 cents. Prior to the day's slight
loss, the contract posted four
straight sessions of gains. "We
sold off initially because of the
break in Chicago (markets) but
came back on trade buying. It
could be mills buying or gins
covering their positions," said
Sharon
Johnson,
a
cotton
specialist with KCG Futures in
Atlanta.
have risen that US farmers will
harvest a bumper crop in the
world's
top
exporter.
Rains in Texas added weight,
easing worries over the return of
dry weather to the top-producing
US state that has been plagued
by drought since 2010. US
government data on Friday
showed that speculators trimmed
a huge bearish bet in cotton
futures and options in the week
ended August 19. Exchange
inventories steadied at 83,309
bales on Friday, unchanged from
the previous session, the most
recent ICE data showed. That
was the lowest level since late
January.
The December contract sank to
support at its near-term moving
averages before late-session
buying pulled pprices back to
near unchanged The benchmark
ICE cotton contract has slumped
some 30 percent from March
highs near 97 cents a lb as
speculators have moved to a big
bearish bet and expectations
New York cotton
RECORDER REPORT
The fluctuations observed during the day:
Current Session
Prior Day
Open
High
Low
Last
Time
Set
Chg
Vol
Set
Oct'14
67.46
67.93
65.93
67.66
14:45
Aug 25
67.66
0.20
22
67.46
Dec'14
66.21
66.44
65.01
66.15
14:45
Aug 25
66.15
-0.03
7892
66.18
Mar'15
66.61
67.81
66.42
66.63
14:45
Aug 25
66.63
0.06
2563
66.57
Swelling of C/A deficit
RECORDER REPORT
Foreign sector of the country is
coming
under
increasing
pressure. As reported by the
State Bank on 22nd August,
2014, current account balance
(the best indicator of a country's
external sector position) was in
the red by as much as dollar 454
million in the first month of FY15
(July, 2014) as compared with the
deficit of only dollar 125 million in
the corresponding period of last
year, depicting an increase of
dollar 329 million or 263 percent.
Deficit was also much lower at
dollar 135 million in June, 2014,
which means a surge of dollar
319 million in a single month.
Country's trade deficit during July,
2014 stood as high as dollar 1.9
billion as imports at dollar 3.8
billion
exceeded
exports
amounting to dollar 1.9 billion by
a very high margin or in other
words, imports were double the
level of exports. Compared to the
corresponding month of 2013,
trade deficit was higher by about
dollar 0.63 billion or 51 percent.
With dollar 328 million of exports
BUSINESS
RECORDER
Tuesday, 26th August, 2014
and dollar 603 million of imports,
services sector deficit stood at
dollar 275 million while income
deficit amounted to dollar 186
million due to outflows of dollar
226 million and inflows of only
dollar 40 million. Although it is too
early to make even a rough kind
of estimate, yet if the present
trend continues, current account
deficit of the country during FY15
could amount to over dollar 5
billion, which would be sharply
higher than a deficit of dollar 2.97
billion
during
2013-14.
The opening of the year FY15
with such a negative note so far
as current account balance is
concerned, indeed is a very bad
news for the country. Evidently,
political uncertainty in the last few
months has contributed to the
widening of the deficit during July
2014. As the situation has turned
much uglier over the last few
weeks,
the
trend
in
the
subsequent months could worsen
further. Loss of SBP reserves,
depreciation of the exchange rate
of the rupee, strengthening of
inflationary expectations
and
disruption of economic activities
witnessed recently are some of
the
manifestations
of
the
deteriorating trend in the external
sector. Of course, if this trend is
not arrested soon, not only these
variables would continue to be
affected adversely but the
prospects of growth would also
be undermined, which would
have far-reaching implications for
employment and poverty levels
as well as for investors'
confidence and credit rating of the
country. The worrying aspect is
that enhanced productivity in the
economy and increase in exports,
which could bring a sustainable
improvement in the C/A balance
are still held hostage to adverse
factors
like
acute
energy
shortages,
lawlessness,
corruption, war on terror and
political
uncertainty.
Rising
political tensions in the country,
especially the recent antics and
belligerent
attitude
of
the
marchers and revolutionaries, in
Islamabad give the perception of
a banana republic to the country
to foreigners who may now be
loathe to even visit, invest and
deal with the businessmen of the
country. These latest negative
developments could darken the
prospects of a turnaround in the
C/A balance further, forcing the
country to draw down its reserves
or borrow more from abroad and
increase the debt servicing
enormously in the coming years.
The alarming aspect is that
autonomous inflows in the form of
foreign investment etc have
almost dried up and the country is
poised to rely increasingly on
expensive foreign borrowings.
IMF has also delayed its tranche
which was due this month. If the
turmoil now engulfing the country
is not properly tackled and the
Fund is not supportive, foreign
exchange reserves held with the
SBP could deplete to a risky zone
in the coming months with all the
attendant
consequences.
Unfortunately,
the
continues to brag about the
improvement in the external
sector and does not seem to be
prepared to take appropriate
measures
to
reverse
the
worsening trend. In a situation
like this, all-out efforts are needed
to
be
made
to
increase
productivity in the economy to
generate exportable surpluses,
contain domestic demand through
a tight fiscal and monetary policy
and ensure competitiveness in
the international market by strictly
adhering to a flexible exchange
rate
policy.
While
the
impediments
to
enhancing
productivity and adopting a
stringent
fiscal
policy
are
understandable in the present
circumstances, sticking to a
particular exchange rate and
boasting about this is beyond
comprehension. The Finance
Minister should not make it a
matter of prestige because
consequences of such a flawed
policy could be disastrous in the
long run. We usually appreciate
Chinese policies but can't follow
its example of keeping its
currency deliberately undervalued
despite stiff opposition from all
over the world. Overall, the
government needs to move very
fast on a number of fronts to
reverse the present trend and
ensure a sustainable position in
the C/A balance in the medium to
long-term. Failing this, the
pressure on the foreign sector
could increase, threatening the
solvency of the country and
jeopardising
its
future.
government
Faisalabad yarn and fibre prices
RECORDER REPORT
Cotton yarn rates in rupees per
10 Lbs on Monday (August 25,
2014).
6-8/S Cone (Cotton)
ARY
530.00
Hafiz
520.00
Crescent
1000.00
Nelibar
990.00
Diamond
570.00
Al-Fallah
570.00
-----------------------------------------
10/S Cone (Cotton)
----------------------------------------Crescent
1020.00
Meraj
540.00
Nelibar
1000.00
Nelum
600.00
Owais
Karni
525.00
Gold Star
680.00
Qadri
630.00
Sun Flower
550.00
Soofi
550.00
Sadiq
540.00
Prince
590.00
Dawoo
560.00
Zam Zam
540.00
Suraj
530.00
Apple
660.00
Ton-Ton
670.00
Adil
550.00
----------------------------------------10/S Cone (Soft)
BUSINESS
RECORDER
Tuesday, 26th August, 2014
----------------------------------------Nelibar
1020.00
Shafi
850.00
Malta
940.00
Model
830.00
----------------------------------------12-14/S Cone (Cotton)
----------------------------------------Resham
1070.00
Nelibar
1030.00
Ruby
1120.00
Qadri
690.00
Adil
690.00
Madni
900.00
----------------------------------------16/S Cone Soft (Cotton)
----------------------------------------Resham
1110.00
Candi
1100.00
----------------------------------------16/S Cone (Cotton)
----------------------------------------Khalid Siraj
1080.00
Prince
870.00
H-2
1110.00
Wasal
Kamal
1120.00
Golden
Eagle
1140.00
Neeli Bar
1120.00
Super
Motia
850.00
Metro
820.00
Ravi
1110.00
Tri-Tex
1180.00
Ruby
1150.00
Apple
890.00
Super
1110.00
M.G.M
1150.00
----------------------------------------20/S Cone (Cotton)
----------------------------------------Resham
1190.00
Zahidjee
1280.00
Anmool
1220.00
J.K.
1230.00
Khalid
Shafiq
1270.00
Khalid Siraj
1270.00
Tri Tex
1275.00
Ruby
1240.00
MGM
1240.00
Golden
Eagle
1240.00
Pride
1160.00
Crescent
Ujala
1170.00
-----------------------------------------
21-22/S Cone (Cotton Warp)
----------------------------------------Resham
1200.00
Crescent
1220.00
Yahya
1250.00
HAR
1260.00
Super
Moon
1230.00
Tayyab
1250.00
----------------------------------------24/S Cone (Cotton Warp)
----------------------------------------Polo
1320.00
Naigra
1285.00
Prince
1300.00
Sufi
1280.00
Sarfraz
1250.00
Paragh
1280.00
Jet
1270.00
Golden
Eagle
1270.00
----------------------------------------30/S Cone (Cotton Warp)
----------------------------------------Afzal
Spinning
1390.00
Resham
1360.00
Crescent
1400.00
Acro
1350.00
Glamour
1340.00
Shaheen-2
1370.00
Arain
1330.00
Polo
1400.00
Ujala
1390.00
Jet
1370.00
Khalid
Shafiq
1410.00
Shafi
1370.00
CA
1410.00
Nagra
1380.00
----------------------------------------32/S Cone (Cotton)
----------------------------------------Babri
1410.00
Al-Qadir
1375.00
Ittehad
1380.00
A-3
1410.00
MKB
1370.00
Ab-shar
1375.00
Amjad
1390.00
Target
1410.00
Gilani
1380.00
F.F.
1380.00
CA
1390.00
----------------------------------------40/S Cone (Combed Cotton)
----------------------------------------JK
2100.00
JK
Carded
1775.00
Acro
2100.00
Betray
1800.00
Ittihad
1780.00
Suraj
2025.00
C-20
1665.00
Gilani
1610.00
Gadoon
1620.00
MKB
1685.00
Hussan
Nayab
1665.00
Ahmad
1690.00
Azam
1810.00
Nagra
1685.00
----------------------------------------52/S Cone (Combed Cotton)
----------------------------------------Crescent
2250.00
Ittihad
2350.00
Suraj
2400.00
Babri
2000.00
A.A
2075.00
Three G.
1950.00
Amjad
1850.00
Diamond
2050.00
Umer
Auto
1800.00
Kapaas
1800.00
Gujjar
Khan
1975.00
Bashir
Cotton
1950.00
Motorway
2075.00
Ravi
1800.00
Zeshan
1725.00
Prime
Plus
1950.00
----------------------------------------60/S Cone (Combed Cotton)
----------------------------------------Nishat
2575.00
J.K.
2600.00
Ittehad
2585.00
Kohinoor
2625.00
Taj Mahal
2550.00
----------------------------------------72/S Cone (Cotton)
----------------------------------------Prime
2175.00
Bemisal
2250.00
Idreas
2250.00
Super
Sally
2275.00
Super
Shine
2150.00
Hub 74/s
2275.00
----------------------------------------80/S Cone (Cotton)
BUSINESS
RECORDER
Tuesday, 26th August, 2014
----------------------------------------Gold King
2950.00
Super
King
2925.00
General
3250.00
Azam
3150.00
Usman
3250.00
Four-Star
3325.00
D.S.
2900.00
Babri
2850.00
Diamond
Gate
3100.00
----------------------------------------30/S Cone (Polyester Cotton)
----------------------------------------Gold Star
150.00
Sun
146.00
JK
131.00
Dawood
128.00
Tahir
Rafique
121.00
Zahidjee
120.00
Imperial
108.00
Shadman
119.00
Sarfraz
121.00
Cherry
123.00
Khalid Nazir
120.00
Wasal
Kamal
121.00
North Star
121.00
Super
Khuwaja
119.00
Ruby
119.00
Action
115.00
Pak
Panther
118.00
NP
107.00
Super
Al-Qadir
119.00
Club
108.00
Shaheen-2
122.00
Metro
119.00
Kiran
104.00
----------------------------------------38/S Cone (Polyester Cotton)
----------------------------------------Gold Star
165.00
Ghazi
119.00
Golden
131.00
Kirshma
121.00
AD
122.00
Sarhad
128.00
Aslam
119.00
Royal
118.00
Chairman
(N)
128.00
Eagle
128.00
----------------------------------------40/S Cone (Polyester Cotton)
----------------------------------------A.A.
172.00
Mehtabi
153.00
Shadab
152.00
----------------------------------------30/S Cone (CVC)
----------------------------------------Ayeshia
143.00
SUN
149.00
Kamal
147.00
----------------------------------------26/S Cone (PV)
----------------------------------------AA
140.00
Ashiana
140.00
MM
119.00
Blue Star
123.00
Super Jett
127.00
Car
125.00
M-4
127.00
Bemisal
118.00
Reshim
117.00
U-2
125.00
Target
119.00
Cheeta
117.00
White Tiger
118.00
Triple two
117.00
AJ Gold
124.00
----------------------------------------34/S Cone (PV)
----------------------------------------A.A.
155.50
Ashiana
154.00
Sapna
151.00
Blue Star
126.00
Super Jett
130.00
Shahzad-2
134.00
Shuttle
121.00
Bemisal
121.00
Shuttle less
128.00
Cheeta
119.00
Mom Batti
126.00
Target
122.00
Suraj Mukhi
119.00
Royal
110.00
Fareed
119.00
U-7
120.00
Laser Jet
122.00
Sundar
121.00
----------------------------------------44/S Cone (PV)
----------------------------------------A.A.
182.00
Ashiana
181.00
Sapna
169.00
Bemisal
144.00
Marghala
140.00
U-2
145.00
Cheeta
140.00
A-J Gold
140.00
----------------------------------------65/S Cone (PV)
----------------------------------------Four Star
202.00
White Tiger
204.00
Dollar
203.00
Bemisal
206.00
Cheeta
198.00
U-2
203.00
Marghala
202.00
----------------------------------------60/S Cone PP
----------------------------------------Zamin
168.00
Anwar
166.00
Cheeta
165.00
Ellahi
160.00
Taj Mahal
161.00
----------------------------------------35/S Cone (Staple)
----------------------------------------Diamond
Gate
1800.00
Marghala
1715.00
Saif
1725.00
Four Star
1735.00
A.J.
1725.00
Fazal Cloth
1730.00
L G.
1735.00
----------------------------------------30/S Cone (Ecrylic)
----------------------------------------Koial
193.00
Saif
183.00
----------------------------------------40/S Cone (Ecrylic)
----------------------------------------Koial
200.00
Saif
195.00
Latif
197.00
----------------------------------------22/S Cone (NP)
----------------------------------------Ittehad
109.00
Chaman
103.00
Hub
107.00
Shafi
104.00
Model
106.00
Shaheen
108.00
Karachi Yarn Market Rate
BUSINESS
RECORDER
Tuesday, 26th August, 2014
RECORDER REPORT
Karachi Yarn Market Rates on
Monday (August 25, 2014).
CONES CARDED
10/1.
Popular
Fibre
850.00
Diwan
990.00
Tritex
870.00
12/1
A. A. Cotton
NIL
Popular Fibre
NIL
16/1.
United
1130.00
Popular
Fibre
1050.00
Abdullah
Textile
1050.00
Indus
1140.00
A. A. Cotton
NIL
Tritex
1080.00
21/1.
Ishtiaq Tex
1200.00
Al-Karam
(A.K)
1200.00
Suriya Tex
1200.00
United
1200.00
GulAhmed
(G.Lite)
1210.00
Popular
Fibre
1150.00
Shadman
1170.00
Indus
Dyeing
1200.00
Abdullah
Textile
1170.00
Lucky
Cotton
1170.00
A.
A.
Cotton
1160.00
Diwan
1150.00
22/1.
Bajwa
1190.00
Popular
Fibre
1180.00
United
1190.00
24/1.
A.
A.
Cotton
1250.00
Tritex
1240.00
26/1.
AL-Karam
1280.00
Dewan
1250.00
Amin Text
1280.00
Shadman
Cotton
1270.00
Diamond
Int'l
1250.00
Popular
Spinning
1240.00
Ishtiaq Textile
1300.00
26/1.
Standard
1230.00
Lucky
Cotton
1220.00
A.
A.
Cotton
Hosiery
1300.00
28/1
Abdullah
Textile
1300.00
30/1.
Amin Tex.
1350.00
Al-Karam
1380.00
Jubilee
Spinning
1330.00
GulAhmed
(G.Lite)
1400.00
Lucky
Cotton
1330.00
Diamond
Intl
1360.00
A.
A.
Cotton
Hosiery
1400.00
32/1
Abdullah
Textile
1340.00
40/1
Lucky
Cotton
1550.00
52/1
Lucky
Cotton
1600.00
----------------------------------------COMBED CONE
----------------------------------------20/1
Gulistan
1270.00
30/1
Gulistan
1420.00
32/1
Gulistan
1420.00
40/1
Gulistan
Warp
1600.00
Gulistan
(Non
Compect)
1600.00
Indus CF
1800.00
20/2.
GulAhmed
1280.00
Amin
1280.00
Indus
Dyeing
1320.00
Bajwa
1280.00
Shadman
Cotton
1280.00
42/1
Abdullah
Textile
1600.00
52/1
Abdullah
Textile
1700.00
10/1 SLUB
Gulistan
(Carded)
1150.00
Gulistan
(Combed)
1250.00
20/1. SLUB
Abdullah
Textile
1220.00
Gulistan
1200.00
30/1 SLUB
Abdullah
Textile
1450.00
60/1.
Abdullah
Textile
1750.00
70/1
Abdullah
Textile
1850.00
----------------------------------------COTTON AUTOCORO
----------------------------------------7/1.
Gulistan
860.00
10/1.
Gulistan
870.00
12/1 Gulistan
900.00
----------------------------------------CHEES CONES
----------------------------------------10/1.
Kasim Tex
650.00
Latif Tex. (Latif)
650.00
Super
650.00
Abdullah
Textile
(OE)
620.00
16/1. (O.E.)
Kasim
Textile
850.00
Masal
850.00
----------------------------------------RATE OF BLANDED YARN IN
RUPEES (PER LBS)
----------------------------------------P.V. CONES
----------------------------------------18/1 PV
A.A. Textiles
123.00
A.A.
Cotton
(80
:
20)
130.00
20/1 PVB
BUSINESS
RECORDER
Tuesday, 26th August, 2014
A.A. Textile
126.00
24/1 P.V. BRIGHT
A.A. Tex.
129.00
Sana
122.00
A.
A.
Cotton
(80:20)
125.00
26/1.PV Bright
A.A. Tex.
137.00
Sana
128.00
A. A. Cotton
136.00
30/1 PV
A.A.
Tex."Z"
Twist
141.00
Sana
134.00
A. A. Cotton
139.00
26/1 P.V. (S.D.)
A.A. Textile
137.00
A.
A.
COTTON
128.00
Sana
126.00
36/1 PV (SD)
A.A. Textile
152.00
A.A.
Textile
(65-35)
157.00
A. A. Cotton
150.00
Sana
136.00
40/1. (PVB)
Sana
151.00
A. A. Cotton
154.00
A. A. Textile
158.00
46/1 PVSD
Ibrahim Fibre
179.00
A.
A.
Cotton
(80:20)
170.00
60/1 PVB
A.A.
COTTON
182.00
26/1 SLUB
A.
A.
Cotton
SLUB
160.00
30/1 PV SLUB
A.A.
Clock
Tower
161.00
A.
A.
Cotton
(PVB)
162.00
A.
A.
Cotton
(PC)
160.00
A. A. Cotton SLUB (PP)
162.00
Sana
SLUB
(PP)
146.00
20/1 PVT
Sana
134.00
30/1 PVT
Sana
146.00
12/1 PP
A. A. Cotton
119.00
16/1 PP
A. A. Cotton
124.00
20/1 PP
Sana
111.00
Diwan
98.00
A. A. Cotton
129.00
Agar
96.00
Stwist
110.00
26/1 PP
A. A. Cotton
131.00
30/1 PP
Agar
101.00
Anwar
109.00
Sana
121.00
Diwan
103.00
A. A. Cotton
134.00
A.
A.
Cotton
(Stwist)
120.00
34/1. (PP)
A. A. Cotton
125.00
40/1 PP
A. A. Cotton
144.00
50/1. (P.P)
A.
A.
Cotton
(Twist)
145.00
60/1. (P.P)
Agar
124.00
Diwan
125.00
Anwar
130.00
A. A. Cotton
156.00
80/1 PP
A. A. Cotton
200.00
8/.1.
A.
A.
Cotton
(52
48)
98.00
10/.1.
Zainab
125.00
A. A. Cotton
98.00
Lucky
Cotton
135.00
12/1
A. A. Cotton
100.00
16/1
AA SML Carded (52 48)
125.00
IFL (52 48)
132.00
A. A. Cotton
112.00
----------------------------------------P.C. COMBED
----------------------------------------20/1. PC
A.A.SMLCARDED
133.00
Zainab
(Combed)
141.00
A.
A.
Cotton
(Carded)
115.00
A. A. Cotton CVC (65 : 35)
117.00
24/1. PC
A.
A.
SML
Carded
137.00
Zainab
(Combed)
137.00
A.
A.
Cotton
(60:40)
132.00
25/1
A.A. Cotton
120.00
30/1. PC (52 : 48)
Zainab
Textile
(combed)
147.00
Stallion
130.00
K. Nazir
130.00
Al-Karam
134.00
AA
SML
(Carded)
142.00
A.
A.
Cotton
(Carded)
130.00
A.
A.
Cotton
(W)
120.00
A. A. Cotton CVC (85 : 35)
132.00
36/1. PC
IFL
Tex
(Combed)
161.00
40/1 PC
A.A.
Textile
(Combed)
168.00
A.
A.
Cotton
(52:48)
155.00
A.
A.
Cotton
(65:35)
155.00
45/1 PC
Zainab
182.00
10/1 CVC
A.
A.
Cotton
(60:40)
100.00
12/1 CVC
A.
A.
Cotton
(60:40)
102.00
20/1 CVC
A.
A.
Cotton
(60:40)
118.00
24/1 CVC
A.
A.
Cotton
(60:40)
122.00
30/1 CVC
A.
A.
Cotton
(60:40)
133.00
30/1. VISCOSE
A. A. Cotton
170.00
Sana
146.00
35/.1. VISCOSE
Sana
151.00
40/.1. VISCOSE
Sana
156.00
A. A. Cotton
160.00
----------------------------------------SEWING THREAD YARN
----------------------------------------Sana
21/1 PP
118.00
30/1 PP
128.00
34/1 PP
132.00
40/1 PP
140.00
BUSINESS
RECORDER
Tuesday, 26th August, 2014
50/1 PP
151.00
----------------------------------------RATES OF PAKISTANI
/IMPORTED POLYESTER YARN
(PER LBS) + GST
Imported
50/36
FDY
89.00
Local Mill
128.00
Rupali
75/78
FDY
96.00
Import
75/72
FDY
85.00
Local Mill
90.00
Rupali 75/36/0 & 75/24 DTY
108.00
Imported
75/36/0
DTY
103.50
Local Mill
108.00
Rupali
75/128
INT
DTY
120.00
Local Mill
120.00
Imported
75/72
INT
DTY
104.00
Local Mill
110.00
Imported 75/144
INT
DTY
112.00
Local Mill
NIL
Rupali
300/96/
INT
DTY
93.00
Imported 300/96/ INT DTY
89.00
Local Mill
90.00
Rupali
300/96/0
DTY
88.00
Imported
300/96
DTY
84.00
Local Mill
85.00
Rupali
75/24
INT
DTY
112.00
Imported75/36
INT
DTY
109.00
Local Mill
111.00
Rupali
150/48/0
DTY
90.00
Imported
150/48/0
DTY
86.00
Local Mill
86.00
Rupali
150/48
INT
DTY
95.00
Imported 150/48 INT
DTY
94.00
Local Mill
94.00
Imported
150/144
SIM
91.00
Local Mill
NIL
----------------------------------------READY RATES OF STAPLE
FIBER IN RUPEES
----------------------------------------POLYESTER
K.G.
----------------------------------------I.C.I. 1.D
160.00
I.C.I. 1.2 (SD)
160.00
I.C.I. Bright
165.00
Rupali 1.D
160.00
Rupali
1.2
(SD)
160.00
P.S.L. 1.D
160.00
P.S.L.
1.2
(SD)
160.00
Ibrahim
Fiber
(SD)
160.00
Ibrahim 1.D
160.00
Ibrahim
Fiber
Bright
165.00
Ibrahim
Trilobal
Bright
165.00
----------------------------------------VISCOSE
K.G.
----------------------------------------FCFC
44
MM
215.00
FCFC
51
MM
215.00
Grysum
India
212.00
Thai
Reyon
51
MM
212.00
S.P.V.
Ind.
51
MM
215.00
----------------------------------------ACRYLIC
FIBER
K.G.
----------------------------------------Monty
1.2x51
310.00
Acelon
Korea
1.2x51
310.00
Tuesday, 26th August, 2014
Prices of imported items go up
By Aamir Shafaat Khan
KARACHI: Prices of imported items,
like leather apparel, footwear,
garments, sports goods, etc have
gone up following an increase in
sales tax to 17pc from 5pc cent
through SRO 575(I) 2014 and 420 (I),
2014.
These items are being imported by
businessmen to cater to the demand of
international brands in the local market.
Earlier, Pakistani elite used to fly to
Dubai and London for shopping.
The government, under SRO 575 (I)
2014, has tried to encourage local
manufacturers by applying 5pc sales
tax on local products against 17pc tax
charged on competing imported items.
Consumers are paying 12pc more on
imported brands. Retailers of these
items, who asked not to be named,
said that it seems the government
wants to penalise documented and
taxpaying importers and retailers.
The move, they said, is aimed at
making
imported
goods
more
expensive which will erode the market
share of these brands.
A number of Pakistanis like brands,
such as Mango, Next, Baby Shop,
Splash, Nike, Debenhams etc. Eyeing
demand, some local players, like Bata
and Servis, have also introduced
foreign footwear brands in their retail
outlets.
Retailers said good business of foreign
companies
restored
business
confidence of foreign manufacturers in
Pakistan, but after the hike in the rate
of GST, the situation may change.
They said perhaps Pakistan is the only
country in the world where consumers
pay a different Sales Tax rate for the
same category of goods depending on
the country of origin.
They said 17 per cent sales tax will
discourage importers from introducing
international brands in Pakistan
besides raising questions on the
viability of their existing operations.
“The implementation of the revised
SRO 1125(I)/2014 would promote
smuggling. Besides, genuine imports
are also likely to indulge in
misdeclaration and under-invoicing,”
commented
a
businessman.
Industry grows 3.9pc in FY14
By Mubarak Zeb Khan
ISLAMABAD:
Large-scale
manufacturing (LSM) posted a
growth of 3.95 per cent in the
outgoing fiscal year 2013-14 from a
year ago.
The industrial output witnessed a
positive growth in the outgoing fiscal
year mostly with few exceptions, where
industries entered a negative growth,
suggested data of Pakistan Bureau of
Statistics issued on Monday.
This reverse in manufacturing sector
growth was mainly driven by an
increase in 11 categories of items
during the year under review over the
corresponding previous year.
Also
read: Large-scale
expands 2.6pc
industry
Major contribution towards positive
growth in LSM performance in 2013-14
was from textile 1.32pc; food and
beverages 7.16pc; petroleum products
6.22pc, paper and board 10.99pc;
fertilisers 16.50pc; electronics 9.55pc;
iron and steel products 5.58pc; leather
products 11.65pc; chemicals 6.87pc;
non-metallic mineral products 0.79pc
and rubber products 11.47pc.
Last year, the LSM sector, which
accounts for 70pc of industrial
production, recorded a positive growth
of 3.79pc.
Some sectors, like wood products,
witnessed a negative growth of
27.57pc;
engineering
products
12.52pc; pharmaceuticals 0.17pc and
automobiles 2.56pc during the year
from the previous year.
Industry specific data showed that
many sub-sectors didn’t perform well in
July-June 2013-14 period.
In electronic and electrical goods,
production of refrigerators recorded a
positive growth of 8.22pc; deepfreezers 43.12pc; air-conditioners was
increased by 15.17pc; electric motors
31.20pc; and switch gears 44.95pc.
However, production of electric bulbs
declined by 5.29pc; electric fans
2.16pc; electric meters 0.95pc; electric
transformers 56.98pc; TV sets 7.90pc;
storage batteries 1.10pc; generating
sets 100pc and bicycles 11.82pc during
the outgoing fiscal year from a year
ago.
The growth was witnessed in case of
food, beverages and tobacco. The
sector has adjusted weightage of
12.37pc in LSM basket.
Vegetable ghee production increased
by 3.68pc; oil 2.36pc; and tea blended
13.47pc.
The production of trucks was up by
39.05pc; buses 7.09pc; LCVs 20.39pc
and motorcycles 3.17pc during the year
under review.
However, production of tractors was
down by 32.13pc, jeeps and cars
3.54pc during the year over the
previous
year.
Tuesday, 26th August, 2014
Lint prices rise on tight phutti supply
By The Newspaper's Staff Reporter
KARACHI: Tight phutti (seed cotton)
supply pushed lint prices higher on
the cotton market on Monday.
Leading spinners and exporters
were in the forefront of buying
spree, but limited cotton stocks held
by ginners restricted trading.
However, slow arrivals of phutti from
cotton fields into ginneries disappointed
many millers and exporters who were
unable to get hold of their required
stocks.
A report was circulating in the trading
ring that the State Bank of Pakistan
has convened a meeting with
commercial banks to muster support
for the rupee. This was taken as a
move by the central bank to check
further slide in the rupee’s value.
Floor
brokers
said
that
fresh
depreciation in the rupee’s value
induced exporters who were eager to
replenish their stocks at current prices.
Similarly, leading spinners conscious of
quality were also equally keen to book
large orders.
ready dealing while phutti prices were
also firmer over the week-end level.
The following major deals were
reported to have changed hands on
ready counter: 2,000 bales Mirpurkhas
at Rs5,450 to Rs5,550, 1,000 bales
Hyderabad at Rs5,450 to Rs5,500,
2,200 bales Shahdadpur at Rs5,500 to
Rs5,600, 2,000 bales Tando Adam at
Rs5,500 to Rs5,600, 2,400 bales
Sanghar at Rs5,450 to Rs5,550, 1,000
bales Hasilpur at Rs5,600, 1,000 bales
Khanewal
at
Rs5,650.
However, lint prices of Sindh and
Punjab rose by Rs100 per maund in
THE FOLLOWING ARE THE KCA OFFICIAL SPOT RATES FOR 2013-14 FOR LOCAL
DEALINGS IN PAK RUPEES FOR BASE GRADE 3 STAPLE LENGTH 1-1/32"
MICRONAIRE VALUE BETWEEN 3.8 TO 4.9 NCL
Rate
For
Ex-Gin
Price
Upcountry
Expenses
Spot Rate
Ex-Karachi
37.324 Kgs
Equivalent
5,500
150
5,650
40 Kgs
5,894
160
6,054
Tuesday, 26th August, 2014
Tuesday, 26th August, 2014
Rupee falls to 6-month low on dollar demand; politics
weigh
Aamir Ashraf
KARACHI: The rupee fell to a six
month low against the U.S. dollar
on increased import payments and
concerns that growing political
tensions in the country could
choke off the much needed
International Monetary Fund‘s fifth
tranche, dealers said on Monday
Government officials claim foreign
currency reserves have fallen $800
million to $13.5 billion on lower than
expected scheduled inflows because
of the domestic political turmoil.
Pakistan has suffered as much as Rs
500 billion losses since the protest
started on August 14.
“There’s just panic in the markets.
The high demand for the dollar today
exceeded
its
supplies,”
said
Mohammad Sohail, head of Topline
Securties.
The trade deficit - witnessed around
$1.892 billion in July 2014 - is also
likely to inflate in the coming month
as exports drop on persistent political
uncertainty, they added.
“The market was short of dollars after
the sharp rise in demand, mainly for
oil import and dividend payments,
while dollar inflows are soft, pushing
the rupee further down,” Sohail said.
Dealers said that - because of
political uncertainty - outflows from
the stock market also contributed to
the soft dollar availability.
Dollar payments are typically high in
Pakistan during the month of July
and August because of stronger oil
demand
and
debt
payments.
However, dealers said additional
payments worth $70 to $75 million
were made on Monday that kept the
rupee under pressure.
Dealers said political tensions and a
shaky economy will further pummel
the local currency in the coming
weeks.
Concerns over a possible delay in the
IMF tranche have flared since
opposition parties led by cricketer turned politician Imran Khan and
firebrand cleric Tahir ul Qadri took to
the streets calling for the dismissal of
Prime Minister Nawaz Sharif’s PMLN government.
The Fund is expected to release the
fifth tranche of $550 million early next
month from the $6.67 billion bailout
package for Pakistan.
on market talks that the IMF may
delay the next tranche because of the
country’s current bleak political
outlook.
“Exporters are holding back their
receipts on hopes of further
depreciation of the rupee, which will
keep the currency under pressure,”
another dealer said. “Going forward
the central bank has to intervene in
the market if it wants to keep the
rupee stable.”
Though mostly verbal, regular
interventions by the central bank State Bank of Pakistan (SBP) - did
restrict its fall.
“The rupee is unlikely to start a freefall from here as the central bank
remains vigilant,” said a dealer at a
state-run bank.
The SBP has stepped up its push to
support the rupee and has discussed
the currency’s depreciation at the
interbank market with bankers in an
urgently called meeting.
Bankers said the State Bank has
instructed them to curb speculation
and pursue exporters to bring back
their
receipts
in
on
time.
Dealers said importers were buying
dollars to secure their forward deals
Islamabad protests
Economy suffers losses worth Rs800bn
Mehtab Haider
ISLAMABAD: The protests in the
capital have rendered direct losses
of up to Rs800 billion to the
economy, Minister for Commerce
Khurram Dastgir Khan said.
According to various estimates, the
indirect losses have reached several
hundred billion rupees.
Further, said the minister the rupee
devaluation against dollar has raised
public debt by Rs350 billion.
Investors have become skeptic on
this political turmoil. Only in stock
market, they have so far lost around
Rs450 billion.
Besides tarnishing Pakistan’s image
internationally, the quixotic desire of
opposing parties is making the willing
foreign investors hesitant.
The minister Dastgir said the heads
of the states of China and Sri Lanka
have postponed their important visits
due to the prevailing uncertainty and
the country could not hold important
economic negotiations with these
economic partners.
Tuesday, 26th August, 2014
The negative politics being played in
the country is misleading the youth
and the country will have to strive
hard to erase the harmful effects of
this upheaval on the economy, he
said.
under the guidance of the Prime
Minister.
economic
sustainability
in
the
country, said the commerce minister.
The vision is a detailed roadmap for
the economic revival to address
challenges.
Need of the hour is to follow an
approach, which could address the
national economic challenges with a
collective
wisdom,
he
said.
Recently, the Planning Commission
of Pakistan launched Vision 2025,
Social stability and development
issues are directly linked to the
LSM growth falls 2.74 percent in June
Israr Khan
ISLAMABAD:
Large
scale
manufacturing sector witnessed a
decline of 2.74 percent in June
2014 over the preceding month,
reported Pakistan Bureau of
Statistics (PBS) on Monday.
The LSM’s growth inched up slightly
0.25 percent over the same month of
the last fiscal year.
The sector grew 3.95 percent for the
July-June 2013-14 as compared to
4.28 percent recorded in the
preceding fiscal year, showed the
PBS data.
The PBS computes the percentage
on the basis of latest production data
of 112 items received from various
sources, including Oil Companies
Advisory Committee, Ministry of
Industries and Production and
provincial bureau of statistics.
The OCAC that supplied the data of
11 items registered a growth of 0.5
percent during FY14. The production
ministry recorded data of 36 items,
and showed a growth of 2.01
percent. The provincial bureaus of
statistics, providing data for 65 items,
registered a growth of 1.44 percent in
FY14 over FY13.
During this fiscal under review,
fertiliser production went up by
16.5pc, leather products 11.65pc,
rubber products 11.47pc, paper and
board 11pc, electronics 9.55pc, food
beverages and tobacco 7.16pc, coke
and petroleum products 6.22pc,
chemicals 6.87pc, iron and steel
products 5.58pc, and textiles 1.32pc,
according to the data.
However,
engineering
products
output dipped by 12.52pc, wood
products 27.57 pc, pharmaceuticals
0.17pc and automobiles 2.56pc
during the last fiscal year.
Pakistan’s manufacturing sector grew
at an average rate of eight percent
from the 60s to 80s, but fell to 3.9
percent during the 90s.
This was mainly due to reduction in
investment levels and lack of
continuity and consistency in policies,
experts said.
In Pakistani exports, the share of
high technology goods is only one
percent, which is indicative of a
neglect or inability to exploit a major
opportunity, since engineering goods
make up around one-thirds of the
world
trade
with
electronics
contributing nearly half of this value,
said
the
experts.
Power tariff hike proposed
Our correspondent
KARACHI: The Central Power
Purchasing
Agency
(CPPA)
proposed on Monday an increase
of Rs0.4357 per unit (kilowatt per
hour) under the fuel price
adjustment for ex-Wapda (Water
and Power Development Authority)
distribution companies for July
2014.
The proposed deduction if approved
by the National Electric Power
Regulatory Authority (Nepra) would
be adjusted in monthly bills of August
onwards, said a media release on
Monday.
The authority has to review and
revise the approved tariff on account
of any variation in the fuel charges on
monthly basis under the section 31(4)
of the Nepra Act and the mechanism
for monthly fuel price adjustment.
On the basis of data
CPPA, an increase of
kWh over the reference
i.e. Rs7.0622 per kWh
for July 2014.
provided by
Rs0.43 per
fuel charges
is proposed
Nepra has scheduled a public
hearing today (August 26) to consider
the proposed adjustment, according
to
the
release.
Tuesday, 26th August, 2014
Trade deficit likely to swell this quarter
Javed Mirza
KARACHI: Trade deficit is likely to
swell this quarter of the current
fiscal year as exports have slowed
down on unvarying political
standoff
and
consequent
uncertainty over the law and order
situation.
Pakistan witnessed a trade deficit in
goods of $1.892 billion for July 2014.
Amir Hussain, an economist at Trade
Development Authority of Pakistan,
said the entire trade had been
disturbed due to recent episodes of
political unrest.
Cricketer-turned
politician
Imran
Khan and Canadian cleric Tahirul
Qadri, along with their supporters,
have been sitting in the capital for
over a week, demanding primarily
resignation of the Prime Minister
Nawaz Sharif.
“There has been a slowdown in
export; especially, activities at dry
ports upcountry have been affected
and it would reflect in the statistics for
August.”
“Besides, the imports of raw
materials have dropped, impeding
the industrial production,” Hussain
added.
Shipping
agents
said
export
consignments were stuck upcountry
as the exporters were reluctant to
dispatch them fearing impending
disturbed law and order situation, and
vessels were leaving the ports almost
empty.
Moreover, the import consignments
were piling up on the port and raw
material was not being delivered to
the industrial units located in central
and upper Pakistan, they said. Yasin
Siddik, Chairman All Pakistan Textile
Mills Association, said trade was
affected, yet the situation was not
that much grave since main arteries
and highways were operational.
The exact quantum of the trade loss
could not be known at the moment; it
would appear in the trade statistics
for August, said an analyst.
The State
warranted
squeeze
persistent
headline
Bank of Pakistan has also
the political unrest could
supply chain, saying a
standoff could edge up
inflation.
‘Govt. should lift gas ban from industrial sector’
Our correspondent
LAHORE: The Chairman Oil & Gas
Regulatory
Authority
(OGRA)
Saeed Ahmad Khan said that the
authority
would
advise
the
government to lift the ban on new
gas connections for industrial
sector as Pakistan has ample
reserves to fulfil the requirements
of the country for fifty years.
He said that the mechanism to set
the petroleum price has already been
laid down by the government and
OGRA’s job is to implement that.
Khan noted that the high prices of
petroleum products are due to the
various taxes and levies imposed by
the government. The chairman was
speaking at the Lahore Chamber of
Commerce & Industry.
Speaking on the occasion, LCCI
Acting President Mian Tariq Misbah
said the price of petroleum products
should be tied to their respective
dollar-rupee exchange rate.
He said that the recent appreciation
of rupee against the dollar (by about
10%) and decline in crude oil price in
the international market did not result
in corresponding decrease in the
petrol and diesel prices.
He noted that petrol and petroleum
products in Pakistan are substandard
and there is a lot of adulteration.
“Globally, petroleum products are
tested to ensure compliance to
international standards. Likewise,
OGRA should ensure stringent
regulatory testing of all Petroleum
products being sold in the local
market to stop the adulteration and
wastage of national resources and
money.”
Misbah further said that there is
presently a ban on refuelling of Public
Service Vehicles include vans,
wagons, rickshaws with LPG at LPG
Filling Stations. However, there is no
such ban on refuelling the same
vehicles with CNG.
“This ban should be removed and
LPG Auto Stations should be allowed
to establish in the country,” he said,
adding: “This exercise will reduce
consumption of CNG in vehicles, and
make natural gas available for other
important sectors.”
The acting president of LCCI said in
recent years, many un-licensed and
un-authorized manufacturers of LPG
cylinders have started marketing substandard
cylinders
directly
to
distributors.
The distributors purchase these low
quality cylinders as they are cheaper.
He noted that OGRA has not initiated
any action against these illegal
manufacturers, which has resulted in
a mushroom growth of such
operators, presenting a great risk of
accidents and damage to public life
and
property.
Tuesday, 26th August, 2014
KCA increases cotton rate
Our correspondent
Karachi
The Karachi Cotton Association
(KCA) revised up its cotton spot rate
by Rs50 per maund (37.324
kilograms) to Rs5,500 per maund
after price of the commodity was
seen increasing at the local markets,
a dealer said on Monday.
“The KCA revised up its cotton spot
rate in line with the upward trend in
the commodity price at the open
markets,” Taqi Abbas, a broker at the
Karachi Cotton Exchange, said,
adding the price has surged to
Rs5,650 per maund from Rs5,600
per maund on the previous working
day – Saturday. The increase in price
is primarily recorded due to
continuous depreciation in the rupee
value against the dollar. Moreover,
political uncertainty in Islamabad and
significant buying by traders were
also causing increase in price, he
said.
Traders exchanged a total of 16,800
bales (155 kilograms each) at
Rs5,450 to Rs5,650 per maund as
compared to 23,200 bales traded on
Saturday at Rs5,450 to Rs5,600 per
maund,
the
KCA
reported.
Tuesday, 26th August, 2014
Political uncertainty causes Rs800b loss to economy
IMRAN ALI KUNDI
ISLAMABAD
Pakistan's economy has faced
massive loss worth of Rs 800
billion in last few days due to the
political uncertainty created by
the prolong sits-ins of Pakistan
Tehreek-i-Insaf
(PTI)
and
Pakistan Awami Tehreek (PAT) in
front of the parliament house.
"The current protests have
paralyzed Pakistan's economy
and the direct losses to the
economy have reached up to Rs
800 billion while the indirect
losses, according to estimates
have amounted to several
hundred billions", said Commerce
Minister Khurram Dastgir Khan in
a
statement.
It is worth mentioning here that
Pakistani rupee is under severe
pressure in last few days due to
the political uncertainty in the
federal capital of the country. The
dollar value has increased by Rs
1.46 in a single day on Monday.
The dollar value has surged to
over Rs 103 on the first day of the
current week, which was around
Rs 98 before the long marches of
PTI
and
PAT.
Market sources informed that
dollar
value
could
further
enhance if the State Bank of
Pakistan do not take action in
next
couple
of
days.
"The devaluation of rupee against
dollar
and
the
constantly
fluctuating exchange rate has
raised Pakistan's external debt by
Rs. 350 billion. The uncertainty
caused by this political turmoil
has made the investors skeptic
and they have lost Rs. 450 billion
in Stock Exchange", the Minister
added.
The Minister was of the view that
the unbridled desire of the
protestant to achieve power by
hook or by crook has tarnished
the international image of the
country and the news of political
instability have put the willing
foreign investor in doubt. The
heads of states of China and Sri
Lanka have postponed their
important visits due to the
prevailing uncertainty and the
country could not hold important
economic negotiations with these
economic partners. The Minister
said that the negative politics
being played in the country is
misleading the youth and the
country will have to strive hard to
erase the harmful effects of this
upheaval on the economy.
Despite all immature political acts
by certain parties to derail the
democratically
elected
government,
the
pragmatic
leadership of Prime Minister is
committed to address grave
challenges of this nation. The
vision encompasses restructuring
of the economy, initiating projects
to
generate
energy
and
addressing extremism in the
country. The leadership believes
in rule of law, supremacy of
judiciary and fair execution of
governmental policies to raise
this nation among the comity of
developed
countries.
Recently,
the
Planning
Commission of Pakistan has
launched Vision 2025, under the
visionary guidance of Prime
Minister of Pakistan. It serves as
a detailed road map for the
economic revival to address
future challenges. It is pertinent to
mention here that social stability
and development issues are
directly linked to the economic
sustainability in the country. For
smooth
journey
towards
development, it is unavoidable to
set aside the democratic process
in the country. Need of the hour is
to follow an approach which could
address the national economic
challenges
with
collective
wisdom.

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