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News Clips 11 April, 2013

[ Traders seek withdrawal of SRO 154(I) 2013 ]
[ Dissatisfaction over commercial attaches: Senate body orders details about performance ]
[ SMEs unable to avail DTRE scheme ]
[ India: Get ready to pay more for garments ]
[ WTO lowers trade growth estimate ]

Traders seek withdrawal of SRO 154(I) 2013   [ top ]

BUSINESS REOCRDER, Recorder Report, April 4, 2013
Trade and industry leaders on Wednesday joined hands against imposition of 2 per cent tax on exports and called for early withdrawal of SRO 154(I) 2013.

The leaders of Pakistan Readymade Garments Manufacturers & Exporters Association (PRGMEA), Pakistan Hosiery Manufacturers Association (PHMA), Pakistan Tanners Association (PTA), Anjuman-e-Tajran Pakistan and other trade and industry associations met here under the Chairmanship of LCCI President Farooq Iftikhar strongly protested the issuance of anti-business SROs. The meeting continued for well over an hour.

Prominent among the participants were Central Chairman of PHMA Javaid Bilwani, Chairman PTA Agha Saiddain, LCCI Senior Vice President Irfan Iqbal Sheikh, Vice President Mian Abuzar Shad, Chairman PHMA Adil Butt, LCCI former President Sheikh Muhammad Asif, former Senior Vice President Mlaik Tahir Javed and a large number of Executive Committee Members.

During the course of meeting, the participants also decided to hold meeting with caretaker Prime Minister against the imposition of two percent value added tax on all the five zero-rated sectors. They also decided to launch media campaign against this controversial SRO that is not only anti-business but anti-country as well.

Speaking on the occasion, the LCCI President Farooq Iftikhar said that all options including a call for strike and dharna in Islamabad and hoisting black flags on industrial units are open for business community. He said that it was very sad that the government was not realising the social impact of these SROs and only protecting certain vested interests. He said that millions of workers are attached with export oriented industry and in case of closure of theses business they would be jobless.

Farooq Iftikhar hoped that sanity would prevail on the part of the government and it would withdraw the SRO that is bound to create liquidity crunch for crisis-hit businesses. He said that it is the Finance ministry that is causing troubles for the business community.

The Central Chairman PHMA Javaid Bilwani said that unilateral issuance of SROs are enough to make the point that business community hardly matters when it comes to policy making or issuance of SROs. He said that all over the world, economic policies are made and implemented in consultation with business community but in Pakistan, the situation is the other way round.

The Chairman PRGMEA Sajid Saleem Minhas said that the business were already facing liquidity problem but this controversial SRO would worsen the cash-flow further. The Central Chairman of Pakistan Tanners Association (PTA) Agha Saidain said that exports oriented industry is zero-rated all over the world while WTO regime also allows tax-free exports.

He said that the government should take cue from advanced economies and withdraw this SRO. He said that exports are not taken as revenue earner rather they bring in much needed foreign exchange and create jobs. He further said the FBR the plea behind levying of 2 percent tax under SRO 154 that some influential members of APTMA had refunded Rs 6 billion against their total deposit of Rs 2 billion has no logic. He quoted FBR officials as saying that the textile sector was required to pay 5 percent sales tax in case of local sale but those who were allegedly involved in malpractices claimed refunds incorporating their local sale into exports category.

"If FBR realises this flaw in the system that facilitates more refunds than the actual payment then it should reintroduce zero rated system. Earlier, FBR had introduced zero rated regime following an extensive study. The industry is already facing liquidity crunch and need the government's help failing which the issue of trade deficit would further be aggravated, PTA Chairman added.

Former Chairman PRGMEA Ejaz Khokhar said that all the five zero rated sectors and chambers of commerce in the country should go to Islamabad against this controversial SRO. Chairman Anjuman-e-Tajran Ashraf Bhatti said that traders would back industry's call for strike.

LCCI Senior Vice President Irfan Iqbal Sheikh said that only joint trade and industry strategy would work against all anti-business policies therefore it should immediately hold a meeting with Prime Minister and give him facts and figures about the impact of the SROs. The Vice President Mian Abuzar Shad said that it is very unfortunate that the businesses are being pushed to the wall at a time when they were already passing through very critical times. He said that it seemed that policy makers were hell bent to stop industrial wheel.

Dissatisfaction over commercial attaches: Senate body orders details about performance   [ top ]

DAILY TIMES, Ijaz Kakakhel, April 10, 2013
ISLAMABAD: Expressing dissatisfaction over the performance of commercial attaches in Pakistani missions abroad, the Senate Standing Committee on Commerce on Tuesday demanded details about performance of all commercials attaches in main countries of the world. The committee, which met under the chairmanship of Senator Ghulam Ali, was of the view that Pakistani attaches never facilitate Pakistani traders abroad and are always trying to avoid the potential Pakistani traders in the respective countries. Ali said if some one of the businessmen reached there, the commercial attaches were unable to provide any sort of related information, even they could not have any know how. He suggested the Ministry of Commerce that all commercial attaches should have complete information about demand of Pakistani products and all business-related people and market in foreign countries.

The committee was of the view that commercial attaches of other countries in Pakistan and also abroad are very active for promotion of their respective countries exports but our own attaches failed to enhance Pakistan’s exports. The committee directed the Ministry of Commerce to provide performance reports of all commercial attaches in main countries during last five years. UN Ministry of Foreign Affairs Director General Raj Ali Ijaz informed the committee that most of our Pakistani missions (80 percent) consist of very small staff, mostly consists of two or three persons. They don’t have the capacity to facilitate the traders of Pakistan abroad.

Ministry of Commerce Secretary Muneer Qureshi confessed that performance of commercial attaches was not satisfactory and they need to increase their performance. However, he assured the committee that this time the appointment of commercial attaches was purely made on merit.

The committee also formed a sub-committee under the convenership of Karim Ahmed Khawaja and Senator Saifullah Khan Bangash and Senator Adnan Khan as its members, who will formulate investment policy for those Pakistanis, who left the country immediately after partition. The senators said these ex-Pakistanis have great association and affection with Pakistan, if they were properly convinced to invest here, they will contribute.

Senator Gul Muhammad Lot claimed that these (ex-Pakistanis) were spread in different countries of the world and most of them became business tycoons. He said the sub-committee should work hard to bring these potential investors back to the country. He also suggested that chambers of commerce and industries presidents across the world were given status just like federal minister. However, in Pakistan the situation was totally opposite and suggested the committee to recommend for granting the status of federal minister to the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) president.

The commerce secretary said ex-Pakistanis were born in Pakistan and they go somewhere else for more avenues. Appropriate measures should be taken to bring these people back in Pakistan for investment purposes. About trade disputes in several countries, the secretary said the ministry has established for the first time Trade Dispute Resolution, which will be headed by senior official of grade 21. The Trade Dispute Resolution has already taken issues related to a few countries and if there are any complaints of any traders, they can contact the ministry.

The committee also expressed dissatisfaction that the federal government is issuing licence of prohibited bore but it is strange that there is not a single shop from where it may be purchased. In this regard permission was taken from Malik of tribal areas just on papers as gifted, which is not right. There should be a proper mechanism for purchase of such prohibited bore.

The secretary said import of prohibited weapons with complete details may also be allowed in limited numbers with the same terms and conditions as non-prohibited bore to meet the legal requirements.

SMEs unable to avail DTRE scheme   [ top ]

DAWN, Staff Reporter, April 9, 2013
KARACHI, April 8: The small and medium enterprises (SMEs) are unable to avail full benefits of duty-free raw material under the Duty Tax Remission for Exports (DTRE) scheme as they can neither comply with the lengthy procedures nor can they import full consignment of containers.

This was stated by Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) in a press release issued on Monday.

“Only big exporters and large-scale manufacturers are availing full benefits of the DTRE scheme, however, not a single company from the auto engineering sector in Pakistan is benefiting from this scheme to increase the country’s export volumes,” the statement added.

Paapam urged the government to simplify the complex nature of several segments of its policy, including DTRE and sales tax refund system. “If the government removes red tape from the DTRE scheme, exports of auto engineering sector will increase manifold as production cost comes down by at least 15 per cent,” the statement said.

“Around 90pc of the export-oriented auto engineering units are located in Punjab. But due to the energy crisis, these units have not been able to avail import of duty-free raw material with a view to avoid delay in export orders as audit of DTRE takes up to six months,” it further read.

The association said the auto engineering industry was totally different from other sectors and DTRE rules cannot be applied to it, adding: “The government keeping in view of the complexity of the auto sector, should align the rules of DTRE as per its requirements to boost export of automotive parts.”

India: Get ready to pay more for garments   [ top ]

TIMES OF INDIA, Vaivasvat Venkat, April 11, 2013
LUDHIANA: Prices of garments could increase by 10 to 15%, say captains of the textile industry, attributing it to the constant increase in prices of cotton yarn. Industrialists feel the government needs to check the increase in prices of raw material.

"The prices of cotton yarn are increasing constantly and it would not be an exaggeration to say that the cost of the yarn has increased on an average by over Rs30 in the past few days. If the same trend continues, it is going to have an impact on the prices of garments," says Vinod Thapar, Chairman, Knitwear Club.

He further informed that the government should impose a cap on exports of the raw material so that the same is available to the indigenous industry on reasonable prices, which would ensure end-users also get the benefit. As of now, the industry is unable to translate the advantage of the waiver of the 12.5 per cent excise duty to the customers because of the rise in yarn prices.

Rakesh Kapoor, owner of Wilson and Tuscany industry, says, "Prices of cotton yarn will definitely have an impact on the prices of garments not only in summers but also in winters. Rather, there would be more impact on the garments in winters. Apart from the rise in prices of the raw material, there has been a substantial increase in power tariffs as well and this is also going to add to the burden on the industry and the customers in the real sense."

However, customers feel they are also bearing the brunt of the price rise. "If prices of garments are increased, it is going to burn a hole in the pocket of customers," says Kawaljeet, a resident of Rajguru Nagar.

WTO lowers trade growth estimate   [ top ]

DAWN, April 11, 2013
GENEVA, April 10: Global commerce is set to grow by 3.3 per cent this year, the World Trade Organisation said on Wednesday, as persistent gloom in Europe led it to cut a previous forecast of 4.5pc.

The announcement marked the second time that the WTO has reined in its figures for 2013, after initially estimating that world trade would expand by 5.6pc

“The final trade figures for 2012 are quite sobering,” WTO director-general Pascal Lamy told reporters before adding that 2013 would see “more of the same.” Last year, the WTO said, global commerce expanded by 2.0 percent, well below the growth in 2011 of 5.2pc.

It is increasingly clear that the world economy is running at “double speed”, with developing countries outperforming richer nations, Lamy emphasised.

The WTO explained in a statement that “improved economic prospects for the United States in 2013 should only partly offset the continued weakness in the European Union, whose economy is expected to remain flat or even contract slightly this year according to consensus estimates.”

“China’s growth should continue to outpace other leading economies, cushioning the slowdown, but exports will still be constrained by weak demand in Europe,” it added.

As a result, this year looks set to be a “near repeat” of 2012, with both trade and output expanding slowly, though trade was expected to pick up a bit next year.

“Our view is that 2014 should be looking more like 5.0pc growth,”Lamy said.

Last year, the value of world merchandise exports only increased by 0.2pc to $18.3 trillion, the WTO noted.

The trend was driven by falling prices for traded goods, with commodities such as coffee, cotton, iron ore and coal seeing major drops, while oil was relatively stable.

The value of global commercial services exports rose by 2.0pc to $4.3tr meanwhile.

Lamy said that the gap between growth in developed and developing nations should continue, with the latter being major beneficiaries of trade expansion.

“In my view this is here for quite a time ahead,” said the Frenchman, who in September wraps up his second mandate as the WTO chief.

Asked whether that spotlighted policy failings in developed countries, Lamy responded: “There is one thing for sure, there’s a good, solid way to generate growth, and that’s structural reform.” “Refocussing on trade is a good bet, but there are political costs,” he acknowledged.

The 158 economies which make up the WTO set trade rules among themselves in an attempt to ensure a level playing field and spur growth by opening markets and removing trade barriers, including subsidies, excessive taxes and regulations.

Created in 1995, the WTO launched its Doha Round of talks in 2001 with the stated aim of underpinning development in poorer nations.

But the talks have faltered in the face of obstacles set in particular by China, the EU, India and the United States, and Lamy’s successor, still to be chosen, will face the tough task of reviving them.