Spinners assured of 'fair treatment'
By Nasir Jamal
Sunday, 23 May, 2010
LAHORE, May 22: President Asif Ali Zardari and Prime Minister Yousuf Raza Gilani have assured spinners of "fair treatment" on the issue of imposition of 15 per cent regulatory duty on cotton yarn exports, asking them to call off their two-day strike for the next week.
"We have received a message from the presidency to call off our strike for the next week," an official of the All Pakistan Textile Mills Association (Aptma), who did not want to be named, told Dawn on Saturday.
"We have been assured of fair treatment by the presidency. We have been told that a solution to the crisis caused by the imposition of the duty on yarn exports will be found by Tuesday."
In a separate development, the prime minister also assured the top Aptma leadership of resolving the issue amicably.
But, the Aptma official warned, the spinners could close down their factories for an indefinite period if their demand for the textile ministry did not withdraw regulatory duty on yarn exports. "We will not accept any solution that places restrictions on yarn exports," the official declared.
He, however, said Aptma wanted the government to sit with the spinners and "determine yarn surplus in the country". "Once the correct quantity of yarn surplus is determined the government should avoid restricting its exports," he added.
It may be noted that the Aptma leadership was called to Islamabad earlier this week for negotiations after the spinners kept their mills closed for two consecutive days. But two rounds of negations on Wednesday and Friday nights failed to produce any solutions as the value-added manufacturers strongly opposed the withdrawal of the duty on yarn exports. The matter was left pending for a decision on Tuesday next week.
The spinners, whose shipments are stuck at the Karachi port since imposition of the export duty on May 13, decided to renew their two-day strike call for the next week after the ministry refused to give them immediate relief to enable shipment of their yarn. "The renewal of our strike call has prompted the presidency to step in for an amicable solution to the crisis," a leading spinner said.
Some spinners have suggested a "middle way" for the resolution of the crisis by reducing regulatory duty to just 5.0 per cent. "That will allow us to export our surplus yarn without any fear of drastic reduction in our domestic prices and allow the ministry to save its face in addition to making cheaper yarn available to the value-added industry," another leading spinner said.
But, he admitted, the value-added manufacturers were not accepting this suggestions and were putting pressure on the textile minister to stick to his decision of restricting yarn exports from the country.
Prime Minister invites APTMA, other stakeholders for talks
RECORDER REPORT
MULTAN (May 23 2010): Prime Minister Yousaf Raza Gilani has invited the value-added sector, Aptma, PCGA and other stakeholders to resolve the cotton yarn issue on Tuesday, May 25, because the meeting with the Textile Minister proved a futile exercise.
Addressing a press conference here on Saturday, Muhammad Aasim Shah, a leader of Value-added Textile Forum (VTF) North Zone, Muhammad Ahsan Shah, Yariq Sajid, Muhammad Tayyab and Zulfikar Ali appealed to the government not to made the value-added a scapegoat and not to cut the throat of 18.1 million workers and not to surrender exports of 10 billion dollars for only 2 billion dollars.
Aasim said that Pakistan had exported 40 percent more raw cotton than preceding years; 35 percent more yarn was exported while the textile made-ups exports declined by 15 percent.
The VTF leader said that 1.2 million workers of power looms and dyeing, finishing, packing had lost their jobs only in two cities of Multan and Faisalabad. He said that spinners had exported cotton yarn at $2.34 when the ginned cotton was available at Rs 3600. Now cotton rate had surged to Rs 7000 per maund but spinners are exporting their yarn at $2.11. He said that sugar and rice mafia-like people were creating crisis for the nation to mint money at the cost of other sectors.
They reiterated their demand for increasing the regulatory duty on cotton yarn from 15 to 30 percent for the revival of value-added sector. They said that there was no truth in the claim that export of cotton yarn had stopped due to levy of 15 percent regulatory duty while the fact is that yarn is still being exported even today and one can witness from dry ports that some of the leading groups are still exporting yarn which were imported under DTRE scheme and they are minting money at the cost of gagging the local value-added industry.
They said that Bangladesh, India and other countries were among the signatories of WTO regime but Bangladesh imposed ban on the export of Jute to save its own industry. Even it had violated the agreement with Pakistan. Similarly, India refused to export cotton and cotton yarn even on the highest rate for survival of the value-added industry.
They said that the government had taken this step in the larger national interest to give stability to value-added sector which provides jobs to 18.1 million people and contributes 65 percent in country's exports. He asked: why did Indian textile millers and cotton ginners did not observe strike on the imposition of complete ban on the export of raw cotton? Similarly, no strike was observed in Bangladesh.
They said that fact is that the economy is mainly based on textiles and in textiles only value added sector has a potential to take out the country from economic crisis and to balance the trade deficit. Protecting the rights/interests and supporting of value added sector is a right decision of the present government which would emerge with good effects.
They said that all associations attached with VTF fully support the government policies, which is indeed in national interest. They said that spinners had created confusion by claiming that textile industry was on strike while the fact is that a few spinners had observed verbal strike and the units considered as textile mills producing value added home textile products. Mills like Gul Ahmed , Al Karam, Chenab etc are functioning.
Similarly fabrics manufacturers, bedwares, towels, hosiery, garments etc are regularly doing work. They said that it is also important to mention that the government of Pakistan is spending the billions of rupees on subsidising fertiliser with aim that farmers would have low cost of crops and people of Pakistan would be benefiting from this incentive. "But when we export the raw material (cotton and cotton yarn) it means we are passing the benefit/subsidy to foreign industry but not to our domestic industry and the people of Pakistan.
Copyright Business Recorder, 2010
'Value-added sector will agree on 5pc duty'
By: Erum Zaidi | Published: May 23, 2010
KARACHI - After failed on reaching an agreement accepted to all stakeholders in a meeting held recently, the Ministry of Textile Industry has decided to hold another round of negotiations with the representatives of All Pakistan Textile Mills Association (APTMA) and value added manufacturers next week. The proposed meeting aims to resolve the ongoing crisis, which has put the entire textile industry into murky waters for the last few weeks.
The sources in APTMA, who were familiar with this development on the condition of anonymity told The Nation on Saturday that in the upcoming meeting, the value added sector will agree to reduce export duty on yarn exports to 5 per cent from the current rate of 15 per cent as they feel that temporary fall in yarn prices will impede their quest for higher export prices from their buyers and will hurt the value added sector in long run.
Sources further revealed that the Federal Minister for Textile Industries Rana Farooq Saeed Ahmad Khan invited the APTMA delegation including the heads of spinning mills and the representatives of value added sector on Friday at Textile Ministry office in Islamabad with a view to seek out a durable solution of this crisis. However, the Ministry's office at the time of meeting became the scene of bitter infighting among the textile industrialists.
Sources claimed that the value added associations went out of control and forced him (Minister) and two other major exporters to leave the meeting even though they had been formally invited by the Textile Minister.
Sources disclosed that the textile goods' exporters are looking for the intervention of Prime Minister in the issue as they think only PM interference can save the situation from further worsening in the time to come.
During meeting, the APTMA's representatives told the concerned minister that the business of the transport sector has been badly affecting by the government decision of imposing 15 per cent duty on yarn exports because as a rapid consequences of this tax imposition, the export containers have been stuck at the ports and the transport business has come to a standstill despite the strike called off by the APTMA.
It may be mentioned that the players of the transport sector attended a rally of APTMA in Sheikhupura and Punjab and had earlier offered to join the APTMA strike in a bid to show solidarity with the cause of this association.
According to sources, the APTMA delegation waited several hours to get a decision from the Minister and Secretary Textile Industry for urgent relief to allow shipments stuck at the port but the Minister refused to give relief and left the matter pending till next week.
Sources said split in textile industry has been deepening day-by-day. Top exporters of finished textile goods and reputed analysts are blaming Textile Ministry for interfering in the market through quotas and regulatory export duty which has caused severe market distortions, strikes and complaints from foreign buyers and trade officials. The director of a largest textile products' exporting company in the country pointed out that the government's interference in market mechanism was damaging the industry to a large extent.
Sources confirmed that officials of textile ministry being familiar with international trade rules realised that the government decision regarding the imposition of regulatory duty on yarn exports has disturbed the hornets' nest but it needed a face saving device to get out of the mess.
It may be recalled that the APTMA had called off the spinning mills indefinite countrywide strike against the imposition of regulatory duty on yarn export on May 20, 2010 (Thursday) after having successful negotiations with the Minister of Textile Industry.
| Govt imposes ban on cotton import under DTRE | | Sunday, May 23, 2010 | | By By Mansoor Ahmad
LAHORE: The textile crisis in the country has worsened as the government imposed a ban on cotton import under duty and tax remission for exports (DTRE) and has not taken decision on the fate of letter of credits already opened for export of 53,000 tons yarn.
Two rounds of talks between Textile Minister Rana Muhammad Farooq and the spinners on Wednesday and Friday last remained futile.
The spinners have accepted the invitation of the minister, whom they consider biased towards All Pakistan Textile Mills Association (APTMA), in the larger national interest, said Ejaz Gohar, Chairman, APTMA, Punjab Zone, on Saturday.
He deplored the delaying tactics of the minister, saying that he was well aware of APTMA's stance on the issue of regulatory duty and quota on yarn exports.
"He should have put forward some alternative solution to the problem, Gohar said, adding that instead twice the minister took more time from the APTMA delegation on the plea that he wants to bring apparel sector on board.
Strike option is very much there if regulatory duty is not immediately withdrawn, he warned.
The News learnt that on Friday only the value-added sector of Faisalabad came to Islamabad for meeting with the textile minister.
The participants told The News that most of them insisted on increasing the regulatory duty on yarn exports to 30 per cent, but the minister said that no yarn export was made even at 15 per cent export duty and further increase would put a stop on yarn exports.
The representatives of Faisalabad value-added sector then sought time to consult their colleagues in Karachi and another meeting of the value-added sector with the minister has been scheduled on Tuesday after which he would meet the spinners again.
In the meantime, Prime Minister Yousuf Raza Gilani has expressed concern over the ongoing tussle in the textile sector that might jeopardise the interests of cotton growers, sources said.
The PM Secretariat has instructed the Textile Ministry to immediately submit its report. The ministry is likely to send its reply by Saturday evening, the sources said. The spinners are considering going to the courts if the regulatory duty on already established letter of credits is not withdrawn, they said, adding that they have confirmed irrevocable letters of credit for export of 53,000 tons of yarn and it is against fair practices to impose duty on already confirmed orders against which letter of credits have been opened. | |
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Prices ease on cotton market
By Our Staff Reporter
Sunday, 23 May, 2010
KARACHI, May 22: The cotton prices on Saturday eased further by another Rs50 per maund amid reports that India has lifted recently imposed export ban on its lint, and a forward deal in new crop at Rs5,500 per maund for mid-July delivery.
Spinners and mills hailed the lifting of ban by India amid hopes that the price outlook could undergo a major change in the coming weeks, said a leading spinner.
The other positive news for the textile industry was that new crop may not be that expensive as was being speculated by some analysts as a forward deal of 200 bales by a Haroonabad ginner was signed at Rs5,500 per maund, he added.
Cotton analyst Naseem Usman said the global prices could ease further lower from the current peak level after India resumed exports of about a million cotton bales.
He said the other factor which caused depressed local prices was reports that the stuck up consignments meant for Pakistan after the lifting of ban were expected to be released.
According to market sources spinners and mills had signed forward imports deals for about 0.2m bales with Indian exporters but were reportedly held back at the Indian ports after the ban.
The official spot rates were quoted further lower by Rs50 per maund at Rs6,400 per maund for fine lots.
The New York cotton futures on the other hand showed a divergent trend. While the ruling July contract was quoted higher by 0.88 cents at 82.97 cents per lb, the new crop October was marked down by 0.31 cents at 77.54 cents per lb.
For the first time since the levy of 15 per cent duty on yarn export a deal of 400 bales from a Ghotki changed hands at Rs6,400 per maund on Saturday.
FBR proposes hike in FED on cement and gas
RECORDER REPORT
ISLAMABAD (May 23 2010): The Federal Board of Revenue has drafted proposals to increase rate of federal excise duty (FED) on cement from Rs 700 to Rs 900 per ton and on natural gas from Rs 5.09 per mmbtu to Rs 10 per mmbtu in the budget having cumulative revenue impact of Rs 10-11 billion in 2010-11. Another revenue generation measure is to levy 16 percent federal excise duty on goods carriage by train from next fiscal year.
It was learnt here on Saturday that the FBR has drafted these proposals to be forwarded to the Ministry of Finance for consideration in the coming budget. In case the government agrees, the same would be made part of the Finance Bill 2010. In budget 2009-10, the rate of FED on cement was reduced from Rs 900 to Rs 700 per tons. This year it has been proposed to enhance the FED on it from Rs 700 to Rs 900 per tons to generate an additional amount of Rs 4-5 billion in 2010-11.
At present inland carriage of goods by air is liable to 16 percent federal excise duty. The proposal is to levy same amount of FED on carriage of goods by train to generate over and above Rs 2 billion during 2010-11. Sources said that in the Finance Bill 2010 the Federal Excise Act to be amended to increase the FED on natural gas from Rs 5.09 per mmbtu to Rs per mmbtu to implement the recommendations of the National Finance Commission (NFC).
Presently, rate of federal excise duty on natural gas is Rs 5.09 Million British Thermal Unit (mmbtu). This rate will be raised to Rs 10.0 per mmbtu to generate an additional amount of Rs 5-6 billion during 2010-11. The government had notified that natural gas price will be raised by Rs 10/mmbtu from July 1, 2010 with the increase in rate of federal excise duty (FED) as per the decision of the 7th National Finance Commission Award. This has been specified in the Presidential Order No 5 issued by the Ministry of Law, Justice and Parliamentary Affairs.
The amendments included in the revised Presidential Order No 5 also contain the National Finance Commission's recommendations for increase in rate of FED on natural gas to Rs 10 per mmbtu. The federal government may initiate necessary legislation accordingly," revised "Distribution of Revenue and Grant-in-Aid Order, 2010" added.
Copyright Business Recorder, 2010
Cotton supply may ease as India lifts ban on export
RECORDER REPORT
KARACHI (May 23 2010): Cotton supply position may improve in the coming days as India has lifted the ban on export of raw cotton, dealers on the cotton market said on Saturday. The Karachi Cotton Association (KCA) official spot rate dropped by Rs 50 Rs 6400, they said. In ready business, after a gap of about one week, some deals were finalised.
A deal of 200 bales of new crop from Haroonabad was done at Rs 5500 for delivery in 10-15 July 2010. Another business was finalised for 400 bales from Ghotki at Rs 6400. It is expected that trading activity may improve in the coming days, dealers said.
They said that cotton supply may improve in the near future as India has removed ban on export of raw cotton. Now the Indian exporters are bound to get licence from the commerce ministry. According to market sources, traders may come back next week on routine business as the government has rejected the mills' demand to remove RD on exports of cotton yarn.
Naseem Usman, chairman of Karachi Cotton Brokers Association (KCBA), after a short survey of the cotton growing areas of the Punjab, said that production and quality would show significant progress. Favourable weather condition and required supply of irrigation water, in fact, helped the cotton production to grow progressively, other experts said.
They said that growers are quite happy after sowing of cotton but present uncertainties over the exports of cotton yarn made all cotton circles uneasy. On Friday, the US cotton futures rose about 1 percent after a weaker dollar and rise in share prices on Wall Street spurred investors to bid the industrial commodity higher. The key July cotton contract on ICE Futures rose by 0.88 cent to 82.97 cents per lb, trading from 81.54 to 83.21 cents.The volume traded in the July contract stood at 7,599 lots.
Copyright Business Recorder, 2010
Standard VAT procedures: ST collection procedures to be replaced
RECORDER REPORT
ISLAMABAD (May 23 2010): The Value Added Tax (VAT) Rules and Regulations-2010 would abolish special procedures for collection and payment of sales tax on electricity, natural gas, compressed natural gas (CNG), liquefied petroleum gas (LPG) and by oil marketing companies (OMCs), vehicle dealers including supply of sugar to Trading Corporation of Pakistan (TCP), it is learnt.
The FBR would also rescind special procedure for processing of refund claims filed by persons engaged in making zero-rated supply of ginned cotton. The VAT Rules and Regulations-2010 would also abolish special procedures for steel melting, steel re-rolling, ship-breaking units and collection of sales tax from importers.
The VAT Regulations would replace the existing special procedure for payment of sales tax by wholesale-cum-retail outlets and on the supplies of electric home appliances namely, television sets, refrigerators, freezers, air conditioners, electric ovens, microwave ovens, washing machines, spin dryers, and DVD/CD players of all types of electric goods.
Sources said that the VAT Rules and Regulations would be made public for comments after passage of the Federal and Provincial VAT Bills 2010 by National Assembly and Provincial Assemblies, respectively. All sectors operating under the special procedures and fixed tax schemes would operate under the normal VAT regime to issue invoices and obtain credit. The fixed schemes have created serious distortions in the existing Sales Tax Act 1990. A uniform invoice-based mechanism would be introduced for all sectors under the VAT regime.
Under the VAT rules-regulations, there would be no fixed rates, reduced tax, enhanced tax, retail price-based tax or special tax schemes. The existing sales tax special procedures would be replaced with standard VAT procedures for all sectors under the VAT regime. The FBR will issue supplementary rules to regulate the procedures and processes under the Federal and Provincial VAT laws in a simplified manner.
At present, special procedures deal with wholesale-cum-retail outlets chains engaged in bulk import and supply of consumer goods to the general body of consumers who maintain their records electronically. The wholesale-cum-retail outlets would be brought under the standard VAT regime.
Similarly, sales tax rules applied for processing of refund claims filed by registered cotton ginners engaged in separating cottonseeds from cotton and pressing of ginned cotton and making zero-rated supply of the cotton so ginned special procedure would no more remain applicable after abolition of zero-rating under the Federal VAT Act.
A special procedure is applicable for collection and payment of sales tax on electric power imported, generated, produced, transmitted and supplied by electricity generation, transmission and distribution companies. The VAT rules and regulations would abolish this procedure to ensure applicability of a uniform method for issuance of VAT invoices for claiming facility of tax credit.
The VAT rules would also rescind the procedure for collection and payment of sales tax on natural gas including compressed natural gas (CNG) and liquefied petroleum gas (LPG) imported, produced, transmitted and supplied by gas well-head companies and gas transmission and distribution companies including their distributors, dealers, sales agents and retailers.
Copyright Business Recorder, 2010
'Textile sector exempted from power loadshedding'
RECORDER REPORT
MULTAN (May 23 2010): Secretary, Commerce and Investment, Fazal Abbas Maken, has said that the government had exempted the textile sector of power load shedding besides providing relief to domestic consumers through load management. However, energy crisis would end in due course of time.
Addressing the executive committee of Multan Chamber of Commerce and Industry (MCCI), chaired by Asrar Ahmed, President, the Commerce Secretary said that new thermal power plants would be operational in July this year which would add 1000 MW electricity in the power generation system.
He said that the government was executing long-term and short-term energy projects to meet this crisis on permanent basis. Maken said that previous regime did nothing for the power generation, exploration of gas reserves during last decade.
Punjab Chief Minister Shahbaz Sharif said he was taking a number steps to meet the energy crisis and next step of the government is establishment of 200 MW coal plant with the financial assistance of Turkish government. He said that Punjab government was a defaulter of Rs 3 billion, and it had paid Rs 1.5 billion to Wapda and remaining amount would soon be cleared.
He said that line losses in Punjab were much less than other provinces and the people of Punjab pay their electricity bills regularly but Punjab was not being accommodated in power load management. No relief was being given to Punjab. He said that Punjab government wants to do work with the collaboration of private sector.
He assured that Punjab government would continue its advocacy policy to get redressed their problems relating to federal government departments. He stressed the need for value-addition in every sector to earn more and more foreign exchange. He said that Multan is enriched with craftsmen, "and we should promote the handicrafts like camel skin decoration items, blue pottery, woodwork, and clay-pottery.
He said that Pakistan's economy entirely depend upon the agriculture and Textile and we should take positive measures to boost up the production. He assured due representation of Multan Chamber in the boards of management at local and provincial level and allotment of land for the export display centre. In his address of welcome, Asrar said that the government should exploit the potential of southern Punjab by promoting and encouraging the agro-based industry on top priority basis.
He said that southern Punjab produces 80 percent of total cotton production, 40 percent of wheat and Irri-6 and Irri-9 rice. mango, citrus fruits and dates are main crops of this area. He said that the energy crisis had put the local industry in trouble because local manufacturers were losing their foreign buyers and global markets.
Asrar Ahmed said that highest mark-up rates, high power tariff, long duration of loadshedding, non-availability of natural gas had increased the cost of production, "and now we are not in a position to compete with even Sri Lanka, Thailand, Bangladesh, India, Indonesia, Malaysia, etc". He suggested moratorium of two years on long-term loans and one-year moratorium on mark-up payment.
He said that mark-up should be in single digit, like China and India, as the 16 to 18 percent mark-up was very high. Awan said that unnecessary documents should be avoided for the SME sector and mango pulp plant should be given in the control of MCCI so that it could be run on commercial basis. Muhammad Azam, Anwar Saleem Keen, Deputy Secretary Commerce Raafia, Ms Kausar, Iqbal Hassan, Idrees Ahmed, Saqib Ali, Muzaffar Khan and Khurram Javed also spoke.
Copyright Business Recorder, 2010
| Govt works out Rs2.255trn outlay for 2010/11 |
| Sunday, May 23, 2010 |
| By By Aftab Maken
ISLAMABAD: The government has worked out a total federal expenditure of Rs2.255 trillion with the total revenue receipts of Rs2.423 trillion for fiscal year 2010/11 (July-June), a blue print prepared by the Economic Advisory Council and made available to The News revealed on Saturday.
Out of this federal expenditure outlay, the government, under the head of transfer to provinces of Rs1.036 trillion, has estimated a fiscal deficit of Rs868 billion, which is 5.1 per cent of the GDP, the document said. However, the consolidated government fiscal deficit is estimated at Rs703 billion, a 4.1 per cent of the GDP after detecting Rs165 billion of provincial surplus, it said.
The fiscal deficit would be financed through external sources of Rs182 billion, Rs521 billion of domestic and Rs155 billion and Rs366 billion through banks and non-banks.
Of the total revenue, the document said that Rs1.7 trillion, 10 per cent of the GDP, will be collected through the Federal Board of Revenue (FBR) and Rs723 billion, 4.3 per cent of the GDP, will be collected under non-tax revenue. The government expects a nominal GDP growth of 4.0 per cent at the market price of Rs16.975 trillion for FY10/11.
Of the total expenditures, Rs693 billion will be spent on interest payment, Rs442 billion for defence, Rs221 billion for running federal government, Rs100 billion for pension, Rs141 billion for subsidies, Rs361 billion for grants, Rs280 billion for the Public Sector Development Programme (PSDP) and Rs17 would be spent for net lending, the document said.
Pakistan's domestic and foreign debts are estimated at Rs8, 922 billion, 59.3 per cent of the GDP, with domestic debt of Rs4,325 billion and foreign debt of Rs4,597 billion, it said. Domestic public guaranteed debt (including commodity financing, credit to the private sector entities by banking and non-banking sources is estimated at 5.3 per cent of the GDP.
The EAC also proposed removal of a number of subsidies that include general sales tax (GST) on electricity (except for life-lines), tube-wells, tariff differential, only 0.5 million wheat strategic reserves and subsidy on sugar and only recommends subsidies for interest of circular debt, areas on arrears on PDC, tariff differential, food and FATA, it said.
On the subject of grants, the EAC proposes that the federal government will only disburse grants to provinces (hydel, profits, goods declarations), Rs23 billion to Railways, Rs110 billion for the war on terror, Rs70 billion for Benazir Income Support Programme (BISP), Rs35 billion for internally displaced persons (IDPs) and Rs20 billion for textile R&D package, it added.
Preparing the Federal Budget 2010/11, the EAC said that they faced a number of challenges, including fiscal consolidation, implementation of the Value-Added Tax, public debt for commodity financing, energy shortage, stimulating growth and fiscal devolution under the 18th Amendment.
Security and security-related expenditure, inflation, poverty reduction, employment generation, slow pace of materialisation of the pledges made by the Friends of Democratic Pakistan (FoDP) and execution of medium-term policies were also considered in preparing the federal budget, it said.
Highlighting salient features of the Federal Budget 2009/10, the Economic Advisory Committee reported that a total deficit of Rs763 billion, a 5.1 per cent of the GDP was financed through domestic, foreign borrowing and grants. The PSDP for the outgoing fiscal year was also reduced from Rs406 billion to Rs235 billion mainly because of increased expenditures on the war on terror and subsidies on energies, the document added.
Highlights
•Fiscal deficit estimated at Rs703bn
•Rs1.7trn to be collected through FBR
•Rs723bn to be collected under non-tax revenue
•Rs693bn to be spent on interest payment
•Rs442bn to be spent on defence
•EAC proposes removal of number of subsidies |
| Pakistan's economy likely to grow by 4.1pc in 2009/10 |
| Sunday, May 23, 2010 |
| ISLAMABAD: Pakistan's economy is likely to grew by 4.1 per cent during the fiscal year ended on June 30, above a target of 3.3 per cent and is expected to grow even faster during the next fiscal year, a statement said.
The government had earlier expected 3.3 per cent economic growth during 2009/10 (July-June) fiscal year, but officials said a rebound in the large-scale manufacturing sector and a strong performance in services sector contributed to the higher growth projection.
The Planning Commission, which prepares the growth targets, held a meeting on Friday to review economic performance and set the targets for the next fiscal year.
"During the current fiscal year, the achieved GDP growth rate is 4.1 per cent as against the target growth rate of 3.3 per cent," the Planning Commission said in a statement.
"The GDP growth for the next year has been projected at 4.5 per cent on assumptions that the agriculture sector will grow by 3.8 per cent, manufacturing sector by 5.6 per cent and the services sector by 4.7 per cent," it said.
Large-scale manufacturing contributed a major share to the growth in the outgoing fiscal year with a 4.4 per cent increase, after having declined to 3.7 per cent during 2008/09, an official of the Planning Commission said.
The services sector surpassed its 3.9 per cent target and grew by 4.6 per cent in 2009/10, the official said, adding that the next year's target has been set at 4.7 per cent.
The agriculture sector's growth fell to 2.0 per cent in 2009/10 against 4.0 per cent last year, but it was showing signs of stability, the official said.
Lower production of major crops, including sugar, was a major reason for the decline, he said.
The National Economic Council (NEC), a top economic decision-making body, will meet on May 28 to give final approval to the yearly targets.
Inflation: The commission has recommended an inflation target of 8 per cent for the next fiscal year, the official said.
The central bank has forecast inflation for the whole of 2009/10 to average between 11.0 per cent and 12.0 per cent.
The consumer price index (CPI), a key indicator of inflation, rose 13.26 per cent in April from a year ago.
The central bank is widely expected to keep its key policy rate unchanged at 12.5 per cent when it sets the monetary policy for the next two months on Monday, as inflation still poses a threat, it said.
The International Monetary Fund (IMF), which bailed out Pakistan in 2008 to avert a balance of payments crisis, has repeatedly urged caution in cutting rates, listing persistent inflation as one of the worries for Pakistan's economy. |
| EAC proposes withdrawal of GST exemption on several items |
| Sunday, May 23, 2010 |
| By By Aftab Maken
ISLAMABAD: The Economic Advisory Council (EAC) has proposed withdrawal of general sales tax (GST) exemption on a number of taxable items by imposing a uniform Value-Added Tax (VAT) to generate additional revenue of Rs130.5 billion, an official document available with The News said on Saturday.
However, the national exchequer will bear a loss of Rs50 billion under the head of transitional cost of moving of existing sectors from multiple rates ranging from 16-25 per cent to a single rate of 15 per cent, but the net revenue implication of Rs80.5 billion under VAT is anticipated for FY10/11, it said.
The proposed federal VAT Act 2010 having zero-rated supplies under the new taxation system will include a supply of stores and provisions for consumption aboard, basic pharmaceutical and medical supplies, supply of precious metals and international transport services, it said.
The first schedule of the proposed VAT Act 2010 will also include unprocessed peas, wheat, wheat flour, ice, water, ice, excluding those for sale under brand names or trademarks, the document said.
Table salt, including iodised salt, excluding salt sold in retail packing bearing brand names and trademarks were also included in the VAT list. Books, including brochures, leaflets and similar printed material, children's picture, drawing or colouring books, music printed or in manuscript form, maps and hydrographic or similar charts, newspapers and periodicals, other than material wholly or predominantly devoted to advertising, it added.
The document revealed that the Holy Quran in whatever form or on whatever media, diapers for adults (patients), ambulances and fire-fighting trucks, dextrose and saline inclusion of giving sets along with empty non-toxic bags for infusion solution, and dextrose and saline infusion giving sets would be exempted from the new tax.
Artificial body parts, intra-ocular lenses and glucose testing equipment, contraceptives and accessories, precious metal other than a first supply of precious metal after refinement that is zero-rated under this schedule and personal wearing apparel and bona fide baggage imported by overseas Pakistanis and tourists are exempted from customs duties under the Customs Act.
Import of goods chargeable to zero-rate of customs duty under relevant heading specified in heading 99.01,99.02, 99.03, 99.05, 99.06, 99.07,99.08, 99.09, 99.10, 99.11, 99.12, 99.13, 99.14, 99.15, 99.16, 99.18, 99.19, 99.20, 99.21, 99.22, 99.24, 99.25 and 99.38 of the Pakistan Customs Tariff, it added.
This exercise of imposing VAT regime is mainly focused on directing towards improvement of tax-to-GDP ratio, broadening of the tax base, encouraging corporatisation and documentation of the economy and rationalisation of tax rates so that people with lesser income are not affected and those earning more pay their due share, the document said.
It also unveiled that the VAT regime will not only rationalise the tax rates on salaries and non-corporate and imposition of tax at 25 per cent to Associations of Persons (AOPs), but also increase the rate of taxation of small companies from 20 per cent to 25 per cent.
Rationalisation of tax rates at Rs1 per kilogram of laden weight for goods transport business, tax on capital gains, tax rates rationalisation on imports, increase in tax rate by 2.5 per cent on a bank with spread over 5 per cent, charging of withholding tax on purchase of air ticket for inland travel at 5 per cent and rationalisation of provisions on the capital value tax were also proposed under the VAT regime.
Under the VAT regime, the government expects revenue of Rs16.8 billion after withdrawal of exemption for major sectors such as fertiliser, pesticides, pharmaceutical and tractors, Rs7.7 billion from plant machinery and equipment, Rs23.8 billion from withdrawal of zero rating for apparel, textile and footwear (ATF) and their inputs and Rs82.2 billion from services, the document added. |
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| First advance deal of new cotton crop finalised | | Sunday, May 23, 2010 | | By By Gohar Ali Khan
KARACHI: The first advanced-deal of the new cotton crop, due in June, was finalised on Saturday at the rate of Rs5,500 per maund, dealers said.
They said that 200 bales of average-quality Haroonabad cotton was sold booked in advance by the millers, who expect prices to remain high in the next season on its increased demand.
Naseem Usman, chairman Karachi Cotton Brokers Forum, said that the Indian decision to abolish restriction on the raw cotton export under licence would improve the supplies.
India suspended cotton exports on April 19 in an attempt to cool-down domestic prices.
"Two major textile groups in Pakistan are at loggerheads over the government's decision to impose 15 per cent regulatory duty on yarn exports," he said.
The value-added textile mills want the regulatory duty not only to stay, but they also demand an increase in it, while the other group led by spinners want the government to remove this controversial duty.
Usman said that both groups were actively lobbying with the concerned government officials to get their respective demands accepted.
Giving details of the new crop, Usman said that it would start arriving by the end-June. Initially, cotton from Kabula, Faisalabad and Sanghar would arrive, he added. Because of Bt-cottonseed, a high crop yield from various areas, including Chichawatni, Arifwala, Sahiwal, Bhawalnagar, Gojra, Toba Tek Singh, Badin, Degree, Kot Ghulam Mohammad, Kunri, Mirpurkhas and Umerkot is expected this year, he added.
A total turnover of the ready market on Saturday touched 400 bales from Ghotki at Rs6,400 a maund, and 200 bales of the newly-sown crop was reported at Rs5,500 per maund for July delivery in Haroonabad.
Spot rates of the Karachi Cotton Association fell by Rs50 to Rs6,400 per maund.
Cotton futures for July delivery gained 0.88 cents at 82.97 cents per pound and the rates for October delivery fell by 0.31 cents at 77.54 cents a pound at the New York cotton exchange. | |
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NY cotton up 1pc
Sunday, 23 May, 2010
NEW YORK, May 22: US cotton futures rose about 1 per cent on Friday after a weaker dollar and rise in share prices on Wall Street spurred investors to bid the industrial commodity higher.
The key July cotton contract on ICE Futures rose 0.88 cent to end at 82.97 cents per lb, trading from 81.54 to 83.21 cents.
Volume traded in the July contract stood at 7,599 lots.
We had a mix of speculator and trade buying, said Sharon Johnson, senior cotton analyst at First Capitol Group in Atlanta. All in all, we were following the weaker dollar and stronger equity markets. Cotton has had a fairly strong run this week, even bucking the broad downtrend in commodity markets sparked by the European debt crisis.
On Wednesday, July cotton hit a 16-day high above 84 cents a lb on optimism that China would be a big buyer of the fiber this year.
In other industry developments this week, India allowed export of cotton under license just as new plantings began in the country. It halted shipment registration a month ago, to rein in domestic prices. Volume traded in ICE cotton on Thursday reached 5,252 lots, against the previous tally of 23,887 lots, according to ICE Futures US.
Open interest in the cotton market was at 212,723 lots as of May 20, up from the prior 189,135 lots, the exchange said.---Reuters
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