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BuSinESS Wednesday, 8 May, 2013
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AGENCIES
S the contribution of tax revenues to the economy slips below nine percent, the Federal Board of Revenue (FBR) is contemplating levying a minimum Rs 130 billion in new taxes, aiming to fulfill a key precondition of entering a loan programme with the International Monetary Fund (IMF), besides increasing the tax-to-GDP ratio to a respectable level. The new measures will contribute only 0.5 percent of the GDP, but have been deemed essential to achieve a revenue target of Rs2.444 trillion which will likely be assigned to the Federal Board of Revenue (FBR) for fiscal 2013-14, said senior government officials. The economy’s recent rebasing and an expected minimum revenue shortfall of Rs331 billion has resulted in the tax-toGDP ratio slipping below 9%, one of the
Oil import bill increased to 35% in 2012 ISLAMABAD: Pakistan’s oil import bill sharply increased to $14 billion in fiscal year 2012 as against $12.5 billion in the corresponding period of last year, contributing 35% in the total import bill of the country. During FY12, country’s primary energy supplies increased by 0.3% and stand at 64.7mn toe compared to 64.5mn toe in the previous year and major momentum come from gas sector that rose by 4%. According to the statistical data of Pakistan energy year book 2012 the oil and hydro supplies in the country remained under-pressure as they fell by 3% and 10% respectively, despite growing demand in the country. In FY12 gas remained the major source of energy supply that contributed to 50% as compared to 48% in previous year. Furthermore the energy year book disclosed that of the total oil consumption, country’s reliance on the imported oil decreased to 83% as compared to 84%. Though declining by 1pps but such a high reliance on imported oil depicts country’s vulnerability to uncontrollable commodity shock that was witnessed in FY08. Reliance on imported energy primarily arises from increased demand of petroleum products, particularly furnace oil (FO), which is used primarily for power generation. After adjusting transmission, system losses and non-energy use, final energy consumption of the country during FY12 stood at 40.0mn toe, up 3% as against 38.8mn toe in FY11, according to statistics of Energy Yearbook. ONLINE
FBR mullinG new taxeS tO meet Revenue taRGetS comes up to Rs400,000. THE MATH: The FBR expects to collect Rs2.05 trillion at best for this year, which is just 8.7% of GDP. This is just 8% above the previous year’s collection and almost equal to the inflation rate: so, in real terms, the FBR has done almost nothing for the entire year as far as enhancing the tax net is concerned. If the new government decides to take other measures – as desired by the IMF – total new revenues raised will come close to Rs180 billion (equal to 0.7% of GDP), and next year’s tax target will subsequently be increased to Rs2.5 trillion. Authorities are likely to set next year’s economic growth target at 4.4%, and the inflation target at 8% or 8.5%. Thus, nominal GDP growth (non-inflation adjusted) will automatically reap a benefit of Rs267 billion without any new tax being levied, which is 13% higher than the anticipated collection for 2013, they added. By adding that Rs267 billion to the Rs2.05 trillion collected in taxes this year, Rs2.317 trillion in revenues will be raised
lowest in the world, officials added. LIKELY AREAS OF TAXATION: The most lucrative option for tax authorities is increasing the sales tax rate by 1% to 17%, which will generate close to Rs50 billion in additional revenues. However, such a move will be highly unpopular, and officials say that increasing the sales taxes will fuel inflation. Therefore, the option will be left for the new government to avail. Another measure under discussion is the reducing federal excise duty slabs on cigarettes from three to two, which will generate additional revenue worth Rs12 billion. The FBR is also planning to make imports more expensive by increasing the tax rates on all types of imports by 1%, officials disclosed. It also intends to withdraw all zero ratings and levy a 1% tax where no taxes are charged currently. The FBR is considering increasing the tax rate for the highest individual income category to 22-23% from the current 20%, and keeping tax exemptions for annual in-
without any extra effort. To achieve the Rs2.44-2.5 trillion collection target, therefore, revenue authorities will require raising new taxes approximating Rs130-180 billion. EXTERNAL pRESSuRES: During negotiations with the IMF for a new bailout programme, the IMF asked Pakistan to make revenue and expenditure adjustments equal to 1-1.5% of GDP every year, during the three-year period of the new programme. This measure aims to increase the abysmal tax-to-GDP ratio to close to 13%. Officials say that as far as next year’s tax target is concerned, any new government will have little room to make changes. However,
State Bank revises prudential regulations for SME financing
KARACHI A Currency Swap Arrangement (CSA), the central banks of Pakistan and China had signed some 17 months ago, has come into effect from today (May 7). With the CSA having been implemented, the State Bank of Pakistan (SBP) Tuesday asked for bids from the authorized dealers to auction Chinese Yuan (CNY) on June 4. The SBP and the People’s Bank of China (PBoC) had inked the landmark agreement worth CNY 10 billion and Rs 140 billion in December 2011 in Islamabad. The landmark bilateral arrangement, which was signed by SBP Governor Yaseen Anwar and PBoC Deputy Governor DU Jinfu, is being implemented after the issuance of necessary instructions to the banks and completion of operational formalities with the PBoC. According to SBP’s implementation guidelines, the agreement would give a
Gas supply to fertilizer sector deceased by 8% in 2012 ISLAMABAD ONLINE
KARACHI STAFF REPORT
The State Bank of Pakistan (SBP) on Tuesday issued revised Prudential Regulations (PRs) for Small and Medium Enterprise (SME) financing to ensure smooth flow of funds to the sector. The revised PRs focus more on small enterprise and formulate more specific and simpler regulations for them, said the central bank. The new set of regulations is believed to further improve the current regulatory environment and would boost the efforts to meet financing needs of SMEs. The revised regulations underscore importance of cash flow analysis and other tools assessing the primary source of repayment of SME borrowers. It also emphasizes the use of technology and documentation for disciplined credit control for monitoring of credit quality. Since the SMEs are relatively less credit constrained in accessing loans compared to small enterprises, the regulations governing them have not been changed. However, the definition for medium enterprises has been changed and their individual and aggregate borrowing limits revised upwardly.
After review, the SME Prudential Regulations have now the following structure: a) General Prudential Regulations that apply on both Small and Medium Enterprises. b) Specific Prudential Regulations for Small Enterprise Financing. c) Specific Prudential Regulations for Medium Enterprise Financing.
The revised PRs are applicable with immediate effect for the fresh financing facilities, the state bank said. However, since the banks and DFIs need to segregate their existing SME portfolio according to the new definitions and revised classification criteria, they are allowed a maximum implementation period up to September 30 (2013) for the existing portfolio.
SBP to auction Yuan as Rs140b CSA with China turns operational ISMAIL DILAWAR
the new leadership can choose from among the taxation options available in order to achieve the target. According to a finance ministry senior offical, the country will have to adjust to at least 1% of GDP. This adjustment’s major component will have to be from taxation, with the authorities aiming to increase the tax-to-GDP ratio to a more respectable 9.3-9.5% in the next fiscal year. According to an FBR official who participated in negotiations with the IMF, the lending agency has clearly told Pakistan that tax increases should come from changes in national policy. This suggests that the FBR will have to take significant measures to increase revenues, irrespective of which party wins the upcoming elections.
positive signal to the market on the availability of liquidity of other country’s currency in the onshore market. The arrangement would augment the pool of liquidity available to finance bilateral trade between the two countries, supplementing the already available sources of liquidity. In order to ensure transparency in determination of market interest rates, the State Bank has decided to conduct competitive auctions of Chinese Yuan Loan Facility (CNYLF). According to an SBP circular, the first auction would be held on June 4 for 3- and 6-month period facility at an auction reference rate of 5.75 and 6.00 percent, respectively.
“To provide sufficient lead time for banks to arrange on-lending of CNY to importers and exporters, the first auction would be conducted on June 4 with settlement on June 13,” said the SBP circular. Based on the participation of banks in this auction, the central bank would draw on the swap line and provide Chinese currency to the local banks. The banks would onlend this liquidity to the importers and exporters involved in trade denominated in CNY. At maturity, the importers and/or exporters would repay the foreign currency to the lending bank, which in turn would repay to the respective central bank. The State Bank has asked the banks to
educate their customers on the additional option of denominating their trade documents in CNY. “The SBP would encourage banks to hold sessions with local trade bodies,” it said. The regulator also has requested the local importers and exporters to contact their respective banks for more details on how they could borrow Chinese Yuan liquidity to finance bilateral trade. The objective of the CSA is to promote bilateral trade and investment between the two countries in the respective local currencies. Since the CSA is a bilateral financial transaction, all terms and conditions apply equally to both countries and the pricing is based on standard market benchmarks which are widely acceptable in the respective domestic markets. The execution of bilateral CSA was achieved through series of technical-level team discussions between both the central banks led by Asad Qureshi from State Bank and YAO Yudong from PBoC.
Despite the recent commissioning of new fertilizer plants, gas supply to the fertilizer sector decreased by 8% in fiscal year 2012. According to the data of Pakistan Energy Year book 2012, in the above mentioned period gas supply to the power sector was given on priority basis and it consumed 24% of total country’s energy gas as supply to the power sector was increased by 4%. This resulted into 7% higher electricity generation on gas. Moreover general industry consumed 24% of the country total gas while interestingly, against popular perception gas supply to the CNG sector rose by 5% in FY 12. Energy year book further stated that during 2012 domestic sector remained top priority that has no immediate substitutes for the commodity.
Punjab achieves 16.46 percent, Sindh 30 percent cotton sowing targets ISLAMABAD APP
Punjab achieved 16 percent of cotton sowing targets fixed for the sowing season 2013 to fulfill the domestic requirements of the commodity as well as to export it. The sowing is 16 percent higher than that during the same period of last year, said Cotton Development Commissioner in the Ministry of Textile Industry, Dr. Khalid Abdullah. Abdullah said that up to May 6, cotton crop has been cultivated over 987,756 acres which was recorded at 928,305 acres during the same month last year. He said that the Federal Cotton Committee (FCC) has fixed a target of 6 million areas for cotton cultivation in the province during current sowing season, he added.
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BuSinESS B Wednesday, 8 May, 2013
Riaz Khan appointed acting mD/CeO OGDCl
Mobile phone imports reach $536.7m in nine months of FY12-13
Major Gainers COMPANY Shezan Inter. MithchellsFruit Murree Brewery Service Ind.Ltd.XD National Foods
OPEN 582.90 425.81 306.19 281.61 379.79
HIGH 612.04 447.10 321.49 295.69 390.00
LOW 612.04 447.10 321.00 295.69 380.00
CLOSE 612.04 447.10 321.49 295.69 388.98
CHANGE 29.14 21.29 15.30 14.08 9.19
TURNOVER 600 300 17,700 10,900 6,700
1985.50 1555.00 5100.00 705.00 305.00
1985.50 1550.96 5100.00 704.00 304.95
1985.50 1550.96 5100.00 705.00 304.95
-104.50 -81.62 -45.00 -31.00 -16.05
100 1,200 80 200 300
10.00 10.24 11.00 135.49 7.15
8.96 9.49 10.42 133.60 6.81
9.94 9.68 10.48 135.03 7.10
0.93 -0.26 -0.54 -0.04 0.13
61,965,000 11,175,000 6,458,000 6,264,500 5,123,500
Major Losers Colgate Palmolive Wyeth Pak Ltd Unilever Food Island Textile Bhanero Tex.
2090.00 1632.58 5145.00 736.00 321.00
Volume Leaders ISLAMABAD: The Ministry of Petroleum and Natural Resources has notified the appointment of Muhammad Riaz Khan as Acting MD/CEO OGDCL Riaz has vast experience of more than 30 years in the field of exploration and production sector of hydrocarbon resources in Pakistan. He was the executive director (Joint Ventures) in Oil and Gas Development Company Limited (OGDCL). He graduated from University of Engineering & Technology UET, Lahore in Petroleum & Gas Engineering Department. He has over 30 years diversified and rich experience of E&P sector especially in leadership/managerial skills, petroleum engineering, Joint Ventures, Enhanced Oil Recovery EOR & Improved Oil Recovery IOR projects and has supervised execution of several critical oil & gas field development projects. He has attended extensive advance courses on Management, Production, Project Development and Petroleum Economics from, USA, Canada and Oxford UK. He is Director on the Board of Mari Gas Company Ltd and has also served as Director on Pirkoh Gas Company Limited (PGCL) Board. He has authored/coauthored and presented several technical papers. He is an active member of PEC, PIP and SPE (USA). After taking the charge, Riaz Khan said that OGDCL being national oil company is more responsible towards completion of its development projects and exploration targets set by the Ministry of Petroleum & Natural Resources to play a positive role in the national economy. He desired that professionals of the company should perform their responsibilities with hard work and dedication in transparent manner. STAFF REPORT
Fauji Cement TRG Pakistan Ltd. Jah.Sidd. Co. Engro Corporation Soneri Bank Ltd
9.01 9.94 11.02 135.07 6.97
interbank Rates ISLAMABAD APP
The mobile phone imports into the country increased by 4.38 percent during the first nine months of the current year over the same period of last year. The imports of mobile phone into the country during July-March (2012-13) were recorded at $536.7 million against the imports of $514.18 million during July-March (2011-12), according to the data of Pakistan Bureau of Statistics (PBS). Similarly the mobile phone imports into the country during the month of March 2013 increased by 23.81 percent and 51.37 percent when
compared to the imports during March 2012 and February 2013, respectively. The mobile phone imports during March 2013 stood at $77.258 million against the imports of $62.34 million in March 2012 and $51.088 million in February 2013, the data revealed. It is pertinent to mention here that the overall trade deficit during the first nine months of current fiscal year stood at $15.34 billion against the deficit of $16.2 billion, showing negative growth of 4.86 percent. Meanwhile, the trade deficit during March 2013 stood at $2.211 billion against the deficit of $1.548 billion during February 2013 showing an increase of 42.83 percent.
Cooperation in energy sector will energize Pak-Tajikistan ties: Tajik envoy ISLAMABAD: Centuries old historical and cultural links between the people of Pakistan and Tajikistan provide a strong basis for further enhancing their economic, commercial and trade relations. These remarks were made by Gononov S.Sherali, Ambassador of Tajikistan in Pakistan while expressing his views with the business community of Islamabad Chamber of Commerce & Industry (ICCI). He said that Tajikistan has huge hydel power potential, therefore, both the countries could cooperate in this areas to further enhance their bilateral relations. The ambassador said that Tajikistan is keen to establish direct air-link between Islamabad and
Dushanbe which would bring people of the two countries closer to each other. He said that Tajik Air flights on Dushanbe-Islamabad-Dubai would pave the way for increasing tourist traffic and promoting greater people to people contacts as well as he informed the meeting that Qatar Airline is also interested to establish Doha-Dushanbe-Islamabad air link which would also create direct air link between Pakistan and Tajikistan. Gononov said that Pakistani cement and textile have great demand in Tajikistan, adding that both the countries could initiate joint ventures in the areas of mutual interests which would open new avenues of cooperation. ONLINE
USD GBP JPY EURO
PKR 98.3574 PKR 152.8179 PKR 0.9922 PKR 128.6318
Forex BUY US Dollar Euro Great Britain Pound Japanese Yen Canadian Dollar Hong Kong Dollar UAE Dirham Saudi Riyal
99.30 128.13 151.58 0.9857 97.04 12.49 26.75 26.25
SELL 99.55 128.47 151.83 0.9923 98.38 12.67 26.90 26.40
Pm approves 795km GwadarHoshab road completion proposal ISLAMABAD: Prime Minister Mir Hazar Khan Khoso on Tuesday approved a proposal for completing the 795km Gwadar-Hoshab road in two years time. The PM said that completion of this strategic road would herald a change in the socio-economic condition of Balochistan and Sindh provinces. He was chairing a high-level meeting to review the progress on Gwadar-Ratodero Road project here at Prime Minister’s House. Prime Minister Khoso said that completion of this road would connect Gwadar port with rest of the country and the connectivity would result in the beneficial utilization of Gwadar port for the entire nation. It was also decided that Gwadar-TurbatHoshab and Khori-Qubo Saeed Khan would be completed within 14 months i.e. before June 2014. APP
CORPORATE CORNER emirates SkyCargo wins Cargo airline of the Year 2013
KARACHI: Emirates SkyCargo, the freight division of Emirates, has won Cargo Airline of the Year 2013 at Air Cargo News’ awards evening. The airline was also named Best Middle East Cargo Airline for the 25th consecutive year. Emirates SkyCargo received the accolade at the 30th Cargo Airline of the Year awards, which took place at the Lancaster London Hotel. The event recognises excellence in the cargo, freight and logistics business and is known as the ‘Oscars’ of the industry. “It is a great honour to win these prestigious awards and to be recognized by our customers in this way. These awards are voted for by our industry and this success would not be possible, without their support. We will continue to focus on delivering the highest levels of service to our best ability,” said Ram Menen, Emirates Divisional Senior Vice President Cargo. The Cargo Airline of the Year 2013 awards are organised by trade magazine Air Cargo News and attract votes from freight forwarders around the world. The awards are the only event where the British International Freight Association audits and approves the votes cast.
‘tera ishq mojaza Hai’ launched
GUJRANWALA: The book launching ceremony of poetess and Director General (DG) Quality Assurance (QA), Higher Education Commission of Pakistan (HEC) was held at GIFT University on April 30. It was second collection of poetry by Ms Zia Batool under the title of “Tera Ishq Mojaza Hai.” Her first book of poetry was “Fasle-Raygaan.” The ceremony was attended by renowned litterateur, poets, columnists and fictionists like Mr. Siraj-Ud-Deen, Mr. Ali Hasnain, Mr. Muhammad Iqbal Najmi, Mr. Ansar Ali Ansar, Mr. Shahid Jamil Ahmed, Mr. Faiz Rasool Faizan, Ms. Irfana Amr, Professor Javed Iqbal Sindhu and Mr. Rehmat Ullah Kakar. These eminent personalities highlighted various facets of Ms. Batool’s poetry and paid homage to the poetess’. Mr. Ejaz Qaiser, a famous ghazal singer offered tribute and honor to Ms. Zia Batool by melodiously singing ghazals from her book. The audience also enjoyed the ghazals and appreciated the efforts of Ms. Zia Batool. PR
mD City Schools honoured at ‘wonder women of the Year awards’ 2013 LAHORE: Dr Farzana, Managing Director City Schools (Pvt) Ltd, was recently honoured with a prestigious award in recognition of her meritorious services to promote education in Pakistan and internationally. The 3rd Edition of the Wonder Women of the Year Awards, held under the aegis of the National Hero Foundation, was organised this year at the Karachi Expo Centre. Renowned Pakistani nuclear scientist Dr. Abdul Qadeer Khan was invited as Chief Guest during the ceremony. The conferral statement for Dr. Farzana on behalf of the Foundation’s Chief Executive, Mr. Shaikh Rashid Alam, noted: “In view of votes received through nationwide public nominations and expert panel recommendations, I, on behalf of the governing body of National Hero Foundation, do hereby confirm that your name has been finally selected for the prestigious honour of ‘Wonder Women of the Year Awards’ 2013 for your valuable work/services as ‘Educationist’ for award type ‘Women of Inspiration’. Kindly accept our heartfelt gratitude for this milestone achievement and your kind consent on acceptance of the afore-mentioned honour”. PR
Rocket internet’s Foodpanda Portfolio receives over $20m funding KARACHI: Foodpanda, the fastest growing food delivery service worldwide, secured more than US$ 20 million funding from a group of investors: AB
Kinnevik and Phenomen Ventures. Foodpanda focuses especially on emerging markets, currently operates in 27 countries in four continents and reaches out to about 3 billion people worldwide. In the past few months, Foodpanda expanded into 15 more countries and launched a mobile app for iOS and Android, which is already the leading food delivery app in Pakistan with more than 23,000 downloads in 3 months. Foodpanda.pk cooperates with more than 200 restaurants in Karachi, Lahore, Islamabad, and Rawalpindi and is already the market leader in majority of the countries the company operates in. PR
unidentified floating object finally identified as Chocolate mascot
KARACHI: An unidentified object floating at the shores of the Arabian Sea caught the public attention on Wednesday when a group of picnickers managed some early glimpses with the help of binoculars. However later it cleared-out to be a floating brand-mascot attracting a huge numbers of visitors to the sea. The mascot was a shark figure, a fun loving and mischievous character by the name of “Sharky”. A colorful event was organized at Sea View to reveal the mascot and celebrate the launch of CRUNCH, a new chocolate snack launched by Nestlé Pakistan. PR