NEWS COVERAGE PERIOD FROM MARCH 23RD TO MARCH 29TH, 2020
RS100BN REFUNDS TERMED ‘TOO LITTLE, TOO LATE’
March 25, 2020
ISLAMABAD: The export-oriented sectors have termed Prime Minister Imran Khan’s announcement of issuing tax refund of Rs100 billion “too little, too late”, which they say would not adequately help in response to coronavirus challenge. However, exporters have welcomed the State Bank of Pakistan (SBP) decision of reducing the policy rate by a further 150 basis points to 11 percent.
This was the consensus among manufacturers and exporters, while reacting to PM’s announcement of disbursing tax refunds worth Rs100 billion for exporters.
Major demands of exporters including restoration of zero rating facility for the five exports-oriented sectors, and freezing utilities payment were not met, they added.
Shabbir Ahmed, patron-in-chief, Pakistan Bedwear Exporters Association told Business Recorder that the promise of payment of refunds of Rs100 billion to the entire export sector was just peanuts.
“We have to make payments to the suppliers, and give salaries to the employees, and other cost of production. The timeframe for payment of refunds by the Federal Board of Revenue (FBR) is also yet not clear,” he added.
The Council of Textile Association (CTA) Chairman, Zubair Motiwala, said that disbursing Rs100 billion was not enough for the exports industry. “This is our own money, the government is refunding it to us,” said Motiwala, adding that the government had not considered their demand for freezing utilities’ bills payment, which was a prime concern of the industry.
He further said that there were other issues such as income tax refunds, customs duties, the DLTL, which were much more than Rs100 billion.
Motiwala, however said that slashing the policy rate by 150 bps was a welcome decision in the right direction, which would provide stimulus to the economy, and it was a great opportunity to send a positive message to the domestic financial market in restoring its confidence. Pakistan Readymade Garments and Manufacturers and Exporters Association (PRGMEA) Chairman Ijaz Khokhar expressed dissatisfaction over the prime minister’s announcement, while saying their major demand for restoring the zero-rating facility for the five export-oriented sectors to avoid liquidity crunch in future was not met.
He said that around Rs250 billion of five export sectors were stuck with the government on account of blocking refunds, and they were demanding for its releases at once, but the demand was not honored.
Khokhar said that the government had announced to release Rs100 billion refunds to exporters but no mechanism had been laid down for its release. “In the past such announcements were made but not honoured later,” he added.
He further said that the government has yet to notify the agreed rate of 7.5 cents per unit (kWh) for exporters.
He said that reducing the interest rate was a good decision, which would help the major industries but was not going to help the Small and Medium Enterprises (SMEs).
The Union of Small and Medium Enterprises (UNISAME) appreciated the PM for the relief package for the sector, which according to them would reduce the burden on the small to medium entrepreneurs.
UNISAME President Zulfikar Thaver said the PM had considered their four recommendations including concessional loans, reduction in interest rate, relief in taxation rebate payments, and rescheduling of loans.
ENGRO REDUCES UREA PRICES BY RS 240 A BAG
By RECORDER REPORT on March 25, 2020
Engro Fertilizer has reduced urea prices by further Rs 240 per bag to ensure national food security and support the farmers. According to the company, global COVID-19 pandemic has posed a significant challenge to not only global, but also national economic prosperity. As one of Pakistan’s most responsible companies, Engro Fertilizers remains committed to the alleviation of adverse impact of this global pandemic on our nation, in particular the agriculture sector which remains the largest driver of employment in our country.
Keeping in view the situation, the company has announced a further reduction in urea prices by Rs 240/bag. This additional price cut would result in an overall price reduction of Rs 400 per bag since the beginning of the year.
The company is of the view that in this difficult time, Engro Fertilizers stands firm with the people of Pakistan and the government to prioritize the sustainability of agriculture sector to ensure our nation’s food security. In this pursuit, the Company has made an additional price reduction to support our valued farmers in these trying times.
Copyright Business Recorder, 2020
NEWS COVERAGE PERIOD FROM MARCH 16 TO MARCH 22ND, 2020
COST OF ILLICIT CIGARETTE TRADE
By M ZIAUDDIN on March 18, 2020
According to a UN ‘doom’s day scenario’ the global economy faces a ‘US$ 2 trillion’ hit in view of the devastation being caused by the novel coronavirus pandemic. But even this figure is only tentative. Seemingly almost the entire world is gradually moving towards a complete lock-down. With such a scenario in the offing one cannot but keep one’s fingers crossed while gazing at the proverbial Chrystal ball to find out how Pakistan’s economy would fare in case the border clampdown lasts for more than a fortnight.
Meanwhile, the sword of FATF continues to hang over Pakistan. We seem still to be lost in the woods. We do not know for sure whether by the final deadline of June this year – only two months away – we would be able to satisfy our FATF interrogators on the twin issue of money laundering and terror-financing.
Among a number of queries that we would be confronted with at the June meeting, one could also be with regard to the unaccounted billions that are made every year by the unscrupulous through the illicit cigarette trade and their possible utilization in terror financing.
As per Oxford Economics Study, Pakistan ranks 1st in illicit trade of cigarettes in Asia, with a total volume of 326 billion illicit cigarettes consumed in 2017. The primary reason for existence of illicit manufacturers is the tax-driven price differential between legal and illicit brands, which currently stands at 130%.
Apparently, there is no system in the Health Ministry to check or control or monitor the manufacturers, suppliers, sellers and impact on consumers of illicit production of cigarettes.
Currently in Pakistan, tax increases are counter-productive in achieving the government’s revenue since they are encouraging people to smoke cheaper cigarettes that are more affordable.
Over 22 million (19%) Pakistani adults (18+) currently use some form of tobacco. Almost one-third of Pakistani men (32.4%) and 5.7% of women smoke tobacco.
An earlier State Bank of Pakistan’s quarterly report shows that the sale of illegal cigarettes in the country has increased significantly since the imposition of the Federal Excise Duty (FED).
The report stated that the increase in FED had negative implications for the growth of the formal cigarette industry, as it pushed consumers towards cheaper alternatives in the form of counterfeits and cigarettes smuggled from abroad.
Officially, the lowest cost of a packet of cigarettes is fixed at around Rs 63, from which the tobacco companies are bound to pay at least Rs 42 in taxes to the government. Instead, cigarettes are being illegally and openly sold for Rs 30-40 per packet in major cities across Pakistan.
Muhammad Sabir, Principal Economist at SPDC, presenting the findings of a study has claimed that Federal Board of Revenue (FBR) currently relies on voluntary declaration of production by the manufacturers to determine their tax liability. The absence of an integrated information system creates an incentive for under-reporting of production to avoid taxes. The research findings suggest the presence of under-reporting of cigarettes in the range 22 to 47 per cent. The loss of revenue due to undeclared production is estimated to be Rs 37 billion in 2016-17, including Federal Excise Duty (FED) of Rs 31 billion and General Sales Tax (GST) to the tune of Rs 6 billion. The study also revealed that during 2015 and 2016, when tobacco firms reported a decline in their sales, profit margins remained substantially higher compared to the previous years.
The research work also forwarded policy recommendations proposing that FED is linked with GST collection, and the GST is collected in VAT mode. The GST should be collected at three stages – factory, distributors and wholesalers/retailers.
Academic Hana Ross, a researcher at the University of Cape Town who studies tobacco control, has said that although under-reporting of cigarette production is a problem in many countries, the level in Pakistan borders on “obnoxious.”
Pakistan’s Social Policy and Development Centre estimates that allowing tobacco companies to self-declare has cost the country 15 to 47 billion rupees in lost taxes each year, between 2015 and 2018.
The FBR tried to make sure Philip Morris Pakistan and Pakistan Tobacco Company – local subsidiaries of Philip Morris International and British American Tobacco, respectively – which together account for some 98 percent of the market – were reporting accurate figures by sometimes posting inspectors in their factories. But the results were patchy at best, according to Hamid Ateeq Sarwar, a member of the FBR.
“The physical presence of people usually yields results in initial days, but dies down after 20 or 30 days, even if we change the people,” he claimed.
The government’s resolve strengthened, however, after the IMF made having a tobacco track-and-trace system up and running by the end of March 2020, one of the conditions of Pakistan’s bailout. In August 2019, the FBR issued another tender and this time, with $6 billion of international assistance on the line, they followed through.
Bids for the system were originally due on Sept 5, 2019, but the FBR extended the deadline twice, first to Sept 20, then to Sept. 27. In the space of these few weeks, the tax authority also dramatically changed the terms of the tender.
Previously, technical expertise was a key consideration: 80 percent of each bid would be rated according to the bidder’s technical capability and 20 percent according to price. But in the new tender, any offer that met certain vaguely defined technical requirements would be considered, and the cheapest one would win.
This shift was a crucial one. It took the focus off how effectively the system would police the illicit trade in tobacco and turned it into a price war. What prompted the revisions? It is still unclear.
Organised Crime and Corruption Reporting Project (OCCRP) investigations claim that after a “shady” bidding process, which is now being challenged in court, Pakistan’s tax authorities awarded the contract to a company working with Swiss software provider Inexto.
“Critics say Inexto’s software is a “black box” based on a system devised by the tobacco industry that does little to help curb smuggling. The company has been barred from working on key aspects of the European Union’s track-and-trace system because of its ties to the tobacco industry. Nonetheless, its software is being used to track and trace cigarettes in Russia, West Africa, and Mexico.
“Inexto declined to comment on the tender process, citing ongoing litigation, and said accusations it is too close to the tobacco industry are “entirely unfounded.”
“Out of 13 bidders, only one, which appears to be a food export business, was disqualified for technical reasons. When the results were announced on Oct. 14, 2019, it transpired that two of the bidding consortia had been disqualified for giving a conditional price.
“But the winning bidder, the National Radio and Telecommunications Corporation (NRTC), which was working with Inexto, had mistakenly quoted a price that was 1,000 times lower than it had intended (.731 rupees, or less than a penny, per thousand tax stamps, rather than 731 rupees, or $4.74). NRTC was allowed to revise its bid after all proposals had been evaluated and it had been recommended for the license.
“The FBR accepted NRTC’s argument that the difference was merely an “obvious arithmetic and accidental typographical slip.” One of the companies whose bid was rejected cites this decision as evidence that NRTC was given an unfair advantage. Another company contests the process as a whole.
“A third consortium questioned the technical qualifications of NRTC in a letter to the International Tax Stamp Association: NRTC’s proposed track-and-trace system is based on Codentify, software originally developed by Philip Morris International. They call Inexto a “front company” for Codentify, which they say is a “black box” controlled by the tobacco industry. As such, they maintain, it violates the terms of the treaty that mandated Pakistan implement track and trace in the first place.
“Given that the system is not open source, some observers have suggested Codentify may contain hidden features known only to the tobacco industry,” the filing says. ‘NRTC should be immediately disqualified as the solution offered in non-compliance with [the] World Health Organization… and [the licensing process] itself.’
“Sarwar, the FBR board member, defended the choice, saying the NRTC deal included a clause that allows the FBR to cancel it if they find any “clear and close ties [with the tobacco industry], that there’s common shareholding by a parent company, or something like this.”
Copyright Business Recorder, 2020
EXPORT, IMPORT MATTERS: MINISTRIES, EXCEPT MOC, BANNED FROM ISSUING PERMISSIONS
By MUSHTAQ GHUMMAN on March 19, 2020
The Federal Cabinet has imposed a ban on issuance of export/import permissions by the ministries except Ministry of Commerce (MoC) as the latter was unhappy on such instances, saying that this practice promotes rent seeking; well-informed sources in the MoC told Business Recorder. This decision was taken during a discussion on a summary of the Commerce Ministry “imposition of ban on export of personal protective equipment”.
Commerce Ministry apprised the Cabinet that the outbreak of COVID-19, commonly known as Novel Coronavirus, emerged in Wuhan, China, in December 2019, and has caused widespread disturbance across the globe. The unabated spread of the strain has made the health experts apprehensive of the likely emergence of new clusters in Europe and the Middle East, which could accelerate the global spread of the deadly disease.
The public authorities across the world are struggling hard to contain the spread of the virus with discouraging results. So far, over 250 cases of coronavirus have been confirmed in Pakistan. Given the emerging scenario, the Ministry of National Health Services Regulation and Coordination (MNI-ISR&C) and the National Disaster-Management Authority (NDMA) have issued advisories as precautionary measures to safeguard against the outbreak in the country.
These advisories, however, were issued without consultation with the Ministry of Commerce. In order to curtail the outbreak of coronavirus in Pakistan, the availability of sufficient quantity of first aid material such as N-95 masks (facemasks and gloves) and goggles are utmost essential at all tiers of the health units.
The wearing of facemasks and gloves, for both the patient and the handler, is considered the first and immediate treatment against the viral disease. The sources said, the MNHSR&C has informed of the consultation process undertaken with the stakeholders and the National Institute of Health (NIH) for assessing the baseline requirements of the country and stockpiling accordingly.
The MNHSR&C has also provided a list of Personal Protective Equipment (PPE) with the request to ban the items till the completion of the process of assessment and stockpiling. The MoC sought the approval of the Cabinet to impose a ban on the export of the following PPE as requested by the MNHSR&C till the completion of the process of assessment of the baseline requirements of the country and stockpiling; (i) tyvek suits; (ii) disposable gowns; (iii) disposable gloves; (iv) face shields ; (v) N-95 masks; (vi) biohazard bags; (vii) goggles; (viii) shoe cover; (ix) surgical masks, and; (x) hand sanitizers.
During the discussion, one of the members highlighted the need of conducting a SWOT analysis to determine the impact on economy and identify opportunities in the wake of COVID-19 pandemic. The MoC brought to the notice of the Cabinet that while it is responsible for imposing/relaxing ban on export and import, there have been instances where divisions had themselves exercised these powers, adding that this was highly undesirable since it promotes rent seeking.
The Cabinet took a serious note of the “violations” and directed that instructions be issued to all divisions to refrain from imposing ban on export/import of items falling in their respective sectors and instead send proposals to Commerce Ministry.
Copyright Business Recorder, 2020
NEWS COVERAGE PERIOD FROM MARCH 09 TO MARCH 15, 2020
UK’S TRADE DIRECTOR HIGHLIGHTS OPPORTUNITIES TO BOOST BILATERAL TRADE
By RECORDER REPORT on March 11, 2020
The UK’s Department for International Trade (DIT) at the British Deputy High Commission (BDHC) Karachi hosted two interactive round-table conferences at a local hotel today in Karachi focusing on the Education and Health sectors.
Attended by prominent schools, universities, hospitals and pharma industry, the conferences highlighted the increasing focus of DIT on developing stronger commercial links between the UK and Pakistan. DIT’s expertise in supporting exports, inward and outward investment, negotiating better market access, exploring trade deals, and championing free trade were all discussed.
Addressing the public and private health and education stakeholders, Deputy High Commissioner and Trade Director for Pakistan, Mike Nithavrianakis, said:
“The UK has a long history of educational excellence, and investing heavily in our health services. The UK has been a committed partner to Pakistan in supporting its education and health services over a number of years, including through DFID.
It is striking how the conversation is now moving towards the commercial opportunities that exist to help Pakistan significantly expand its service provision. The UK’s expertise in delivering high quality public private partnerships is one area worthy of consideration.”
“This was a stimulating and dynamic series of discussions, from which we learned much. I am optimistic that the UK and Pakistan can work more closely together on delivering projects in country that provide high quality health and education to Pakistan’s young and rapidly growing population.
We plan to build on this engagement by arranging inward and outward trade missions to/from Pakistan. Both countries stand to gain from a greater focus on health and education partnerships.”-PR
Copyright Business Recorder, 2020
PM IMRAN APPROVES 5-YEAR TRADE POLICY FRAMEWORK
By Zafar Bhutta Published: March 13, 2020
ISLAMABAD: Prime Minister Imran Khan on Thursday gave the go-ahead to the five-year Strategic Trade Policy Framework that will incentivise 26 non-traditional sectors to boost exports by shifting the role pertaining to duty drawback, Drawback of Local Taxes and Levies (DLTL) and sales tax refund to the State Bank of Pakistan (SBP).
Talking to a group of journalists, Adviser to Prime Minister on Commerce Abdul Razak Dawood said he would meet the adviser to finance, State Bank governor and Federal Board of Revenue (FBR) chairman to draft a mechanism for handing over the role of sales tax refund to the central bank.
He emphasised that the new system would ensure speedy release of tax refunds to the exporters. At present, the FBR deals with the duty drawback and sales tax refunds while the Ministry of Commerce oversees the DLTL system. Under the new trade policy framework, all these subjects will be transferred to the State Bank.
Currently, the average duty drawback rate stands at 3%, which would be revised for many non-traditional sectors such as engineering, pharmaceutical, auto parts, food processing and beverages, footwear, gems and jewellery, chemicals, meat and poultry and fruits and vegetables.
The FBR is the main body dealing with tax refunds, however, exporters are sometimes unable to receive them.
Dawood said there had been a huge issue of clearing the 17% sales tax refunds.
“There is an anti-export bias in the country and wherever the export culture exists, there is no culture of taxes, levies and surcharges,” he said. “On the other hand, there is an issue of duty drawback and there has been no revision in it for the last eight years.”
Citing figures, the adviser said the export target had been set at $26 billion for FY21, $31 billion for FY22, $35 billion for FY23, $40 billion for FY24 and $46 billion for FY25.
Dawood pointed out that the trade policy framework covered 26 sectors and incentives would be provided for only the value-added sector. He clarified that the incentives for duty drawback would not be available to the textile sector. He pointed out that there was no more growth in the textile sector and Pakistan had to move away from it.
Published in The Express Tribune, March 13th, 2020.
TRADERS PROTEST PROFESSIONAL TAX
Bureau Report March 14, 2020
PESHAWAR: The business community on Friday set up a protest camp against the government for sending professional tax notices to traders and warned to announce a shutter down strike in case the relevant department did not withdraw the notices.
The camp was set up at Hashnagri where office-bearers of different bodies of traders shared their views and said that unlike other provinces the Khyber Pakhtunkhwa government had sent professional tax notices to the traders.
“We are already paying multiple taxes. The government should serve the notices to professional people like doctors, lawyers as the traders are regular taxpayers,” Markazi Tanzeem-i-Tajiran provincial president Malik Meher Ilahi said.
Anjuman-i-Tajiran Cantonment leader Mujeeb ur Rehman, Insaf Tajiran leader Khalid Gul Mohmand, Peshawar Chamber of Small Traders and Small Industries representatives Ihtesham Haleem, Shakeel Ahmed and others also spoke on the occasion.
They said the traders had suffered heavily during the prolonged war against terror, but the government did not compensate them. They said that most of the traders were paying regular taxes but the government was introducing additional taxes forcing them to protest.
The protesters demanded of the provincial government to withdraw the notices of professional tax, or they would announce a shutter down strike soon.
Published in Dawn, March 14th, 2020
REPORT ANTICIPATES SOME DECLINE IN TRADING ACTIVITY IN COMING MONTHS
By RECORDER REPORT on March 14, 2020
The coronavirus outbreak is expected to affect industrial activity of various countries, including key trading partners of Pakistan, analysts said.
A large portion of Pakistan’s economy is driven by imported materials including most key sectors such as textiles, automobile, energy, steel, pharmaceuticals, and consumers. “With quarantine efforts at full effect within Pakistan’s major trading partners, we can anticipate some decline in Pakistan’s trading activity in coming months,” a research report of BMA Capital said.
The coronavirus pandemic has continued making headlines as the virus’s confirmed cases have crossed the 130,000 mark with its death toll reaching around 5,000. The evident proliferation of the virus has compelled most countries to take preventative actions to limit the spread.
These preventive measures are expected to take a toll on the global economy with expectations of global GDP falling to 2.4 percent compared to previous estimates of 2.9 percent. Many governments have imposed travel restrictions, considerably limiting movements of their population. Moreover, companies are implementing work from home policies in light of the outbreak, which will result in reduced economic activities.
The report said the decline in oil prices resulting from coronavirus outbreak and recent disagreement between Saudi Arabia (KSA) and Russia over supply cuts have the potential to become a boon for Pakistan’s economic landscape. During FY19, Pakistan imported $16 billion worth of oil, 31 percent of the country’s total import bill. “We estimate that for every $10/bbl decline in Arab Light’s spot price, Pakistan’s import bill can fall by $1.6 billion,” the report said.
Lower oil prices also have the potential to reduce inflation levels on account of lower energy tariff and transportation costs. Consequently, a softer inflation outlook will likely expedite the eventual monetary easing, it added.
In order to combat the potential economic slowdown resulting from the pandemic, many economies have introduced stimulus packages with monetary easing and fiscal expansion to improve economic activity. “In the backdrop of lower inflation trajectory and anticipated economic slowdown, we expect Pakistan’s central bank to follow suit”, the report said. “We contend for a 100bps cut in policy rate in the upcoming Monetary Policy Committee (MPC) meeting scheduled for March 17, 2020,” it added.
While the latest coronavirus affected count stands low at 21 cases (as of 13th March), the virus has shown to proliferate at rapid levels if left unchecked. The risk of the outbreak spreading will likely compel many individuals to take precautionary and preventive actions.
“We can witness a significant reduction in recreational spending, particularly at places where crowds gather, including restaurants and cinemas.” Moreover, as seen in other affected countries, families may restrict non-essential road travels. This fact, in addition to the temporary closure of schools (till 31st May) and certain offices, has the potential to significantly curb domestic demand for petroleum products. However, bulk purchasing of sanitizing products such as tissues, soaps, hand sanitizers, disinfectants etc. can follow that is already being seen in Western countries.
“As the situation continues to normalize in China, we believe they may provide the necessary support to ease out Pakistan’s overall economic situation from the virus’s fallout,” the report said. Pakistan is all set to benefit from the reduction in oil prices, allowing the country to reduce inflationary pressures and eventually reduce interest rates to jump-start the economy. Moreover, the IMF announced a $50 billion emergency funding for coronavirus affected countries, which Pakistan can opt for if the virus has significant negative impact on the country’s economy. While the containment of coronavirus in China shows encouraging signs, Western countries may likely see surge in cases till June after which the pandemic situation may start to subside (UK government is expecting the virus impact to peak by late May/early June).
“We are of the view that the Pakistan stock market has the potential to bounce back from current levels”, the report said adding that the pace of prevention in the virus hit countries along with movement in international oil prices will determine the speed of recovery in local equities.
Copyright Business Recorder, 2020
NEWS COVERAGE PERIOD FROM MARCH 02 TO MACH 08, 2020
EXPORTS JUMP 13.6 PC IN FEBRUARY
Mubarak Zeb Khan Updated March 03, 2020
ISLAMABAD: Pakistan’s merchandise exports posted double-digit growth during February reversing the declining trend.
Trade analysts believe the growth is due to global diversion of orders from China owing to the spread of coronavirus in the country.
The drop in exports’ proceeds had started since December 2019 when it fell by 3.8 per cent while a similar quantum of decline was seen in January. The February figures showed a 13.6pc growth over the last year, data released by the Commerce Division showed on Monday.
The Pakistan Bureau of Statistics usually releases official figures at the end of first week of every month. However, the Adviser to PM on Commerce Razak Dawood shared provisional data of customs only on Monday.
In February, the export proceeds edged up to $2.13 billion from $1.88bn over the corresponding months last year, showing an increase of 13.61pc. In rupee terms, the export proceeds posted a growth of 26.9pc during the month under review.
Between July 2019 and February, the export proceeds’ grew up by 3.62pc as it stood at $15.64bn against $15.09bn over the corresponding months last year.
An official source said that the increase in exports is due to diversion of orders especially textile and clothing from China by several countries in Europe and North America due to Coronavirus. The textile sector has received excessive orders in February, the official said, adding it depends whether the orders will be placed in coming months or not.
The government projects exports during the ongoing fiscal year to reach $26.187bn from $24.656bn in FY2019.
In the 2019-20 budget, the government reduced cost of raw materials and semi-finished products used in exportable products by exempting them from all customs duties. The government also promised to provide sales tax refund to export sectors.
The Commerce Division’s main focus is on negotiating and seeking preferential market access, but it has not been linked with the domestic production line.
The large-scale manufacturing sector of the country has already been in negative growth since July 2019 but still the ministry’s focus is on negotiations for international trade agreements and market access.
The commerce and textile divisions are yet to finalise the much-awaited industrial and textile policies despite several deadlines.
On the external side, imports are still dropping, which is providing some breathing space despite paltry growth in exports from the country.
The country’s trade deficit came down by 27.05pc in the first eight months of current fiscal from a year ago. The decline is mainly due to a double-digit fall in imports. Another reason is the government’s corrective measures to slow down imports to reduce pressures on foreign exchange reserves and slump in overall demand.
In absolute terms, the trade gap narrowed to $15.65bn in July 2019 to February from $21.46bn over the corresponding months last year. On a monthly basis, the deficit fell by 19.67pc to $1.81bn in February from $2.26bn during the same month last year.
The Ministry of Commerce estimates that the annual trade deficit may decrease by $12bn to $19bn in the ongoing fiscal year from $31bn during the last fiscal.
The data showed that imports in the first eight months of current fiscal year clocked in at $31.3bn, down by 14.39pc from $36.56bn during the same period last year. The decline in value of imported goods in February was 4.56pc to $3.95bn against $4.14bn during the same month last year.
The trend shows that the quantum of decline in imports is reducing with each passing month. This shows that the imports will stagnate to the tune of around $4bn per month in the next few months.
Published in Dawn, March 3rd, 2020
TRADE DEFICIT SHRINKS 26.5PC
The Newspaper’s Staff Reporter Updated March 05, 2020
ISLAMABAD: Pakistan’s trade deficit fell by 26.5 per cent to $15.77 billion in the first eight months of this fiscal year from $21.46bn over the corresponding period of last year, Pakistan Bureau of Statistics said on Tuesday.
The decline came mainly on the back of double-digit decline in imports following government’s corrective measures to reduce pressures on foreign exchange reserves and slump in overall demand.
On a monthly basis, the deficit fell by 14.6pc to $1.9bn in February from $2.26bn during the same month last year.
The commerce ministry estimates the annual trade deficit to decrease by around $12bn to $19bn in the ongoing fiscal year from $31bn during the last fiscal year.
The data showed imports in the first eight months of current fiscal year clocked in at $31.42bn, down by 14.06pc from $36.56bn during the same period last year. The decline in value of imported goods in February was 1.71pc to $4.07bn against $4.14bn during the same month last year.
In February, the export proceeds edged up to $2.14bn from $1.88bn over the corresponding months last year, showing an increase of 13.82pc.
Between July 2019 and February, the export proceeds’ grew up by 3.65pc as it stood at $15.64bn against $15.09bn over the corresponding months last year.
On the other hand, the export of services surged by 5.18pc year-on-year to $3.23bn in first seven months of the current fiscal year.
On monthly basis, export of services proceeds dropped by 0.21pc in February to $496.12 million on a year-on-year basis.
In 2018-19, export proceeds of services were recorded at $5.37bn, from $5.28bn over the preceding year, reflecting a paltry growth. Meanwhile, in FY18, services exports had declined 7pc year-on-year to $5.4bn.
Meanwhile, the import of services fell to $5.21bn in July-January FY20 from $5.45bn in same months last year, reflecting a decline of 4.46pc. In January, imports of services fell by 2.99pc to $678.2m on a year-on-year basis.
Published in Dawn, March 5th, 2020
1,400 CARGO TRUCKS STRANDED AT TAFTAN AS BORDER SHUT ON CORONAVIRUS FEARS
Mubarak Zeb Khan Updated March 06, 2020
ISLAMABAD: More than 1,400 trucks loaded with goods are stranded at the Taftan border crossing after Pakistan temporarily closed its border with Iran over concerns of coronavirus, Dawn has learnt from knowledgeable sources.
Pakistan closed its border with Iran on Feb 23 amid rising number of coronavirus cases and associated deaths. Balochistan, which shares 959km border with Iran, has already declared emergency in the province to contain the virus.
Well-placed sources told Dawn that Tehran has requested Islamabad to allow trucks to enter into the country. “We are considering finding out ways for the clearance of goods,” the source said while adding the final decision is expected in the next couple of days.
The trucks stranded at the border are loaded with petroleum products especially liquefied petroleum gas, scrap and chemicals.
The source said the goods are not the problem, since they cannot carry the virus but the issue lies with drivers and helpers driving the trucks. The government is considering various options to check truck drivers at quarantine places on the border, the source said.
In addition, Pakistan’s leather manufacturers import raw skin of sheep and other animals from Iran and there is no alternate option for this raw material. The closure of borders with Iran is likely to affect the leather industry as well.
Pakistan and Iran carry out trade on barter basis in the wake of US sanctions on Iran. In April 2017, the State Bank of Pakistan had signed a Banking and Payment Arrangement with Iran’s central bank, Markazi Jomhouri Islami Iran Bank (BMJII) for providing a trade settlement mechanism to promote bilateral trade. However, the agreement failed to materialise after the US reimposed sanctions on Tehran following its withdrawal from Joint Comprehensive Plan of Action.
According to sources, Iranian envoy in Islamabad also held meetings with top Pakistani authorities for opening of border stations to allow entry of trucks in to the country.
Pakistan’s exports to Iran through the Taftan border mostly include fruits and vegetables. There is no restriction on exports of fruits from Pakistan on the Taftan border, a customs official told Dawn. He said our exports are mostly seasonal and currently there are no exports to Iran at border.
The potential of vegetable and fruit trade has remained unfulfilled due to a lack of quarantine department at the border crossing. The government had announced in November last year to setup a quarantine department at the border to allow imports of vegetable and fruits from Tehran.
According to the official, Iran can export these products to Pakistan via sea route. However, he agreed that the sea route will increase freight charges.
As part of liberalisation of trade, Pakistan and Iran have committed to increase bilateral trade to $5 billion per annum. Currently, the bilateral trade is hovering around $1bn mostly in favour of Iran. Compared to that, Iran’s trade volume with Iraq stood at $13bn and around $10bn with the UAE.
In this background, authorities from both sides have held several rounds for enacting a permanent mechanism for barter trade. In this connection, a joint trade committee, co-chaired by the commerce ministers of both the countries has already been set up.
In addition, the Tehran Chamber of Commerce and Industry (TCCI) President Masoud Khansari also visited the Karachi Chamber of Commerce and Industry last week stressing upon the need to enhance interactions between the business communities between the two neighbours.
Khansari said that instead of waiting for trade promotion at government level, the business communities will have to sit together and make collective efforts to promote trade and investment.
“We look forward to seeing Pakistan at the same level in terms of trade volume which Iran has been enjoying with Iraq and the UAE etc”, he added.
Published in Dawn, March 6th, 2020
PAKISTAN, POLAND URGED TO BOOST TRADE
By Our Correspondent Published: March 6, 2020
ISLAMABAD: Pakistan’s trade with Poland is negligible as compared to actual potential and the business community should focus on further enhancing trade and exports in Polish market, said Ambassador-designate of Pakistan to Poland Malik Muhammad Farooq.
During a meeting with Islamabad Chamber of Commerce and Industry President Muhammad Ahmed Waheed, the two sides discussed matters for further improving bilateral trade and economic relations of Pakistan with Poland. Farooq assured that he would fully cooperate with the businessmen in these efforts.
He said that around 90% of Pakistan’s exports to Poland were comprised of textiles products and stressed that the business community should focus on exporting other products to Poland to achieve better results.
He said that both countries have good potential to cooperate in the IT sector as Polish companies could contribute towards growth of 5G and telecom infrastructure in Pakistan.
He said that Pakistan could import heavy machinery and high tech products from Poland. Farooq further said that Poland had cooperated with Pakistan in establishing PIA and other institutions and Pakistan could achieve beneficial results by developing close cooperation with Poland.
Also speaking at the occasion, Waheed said that foreign missions of Pakistan have an important role in improving Pakistan’s trade and exports with other countries.
He emphasised that Pakistan’s embassy should identify new opportunities for Pakistani products in Polish market that would help in improving Pakistan’s exports with Poland.
He stressed that Polish investors should also be convinced to setup joint ventures in Pakistan in textile and other sectors that would enable Pakistan to realize actual value of its exports.
Published in The Express Tribune, March 6th, 2020.