BUSINESS NEWS 07-05-2010
Revenue body sees next target at Rs1.65tr
By Kalbe Ali
Saturday, 08 May, 2010
The RAC met here in the FBR head office was chaired by Dr Haeez Pasha. Chairman FBR Sohail Ahmed was also present in the meeting.
It was observed that the initial reports suggest that the revenue collection would remain below the target of Rs1,380 billion for the current fiscal year.
Sources said that the FBR officials rejected the idea that revenue generation target for the next fiscal year was not ambitious as inflationary impact and increase in collection by around Rs100 billion due to VAT would enable the FBR to meet the planned target of Rs1,650.However, an official of the finance ministry told Dawn that the final discussions over the revenue targets for next fiscal would be held in the next RAC meeting scheduled for May 14. The RAC meeting observed that a special tax regime has to be introduced for exporters to facilitate the refundk of taxes and reduce the amount stuck up in such cases.
Members belonging to the private sector criticised the auditors of the FBR for being involved in corrupt practices and said that it was the major reason for scaring the tax filers away.
It was noted that the VAT on input for the exporters could be reduced to around five per cent against the overall rate of 15 per cent to minimise the stuck-up amount of refunds to the exporters.
The council observed that exemptions have to be on exports and not on sectors as in existing taxation system there is the zero-rating regime for export-oriented sectors instead of the exports.
These sectors are textile, leather, sports goods, surgical instruments and carpets. However, the goods manufactured by these sectors are also consumed by local markets, which should not be zero-rated.
RAC was informed that this 'distortion' was created in 2005 due to gross abuse of refund system. It was also suggested that after the exports are branded as zero-rated and the local sales by these sectors are taxed many returns would be adjusted between the local sales and the refunds claims.
There are many companies, whose local sales account for up to 40 per cent of total production, the FBR officials said, and added that almost all the refund claims would be adjusted instead of issuing cheques.
Such a move would discourage false refund cases and corruption in the FBR.
The meeting also discussed a lucrative scheme for tax filers, whereas an option has to be introduced for those in dispute over assessments made by the FBR auditors and such businessmen can file returns after the decision of the tribunal.
The council constituted a committee headed by Masood Naqvi, which would visit the Regional Tax Office,
Automated clearance system from 15th
By Parvaiz Ishfaq Rana
Saturday, 08 May, 2010
The software of the new auto-clearance system had been prepared by Pakistan Revenue Automation Ltd (PRAL) and is going to replace the existing system whose intellectual property rights (IPR) belong to a foreign company.
The new software starting from May 15, at Pakistan Automation Computerised Clearance System (PaCCs), will deal with clearance of all containerised imports.
The system will take on loop all the three container terminals – Pakistan International Container Terminal (PICT), Karachi International Container Terminal (KICT) and Qasim International Container Terminal (QICT) for auto-clearance of boxes.
However, it is being apprehended that the system, being introduced without test run and in haste, may create problems for trade and industry. A terminal operator requesting anonymity said, "We have no objection to any system but only want to be ensured that it will clear containers at a faster pace."
He further said that if the system does not meet the required speed in clearing boxes from terminals it will create space problem and congestion at the ports. This in return will increase cost of imports.
There is also no problem of compatibility, which could be done easily at the terminals but "our only fears are about the speed of the system, he maintained. After all huge volume of boxes, which stands in millions, will have to be cleared annually and the computerised system should have the capacity to bear the load without fail.
The FBR has also notified the staff for the e-customs and their strength has been almost reduced by 50 per cent from the present number. It will be headed by a collector with two additional collectors and ten deputy and assistant collectors. There will be seven principal appraisers, 21 appraising officers and 20 examining officers.
Official sources said that the owner of the existing software installed at PaCCS has moved the court of law against the FBR for not making payment towards the services rendered for last five years. The company has also served notice to the FBR for shutting the system by June 2010, sources said.
However, customs agents feel that the FBR move to change the software of the auto-clearance at this stage could not be understood because most of the weaknesses and loopholes used for evading duties and taxes through the existing system in the initial stages have been overcome.
They pointed out that for the last two years the revenue collection at PaCCs had improved because high customs officials managed to plug in all such leakages in the system, which was being widely abused in the past.
The best option would have been that the FBR should have purchased the software from the company, which is even now ready to give data at very cheap price, they added.
However, sources said that FBR was not keen to enter into any negotiations with the company because reservations were shown by some sensitive agencies about the working of the company.
Cotton market lacks trading interest
By Our Staff Reporter
Saturday, 08 May, 2010
They said spinners and mills carefully watched the developing global situation after limit-fall in prices of
For the second time during the week the
Both the maturing May and the ruling July contracts were quoted well below the barrier of 80 cents per lb at 78.36 and 79.85 cents per lb respectively, off well over two cents.A section of central Sindh ginners which holds stray lots of inferior types was said to be seller around Rs6,600 per maund but spinners offered Rs6,400 and according to them some lots did change hands.
Some of the leading spinners were said to be buyers of fine lots around Rs6,800 per maund and bid for some lots from the southern
In the absence of physical activity in the ready section, the official spot rates did not show any change and were firmly held at the overnight level.
In the ready section, a sole lot of 200 bales from a Mailsi ginnery changed hands at Rs6,750.
Centre-Sindh row over VAT stays unresolved
ZAHEER ABBASI
ISLAMABAD (May 08 2010): The controversy over imposition of Value Added Tax between Centre and Sindh government could not be resolved despite strong efforts as the former remained firm on its resolve to collect VAT, sources told Business Recorder on Friday. Sources said a meeting of Sindh government high-ups with President Asif Ali Zardari could not take place due to some other engagement of the President.
However, during an informal meeting with the Ministry of Finance, Sindh government remained firm on its stance to collect the VAT on services. The provinces have the right under the Constitution to impose and collect VAT on services. Federal Board of Revenue Chairman Sohail Ahmed attended the meeting for some time and left for attending Economic and Revenue Advisory Councils meetings.
The top priority of the Ministry of Finance in the last few weeks had been to arrange this meeting and Advisor to Prime Minister Dr Abdul Hafeez Sheikh met with Sindh Chief Minister last month in this connection. The Ministry of Finance tried to convince the representatives of Sindh government about the economic fallout of a delay in the IMF tranche release due to failure to comply with this critical condition. However, Sindh government remained adamant about setting up its Revenue Services Department that would independently collect VAT on services.
Sindh Secretary Finance had also walked out of the Revenue Advisory Council meeting once in protest against the implementation of an integrated VAT, an IMF condition that the
The IMF has delayed the Board meetings, without whose approval the subsequent tranche cannot be released, till the certification by
They said the reason for this understanding was that only integrated application of VAT could be feasible. Once the provinces develop capacity to collect VAT, the provinces could collect the levy with the help of their own tax machinery. The federal government's sales tax collections (on services and goods) formed part of the divisible pool and were then distributed among the provinces under the National Finance Commission Award formula based on population.
Copyright Business Recorder, 2010
VAT to be recovered from defaulter's close relatives
SOHAIL SARFRAZ
ISLAMABAD (May 08 2010): The Federal Board of Revenue (FBR) would be empowered to recover value-added tax (VAT) only from close relatives of defaulters, including father/brother and others in case they are also engaged in the same taxable business activity under the VAT.
Removing apprehensions of the business community, FBR chief of value added tax (VAT), Iftikhar Qutub, informed the representatives of chambers on Friday that section 61 (recovery of tax arrears) of the Federal VAT Act had been wrongly interpreted by some business units, which created confusion.
The term 'associated persons' has not been properly analysed within the context of VAT. Section 61 of the Federal VAT Act empowers the FBR to recover arrears from defaulter or the 'associated persons'. The board is also empowered to stop removal of any goods from the business premises of the defaulter, or the 'associated person', till the recoverable amount is paid, or recovered in full. However, the FBR has used the term 'associated persons' in case of Federal VAT Act only.
For example, if wife is also engaged in business activity, she would be considered as 'associated person' in the context of VAT. Therefore, if any 'associated person' ie relative of the defaulter is not directly involved in the same business activity under the VAT Act, the same would not be declared as 'associated persons' for recovery of the defaulted amount.
The term 'associated persons' can be used within the scope of the Federal VAT Act. If brother of the defaulter is not part of the business activity of the defaulted unit, the FBR cannot make recovery under the Federal VAT Act. The term 'associated persons' has not been generally specified in the Act.
Tax experts strongly objected as to why such provision has been included in the Federal VAT Act, which would create harassment. In the presence of several investigation agencies, this law of recovery from 'associated persons' could be widely misused by the tax officials. Therefore, any such law which could be misused should not be made part of the VAT law.
Even if the recovery provision is invoked within the context of the VAT, the presence of such law may increase the possibility of its misuse. The FBR has to customise its laws in view of the prevailing tax culture. It seems that the FBR has copied the concept of 'associated persons' from the Income Tax Ordinance in the name of harmonisation of taxes.
Through proposed amendment in the VAT Act, the "directors" have been replaced with "partners" for recovery from the defaulters. However, this concept under VAT may be extensively misused due to wider definition of associated persons specified in the VAT law, they added.
The question arises whether the tax liability of one person can be transferred to another under the definition of 'Associated persons' in the VAT bill. Responding to objections on section 82 (bar on payment of refund) of the Federal VAT Act, Chief of VAT explained that the refund claim could only be rejected after process of adjudication is completed providing full opportunity to the claimant.
Under section 82, where tax officials suspect or believe that any refund claim has been made on the basis of any document suspected not to be genuine, he may reject such claim through the process of adjudication. Therefore, tax officials have to follow the complete process of adjudication with the ample evidence to prove wrong refund claim.
"The section 82 is close to the concept of justice to follow legal process for taking any action against the refund claimant. Unless evidence of inadmissible refund has been submitted, tax officials cannot reject the claim", he added.
Iftikhar said that the new Federal VAT 2010 would enable the tax officials to keep track of unregistered buyers, retailers and wholesalers in the supply chain which is not possible under the Sales Tax Act, 1990.
There are also problems of fake/flying invoices under the existing sales tax system. "A big flaw in the Sales Tax Act is that tracking is not possible", he stated.
The tracking of unregistered persons has been made possible linking it with the submission of National Tax Number (NTN) and computerised national identity card (CNIC) numbers. The details of the suppliers could be obtained from the manufacturers to whom they have made sales including wholesalers and dealers under the VAT tracking system.
On the basis of sales data obtained from importers and manufacturers, it is easy to determine the turnover of the person. He clarified that people are not afraid of the VAT, but most of them are not ready to disclose their identity. The identification problem could be resolved with the help of data available with the National and Database Registration Authority (Nadra). Data of over 90 percent wholesalers, dealers and retailers is available with the Nadra which could be effectively utilised by the board.
FBR Member Sales Tax Abrar Ahmed Khan said that the real issue in VAT is documentation of the business transactions. One of the options is to ensure business transactions through legal banking channel or at least buyers should deposit their CNICs/NTNs or pay 3 percent additional tax which would make them uncompetitive in the market, he added.
Copyright Business Recorder, 2010
Discussion on challenges from VAT introduction: World Bank team to visit from 13th to 28th
RECORDER REPORT
ISLAMABAD (May 08 2010): A special World Bank (WB) mission on value-added tax (VAT) will visit Pakistan from May 13 to 28, 2010 to obtain input from the Federal Board of Revenue (FBR) on challenges and risks involved in VAT introduction from July 1, 2010.
Government sources told Business Recorder here on Friday that the WB VAT mission is coming at a crucial time when most of the trade federations, chambers and other trade bodies have requested deferment of VAT for at least one year, and the FBR is facing severe resistance from major stakeholders, including business and trade, reluctant to come into the VAT net.
The FBR is trying its level best to convince the business community to enjoy tax credit or adjustment facility at each stage of value-addition under the documented regime, but huge inflationary impact of VAT has emerged as the single biggest concern. According to sources, the FBR will share information on the extent of the negative reaction of the business community to VAT levy and its strategy to deal with it, including registration of retailers.
The WB mission would convene meetings with the FBR VAT team, headed by Member, Sales Tax, Abrar Ahmed Khan, to review progress on drafting of VAT rules/regulations and VAT implementation plan. All meetings between the FBR and the WB mission would take place at the FBR headquarters from May 13 to 28.
The WB mission would also meet FBR Chairman Sohail Ahmed and FBR Members Domestic Operations to review the VAT enforcement strategy under the proposed Federal VAT Act. The WB VAT mission would meet officials of FBR Facilitation and Taxpayer Education (FATE) Wing to get an update on the VAT publicity campaign and public education plan.
This would cover information on the establishment of Taxpayer Facilitation Centers (TFCs) with the facility of self-service and operator assisted computer terminals. The TFCs must have good internet bandwidth and uninterrupted power supply; and should operate 9 am to 9 pm. Such TFCs are already in place in most of the Regional Tax Offices (RTOs).
However, these should be expanded to all District HQ and the TFCs (about 72) already planned by FBR under Tax Administration Reform Program (TARP) should be established. The FBR VAT team would also share report of the Revenue Advisory Council and Pakistan Institute of Development Economics (PIDE) on the inflationary impact of VAT. Presently, PIDE is in the process of compiling a report on inflationary impact of VAT.
Sources said that the FBR would also inform the WB team about the estimated number of new taxpayers expected to come in the VAT net. An action plan for VAT implementation, titled 'VAT Introduction Timetable Version', has been jointly prepared by WB review mission and FBR. The board should estimate the number of VAT taxpayers under different thresholds and exemption levels.
Tax authorities should also estimate VAT revenue under different assumptions of rates and exemptions and continue to review the ST critical processes with a view of streamlining them and applying them to VAT, sources quoted WB review mission report.
The WB further observed that the implementation of the 'Expeditious ST Refund System' would need to be closely monitored. The FBR should also ensure that the 'VAT Introduction Task Force' participants have background in law, training, public relations, domestic tax administration, customs administration, and that their priority is execution of the VAT implementation plan.
The WB review mission stated that VAT implementation is one of the most challenging tasks of the FBR. It requires an organised and decisive effort focusing on key priorities. When preparing regulations, special attention would need to be paid to FBR powers regarding VAT administration.
Sources said that the FBR would design the VAT returns, require invoice information to be attached to the returns and require other information necessary for monitoring compliance and supporting audit work. The FBR audit plan should include the post-refund audit, and refund payment should be made directly to claimant's bank account.
The WB has asked the FBR to define the format and contents of VAT invoices, define the format and contents of sales receipts to final consumers, define how prices should be announced in retail sales (VAT inclusive), and define if VAT charged will appear in the final consumer sales receipts. Taxpayers should request FBR authorisation for printing and issuing invoices and sales receipts.
The FBR should identify and suspend inactive taxpayers, re-activate automatically these taxpayers as they become up to date with their tax obligations, and close premises temporarily of taxpayers not complying with relevant VAT rules. In this regard the premises may be closed for up to 3 days and the period of closure could be increased in case of re-incidence, WB review mission suggested.
The WB review mission added that the FBR business procedures for VAT are not expected to be different from those applied to the current sales tax. However, given the progress made in IT (in particular the centralisation of the IT systems at the FBR national server), this would be an opportunity to review the related main business processes.
Copyright Business Recorder, 2010
RAC rejects three of FBR budget proposals
RECORDER REPORT
ISLAMABAD (May 08 2010): The Revenue Advisory Council (RAC) on Friday opposed three FBR budget proposals suggesting increase in tax rate on banking companies from 35 to 40 percent, imposing tax on electronic transfer of funds through banks and withdrawing exemption of capital value tax (CVT) on immovable property.
A member of the RAC, on condition of anonymity, told Business Recorder that around 90pc proposals of chambers, federations and trade bodies have been dropped during the RAC meeting held at the FBR headquarters. However, capital gains tax (CGT) on stock exchange would be imposed as planned from 2010-2011. Israr Rauf Member Direct Tax Policy gave a detailed presentation on the taxation proposals for 2010-11 related banking and levy of capital gains tax (CGT) on the stock exchanges from 2010-11 as planned.
The presentation also focused on other major measures on the direct taxes side. However, the RAC is against increasing tax rate of banking companies. Secondly, RAC has also opposed levy on electronic transfers through banks and levy of 4 percent uniform rate of the CVT on immovable property.
The RAC and the FBR are divided over the issue of levying a nominal 2.5 minimum rate of Value Added Tax (VAT) on the local supplies made by the five leading export sectors including textile, leather, sports goods, surgical instruments and carpets. According to initial estimates, the revenue collection target could be around Rs 1711 billion for next fiscal 2010-11 keeping in view current pace of revenue collection.
Earlier, the RAC and the FBR have jointly chalked out the revenue collection target of Rs 1,608.3 billion for 2010-11. The figure was again revised to Rs 1620 billion based on different revenue impacts and present situation of collection. Now, the estimates have been worked out to the tune of Rs 1711 billion, which is still not the final figure of revenue collection target for the FBR.
The issue of VAT on local supplies of zero-rated sectors was discussed threadbare during the RAC meeting held on Friday under the chairmanship of Dr Hafiz Pasha. FBR Chairman Sohail Ahmed and tax experts of the World Bank were also present in the meeting along with his team of tax managers. Some of the members of the RAC strongly proposed that a lower rate of 2.5 percent should be imposed on the zero-rated sectors.
A senior member of the Revenue Advisory Council pointed out to initially levy a reduced rate of 5 percent Value Added Tax (VAT) on five leading zero-rated export sectors from 2010-11. However, other RAC members talked about further lower rate of 2.5 percent on the local supply of five zero-rated sectors. The lower rate of VAT on zero-rated sectors would ensure payment of only 2.5 percent refund to these sectors after enforcement of the VAT.
In this way, there would be minimum possibility of issuance of fraudulent VAT refunds due to lower rate of 25 percent. Secondly, it was further proposed that the minimum rate of 2.5 percent should be increased gradually. On the other hand, VAT experts raised objection that there is no concept of zero-rating on the local supplies in all the best VAT administrations across the world.
Therefore, zero-rating facility should only be limited to the export sectors and local supplies be subjected to VAT on the pattern of best tax administrations. It was observed that there is no sector special treatment in the VAT as demanded by the zero-rated sectors. Presently, zero-rating facility is also available on domestic consumption.
On the issue of zero-rating, WB experts opposed multiple or reduced rates of VAT. On the other hand, some members of the RAC observed that the 2.5 percent reduced rate of VAT has been proposed based on ground realities of the market. The RAC further decided to expand the list of First Schedule (Exemption) of the Federal VAT Act to include essential commodities in the list of exempted items.
On behalf of Pakistan Institute of Development Economic (PIDE), a senior official informed the RAC that there would be minimum inflationary impact of the VAT. However, the situation would be clearer after submission of the PIDE scientific study to be issued next week. The scientific study is based on data collected through economic surveys, revenue collection, revenue impact and other economic indicators.
Some of RAC members have shown serious concern over the new automated refund system. They were of the view that there might be cases of fraudulent refund claims in the new refund system as applicable in the old system. It was observed that fraudulent cases of refund have been witnessed in the existing sales tax system and the same situation may again arise in the new Expeditious Refund System.
The FBR officials informed the RAC that the Expeditious Refund System is highly reliable automated system based on the risk-based system. However, some RAC members observed that the people particularly export sector has no confidence in the new system of VAT refund and there is a possibility of fraud in the Expeditious Refund System. The FBR has always claimed that the refund systems are very reliable, but practically loopholes like fraudulent refund claims exist.
Chairman of the RAC Dr Hafiz Pasha has constituted a committee headed by RAC Member Masood Naqvi who would go to Regional Tax Office Lahore and physically check the new Expeditious Refund System and submit the report to the RAC on its authenticity.
The committee would monitor the working of the new system and practically check whether the system has any loophole or it is foolproof as mentioned by the FBR officials. Sources said that the RAC reviewed the FBR preparations on the VAT, which was highly appreciated by the council. The FBR shared concepts of rules and regulations being framed on VAT implementation plan.
Keeping in view current pace of revenue collection, it has been estimated that the revenue collection would be over and above Rs 1320-1330 billion by the end of current fiscal. The FBR has provisionally collected Rs 1028 billion in July-April (2009-2010) against the target of Rs 1060 billion, reflecting a shortfall of Rs 32 billion.
In the month of April 2010, the FBR has provisionally collected Rs 116 billion against the target of Rs 121 billion, showing a decrease of Rs 5 billion. The board has collected Rs 116 billion during the month under review against Rs 85.82 billion in the same period last fiscal, showing an increase of Rs 30.18 billion.
During the RAC meeting, when a RAC member specified Rs 114 billion as revenue gains from services sector under the VAT during first year, other members observed that impact of many sectors have not been specified in the study. On this, it was agreed to again workout the revenue gains from services sector taking into account all kinds of revenue gains under the VAT.
Copyright Business Recorder, 2010
Wahgah border for Indo-Afghan trade: Pakistan's stance softens under US pressure
MUSHTAQ GHUMMAN
ISLAMABAD (May 08 2010): Pakistan has reportedly softened its stance on opening of Wahgah border for trade of goods from India under Washington-pushed Afghanistan-Pakistan transit trade agreement (APTTA) but has not gives any final timeframe, sources told Business Recorder.
This indication came at a meeting between Commerce Minister Amin Fahim and Afghan Minister for Commerce and Industry Ghulam Muhammad Ailaqi held for two and a half hours in the committee room of Commerce Ministry here on Friday. Last year,
Since the signing of a Memorandum of Understanding (MoU) between
"We are doing our homework on opening of Wagah border, and as and when it is completed, we will move forward," said one official attending the meeting. Another official quoted Commerce Secretary Zafar Mahmood as saying that first the Joint Working Group (JWG) of the two countries would finalise recommendations on the revised APTTA and then the government would move forward.
He was also of the view that APTTA should be drafted in a way that the governments and the people (stakeholders) of both countries would accept it. This implies that
Sources said that third meeting of JWG was held on August 4-5, 2009 in
The sixth round of negotiations is likely to be held on May 17-20, 2010 in
Sources said that the Afghan delegation lodged complaints against
Both countries discussed the ways and means to formulate a mechanism to insure goods transported under ATTA as Afghan side complained that there was no system to compensate those traders whose goods are damaged while moving from one destination to other.
Sources said that Pakistan raised serious concerns over the massive misuse of ATTA, as nearly 50 percent of imported goods come back (smuggled) to Pakistan, hurting not only the local industry but also negatively impacting revenue. "Address these issues seriously, otherwise new APTTA will not have any positive impact on the trade of both countries," sources quoted
Amin Fahim assured the Afghan delegation that all important issues would be addressed in a mutually beneficial manner while framing the new APTTA.
Both sides also discussed the impediments in bilateral trade.
Copyright Business Recorder, 2010
Petroleum levy collection 'illegal' since March 8
ZAFAR BHUTTA
ISLAMABAD (May 08 2010): Petroleum levy, netting the government on average nearly 8 billion rupees in monthly revenue, and 50 billion rupees during the first six months of the current financial year, has been rendered 'illegal' with the lapse of the Petroleum Products (Petroleum Development Levy) (Amendment) Ordinance, 2009 on March 8, 2010.
Sources close to Finance Secretary told Business Recorder that the government is now required to table the 'Petroleum Products (Petroleum Development Levy) (Amendment) Ordinance, 2009' before Parliament for approval, in the form of a bill, to provide the levy with legal cover.
President Asif Ali Zardari had re-promulgated the Petroleum Products (Development Levy) Ordinance XV of 2009 on July 8, 2009 to offset Supreme Court's suspension of the imposition of carbon surcharge announced in the budget. The Ordinance was issued to rename 'carbon surcharge' with 'petroleum levy' with equivalent rates of the two: MS at Rs 10 per litre, HOBC at Rs 14 per litre, SKO at Rs 6 per litre, HSD at Rs 8 per litre and LDO at Rs 3 per litre.
The government had initially estimated Rs 14 billion collection of Petroleum Development Levy (now PL), but revised the estimate upwards to Rs 129.2 billion in the last financial year 2008-09. Auditor General in its report said that there was a variation of Rs 11.8 billion between AGPR and the departmental figures of receipts due to the fact that the Ministry of Petroleum had no direct control over financial reporting of PDL which was being collected by Federal Board of Revenue (FBR).
Copyright Business Recorder, 2010
Aptma body apprises MinTex about cotton crisis
RECORDER REPORT
LAHORE (May 08 2010): Spokesman of All Pakistan Textile Mills Association (Aptma) said Thursday that the Aptma's 'Elders' Committee', formed to negotiate further with the Ministry of Textile Industry (MinTex) on the prevailing cotton crisis, has apprised the ministry extensively on cotton shortage leading to yarn crisis and subsequent implication on the textile value chain.
The Elders' Committee presented Aptma's stance to MinTex authorities on the serious cotton shortage scenario, on the 3rd of May in a meeting in
This situation may trigger yarn shortage in the country, likely to affect the ancillary industry badly for its inability to import yarn from any international source. Accordingly, the country's exports to the tune of over one billion dollars will be hit very badly till the arrival of new cotton crop, he maintained. The spokesman said it is highly unfortunate that some elements, representing self-interest, were propagating that the government was going to impose 25 percent regulatory duty on the export of cotton yarn.
He made it clear that no such decision was taken in the 3rd of May meeting in Islamabad and stressed that Aptma will not let anybody panic the spinning industry, likely to add fuel to the fire in a situation when cotton prices are hitting through the roof internationally.
The spokesman said that Aptma firmly believes that the government should offer direct financial subsidy/support to bail out the ancillary industry from one-off crisis until 30th June 2010 instead of distorting the free market mechanism.
Copyright Business Recorder, 2010
"We definitely did some cash business," said Keith Brown, president of commodity firm Keith Brown and Co in
The data will contain the US Agriculture Department's first estimate of cotton market supply/demand conditions in the 2010/11 marketing year. An early focus will be on world cotton production and consumption in 2010/11, they said. Part of the focus next week would still be on the prospect of economic contagion in Europe and the pace of plantings in
Brokers Flanagan Trading Corp put support in the July contract at 80.50 and 79.60 cents, with resistance at 81.35 and 82.60 cents. Volume traded Thursday reached 22,118 lots, against the previous tally of 23,309 lots, according to ICE Futures.
Thin activity as uncertainty prevails on cotton market
RECORDER REPORT
KARACHI (May 08 2010): Uncertainty prevailed on the local cotton market on Friday about fate of exports of cotton yarn and ahead of strike call given by the value-added sector, dealers said. The Karachi Cotton Association (KCA) official spot was unchanged at Rs 6700, they said.
In the ready business only 200 bales of cotton form Mailsi finalised at Rs 6750. The Phutti prices in both the
The country is still facing a shortage of three million bales of cotton to cover the local requirement, they said. The value-added sector was opposing export of cotton yarn and may go on strike next week, they added. They said that falling trend in the international market may cause a modest decline in the prices. On Thursday the NY cotton futures finished at a 3-1/2 week low as risk aversion sales spawned by the
The benchmark July cotton contract dropped 2.23 cents to finish at 79.85 cents per lb, trading from 79.80 to 82.50 cents. Based on the second position daily charts, it was the lowest close for cotton since the middle of April. Volume traded in the July contract stood at a sizeable 15,139 lots at 3:12 pm EDT (1912 GMT). New-crop December fell 1.79 cents to end at 75.51 cents, ranging from 75.27 to 77.40 cents.
Copyright Business Recorder, 2010
'Export of cotton and yarn playing havoc with national economy'
RECORDER REPORT
FAISALABAD (May 08 2010): Chairman Pakistan Textile Exporters Association Khurram Mukhtar and Vice Chairman Sohail Pasha have said unbridled export of cotton and yarn is playing havoc with the national economy, retarding industrialisation process, discouraging new investment creating joblessness, unrest and shattering the peace of the country. They were addressing the action committee meeting of value-added textile industries here on Friday.
They said that cotton and yarn were the basic and most essential raw material for the value-added sector constituting 40 percent of total input. The value-added textile industry was unable to operate if this basic raw material was not available. Furthermore chain of industrial sectors like sizing, power loom, bleaching and dyeing, processing and printing industry were dependent on the availability of cotton and yarn, they said. Over the last one year not only the prices of cotton and yarn have increased rapidly but also the commodities were not easily available in the domestic market, as the spinners have hoarded huge quantities for export purpose, they said.
The export of raw material to
Rebutting the false propaganda plea of free trade economy on international level, they said, it was totally convoluted logic and deliberate misinterpretation of the free trade concept. The WTO rules fully protect and prioritise the domestic industry not only against foreign hurt and injury but also from internal sabotage. The WTO rules, they said, allow appropriate restraint on unbridled export of raw material at the cost of domestic industry and damage to internal labour force. The spinners were totally un-heedful to the national demands and serving the interests of rival countries.
"There is no logic in exporting our raw material to our rival countries when they have regulated their economies," Mukhtar said and added that most of them have regulated supply of raw material for their domestic industry and export only surplus quantity but unfortunately there is no regulatory authority in Pakistan. "We have recent example of
Pasha said that all value-added textile Associations made a decision that they would launch a nation-wide campaign in the national interest of
Both leaders demanded of President Zardari and Prime Minister Gilani to save the value-added textile industry from total collapse by immediately banning export of cotton and yarn.
Copyright Business Recorder, 2010
VTF to observe strike on May 11
RECORDER REPORT
MULTAN (May 08 2010): Leader of Value-added Textile Forum (VTF) Syed Muhammad Asim Shah has said they will observe strike on May 11 across the country and will hand over the keys of industry to the prime minister because the entire textile industry except spinning sector is sinking.
He was talking to journalists here on Friday. Shah said that more than 18.1 million people would lose their jobs with the closure of value added sector like garments manufacturers, hosiery, towel, napkin, bed ware, table ware and other value added items and
Because value added sector brings 10 to 12 dollars for which cotton exporters earn only 2.5 to 3 dollars. Shah said that if a ban on export of cotton yarn up to 32 single counts was not imposed or regulatory duty was not imposed by the Cabinet Committee on textile, all value added textile units would have no alternative but to resort to complete shutdown.
The meeting expressed strong reservations on government's inactive policy, lack of concern and unrealistic and impracticable decision of the Cabinet Committee for textile to abolish duty on the import of cotton yarn. Production of cotton crop has declined globally, showing a shortfall of 4.8 million bales.
World's largest exporters of cotton yarn are
During financial year 2008-09, 480 million kgs of cotton yarn up to 32 single count was exported, meaning 40 million kgs per month, while this year export of cotton yarn is around 60 million kgs per month. "This means almost 50 percent of cotton yarn up to 32 single count has already been exported," Shah said. "It is an irony that while cotton yarn is being sold locally to the value added textile sector at $2.35 per kg, it is exported at $1.92 per kg."
He rejected the decision of the cabinet committee to scrap duty on import of cotton yarn, calling it an eyewash as cotton yarn could be imported by value added textile exporters under the Duty and Tax Remission for Export (DTRE) Scheme. Shah said that members of VTF have unanimously demanded a ban on export of cotton yarn up to 32 single count, otherwise, the industry would be shifted to
"On the one hand, the government is wooing foreign investors while doing everything possible to drive local investors away," a participant at the meeting said. Shah said with the export of yarn the fertiliser subsidy provided by the government to the farmers was being passed on to Pakistani competitors -
Shah informed journalists that chairmen of at least 16 value added textile associations including Pakistan Apparel Forum (PAF), Towel Manufacturers Association, Council of Loom Owners Association, Pakistan Textile Exporters Association, Pakistan Cloth Merchants' Association, All Pakistan Sizing Industry Association, Pakistan Cotton Power Loom Association, All Pakistan Textile Processing Mills Association, Pakistan Knitwear and Sweater Exporters Association.
Pakistan Hosiery Manufacturers Association (PHMA), Pakistan Denim Manufacturers and Exporters Association, All Pakistan Bed Sheet and Upholstery Manufacturers Association, Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) and Pakistan Cotton Fashion Apparels Manufacturers and Exporters Association (PCFA) are unanimous to observe the strike on May 11.
Copyright Business Recorder, 2010
| Cotton market remains lacklustre amid short supply |
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| Saturday, May 08, 2010 |
| Textile sector threatens to go on strike from 11th |
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| Saturday, May 08, 2010 |
| Smuggling, re-export to ISAF, NATO forces in Afghanistan |
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| Revenue body incurring loss of Rs2.5bn per annum |
| CPI likely to rise by 12.6pc in April |
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| Saturday, May 08, 2010 |
| Country's external debt, liabilities rise to $54.23bn |
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| Pakistan's EDL remained almost stagnant at around $37 billion during 2000-06 |
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