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PAkISTAN’S FIRST INDEPTh NEwSPAPER ON CuSTOmS
vol 1 Issue No. 38
weekly
karachi, Tue Nov 05 - mon Nov 11, 2013
Regd. No, mC-1381
Price Rs. 50.00
BuyINg mORE ShIPS
We are committed to increase our fleet of ships up to 15 this financial year, says Kamran Michael | SEE PAgE 4 |
LuRINgFOREIgNINvESTmENT
ISLAMABAD
FAIZA ISRAR
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In order to attract foreign investors, first of all there is an urgent need to encourage local investors, says BoI Chairman | SEE PAgE 6-7 |
SEEkINg hELP
Customs agents sought LCCI help to operationalise Lahore Dry Port that has become dormant because of non-arrival of freight trains, says Ch. Amjad | SEE PAgE 2 |
CARTOONS SPECIAL
| SEE PAgE 11 |
he newly-designated OfPicial Spokesperson for FBR and Member (IR Policy), Shahid Hussain Asad, has said that although the media generally projects a negative image of tax collection machinery, there is also a lot of positive reporting in newspapers about the work being done by FBR. All reports should be properly investigated to verify the facts and Pigures and the viewpoints of all stakeholders should be included to portray a balanced picture. While pinpointing shortcomings, the achievements of FBR should also be highlighted as it is working day and night for the uplift of the country. I believe that healthy and constructive criticism helps in improving the working of government departments. In an exclusive interview with Customs Today Shahid Hussain Asad said he was optimistic and hopeful about achieving the target of Rs 2475 billion set for the Pinancial year 2013-14. “We should be capable enough to generate the necessary resources for the development of our country and it can only be done through the promotion and enforcement of the tax culture. Political in-
dependence without economic independence is meaningless,” he added. The FBR spokesperson elaborated: “Lack of Pinancial management propels us to get foreign loans which ultimately results in negative economic growth. For the last few years FBR has been contributing 70 percent to the national budget and the remaining 30 percent is managed through loans. Loans are never an acceptable option. Rather we should utilize our own resources in a productive way to put the country on the path of development. At this time we are in a debt trap. As a nation, we have to understand the importance of taxes to get out of this trap.” He said that there are two types of tax payers i.e. non-reporting and under-reporting. There are some taxpayers who do not bother to Pile returns and they are non-reporting tax payer. Others only Pile returns but do not report their true income. Replying to a question, Shahid Asad said that the division of the IR wing a year ago did not produce the desired result. About the new SROs issued by FBR, he said that these are not issued to benePit any speciPic group or person but to facilitate the business community with the consent of the government. He said that FBR is now working on Value Added Tax (VAT) mode. Although this is an advanced taxation system, the business community seems reluctant to accept it. At the present time the implementation of VAT cannot be successful, and its misuse will promote corruption at different levels. He suggested that instead of collecting taxes at three different stages, i.e. sales tax on imports and manufacturing tax under VAT, the taxation process should be made simple so that taxpayers could be facilitated. Single tax system is always better than VAT and we will send suggestions to the Finance Minister in this regard.
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02 NATIONAL
NOVEMBER 05 - NOVEMBER 11, 2013
FBR forms committee to investigate pact with Agility
KARACHI: Federal Board of Revenue has formed an inquiry committee, comprising FBR Member Customs, FBR Member IT and two other members, to find out the motive behind repeated extensions in the agreement with M/s Agility for rollout of Pakistan Customs Computerised System (PaCCS) and payment of $11.5 million to the company. Sources said that FBR has made payments to the said company from time to time which also be probed by the committee.
New Shipyard project to uplift shipping industry
FBRordersallmCCstoauditdata ofcargomovementsatports FBR has directed the field formations to carry out audit of data concerning inter-port movement of cargo for the last two years at least and also physically check the presence of unclaimed indices ISLAMABAD
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ederal Minister for Defence Production Rana Tanveer Hussain stressed that Pakistan and Japan should look into avenues where both the countries could venture into civil sector development projects. During a meeting with new designated Ambassador of Japan, Hiroshi Inomata here in his office he said since defence cooperation with Japan was very limited; therefore, ventures on the civil side, where Japan could extend support were of much importance to Pakistan. The Minister said that the second shipyard to be built in Gwadar would cater to the shipping business in the region.“It is going to be a deep sea facility and bring a lot of business to Pakistan, increasing Pakistan’s importance in the region,” he added. “The new Shipyard project will uplift shipping industry of Pakistan and serve as a good harbour for ships trading in the region. It will also act as a gateway to Gulf,” the minister stressed. —CTReport
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MCC Preventive to face dearth of experienced staff he MCC Preventive is going to face dearth of staff in the next five years. The reliable sources informed Customs Today that around 300 senior officials of different cadres in MCC Preventive, including Inspectors Preventive Service, Superintendents Preventive Service, Senior Preventive Officers, Preventive Officers and sepoys, are going to retire from the service in the next five years. Around 130 SPOs and POs, 40 SPS and 130 sepoys are going to retire from service till the year 2018. However, FBR and Pakistan Customs have not taken any steps to bridge the gap. No new recruitment has been made in MCC Preventive for the last 25 years. “The MCC Preventive is also facing acute shortage of resources, including patrolling launches and other modern equipment”, they added. When contacted, Additional Collector Headquarters-I Shafqat Ali Khan Niazi said that the department was following the policies of the government, adding that the MCC Preventive needs young blood to improve the performance. Replying to a question, Niazi said that the authorities concerned have written to FBR about the prevailing issues. —CT Report
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BR has ordered all Model Customs Collectorates to audit data of inter-port cargo movements and conPirm whether all unclaimed containers are available at the ports or cleared illegally against fake Goods Declarations, causing revenue loss to the national exchequer. The sources said that after the detection of illegally clearing of the containers at Port Qasim, FBR wants to determine the number of unclaimed containers removed illegally from all the ports. They said that the case was detected by Directorate General of Customs Intelligence that 22 containers were unlawfully cleared from Port Qasim, Karachi from January 2013 to July 2013. Later, the number of such containers reached 35 after further investigation by the customs intelligence. In this regard, FBR has issued instructions to all Model Customs Collectorate following detection made by the Directorate General of Customs Intelligence, sources said.
According to sources, FBR has directed the Pield formations to carry out audit of data concerning interport movement of cargo for the last two years at least and also physically check the presence of unclaimed indices to see whether the goods were
disposed of legally or otherwise. Details of the case revealed that the staff of Directorate General I&I-FBR, Regional OfPice, Karachi has detected unlawful clearance of twenty-two 40ft containers imported at Port Qasim, Karachi during the period from January 2013 to July 2013. The theft of government revenue has been estimated to be Rs9.46 million. However, more disturbing is the fact that the fraudsters were able to clear a huge number of consignments against fake and fabricated Goods Declarations. Initially, two consignments were detected to have been clandestinely removed against fake GDs bearing Machine Nos. KPPI-HC21132 dated 20.07.2012 and KPQIHC-25192 dated 27.07.2013. Subsequently, twenty more such cases were detected. The Directorate General's staff made extraordinary efforts to trace the truck drivers who were instrumental in transportation of the unlawfully cleared/clandestinely removed goods from the Port to the dumping places of the fraudsters. The FIR has been lodged in the case and one person has been arrested so far. An amount of Rs5.4 million, involved in nine of the 22 consignments, has already been recovered out of the total defrauded amount of Rs9.46 million.
Rawalpindi Islamabad customs agents call off strike awalpindi Islamabad Customs Agents Association has called off its two-day strike against the alleged negative behaviour of Deputy Collector Ayesha BashirWani. R-ICAA President Rana Aqeel told CustomsToday that the demands put by the association have been fulfilled by the Collectorate. He said that though the strike resulted in the loss of revenue collection but the association had to take this step in time of dire need. Deputy Collector Ayesha BashirWani assured the agents that their problems would be addressed on priority basis. AyeshaWani took charges of her office earlier this month after the transfer of deputy collector AbdulWaheed Merwat.The Customs agents went to strike alleging that Ayesha’s behaviour towards customs agents was harsh and there was no need to increase the valuation duty as other ports were giving relaxation to the importers.The strike caused loss of Rs4 billion daily to national exchequer. —CTReport
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CustomsagentsseekhelptomakeLahoreDryPortprofitable Therewasatimewhen70to100freighttrainsusedtoarriveatLahoreDryPort,providinghugerevenuetothegovernment LAHORE
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he Lahore Chamber of Commerce and Industry has agreed to extend full support to the Customs Clearing Agents to make Lahore Dry Port proPitable again. LCCI President Engineer Sohail Lashari, Senior Vice President Mian Tariq Misbah and Vice President Kashif Anwar were talking to a delegation of Lahore Customs Agents Association led by Muhammad Amjad Chaudhry. LCCI former President Muhammad Ali Mian, President of Customs Clearing Agents Association Agha Iftikhar and SVP Ch Abdul Sattar Gujar also spoke on the occasion. “LCCI would not let the Lahore Dry Port suffer loss and would utilize all its energies to put it back into business in the larger interest of 4000 families attached with the dry port.” The LCCI ofPice-bearers said that economic turnaround is directly
— Exclusive Customs Today photo
linked to ease of doing business and the government would have to put in place a consultative economic policy framework for creation of a conducive business environment. They said that complex tax procedures and bureaucratic hurdles had badly affected the business en-
vironment. “We are identifying issues ailing the economy other than the ongoing shortage of electricity and gas. These challenges along with their comprehensive shortterm and long-term solutions would be sent to all the departments including Ministries of Commerce and
Finance, Federal Board of Revenue and the State Bank of Pakistan.” They also expressed the resolve to take up the issues of Customs Clearing Agents with Federal Board of Revenue (FBR) to ensure smooth functioning at all ports. The LCCI ofPice-bearers said that they were well aware of the fact that Customs Clearing Agents were facing multiple challenges and would be putting their best efforts to get them resolved at the earliest. Earlier, the leader of the delegation Chaudhry Muhammad Amjad sought their help to operationalise Lahore Dry Port which has become dormant because of non-arrival of freight trains. Ch Amjad informed the LCCI ofPice-bearers that there was a time when 70 to 100 freight trains used to arrive at Lahore Dry Port, providing huge revenue to the government but today the situation is totally different. He urged the LCCI ofPice-bearers to invite Federal Minister for Railways Khawaja Saad RaPique to the Lahore Chamber of Commerce and Industry and discuss with him this important issue.
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NATIONAL 03
NOVEMBER 05 - NOVEMBER 11, 2013
106 capsules filled with heroin recovered from man’s abdomen
PESHAWAR: A passenger has been arrested from a private airliner at Bacha Khan Airport after 106 capsules filled with heroin were recovered from his abdomen. A press release said that the ANF officials during routine checking found 106 heroin filled capsules in the abdomen of a passenger of a private airliner bound for Oman. The passenger was arrested and charged under the relevant laws.
Rs400m customs duty scam
Body to submit detailed report in 15 days LAHORE
m hAyAT
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ollowing detailed report by Chief Collector of Customs on Rs400 million Customs duty scam of betel leaves, Federal Board of Revenue (FBR) has set up a committee for thorough probe into the matter. Sources said that the sevenmember committee, after taking procession of all the relevant record, has started its work. The committee will submit its detailed report on the matter within 15 days to FBR chairman for further action, the source said. Earlier, an FIR was registered against 28 people for evading Customs duty fraudulently on the import of betel leaves, they added. Special judge on Customs has accepted bail of almost all the accused persons while the main accused Shahbaz, a clearing agent, is still at large and two accused Abdul Khaliq Zaki and Muhammad Saeed are in jail. Sources said that FBR authorities were ordered to contact Interpol for the arrest of Shahbaz but the board has failed to take action in this regard.
Customstodisposeofmissing containerscasesbyendofNovember KARACHI
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akistan Customs has started liquidating pending cases in the missing Nato/Isaf containers scam related to Afghan Transit Trade to ensure recovery of an estimated Rs54 billion. According to an ofPice order, Model Customs Collectorate (MCC) of Appraisement–West constituted a team of two deputy collectors, including Muhammad Yousuf Khan Magsi and Dr Noman Khan, directing them to adjudicate Afghan transit cases with immediate effect. Sources said that the end of November has been Pixed as the deadline to Pinalise the cases and all those found involved in the scam would be issued Pinal demand notices for payment. Early this year, Federal Board of Revenue had reported evasion of around Rs54 billion in this scam in a hearing before the Supreme Court. Two months ago, MCC Port Qasim issued recovery notices in three cases to the clearing agents after declaring them guilty. In protest, Karachi Customs Agents Association halted the entire clearance system on September 10 at all the collectorates and dry ports, arguing that the recovery notices issued against the clearing agents were unjustiPied and they were unnecessarily being dragged into the scam. The protest strike continued for two days and ended with the settlement with the Customs authorities that all the show-cause notices issued to the clearing agents will be
opened for re-hearing to allow another opportunity to them. The three recovery notices were issued in connection with over 28,000 missing containers of Nato/Isaf. A customs ofPicial, on the condition of anonymity, said that in those three cases where ONOs (Orders-inOriginal) were issued will go to Collector Appeal for relief. However, around 10,000 other cases where show-cause notices were issued will be given an opportunity for re-hearing. The Customs sources said that the cases of those agents will be withdrawn where the agents provide banking transactions with the Afghan importers regarding the payment received against service charges. The sources; however, said that such provision was not included
in the show-cause notices. In July 2010, the Supreme Court of Pakistan had took suo motu in around 250,000 missing containers case on which an FBR probe committee identiPied around 28,802 missing containers, incurring a loss of Rs53 billion. However, later in the report submitted by the Federal Tax Ombudsman (FTO), the number of containers was reduced to 7,922. The Customs agents said that instead of taking the outcome of the FTO report, FBR was following its probe committee report. A report presented to the Supreme Court by Ramazan Bhatti, the former Member Customs in Karachi law and order case, said that the Pindings of the Federal Tax Ombudsman in the report submitted in
January 2011 were still under investigation by FBR and National Accountability Bureau (NAB). No worth mentioning results of these investigation had come on the surface. “It will be worthwhile to revisit the underlying assumption/parameters of the Federal Tax Ombudsman report and initiate investigation with the help of intelligence agencies regarding companies registered in Afghanistan but actually owned by Pakistani citizens, remittance of foreign exchange by hawala/hundi through Pakistan-based money changers and containers brought in transit as commercial cargo but shown either returned to ports within 72 hours or so far found missing in the records of the customs,” the report recommended.
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04 PORTS&SHIPPING
NOVEMBER 05 - NOVEMBER 11, 2013
Chinese Customs arrests 19 diamond smugglers, including Indians
BEIJING: In a new case of arrests for alleged diamond smuggling, 19 diamond traders, most of them believed to be Indians, have been arrested by Chinese Customs authorities. They are charged with smuggling around $49 million worth of diamonds into Shenzhen from Hong Kong. The diamonds were confiscated by the Chinese authorities, according to Indian media reports. This is the second time Gujarati diamond traders have been arrested in China on smuggling charges.
80 FBR high-ups on deputation, ex-Pakistan leave KARACHI
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ederal Board of Revenue (FBR) is facing acute shortage of high officials in Grade-18 and above. Reliable sources in FBR informed Customs Today that more than 80 senior officials of Grade-18 and above have either been working in different federal institutions on deputation or are on exPakistan leave for many years. The sources further revealed that only three officials after passing Civil Superior Services (CSS) exams in the year 2012 had opted for Pakistan Customs Service for training while only five officials selected Customs Department after passing CSS exams in the year 2013. They further said that the scarcity of high officials in FBR has reached alarming proportions as FBR has sent the other remaining officials of Grade 18 or above in different departments including Inland Revenue Services (IRS), Sales Tax and Income Tax.
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world’s largest containershipscall atportofBritain he Port of Felixstowe has handled four of the world’s largest container ships in 24 hours and become the first port in the UK to handle an 18,000 TEU vessel. The period of intense activity at the UK’s busiest container port began with the arrival of the 13,000TEU MSC Capella, and included maiden calls by the 18,000 TEU Majestic Maersk, currently the largest class of vessel in the world, and the 13,400TEU Cosco England.The 14,000 TEU MSC Gaia was the fourth of the quartet. Commenting on the series of Ultra Large Container Ships (ULCSs) calling at the port, Paul Davey, Head of Corporate Affairs of Hutchison Ports (UK) Limited, owners of the Port of Felixstowe, said: “The global shipping industry is witnessing rapid growth not just in the size of container ships, but also in the number of the largest ULCSs calling in Europe. Seeing four of these giant ships at Felixstowe in 24 hours demonstrates our unique ability to handle multiple calls by the very largest ships simultaneously. “We are committed to an on-going programme of investment to ensure that we stay ahead of the game when it comes to providing the facilities and resources necessary to turn even the biggest container ships around in the quickest possible time. It is also testimony to the skill and experience of our workforce that all the vessels were completed on or ahead of planned schedule.” —CT Report
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RegionalcountriesmayusePakistani shipsfortradewithSriLanka:Michael
Netherlands to provide fiber boats for Pakistani fishermen 57 security guards won’t be rehired at Port Qasim Terminal Govt is developing Industrial Zone consisting of 1325 hectares at Port Qasim
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ederal Minister for Ports and Shipping Kamran Micheal said that Sri Lankan government has promised that all regional countries, having ship trade with Sri Lanka, would use Pakistani ships, which will help boost our revenue and growth of Pakistan National Shipping Corporation (PNSC). He said the government is taking steps to facilitate the shipping, logistics and supply chain management. The Minister said that we are going to buy four oil tankers, by next month, and we are committed to increase our Pleet of ships up to 15 in this Pinancial year. To attract the foreign and domestic investors, we are developing Industrial Zone consisting of 1325 hectares at Port Qasim. Meanwhile, the Netherlands will provide fiber boats, having navigational systems, to the Ministry of Ports and Shipping on easy installments and reduced rates in order to facilitate the Pakistani fishermen keep to the country’s sea-limits and avoid violation of international sea-laws.
These navigational systems have got the capacity to navigate the right direction and limits of seawater. The provision of the fiber boats was approved in a meeting between Ambassador of the Netherlands Marcel de Vink and Federal Minister for Ports and Shipping Senator Kamran Michael. It was decided that the Dutch companies would provide the fiber boats to Baloch fishermen who earn their livelihood through fishing. Moreover, these Piber boats will be equipped with lifejackets to ensure the protection of Pishermen. The Netherlands also offered ports management courses to Pakistani crew to develop the expertise for administrating ports. Federal Minister Senator Kamran Michael applauded the steps of the Dutch government and stated that such constructive measures would enhance bilateral trade and investment relationship. The federal minister was also given formal invitation to visit the Netherlands to meet the Dutch highups as well as the owners of private companies to persuade them for investment. Meanwhile, Senator Kamran Michael said that the Ministry is not going to extend the contract of 57 security guards after comple-
tion of their tenure at Port Qasim Terminal. In a high-level meeting in Islamabad, Senator Kamran Michael said that at 4 terminals of Port Qasim, 700 security guards are working while these terminals are being administered by private companies. Federal Minister categorically said that there was no need of extra burden on national exchequer, so their contracts would not be renewed.
we are going to buy four oil tankers by next month, and we are committed to increase our fleet of ships up to 15 in this financial year, says
Kamran Michael
Ship-breakingindustryshowssignsofgrowth KARACHI
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hip-breaking industry showed hyper activity during the Pirst four months of the new government. A report issued by the State Bank showed that credit off-take by the ship-breaking industry shot up between July and October. Overall manufacturing sector showed no signs of improvement. Instead, a signiPicant decline was visible in their credit off-take from the banking industry during last four months. According to the State Bank, credit off-take by ship-breaking industry rose by Rs3.5 billion to Rs18.245bn till end September, 2013. However, credit off-take by the entire manufacturing sector witnessed a sharp decline of Rs26bn to Rs1422bn, rePlecting poor state of economy and disappointing manufacturing sector growth. Since the inception of the new government, it was widely expected that Prime Minister Mian Nawaz Sharif would wake up sluggish economic activities with some new ideas and new economic policies, but so far no strategy has been introduced at the highest level. It was not known to bankers why
liquidity suddenly started Ploating towards the ship-breaking industry. However, informed sources said that the new government is interested in seeing the ship-breaking industry Plourishing like it had been in the past. The bankers had no reasons for other sectors to be ignored by the banking industry. The most important sectors, like textile, have yet not shown willingness to improve their performance. According to the State Bank, textile sector which is largest consumer of banking loans (now
mostly for working capital) added only Rs328 million in three months in their total loans worth Rs515.230bn. The textile industry has been crying over higher interest rate when the State Bank increased the interest rate by 50 basis points to 9.5pc last month. Since the cost of production has risen signiPicantly due to massive devaluation of local currency, exports could see a dent during the current Piscal year. Textile exporters use up to 30pc imported constituents for their exportable products.
Port of Rotterdam proclaimed‘Port of theyear’ ort of Rotterdam was proclaimed ‘Port of the Year’during the annual ‘Containerisation International Awards’in London. The expert jury praised the port for its substantial investment programme in Europe’s leading logistics hub and industrial complex. The jury also compliments the port with its attention to sustainability with their modal shift objectives and groundbreaking initiatives like InlandLinks and NextLogic that contribute to it. Emile Hoogsteden, director of Containers, Breakbulk and Logistics at the Port of Rotterdam Authority said, “Winning this award is a tremendous achievement and recognition of our efforts. As the port of Rotterdam, we are constantly working on new investments and innovations. We don’t do this alone, but in partnership with as many market parties as possible. This is the only way we can continue to improve our port and pursue our ambition to be the most efficient, safe and sustainable port in the world.”—CT Report
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NATIONAL
NOVEMBER 05 - NOVEMBER 11, 2013
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20kg gold seized from plane of Bangladeshi national airline
DHAKA: Customs officials recovered 160 smuggled gold bars weighing around 20kg at the toilet of a flight of Biman Bangladesh Airlines at Hazrat Shahjalal International Airport on Tuesday night. “The gold bars kept in four bags were found at the toilet of the national flag carrier. Coming from Hong Kong, it landed in Dhaka around 10:30pm,” Zakiya Sultana, commissioner of customs at the airport, told media. She said they had searched the flight on a tip-off but were not able to arrest anyone.
PNSCtobuytwomoredouble-hulltankers Annual general meeting gave a green signal to the PNSC to go for the acquisition of one Aframax oil tanker and one LR-1 Product tanker to raise the strength of the national fleet to 11. Pakistan presently has nine vessels, six bulk cargo ships and three oil tankers of 656,000 DwT KARACHI
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akistan is acquiring two double-hull tankers at an estimated cost of $ 45 million to upgrade its existing nine-vessel shipping Pleet. The Pakistan National Shipping Corporation (PNSC) caters to 22 percent of the country's $ 16 billion oil imports and is considered to be, what a director at the Corporation's board said, one of the "Pinest" public sector enterprises in Pakistan. The annual general meeting (AGM) held by the company's shareholders was told that the national Plag-carrier earned a gross proPit of Rs 3.291 billion during the outgoing year 2013. This shows remarkable growth when compared with last year's Rs 2.096 billion. A listed Pirm at the Karachi Stock Exchange, the Corporation declared Rs 15.08 earning per share compared to Rs 5.70 of 2012. "The PNSC gave 10 percent dividend
ImF seeks detailed report
FBRcollectsRs636bduring July-October nternational Monetary Fund (IMF) has asked FBR top bosses to present detailed report on implementation of reform agenda on broadening of tax base exercise in first four months of the current fiscal year. IMF’s visiting team also asked the tax authorities for devising plan to remove tax exemptions as well as taking additional measures to avoid revenue shortfall in ongoing fiscal year. FBR had so far dispatched tax notices to 32,000 to non filers in all over the country out of which over 500 filed their income tax returns. Owing to some problems, the broadening of tax base exercise was slowed down but FBR high-ups are upbeat that they will be able to send 100,000 notices in 2013-14. IMF team led by Jeffry Franks visited Islamabad last week for completing review talks and releasing second tranche of $550 million under Extended Fund Facility (EFF), FBR has so far collected Rs 636 billion in first four months (July-October) period of the current year compared to a collection of Rs 546 billion in the same period of the last financial year.“Against the desired growth of 28 percent for materializing revenue collection target of Rs 2475 on its board on June 30, 2014, FBR has so far achieved a growth of just 16 percent, indicating possibility of major revenue shortfall in the current fiscal year,” said the official sources. In October 2013, FBR collected Rs 155 billion against the desired target of Rs 164 billion.The overall shortfall in first four months stood at Rs 33 billion in the ongoing fiscal year. IMF had already predicted that the maximum revenue collection of FBR would be standing in the range of 2345 billion compared to FBR’s fixed target of Rs 2475 billion. FBR has collected Rs 220 billion in shape of gross collection on account of IncomeTax in July-Oct period, Rs 324 billion as SalesTax, Rs 44 billion as Federal Excise Duty and Rs 71 billion as Customs Duty. FBR had paid refunds of Rs 24 billion in first four months of the current fiscal year against repayment of Rs 30 billion in the same period of the last financial year.The net collection of the FBR stands at Rs 635 billion in first four months of 2013-14.The total collection for the first quarter (July– September) stood at Rs.481 billion against an amount of Rs.414 billion collected for the corresponding period last year.The revenue of Rs.481 billion includes Rs.161 billion IncomeTax, Rs.235 billion SalesTax, Rs.54 billion Customs duty and Rs.31 billion Federal Excise duty. —CT Report
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to the shareholders," said Captain Anwar Shah, a maritime consultant and board member of the Corporation. The analysts believe that this unusually inPlated dividend of Rs 10 per share, compared to last year, may have some link with the company's proposed sell-off that the resourceconstrained federal government says is due sooner or later. AGM also gave a green signal to the PNSC to go for the acquisition of one Aframax oil tanker and one LR-1 Product tanker that would increase the national Pleet to 11. Pakistan presently has nine vessels, six bulk cargo ships and three oil tankers of 656,000 DWT (dead-weighttonnage). "The new acquisitions are estimated to cost $ 40 to 45 million," Shah told Customs Today. Shah, a maritime consultant who Friday was elected unopposed for three more years to the PNSC board as a shareholders' director, said the two vessels were to be second hand that would be purchased from the open international market. "The shareholders approved the acquisition in AGM. Now formal bidding would be carried out," said Shah.
Restoration of old organisational structure of FBR recommended KARACHI
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ne-man Commission headed by former FBR Member Customs, Ramzan Bhatti, has expressed dissatisfaction over the performance of FBR's support organisations in controlling tax evasion on imports and smuggling. The sources, referring to the report, said that there are about half a dozen support organisations ie the Directorate General of Intelligence and Investigation, Directorate General of Customs Valuation, the Directorate General of Post Clearance Audit, the Directorate General of Internal Audit, the Directorate of Input-Output Coefficient Organisation, Project Director WeBOC and the Directorate General of Training and Research. It was revealed by the senior officers of these organisations that their role in raising revenue or eradicating tax evasion was minimal because of shortage of funds and personnel, posting of comparatively disgruntled with hardly any clarity and up-gradation of the job descriptions of concerned employees. The Commission also observed that the Directorate General of Customs Valuation, which is mainly responsible for issuing Valuation Advices/Rulings and fixation of Customs Values under Section 25A and 25D of the Customs Act, 1969, had issued 428 Valuation Rulings
and fixed values of 3,700 items, covering only 6 per cent of total imports into Pakistan. This performance, of course, needs improvement as the Customs Valuation Department shall issue rulings/fix values of more than 50 per cent of total imports whether taxed or exempted under the concessionary noti-
Reforms in the tax administration and new organisational structure of FBR as a result of Tax Administration Reform Project failed to achieve the desired results, says Ramzan Bhatti Former member Customs
fications, the report revealed. The Commission in its report also strongly recommended restoration of the old organisational structure of FBR under which separate Members for Customs, Sales Tax, Federal Excise, Income Tax
and Withholding Tax were independently dealing all the federal taxes. According to the Ramzan Bhatti’s report, the reforms in the tax administration and new organisational structure of FBR as a result of Tax Administration Reform Project failed to achieve the desired results, and resultantly there is low Tax-to-GDP ratio in the country. Sources said that a massive effort was made with the Pinancial and technical assistance to re-organise and re-structure FBR and Pield formations during 2004 2010 under the title of Tax Administration Reforms Project (TARP). The project had failed to achieve its objectives and the money loaned had gone down the drain. The factual position is that the restructured FBR and Pield formations have failed to achieve the targeted goal of raising the tax-to-GDP ratio to 15%. Conversely, the tax-to-GDP ratio has declined over the period while the compliance cost ie administrative cost as well as taxpayers cost has increased. Sources said that the stated objectives of broadening the tax base and providing the taxpayers a friendly environment have not been realised despite doubling the remunerations of tax functionaries and improvement of work environment. There is, therefore, a need to evolve a tax policy keeping in view the ground realities. It is a well established fact that a single Member or a Commission cannot appropriately and comprehensively tackle a number of tax regimes completely different from each other.
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SPECIALREPORT
NOVEMBER 05 - NOVEMBER 11, 2013
Foreign direct investments have been on the decline in Pakistan for the last few years owing to security concerns as well as volatile macroeconomic conditions. The government is eyeing to lure Foreign Direct Investment (FDI) to the tune of over $1 billion during the current fiscal year ISLAMABAD
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In order to attract foreign investors, first of all there is an urgent need to encourage local investors which would pave the way for increasing foreign investment in the country, says BoI Chairman mohammad Zubair
ithout improving economic fundamentals of the country, the investment-to-GDP ratio cannot be improved in Pakistan, said Chairman Board of Investment Mohammad Zubair. In an exclusive interview with Customs Today at his ofPice just before his departure for UK, Germany and many other parts of the world to lure foreign investors for boosting investment in Pakistan, Chairman BoI said that there was no movement on signing Bilateral Investment Treaty (BIT) with USA. “Before moving ahead on this subject, we will evolve consensus among all relevant stakeholders,” he added. He said that it was needed to focus upon areas of value addition which could turnaround the country’s economy. While analyzing potential of investment from Chinese investors, he said that Pakistan offered them to invest in few selected areas that could jump-start the sluggish economic activities in a big way. It is relevant to mention here that foreign direct investments have been on the decline in Pakistan for the last few years owing to security concerns as well as volatile macroeconomic condition. The government is eyeing to lure Foreign Direct Investment (FDI) to the tune of over $1 billion during the current Piscal year. He said that he was making all-out efforts to transform this body on the pattern of corporate culture which could ensure one window facility for enhancing investment in Pakistan. The investment in percentage of Gross Domestic Product (GDP) declined massively in recent years as it nosedived from around
20 to 12 percent during the last Pive years. According to newly-appointed Chairman, there was a dire need to bring paradigm shift in the working of the ministries/divisions as alone these efforts could help achieving turnaround on economic front in next three to Pive years period. “If we ensure implementation on decisions in a timely manner, it can make a major difference for achieving the desired results,” he added. When he was asked to comment on government’s envisaged target regarding ambitious privatization plan, he said that the Cabinet Committee on Privatization approved 31 units which would be privatized in Pirst phase. In order to attract foreign investors, he said, Pirst of all there was an urgent need to encourage local investors which would pave the way for increasing foreign investment in the country. In order to give conPidence to investors, he said that the government would off-load shares of those banks which were already under the private sector management such as Habib Bank Limited, United Bank Limited and other such institutions. Without bringing change in the mindset, the dream of transforming this country into destination of potential investors could not be materialized, he said, adding that the uncertainty about fate of future investment would result into shying away of potential investors. There are different avenues available to investors and uncertainty on any account will not extend positive signal to investors, he maintained. The Chairman BoI said that terrorist attacks and overall security situation was not in the domain of economic policy formulation but one thing could make a major difference and that was ensuring effective implementation of policies devised by the government.
NOVEMBER 05 - NOVEMBER 11, 2013
SPECIALREPORT 07
— Exclusive Customs Today photos
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08 EDITORIAL
NOVEMBER 05 - NOVEMBER 11, 2013
Founder & Chairman Zulfiqar Ali Editor Nasim Ahmed Deputy Editor Rahil yasin editor@customstoday.com.pk For advertising & subscription marketing@customstoday.com.pk +92-322-3370002 www.customstoday.com Phones: 042-35781643-4, Fax: 042-35781645 Address: 627, Siddiq Trade Centre, Gulberg, Lahore
EDITORIAL
Reforming FBR
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eform and restructuring of FBR is once again in the news. According to a report, the Bureau has constituted a high-level committee to determine the core functions of the Directorate General of Intelligence and Investigation Inland Revenue and Directorate General of Internal Audit to avert overlapping of functions and organisational restructuring of the agency. At a recently held meeting of the Board-in-Council, FBR chiefTariq Bajwa suggested that since a separate system is operating for broadening the tax base under Commissioner, BTB FBR (HQ), which focuses on individuals rather than businesses and organizations, it may be in the fitness of things that the businesses, not in tax net, may be made the responsibility of the Directorate General Intelligence & Investigation and Inland Revenue (I&I-IR) for the purposes of comprehensive survey and identification.The FBR Chairman also emphasised that the core functions of the Directorate General (I&I-IR) should be specific, clear, categorical and without any overlapping/duplication with other organisations. On the other hand, the one-member Commission on 'smuggling of arms and ammunition' has strongly recommended restoration of the old organisational structure of FBR under which separate Members for Customs, SalesTax, Federal Excise, Income Tax andWithholdingTax were independently dealing with all the federal taxes. The issue of reforming FBR keeps hitting the headlines because despite repeated efforts the Bureau has not been able to push up the abysmally low tax-t-GDP ratio in the country. It may be recalled here that during 20042010 under theTax Administration Reforms Project (TARP) an attempt was made to reorganise and re-structure FBR and its field formations. But the project failed to deliver as the target of raising the tax-to-GDP ratio to 15 percent could not be achieved. Rather, the situation has worsened over the years. Reform in FBR is needed both at the policy/strategy and operational levels.There is often duplication of work and many grey areas which militates against efficiency and optimal results.The Committee set up by the Board-in-Council needs to carry out a detailed scrutiny of the tax administration and organisational structure of the FBR. There is an obvious need to shed the flab, where necessary, and strengthen the wings/sections which can be more productive of results. The objective of broadening the tax base cannot be achieved without tying up all the loose ends the most important of which is the performance of the field staff. Corruption is rampant at various levels which needs to be dealt with an iron hand.We need to evolve a new tax policy keeping in view the ground realities.
PM NAWAZ SHARIF’S USVISIT
ThE IgNORED ECONOmIC DImENSION LAHORE
NASIm AhmED
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akistan-US relations are so overlaid with historical overtones, that whenever any meeting takes place between the leaders of the two countries, its political aspect dominates all other dimensions. The same happened in the case of the recent visit of PM Nawaz Sharif to Washington. The media was so full of news and opinions about drones, terrorism, Afghanistan and Kashmir issues that the progress made by the two countries towards strengthening bilateral economic ties was largely ignored. Economic cooperation was high on Nawaz Sharif’s agenda because the United States is Pakistan’s largest export market and one of the sources of foreign di-
rect investment in Pakistan. The US is also a prime backer of the Pakistan Private Investment Initiative (PPII) launched at the jointly sponsored Pakistan Business Opportunities in Dubai in June 2013, which would make a matching investment of $100m in the development and expansion of small and medium size businesses in Pakistan. In the past, US assistance in the energy sector has been of crucial importance. The prime examples are addition of over 1,000 megawatts of power to Pakistan’s national grid, construction and rehabilitation of Gomal Zam, Satpara, Mangla,and Tarbela dams and the modernization of Guddu, Jamshoro, and Muzaffargarh power plants, support for Daimer-Bhasha and Dasu dams and the recent Overseas Private Investment Corporation (OPIC) loan for private sector
wind development in Sindh. During the meeting the two sides agreed on expediting the funding for the Kaitu Weir Hydroelectric and Irrigation Project, which will increase Pakistan’s overall energy production, expand the amount of irrigated land, and provide livelihood options for residents of North Waziristan. The Working Group on Energy is due to meet in November 2013, followed by a USorganized Pakistani trade mission to Houston, Texas, to meet with major US energy companies. In preparation for this working group, the two leaders instructed their teams to develop a US technical assistance programme to support the development of Pakistan’s domestic natural gas reserves. During the visit Prime Minister Sharif continued to work on the theme of trade, not aid and greater
access for Pakistani goods to the US market. The two sides agreed that the United States-Pakistan Trade and Investment Framework Agreement (TIFA) is the key vehicle to promote US investments in Pakistan, while President announced that US Trade Representative Michael Froman would invite his counterpart to Washington for a TIFA Council meeting, at which these issues could be discussed in greater depth. The most important of all was the decision to develop a joint action plan to expand trade and investment Plows between the United States and Pakistan over the next Pive years and hold the third US-Pakistan Economic Opportunities Conference next year. How many of these decisions are operationalised will depend upon the vigour with which the two sides pursue them.
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PICTORIAL
NOVEMBER 05 - NOVEMBER 11, 2013
Customs seizes 3 trucks
LAHORE: Multan Customs’ anti-smuggling squad took three mini trucks worth Rs3 million into custody for non-payment of customs duty and other dues, officials sources said. The squad led by Inspector Haq Nawaz impounded two mini trucks from Bahawalpur bypass and a mini truck, Khushab-3495, Muzaffargarh toll plaza. The squad sent cases to Customs’ Adjudication Branch for recovery of customs duty and other dues, the sources said.
Iftikhar malik donates Rs 1.1 million
Collector Junaid opens funfair at Customs Public School LAHORE
m hAyAT
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enowned businessman Iftikhar Ali Malik has announced Rs1.1 million donation for Customs Public School at the inauguration ceremony of two-day annual funfair of the school. Customs top officials including Customs (preventive) Collector Junaid Akram, Additional Collector Dr Asif, Customs Public School Principal Sara Zaheer and others were present on the occasion. Inaugurating the funfair, Malik said that Customs is an important organ of the state and working for the development of the country. He said that no nation can make progress unless taxes are paid by the business community and other strata of the society properly, adding that all type of taxes including Customs duty are lifeblood of the country. He urged the business com-
— Exclusive Customs Today photo
munity to fully cooperate with the Customs authorities in order to make the country prosperous. Announcing Rs1.1 million donations for the Customs Public School, Malik said that offspring’s of the Customs Officials are nation’s future builder and
the financially sound individuals and entities should come forward to help such trusts. Customs Collector Junaid Akram welcoming the goodwill gesture appreciated the role and contribution of the business community in the development of the country.
Customs Public School Principal Sara Zaheer said that the school has a high rank among the top schools of the country and she was making hectic efforts to make the organisation more result oriented. She said that extra-circular activities like funfairs are also a
part of the quality education which provide the students opportunity to groom and shine. Students of 7th class Ali and Moazam expressed their pleasure, saying that the annual funfair provides an opportunity to enjoy and participation in the funfair was a great fun for them.
ISLAmABAD: A group photo of Chairman FBR Tariq Bajwa and officers of FBR with the officers of 99th National Management Course and Faculty of National School of Public Policy, during their visit to FBR House
— Exclusive Customs Today photos
ISLAmABAD: Member FATE Ms. Riffat Shaheen talking to media after the inauguration of Taxpayers Facilitation Desk at the press club.
ISLAmABAD: President RCCI in group photograph with Indian delegation at Indo-Pak Young Entrepreneurs Bilateral
ISLAmABAD: Federal Minister Shahid Khaqan Abbasi talking with ICCI President
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10 NATIONAL
NOVEMBER 05 - NOVEMBER 11, 2013
Bid to smuggle 10kg heroin foiled at Lahore airport
LAHORE: Authorities at Allama Iqbal International Airport have foiled a bid to smuggle more than 10 kilograms of high quality heroin. According to Anti Narcotics Force sources, a vehicle carrying footballs was checked at Lahore airport. The 45 boxes of footballs were packed with more than 10 kilograms of high quality heroin. The sources said that the seized heroin was brought from Faisalabad which was planned to be smuggled to African countries. The agent with the car, Faisal, was also arrested, the sources added.
Customsvaluesissuedfor splitair-conditioners irectorate General of Customs Valuation Karachi has issued new customs value of the import of split air-conditioners from China and Far Eastern countries excluding Japan. The Directorate General of Customs Valuation Karachi issued a valuation ruling in exercise of the powers conferred under section 25-A of the Customs Act, 1969. The valuation ruling has superseded valuation Ruling 06/2008-VII dated 31.10.2009. As per ruling, the customs values of split air-conditioners ranges between US $209 to US $1017 per unit, depending on the type and specification of the imported item. The customs values of split air-conditioners were determined vide Valuation Ruling 06/2008-VII dated 31.10.2009. A reference was received from Model Customs Collectorate, Appraisement (East) Karachi, regarding under-invoicing in import of split air-conditioners (Wall mounted/Floor standing). It was informed that original invoice was found in a consignment of China origin split air-conditioner of 12000 BTU. Therefore, an exercise to determine the Customs values of the subject goods under section 25-A of the Customs Act, 1969 was initiated. The valuation methods given in section 25 of the Customs Act, 1969 were followed. Transaction value method provided in section 25(1) was found inapplicable because requisite information was not available. Identical /similar goods value methods provided in sub-section (5) & (6) of section 25 ibid were also not found applicable to determination of the Customs values due to unreliable and variable values. However, for split air-conditioner 12000BTU of China origin, the transaction price intimated by MCC, Appraisement (East) was considered. Consequently, findings of market enquiry as envisaged under sub-section (7) of section 25 of the Customs Act, 1969 read with subsection (9) of section 25 ibid were followed to determine customs values for split air-conditioners (Wall mounted/Floor standing) in this case. A meeting with stakeholders was held to obtain their feedback regarding current international prices of the subject goods. Customs values for split air-conditioners (Wall mounted/ floor standing), hereinafter specified, shall be assessed to duty/ taxes on the customs values mentioned against them at the specified rates. In cases where declared/transaction values are higher than the customs value determined in this Ruling, the assessing officers shall apply those values in terms of sub-section (1) of section 25 of the Customs Act, 1969. In case of consignments imported by air, the assessing officer shall take into account the differential between air freight and sea freight while applying the Customs values determined in this Ruling. The values determined vide this Ruling shall be the applicable Customs value for assessment of subject imported goods until and unless it is rescinded or revised by the competent authority in terms of sub-sections (1) or (3) of section 25 of the Customs Act, 1969. A review petition may be filed against this Ruling, as provided under Section 25-D of the Customs Act, 1969, within 30 days from the date of issue, before the Director General, Directorate General of Customs Valuation, 7th Floor, Customs House, Karachi. The Collectors of Customs may ensure that the values given in the Ruling are applied by the staff concerned. —CT Report
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wRITE TO uS yOuR gRIEvANCES: Through CuSTOmS TODAy platform hELP DESk, now you have chance to DIRECTLy write your problems to top govt. functionaries. If you have any grievances, queries, questions or suggestions, you can write in this section as it provides easiest access to you to approach Customs and Revenue authorities. whO can write in this section? Importers & Exporters, Customs Agents, Chambers of Commerce, Trade Associations and Customs Officers TO whOm you can write? Honourable PM, Minister/Secretary for Finance & Revenue, Minister/Secretary for Ports and Shipping, FBR Chairman, Member Customs and Chairperson Senate/National Assembly Standing Committee on Finance & Revenue. Send your letters at: letters@customstoday.com.pk
mCC Preventive-East collects 15 pc additional revenue: Collector Abdul Rasheed KARACHI
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ollector MCC-Appraisement (East) Abdul Rasheed Shaikh has expressed the hope that the collectorate will dePinitely achieve the tax target set for Piscal year 2013-14 by FBR. The Model Customs Collectorate (MCC)-Appraisement (East) has collected 15 percent additional revenue in the Pirst quarter of the current Piscal year 2013-14, as compared to the same period of the previous Piscal year. This was stated by Collector MCC-Appraisement (East) Abdul Rasheed Shaikh in an exclusive interview with Customs Today at his ofPice in Customs House, Karachi. “The MCC-Appraisement (East) has collected Rs7382.43 million in sales tax in the month of October, 2013, recording an increase of 5 per cent, as compared to Rs 5176.59 million collection in October 2012”, he added. Collector Abdul Rasheed Shaikh further said that MCC-Appraisement (East) has collected Rs 2405.76 million income tax in October, 2013 with an increase of 9 per cent as against Rs 2044.91 million in the same period of the previous year. He further said that the MCC-Appraisement (East) has collected Rs29764.84 million sales tax by the end of the Pirst quarter of the current Piscal year 2013-14 and Rs10458.19 income tax in the same period. Collector Abdul Rasheed Shaikh further revealed that MCC-Appraisement (East) has also achieved 35 per cent in-
crease in sales tax collection and 38 per cent raise in withholding tax in the Pirst quarter.“If we collect 90 per cent amount of the total target set by Federal Board of Revenue (FBR), then Pakistan Customs can dePinitely surpass the target”, Collector East added. To a query, Collector MCC-Appraisement (East) said that Pakistan Customs should put in place trouble-free and importer-friendly operations for facilitation of all stakeholders. “Level-playing-Pield should be provided to all stakeholders in all matters”, he further added. Responding to a query, Abdul Rasheed Shaikh said that Pakistan Customs is reluctant to adopt and implement systems of European and Western Customs; however; there is a dire need to improve the system and its operations. “MCC-East has always remained ahead in terms of achieving revenue targets after division of PaCCS Collectorate into MCC- Appraisement (West) and MCC-Appraisement (East)”, Shaikh added. On the occasion, Collector-Appraisement (East) Abdul Rasheed Shaikh lauded the efforts of Collectors MCC-Appraisement (West) Muhammad Saleem and MCC-Muhammad Bin Qasim Agha Jawwad for their effective working in order to boost revenue generation. Replying to a question, Shaikh said that MCC-Appraisement (East) is detecting tax evasion cases on daily basis and recovering millions of rupees for national exchequer. Collector MCC-Appraisement (East) Abdul Rasheed Shaikh stressed that implementation of laws and tax exemptions through Statutory Regulatory Orders (SROs) should be equal for all.
MCC-East has always remained ahead in terms of achieving revenue targets after division of PaCCS Collectorate into MCCAppraisement (West) and MCCAppraisement (East), says Abdul Rasheed Shaikh
Lax security at Port Qasim To, The Chairman, Port Qasim Authority (PQA), Karachi
Respected Sir, I would like to draw your kind attention towards a sensitive issue related to security outside the Port Qasim Area. This is a very important area where goods worth millions of rupees move all the time but there is no patrolling by the ofPicials of Port Qasim Authority (PQA), police and other security agencies on the 13-Kilometer main road leading to Port Qasim. Besides, there are no proper lighting arrangements on the road. Whatever street lights are installed on the Port Qasim Road are not working properly. People doing business around the port have expressed serious concern because criminal incidents are on the rise due to the absence of security ofPicials and ba-
sic facilities around Port Qasim Authority (PQA). It is pertinent to mention here that the Port Qasim Authority (PQA) has recently increased its staff strength by recruiting more ofPicials, especially in the Security Department. However, there is no improvement in the security situation. In view of the above I will
request the authorities concerned to take appropriate steps in order to enhance security in the vicinity of Port Qasim. Yours Sincerely, Saghir Ahmed Qureshi, Karachi
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Customs seizes smuggled tyres, rims worth Rs22m in Quetta
QUETTA: Customs Collectorate’s anti-smuggling unit has seized huge quantity of smuggled tyres and rims worth Rs22 million. Sources said that an anti-smuggling unit team headed by Amanullah Tareen conducted raid in Bostan near Kuchlak area, Quetta and seized two 40-feet containers, which were loaded with smuggled tyres and rims. They said that around 1,000 tyres and 1,700 rims were recovered from the containers. The Customs value of seized goods is estimated to be around Rs15 million while the market value of the goods is Rs22 million.
CARTOONSSPECIAL
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Published by M. F. Riaz, Off. 91, 3rd Flr, Gul Plaza, M.A. Rd., Karachi, for Customs Today and Printed at Dhoom Printing Press Masheer Mahal Building, Off: I. I. Chundrigar Road, Karachi