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Friday, 06 January, 2012
debate ‘naDRa disburses Rs6.2b through watan Cards’ KARACHI STAFF REPORT
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MFn with India to adversely impact industry LAHORE
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STAFF REPORT
He domestic industry is still not prepared for competition with the Indian industry after 16 years of signing up on the WtO, stated Mehnaz Shiraz, a WtO expert on a seminar conducted by lahore Chamber of Commerce and Industry today. the industry is still trying to shy away from its commitments under the WtO with India. She also stated that the terminology of ‘Most Favoured Nation’ used in the WtO area was a misnomer as the term meant that every trading partner will be given equal treatment and if concessions have been offered to one WtO member, it must be offered to all other members. She added that India had already given Most Favoured Nation status to Pakistan in 1996
but imposed Non tariff Measures such as Product standards, custom procedures, licenses, inspections. If the Government of Pakistan was now going to give the status of MFN, it could make use of the same exception clauses. She also added that the private sector needed to revive its associations and Chambers to come up with a joint strategy for the entire sector. Muhammad anum Saleem, lecturer at luMS and a WtO expert stated that to effectively counter the Indian threat, Pakistan’s industry needs to use trade Defence laws available in Pakistan such as anti Dumping Duties Ordinance, Countervailing Duties Ordinance and Safeguards Ordinance. He also stated that the laws could even be pressed into service if there was a threat of injury to the industry. Saleem lamented the fact that there was no reported case under the Countervailing
Duties Ordinance and Safeguards Ordinance in Pakistan and Pakistan was also slow in going to Dispute Settlement Body of the WtO (“DSB”) in Geneva. He said that India was a frequent user of the DSB and had almost 300 trained lawyers in the trade area while Pakistan had just a few. India had gone to the DSB 16 times as compared to Pakistan which had perhaps gone only a few times. Mr. Saleem added that every businessman in Pakistan could approach the High Court to protect its fundamental rights if it felt threatened from the granting of the MFN status to India provided meaningful consultations with the relevant industry had not been undertaken by the Government of Pakistan. Quite recently, the Islamabad High Court had exercised its jurisdiction in this matter, he added to protect the local industry. While giving specific examples from the industry, Mr.
Saleem informed the audience as to how India was getting ready to dump its products in the local market to drive out competition and give rise to unemployment and poverty. However, he assured the audience that by making use of the relevant laws, the Industry could get five to ten years’ protection even after the giving MFN status to India. the measures could be invoked even if only the threat of serious injury was present, he said as the trade defence laws were enacted under the WtO regime and arose out of exceptions of the Gatt agreement of 1994. at present, the exports of India to Pakistan were approximately rs1.2 Billion compared to a meagre rs200 Million exports from the Pakistan side and a big Indian Manufacturer is seeking to export huge quantities of Pet Coke to the domestic industry as a substitute to Furnace Oil.
atIONal Database & registration authority, NaDra has disbursed rs 6,264,380,379 to 321,336 flood victims in second phase of Watan card project. the Second Phase regarded as Citizen’s Damage Compensation Programme (CDCP) under which second tranche of compensation is being provided to about 1.1 million affectees through Watan cards. this was stated by Deputy Chairman NaDra tariq Malik. the Prime Minister of Pakistan Syed Yusuf raza Gilani inaugurated phase II of Citizen Damage Compensation Programme on 15 September 2011. the Programme is now successfully being executed by Cabinet Division (emergency relief Cell) with the technical support of NaDra and in collaboration with Provincial Disaster Management authorities. In the Second Phase, rs40,000 (in two installments) has to be provided to each of the households identified by the provinces. While elaborating the details of second phase cash disbursement he said that NaDra issued 95,796 Watan Cards in Punjab to disburse around rs1,549,969,390. In Sindh, the number of Watan Cards issued was 8,272 with a disbursed amount of rs40,733,500. In Khyber Pakhtoonkhwa, the number of Watan Cards issued stood at 210,993 with disbursed amount of rs4,560,496,989. In azad Kashmir, 3,075 Watan cards were issued disbursing rs49,690,500 while five NaDra sites were set up in Hattian, Haveli, Mirpur, Neelum and rawalakot I. In Gilgit-Baltistan 3,200 cards were issued disbursing rs63,490,000 and three sites were established in Gilgit, Hunza and Skardu.
CGt not in interest of economy, SECP concedes after two years g
apex regulator moves recommendations to revamp controversial levy KARACHI
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ISMAIL DILAWAR
eCurItIeS and exchange Commission of Pakistan (SeCP) has come up with various proposals to revamp the controversial Capital Gains tax (CGt) in the country’s capital market where the apex regulator has eventually realised that the traded volumes and tax revenues have plunged to lowest levels during the past two years. the commission has observed that the exemption of CGt for a long period of 36 years, from 1974 to June 2010, had created a situation whereby the investors had earned legitimate, but “undocumented gains”. the apex regulator has recommended that the “unexplained incomes” or assets of the investors be deferred for funds invested in the capital market till June 30, 2014, after which the
highest/peak value of an investor’s portfolio between now till then should be treated as income generated from the capital market and part of investor’s wealth. the commission also recommended a centralised collection mechanism in National Clearing Company of Pakistan to simplify and ensure timely deposit of tax revenue. Freezing of the existing CGt rate has also been suggested by SeCP to simplify calculation and achieve smooth implementation of the levy, dubbed by market observers as ill-thought-out. Further, the commission proposed that the applicability of Section III may be suspended from april 1, 2012 till June 2014. the regulators also recommended the documentation of the gains made outside capital market. “Maintaining status quo on CGt is not in interest of the economy as it has adversely impacted tax revenue collection as well as trading volumes
at capital markets,” SeCP Chairman Muhammad ali observed in a notice notified to the country’s stock exchanges on Friday. Karachi Stock exchange, however, placed the notice on its website on Saturday. “Besides these, CGt has adversely affected investors’ sentiments, capital formation and overall functions of the capital market,” the commission conceded. the apex regulator, however, took more than two years in what it said, “objectively”, analysing the global trends on CGt and eventually found its adverse implications on securities trading after the levy was re-imposed on June 30, 2010 and given effect from July 1, 2010 after a gap of 36 years since 1974. after holding deep deliberations with Federal Board of revenue (FBr), the commission decided to revamp the levy that, the analysts agreed, had made the investors, particularly the
retailers, flee the once most liquid stock market of asia where the daily average trading volumes are currently staggering at a level as low as 30 million shares. “SeCP has objectively analysed the situation by looking at the global trends, impact of CGt on CM and issues with the present CGt regions and is pleased to abort its proposal to revamp CGt regime in a manner which not only addresses issues highlighted above, but also meets overall objectives of FBr, SeCP and capital market,” SeCP said. SeCP said the levy was in place in australia, Canada, Brazil, China, France and Germany, however, it encompassed all asset classes such as securities, immovable properties, collectibles and other personal assets. In developing jurisdictions, it said, tax’s applicability varies from jurisdiction to jurisdiction. “CGt regimes across the globe have evolved differently, as per each country’s political, fiscal and
economic environment,” it added. SeCP said that securities were usually brought under the CGt regime after a country achieved a certain level of capital market depth, investor outreach and adequate capital formation and documentation. In Pakistan, the regulator said, securities trading remained exempted from CGt for 36 years since 1974. “Implication of CGt on securities trading from July 1, 2010, has not only impacted tax revenues, but has also reduced average traded value to the lowest level during the last two years,” it conceded. SeCP noted that CGt had also put adverse impact on the capital market in terms of price discovery, withdrawal of investors, business viability and capital formation and resource allocation. the recommendations, however, would take effect after approval of the key stakeholders that include SeCP, FBr, stock exchanges, intermediaries and investors.