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News Clips 03 December, 2014


[ Facing toughest competition in global market: exporters urge government to bring down cost of doing business ]
[ Textile mills: 'gas supply diversion to effect $1.2 billion per month exports' ]
[ Diversion of Rousch gas to industry: Ministry reluctant to implement Prime Minister's directive ]
[ FBR likely to issue notices to over two million non-filers ]
[ Power consumers to pay Rs1.2bn as govt diverts gas to textile industry ]
[ PM forms body to oversee compliance of GSP-plus facility conditions ]
[ ST zero-rating on power and gas connections: scrutinising, verifying of exporters' record begin ]

Facing toughest competition in global market: exporters urge government to bring down cost of doing business   [ top ]

Business Recorder, December 03, 2014
Business Recorder, December 03, 2014 In order to survive in the face of toughest competition in the global market, cost of doing business needs to be brought down to a level of our competitors on priority basis, exporters said on Tuesday. 

Muhammad Jawed Bilwani, Chairman, Pakistan Apparel Forum while briefing the Federal Commerce Minister, Eng, Khurram Dastgir on his visit to Pakistan Hosiery Manufactures and Exporters Association (PHMA) House said as per the regional comparison of cost of doing business, it is evident that Pakistan's wages, interest rates, tariff of electricity, gas and water is much higher creating hurdles for smooth business. 

He said that improving export competitiveness and reducing cost of doing business was the mission statement of Ministry of Commerce however the traders were irked by the country's unfriendly trade environment. He urged the minister to help the people associated with industry particularly in reducing the production cost. 

Bilwani said that the value-added textile export sector was vital with 45 percent of total exports of the country and contributing the major portion 84 percent of the textile exports consisting of apparels, knitted and woven garments, bed-wear, made-ups, processed fabric, knitted and woven fabric, towel etc. Moreover the value-added textile export sector generates the largest employment of almost 34 percent of nation's total employment. 

"Without introducing the culture of value addition, we will never be able to compete in the international market," he added. While comparing he said that Pakistan is far behind from the other countries when it comes to earning the value fetched per million bales. "Pakistan earns $1.17 billion from one million bales while Bangladesh earns $6 billion, China $7.09 and South Korea earns $10.68 billion from the same quantity of bales," he pointed out. 

Bilwani said that Pakistan, the fourth largest cotton producer in the world, is termed as a raw material supplier. "We produce 13.4 million bales per year. If we even convert 50 percent of 13.4 million bales we can fetch price like Bangladesh," he added. "We firmly believe that this situation is due to lack of value-addition in every sector and major reason is cotton sector has lesser value-addition and more export of raw material to our otherwise competitors in the global market," he noted. Bilwani said due to non-payment of sale tax refund and custom rebate the exporters faced financial losses. 

The Commerce Minister said the government's focus was to enhance export volume up to $50 billion through adopting different measures including trade liberalisation and facilitation, higher market access for Pakistani products in existing markets, and better commercial intelligence. These steps would also improve quality of life of the people of Pakistan, he said. 

Khurram said that Pakistan has earned additional $770 million or 18 percent growth from the exports to European Union (EU) since the country was granted GSP plus status. He promised that ministry would work for enhancement of the value-added textile sector along with textile industry because value-added sector generates maximum employment opportunities for the masses. 

Government has established Treaty Implementation Cell (TIC) for the implementation of 27 EU conventions, he said and added that Punjab and Khyber Pakhtunkhwa have set up provincial TICs as well. Prim Minster Nawaz Sharif has tasked all ministries to work for the exports promotion. The government realizes that dependency on International Monitory Fund (IMF) is not the solution to strengthen the country, he said. "Better utilisation of domestic resources and serious efforts for promotion of export will put the nation on the path of development," Khurram added. 

He also announced to install scanners at ports from Export Development Fund (EDF) with a view to ensure transparent inspection mechanism. Secretary Commerce Shehzad Arbab, Chairman Council of All Pakistan Textile Association Zubair Motiwala, Central Chairman, Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) Ijaz. A Khokar, and other representatives of textile sector were also present on the occasion.

Textile mills: 'gas supply diversion to effect $1.2 billion per month exports'   [ top ]

Business Recorder, December 03, 2014
The Punjab-based textile industry has welcomed the government decision of shutting down Rousch Power Plant to divert 85MMCFD gas to textile industry during winter, saying that it will earn $1.2 billion per month foreign exchange through exports of textile products. 

According to these circles, this step would bring more confidence on the part of investors who are ready to invest billions of dollars in Pakistan's textile industry subject to availability of uninterrupted energy, including electricity and gas, supply to the mills, particularly those situated in the province of Punjab. It may be noted that the Punjab-based textile mills are facing unprecedented energy shortage since November 2007, resulting into closing down of over 40 percent of the capacities. Also, the Punjab-based value-added textile industry is crying for energy when the European Union has extended much-awaited GSP-Plus status to Pakistan. This facility was likely to add one billion dollars to exports of Pakistan. However, the government inability to provide energy has hampered the growth in exports. 

Earlier, the energy supply constraints have pulled the exports down substantially, leading to a notice by the Prime Minister Nawaz Sharif who instructed Federal Finance Minister Ishaq Dar to engage stakeholders for a solution. Accordingly, the Ministry of Petroleum & Natural Resources as well as the Ministry of Water & Power have decided to take measure for maximum energy supply, particularly gas, to Punjab-based textile mills. 

Textile industry circles have expressed the hope that the government would stand by its commitment of providing energy during the crucial period starting from December 15 until February 15 by discouraging all types of propaganda by the opponents. They said that measure would keep the jobs of industry workers intact besides brining further investment to the textile sector. 

Diversion of Rousch gas to industry: Ministry reluctant to implement Prime Minister's directive   [ top ]

Business Recorder, December 03, 2014
The Ministry of Water and Power is reportedly reluctant to implement the Prime Minister's directive regarding diversion of 85 MMCFD gas dedicated for 412 MW M/s Rousch Power Company to export oriented industry especially Punjab-based textile sector, sources close to Minister for Water and Power told Business Recorder. 

Punjab-based textile sector held meetings with Finance Minister, Senator Ishaq Dar and Chief Minister Punjab Mian Shahbaz Sharif who assured them that the industry will not be allowed to suffer due to shortage of gas. Minister for Water and Power, Khawaja Asif has been one of the key critics of diverting gas to the textile sector as he believes that this sector earns more on cheap gas for power generation than its export products. 

The sources said Prime Minister's directive is not enough to implement a policy decision and for this purpose either the Ministry of Water and Power or Ministry of Petroleum and Natural Resources has to seek formal approval from the Economic Co-ordination Committee (ECC) of the Cabinet. 

Presently, textile sector in Punjab is being supplied the required quantity of gas diverted from the CNG and fertilizer sectors. However, as winter intensifies, gas from M/s Rousch Power Company will be diverted to textile sector. Minister for Commerce, Engineer Khurram Dastgir repeatedly urged the government to ensure gas supply to export oriented industry so that the country could benefit from GSP plus status granted by the EU. Power sector analysts argue that if the government diverts gas from M/s Rousch Power Plant to the textile sector, consumers will have to pay Rs 600 million per month in winter for at least two months. M/s Rousch Power Plant is top in terms of efficiency and provides electricity at Rs 4.5 per unit to the NTDC. 

The sources revealed that the November 24, 2014 decision regarding diversion of 85 MMCFD of M/s Rousch to the textile sector was taken at a high level meeting. According to sources, last year, similar directives were issued to the Water and Power Minister but the National Power Control Centre (NPCC) refused to implement the directive saying that dispatch order for the most efficient power plant cannot be zeroed without formal approval of the ECC. 

Keeping in view the NPCC's objections, Water and Power Ministry sought the ECC's approval prior to diverting gas from M/s Rousch to the textile sector. According to the Office Memorandum, Prime Minister has directed that the gas allocation mechanism adopted last year be replicated in toto in the current year to ensure balance of supply position between energy sector, industry and domestic consumers/commercial consumers. 

When contacted, Chairman All Pakistan Textile Mills Association (APTMA), S M Tanvir confirmed that textile sector in Punjab is being supplied sufficient gas and Chief Minister Punjab has assured that textile industry will not be allowed to shut down. One of the power sector experts told this scribe that as and when the National Transmission and Dispatch Company brings down dispatch to zero, gas will automatically be freed for the power sector. Under the power purchase agreements, the government could seek 10 per cent closure of power plant at zero capacity payment. 

FBR likely to issue notices to over two million non-filers   [ top ]

The News, December 03, 2014
KARACHI: Tightening its noose on those who do not pay taxes but are registered taxpayers, the Federal Board of Revenue (FBR) is all set to issue notices to at least two million non-filers after the expiration of December 5, deadline, sources said on Tuesday

The sources said the revenue body has estimated over one million tax returns to be filed by December 5, out of the total 3.69 million National Tax Number (NTN) holders in the country. Considering the statistics, the FBR may issue notices of non-filing to around 2.5 million registered taxpayers, the sources said.

Tax filing deadline has expired on November 22, but the FBR announced a general amnesty for late filing of income tax returns by withdrawal of fine and penalty. However, it also warned those who failed to avail of the revised date of December 5, would be charged with the fine and penalty for late filing from November 22.

The sources said the FBR had also directed all the chief commissioners of the Regional Tax Offices (RTOs) and Large Taxpayers Units (LTUs) to submit details of persons having taxable income or having assets qualifying for filing returns under the law, but not on the tax roll.

The sources said the heads of the units had been asked to send details by December 5, to include such persons in the ongoing exercise of broadening the tax base.

The chief commissioners have been asked to provide details of vehicles from provincial excise department; properties from provincial land revenue department and cantonments; electricity connections both commercial and industrial and residential connections receiving monthly bills of specified threshold to be obtained from the power distribution companies; and mobile phone users from the cellular service providers.

Most of the records already available with the FBR database and further flow of information would increase the number of potential taxpayers in the country, the sources said.

During the last few years, the government had introduced several amendments to the Income Tax Ordinance, making it mandatory for certain classes of persons to file income tax returns, but till last year, the result was not encouraging. When contacted, Shahid Hussain Asad, Member of the Inland Revenue (Policy), confirmed the revenue body is planning to issue notices in bulk quantity. He, however, said no coercive action would be taken before the cutoff date.

In the tax year 2013, the FBR had received only 840,000 returns of the population of 180 million people in the country.

The sources, however, said the FBR had already started sending notices to non-filers of last years. They said the notices had been issued directly from the FBR headquarters, while field formation is also contributing towards this.

The sources said the directorate general BTB had made efforts to increase the number of registered NTN holders.

The International Monetary Fund (IMF) in its statement released last month had also lauded the country’s progress towards broadening the tax base. 

Power consumers to pay Rs1.2bn as govt diverts gas to textile industry   [ top ]

Dawn, December 2, 2014
ISLAMABAD: The power consumers will be paying Rs600 million per month during this winter, for minimum two months, even without using electricity of a 412MW power plant to enable the government divert gas supply to the textile industry of Punjab.

The consumers will have to bear the financial impact as a result of the government’s decision to pay Rs600m per month to 412MW Rousch Power Plant Limited (RPPL) — a South Punjab-based power plant for diversion of its fuel to the textile industry.

Under the directives of Prime Minister Nawaz Sharif, the foreign-funded power plant would be kept closed during winter and its 85mmcfd (million cubic feet per day) of gas would be diverted to Punjab’s textile units. The plant would keep getting capacity payments without any interruption to avoid litigation.

The amount will be made a part of the consumers’ power bills, although they would not be using the electricity.

Rousch is one of the most efficient power plants — among top 15 out of 78 plants — in the country that provides electricity to the government at about Rs4.5 per unit and usually helps keep average tariff on the lower side. About Rs2 per unit (kwh) is the capacity charge that would remain part of the consumer tariff.

According to an office memorandum, the ministry of water and power has been directed to prevail upon the management of Rousch to sign an agreement for gas diversion to textile industry. For this to achieve, a last year’s decision of the Economic Coordination Committee (ECC) of the cabinet has been invoked.

“The prime minister has been pleased to direct that the Gas Allocation Mechanism adopted last year is to be replicated in toto in the current year to ensure balance of supply position between energy sector, industry and domestic/commercial consumers,” said an official notification.

Last year too, 85 mmcfd of gas was diverted from Rousch Power to industrial sector for 60 days but with prior consent of Rousch Power and a formal agreement was signed between “Wapda/NTDC and Rousch Power”.

“It was also agreed that Wapda/NTDC will continue to pay monthly capacity payment/price to the RPPL under the provisions of power purchase agreement (PPA). It was also directed that the preference must be given to export oriented industry,” the directive stated.

The water and power ministry has been asked to ensure an agreement with Rousch “to enable Sui Northern Gas Pipelines Limited to divert this gas for export-oriented textile industry”.

Informed sources said the move was inevitable to support textile industry but the decision should have been taken at least six months in advance so that RPPL’s mandatory outage could have been scheduled for winter to avoid payment of capacity charges for at least 35 days.

Under the power purchase agreements, the government could seek 10 per cent closure of power plant at zero capacity payment.

About 74pc of the country’s total exports are textile based, more than 70pc of which is located in Punjab. The government believed the textile industry could double its exports by taking advantage of GSP+ status in Europe provided it was ensured sufficient energy.

Officials argued the textile industry, particularly in Punjab, remained starved for the last one year while expensive electricity was supplied to residential consumers, leading to outburst of consumer bills and public outcry.

On top of that, natural gas remained flowing uninterrupted to the industry in Sindh and Khyber Pakhtunkhwa for two years now following implementation of Article-158 and 172(3) of the Constitution.

As a consequence, the combined electricity cost (66pc furnace oil and 33pc gas based) of industry in Punjab stood at Rs12.31 per unit which increased to Rs14 per unit with imposition of two surcharges in as many months.

On the other hand, the electricity cost of industrial units in Karachi was Rs6.75 per unit which increased to Rs7 per unit this month. The difference made textile units in Punjab uncompetitive in the international market, they said. 

PM forms body to oversee compliance of GSP-plus facility conditions   [ top ]

Associated Press of Pakistan, 01 December 2014
KARACHI: For compliance of 27-conventions linked to GSP-plus facility awarded to Pakistan by European Union, Prime Minister Muhammad Nawaz Sharif has set up a Treaty Implementation Cell and the provinces are bound to follow the same.

The Prime Minister is very serious on treaties implementation. The cell is working very satisfactorily. We will also give you a briefing on this, said Federal Minister for Commerce Engr. Khurram Dastagir Khan during a meeting with the members of Pakistan Ready-made Garments Manufacturers and Exporters Association (PRGMEA) here on Monday. He informed that Punjab and Khyber Pakhtoonkwa have come ahead and set up their own cells and other provinces are expected to do the same at the earliest.

" Prime Minister is very anxious to increase exports. Even today, he directed me to take more steps in this regard. I assured him of more meetings with the stakeholders for better plans," the Minister said. He said the Government is working to revise the import policy and he sought input from PRGMEA and other trade bodies of the country. He assured the value-adding textile sector people that their claims like sales tax refunds pending with Federal Board of Revenue (FBR) would be cleared soon.

" Pursuing on top priority, I have even requested the Prime Minister to issue directives for the earliest resolution of this serious issue affecting your financial liquidity," he said adding that we are advocating that on the very next day when these refunds claims are cleared, the value-added textile sector be zero-rated. For the provision of natural gas to the value-added textile sector especially to the processing sector in the country, the Commerce Minister invited data about the required gas by the processing units so that the issue should be dully addressed.

The Minister agreed to the demand by PRGMEA's Central Chairman Ejaz A. Khokhar for setting up more training institutes for skill development in textile industry by utilizing Export Development Fund (EDF). However, he said, the associations would have to play their role in setting up and successfully running these institutes as EDF would not be used to pay any kind of re-current expenses.

" EDF is purely for development of export infrastructure," he asserted. Engr. Khurram Dastagir Khan assured that his ministry is ready to help PRGMEA members to get international certification.

He urged the business community to join and support the government's efforts for taking full benefit of GSP-plus. The first review in this regard is due in January 2015 and was confident that Pakistan would soon be able to comply all 27 conventions.

The Minister said the Ministry of Commerce has planned to hold 'Aalee Shan Pakistan' trade exhibitions in many countries including East Europe to project our trade potential.

He advised the associations belonging to value-adding textile sector to provide clear cut proposals for making Pakistan competitive especially in the region.

He was critical on the negative politics including sit-ins and maintained that all this, have badly affected the economy of the country.

PRGMEA's Central Chairman Ejaz A. Khokhar and Chairman, Sindh-Balochistan Zone, Jawed Suleman and other senior leaders of the association Dawood Jakhura and Bilal Mulla apprised the Federal Commerce Minister of the problems facing value-adding textile sector and the textile industry in general.

The Minister was accompanied by Federal Secretary Commerce, Shahzad Arbab, Chief Executive Officer (CEO), Trade Development Authority (TDAP) S.M, Muneer and Secretary TDAP, Rabia Javeri Agha. 

ST zero-rating on power and gas connections: scrutinising, verifying of exporters' record begin   [ top ]

Business Recorder, December 01, 2014
The Federal Board of Revenue (FBR) and gas/power distribution companies are jointly scrutinising and verifying the record of exporters in textile, leather, surgical, carpets and sports industries to check authenticity of sales tax zero-rating on electricity and gas connections. 

Sources told Business Recorder here on Sunday that the FBR has issued instructions to all Chief Commissioners of Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs) to verify tax record of each and every registered exporter of the mentioned sectors enjoying sales tax zero-rating facility. The purpose of the whole exercise is to check that only admissible companies are enjoying sales tax zero-rating on electricity and gas connections. During the exercise, the persons involved in misuse/unauthorised use of the sales tax zero-rating would be identified for taking enforcement action against them. There are apprehensions that certain units are availing the sales tax zero-rating on electricity and gas connections without necessary approval of the FBR. 

According to the FBR's instructions, the Board has provided CDs containing data / list of sales tax general orders (STGOs) regarding grant and withdrawal of zero-rating on electricity and gas to the field formations. 

In this connection, the FBR has directed the field formations that scrutiny in respect of cases falling under respective jurisdiction of LTU/RTO may be carried out in collaboration with concerned utility companies to ascertain/verify that only registered person duly authorised by the Board are availing the said facility. 

The persons involved in misuse/unauthorised use of the said facility may be identified and action be taken as per law, FBR's instructions added. 

When contacted, an expert said that the FBR had already launched a national survey of manufacturing premises of exporters in textile, leather, surgical, carpets and sports industries to physically verify sales tax zero-rating on electricity and gas connections. The physical survey was launched to check the misuse of sales tax zero-rating facility on supply of electricity and gas bills by the authorised registered persons/un-authorised (registered) persons.