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Karachi not particularly amused by budget announcement Page 2
Saturday, 2 June, 2012
Uneven tax net holes out the big boys g
govt avoids bringing influential businesses under the tax net ISLAMABAD
voiding influential businesses with new taxes could have further added fuel to fire in the ongoing street protests against power outages. The government is left only with the administrative measures to collect the ambitious revenue collection target of Rs 2.381 trillion during the next fiscal year. Contradictory to the Finance Minister’s claims before the budget that all the sectors will be taxed uniformly, the government has retained the sales tax collection slab for the five exports oriented sector and agriculture machinery at 5 percent while the telecom sector will continue to pay a high sales tax of 19.5 percent. This means no relief for over 111 million mobile phone subscribers. The total revenue impact of the new measures is estimated at Rs 63 billion which will actually turn out to be Rs 31.7 billion after deducting relief measures of Rs 31.2 billion during the next fiscal year, said Member inland Revenue Shahid Hussain Asad. He said the main thrust for meeting the revenue target will be on simplification, enforcement, facilitation and recovery of arrears of Rs 136 billion. The government has proposed relief for big businesses. instead of netting completely the highly profitable banks that are evading income tax (iT) by investing in the capital market as return on dividend is taxed at the rate of 10 percent as compared to corporate iT rate of 35 percent. it is proposed that their dividends earned from money market and income funds should be taxed progressively over two year period at the rate of 25 percent in FY 2013 and at 35 percent in FY2014. Custom duty on scrap of rubber, shred-
ded tyres is recommended to be reduced from 20 to 10 percent to encourage its use as an alternate fuel in the cement industry. it may cause some environment issues in future. The cement industry is also provided relief of Rs 100 per ton in federal excise duty by lowering it from Rs 500 per ton to Rs 400 per ton. it will cause a revenue loss of Rs 2 billion next fiscal year. despite these relief measures, the cement sector has recently increased their product prices. A glaring example of tax evasion culture was given by Shahid Hussain Asad who said the fridge market in Pakistan is estimated to be of Rs 120 billion per annum but the dealer’s returns show a market of Rs 30 billion. in 300 yearly working days, a dealer sells at least one fridge per day that shows an annual turnover of Rs 9 billion. The manufacturers are asked to collect one percent withholding tax from dealers which they can reclaim when they file return. A futuristic incentive on the profit and gains to the venture Capital Company and venture Capital Fund is proposed to be extended for 10 years upto 2024. The limit expires in 2014. Most of the highly profitable brokerage companies have opted in this sector but no venture funded company has emerged due to the stringent investment requirements. Income Tax measures: The exemption for income tax (iT) is proposed to be enhanced to income of Rs 400,000 per annum for salaried and business individuals as well as association of persons. Any further income will be taxed at 7.5 percent till the next slap of 750,000. it has been proposed that the existing iT rate slabs of 17 should be reduced to 5 rate slabs. it will cause a cumulative revenue loss of Rs 8.5 billion during the next fiscal year. The minimum gross turnover iT tax levied at 1 per-
cent for business community is proposed to be reduced to 0.5 percent. it will lead to Rs 11 billion less revenue generation next fiscal year. The advance tax of 0.2 percent on cash withdrawal of Rs 25,000 from banks is proposed to be enhanced to Rs 50,000. Provident funds if managed by pension fund will be exempt from the tax. Pension funds are also exempted from with holding tax. The monthly installment received form pension funds of ten year period is also proposed to be exempt from tax. The income of workers profit participation fund is also proposed to be exempt from iT. Low rate of iT will be offered to commercial importers, exporters and suppliers if they come out of the presumptive tax regime. Employees availing small loan upto Rs 500,000 are proposed to exempt from iT, with a benchmark interest rate of 10 percent instead of progressively increasing interest rate. Taxpayers paying taxes for the last five years will be given a taxpayer honor card that will provide some incentives at airports, nAdRA, PiA and passport offices. The limit of investment eligible for tax credit in securities and insurance sectors is proposed to be enhanced from 15 to 20 percent. The existing limit for investment of Rs 500,000 in securities and insurance premium is enhanced to Rs 1 million. The rate of initial depreciation on new buildings is proposed to be reduced from 50 percent to 25 percent. Real estate business in federal capital is proposed to be brought under capital gains tax at the rate of 2 percent and capital value tax at the rate of 2 percent. in-
case a property is sold within 12 months it will taxed at 10 percent and incase within 24 months at 5 percent. it will help generate Rs 5 billion per annum. cusToms: Pharmaceutical, construction and cement sectors have remained the biggest beneficiaries of government largess, as the custom duty on 88 pharmaceutical raw materials and other input goods are proposed to be further reduced from 10 percent to 5 percent. it will cause a revenue loss of Rs 100 million next fiscal year. Reduction in custom duty on raw materials and components for printing and stationery will cause a revenue loss of Rs 78 million while the reduction in custom duty to 10 percent for self copy papers and self adhesive papers will cause a revenue loss of Rs 50 million during the next fiscal year. Under the legislative measures it is proposed the punishment of whipping in case of smuggling, possession of smuggled goods and armed intimidation of persons engaged in discharged of duty under the custom act should be removed. sales Tax and Federal excIse duTy (Fed): Even though FEd was planned to be phased out with gradual reduction in three years, it is increased on cigarettes. Every pack will be costlier by Rs 5. it will be generating Rs 10 billion more next fiscal year. Ten items of lubricating oils, cosmetics and cigarette filter rods are proposed to be phased out from FEd next fiscal. The sales tax on electricity consumption for steel sector is proposed to be enhanced from Rs 6 to Rs 8 per Kwh. it will increase the revenue by Rs 4b.
Budget Pie diStriBution
Govt runs out of slices in the budget brawl g
gov't allocates rs.774.485 million for industries division ISLAMABAD APP
The government allocated Rs.774.485 million for industries division projects in Public Sector development Programme (PSdP) for the year 2012-13. According to the budgetary document released here on Friday, out of the total allocations, Rs.70 million have been allocated for establishment of intake ad Brine disposal system/Civil Works for desalination plants at gadani, Jiwani and Pasni. The government allocated Rs.55.083 million for establishment of Bostan industrial Estate Phase-i while Rs.55 million have been have been earmarked for Establishment of infrastructure in Quetta industrial and Trading Estate (Phase-ii). Rs.50 million have been allocated for Water supply Scheme for HUB industrial Trading Estate Phase-ii, Rs.40 million for Meat Procession and butchers Training Centre, Multan, Rs.40 million for establishment of Chromite Benefication Plant at Muslim Bagh, district Qilla Saifullah, Balochistan whereas another Rs.40 million have been provided for Coster oil Solvent Extraction Plant at Uthal district Lasbela. The government also provided Rs, 34.180 million for Energy Efficiency for Textile Sector in Pakistan (Phase-iii), Rs.
30.645 million for Revival of Multani Blue Pottery (MBP), Multan, Rs.30 million for Un-gradation of nFC institute of Engineering and Technology Facilities, Rs.27.820 million for Energy Efficiency for Steel Sector in Pakistan, Rs. 26.360 million for Women business development Center, Karachi while Rs. 20.530 million have been earmarked for establishment of CFC for Honey Processing and Packing at Swat. Rs.18.724 million have been allocated for Sialkot Business and Commerce Centre (CBCC), Rs.17.440 million for Women Business incubation enter Quetta, Rs.16.750 million for establishment of Spinning CFC at islampur, Swat, Rs.15.630 million for CFTC for Light Engineering Cluster Mardan, Rs.12.591 million for Strengthening of Planning, Monitoring and Evaluation Cell in M/o i&P islamabad, Rs.11.700 million for institutional development in MoiP&Si with respect to WTo while Rs.8.733 million have been earmarked for Women Business incubation Centre Lahore. rs 653.766 mIllIon allocaTed For commerce dIvIsIon: The government has allocated Rs 653.766 million for Commerce division projects in the Public Sector development Programme (PSdP) for the year 2012-13. According to the budgetary documents released on Friday, out of the total allocations for the
Commerce division, Rs.200 million has been allocated for enhancement in Exhibition Halls and Additional Technology Works (Expo Center Lahore Phase-ii), Rs 143.780 million for purchase of equipment, furnishing, Curriculum development and Training of Pakistan School of Fashion design, Lahore and Rs 100 million for the upgradation of Animal Quarantine Stations in Pakistan. The government has also allocated Rs 80 million for Trade and Transport Facilitation Project-ii: Trade and Transport Facilitation Unit, islamabad, Rs 70 million for Restructuring of Pakistan institute of Trade and development (PiTAd), islamabad, Rs 40 million for Adoption of Social Accountability and Rs.19.986 million for establishment of Animal Quarantine Station gwadar. Gov'T allocaTes rs.13616.044 mIllIon For FInance dIvIsIon: The government has allocated Rs.13616.044 million for industries division projects in Public Sector development Programme (PSdP) for the year 2012-13. According to the budgetary document released here on Friday, out of the total allocations, Rs.1584 million has been allocated for Project for improvement of Financial Reporting and Auditing (PiFRA), Phase-ii, islamabad. The government also earmarked Rs.1785 million for greater Karachi Sewerage Plant (S-iii), Rs.1500 million for greater Water Supply Quetta
(main), Rs.1000 for gwadar development Authority, Rs.900 million for 2MW Power Plant for Syngas (igCC-209) Tharparkar and Rs.700 million for Capacity Building of Teachers Training institutions and Training of Elementary Schools Teachers in Punjab. in addition, the government allocated Rs.500 million for 10 Sewerage Schemes by WASA (Southern Punjab), Rs.500 million for Construction of various Black To Roads in districts Mastung, Bolan and Quetta, Rs.300 million for up- gradation of Cancer Treatment Facility at nishtar Hospital (Southern Punjab), Rs.282.689 million for Tubli Badani Road, Balochistan while Rs.222.386 million have been allocated for Capacity Building of Teachers Training institutions and Training of Elementary Schools Teachers in Sindh. in addition, the government allocated Rs.135 million for Construction of northern Bypass for Bosan Road to Qasim Bela Multan while Rs.100 million have been allocated for Capacity building of Teachers Training institutions and Training of Elementary Schools Teachers in Balochistan and Rs.100 million for Southern Bypass (Southern Punjab). The government allocated Rs.100 million each for Shaheed Benazir Bhutto Montehr & Child Health Care Center nawabshah and Construction and improvement of Roads in Hyderabad district (Rural) Hyderabad Package.
SMe union appreciates tax exemption enhancement ISLAMABAD: The Union of Small and Medium Enterprises (UNISAME) on Friday appreciated the federal government's reformative steps inn the budget to facilate business sctor, terming it helpful in boosting economy. The enhancement of tax exemption limit to Rs 400,000, the reduction of 0.5% in turnover tax, the limit of bank cash withdrawl exemption from Rs 25000 to Rs 50000, the reduction of custom duties on raw materials for medicines, increase in salaries of government servants by 20% and rationalization of federal excise duty, sales tax and custom duties on some items was highly appreciated by the union. In a press release the President UNISAME Zulfikar Thaver said some of their demands have been accepted for which they are thankful that the finance minister Dr Abdul Hafeez Shaikh. However he said the SME sector expected that an economist like Dr Hafeez Shaikh would think beyond this and bring about dynamic changes to stimulate the economy. APP
icci sees no measures for industrial revival ISLAMABAD: There is no incentive and relief for the country’s ailing trade and industry. Pakistan is facing severe energy crises but no concrete measures were announced to overcome the crisis. Giving his reaction after the budget speech of Federal Budget 2012-13, Yassar Sakhi Butt, President, Islamabad Chamber of Commerce & Industry (ICCI), said that no pragmatic steps have been announced by the government to create job opportunities and provide relief to the masses who were stricken by the skyrocketing price hike. He said that very diminutive money has been set aside in the budget for fast crumbling infrastructure. He maintained that the budget was not reflected by any long-term planning and strategy to address key issues confronted by the country. ICCI President said that the revenue target of Rs.2.38 trillion was unrealistic that will open new opportunities of corruption and 4.7 percent fiscal deficit target was simply not achievable. He said that sale tax has been made uniform to 16 percent, however it should have been further reduced to bring down the rate of inflation. INP
economic reforms continue ISLAMABAD: Federal Minister for Finance, Dr. Abdul Hafeez Shaikh said Friday that despite disassociation the International Monetary Fund programme, the government continued its economic reforms programme. Presenting the National Budget for the year 2012-13, he said that during the last two years, the government demonstrated much better fiscal discipline as compared to the past. He said government also succeeded in keeping country's macroeconomic framework stable and this success was achieved without disbursements from IMF. He said that the government had returned $1.2 billion to IMF and despite that the country's reserves are sufficient while the exchange rate is comparatively strong. He said that exports also showed satisfactory performance while remittances increased. The increase in the imports into the country was due to hike in oil prices at international market, he added. Shaikh said that during the period the government introduced many reforms including elimination of sales tax exemption (except on food, agriculture produce, education and medicines). APP
‘Budget missed basic reforms’ ISLAMABAD: The Pakistan Economy Watch (PEW) on Friday termed the fiscal year budget of 2012-13 as missing meaningful reforms. No steps were announced to reduce the fiscal deficit, contain inflation, ensure political and economic stability, and give relief to any section of society, it said. The statement of Finance Minister Dr Abdul Hafeez Shaikh regarding energy crisis was vague which left much to be desired, said Dr. Murtaza Mughal, president PEW in his statement. “The budget is nothing but continuity of failed policies which is based on imaginative targets which prove that government is not ready to ensure enabling environment, reduce expenditure or revive industry,” he added. He said economic managers lacked will and capacity to initiate any reforms as it continued to blame former rulers even after five year, adding, there was no economic revival plan on cards, as it was a jugglery of words which would put extra-burden on the inflation-stricken public. INP
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Saturday, 2 June, 2012
Karachi not particularly amused by budget announcement
Belgian envoy wants strong trade bond with Pakistan
‘Political’ budget condemned by stakeholders in the commercial capital g Lack of energy crisis solution adds fuel to the fire
The current strong partnership and friendship between Belgium and Pakistan would continue to thrive, said Belgian Ambassador to Pakistan Hans-Christian Kint on Thursday. This, he stated at a dinner reception organised by the Pakistan Belgium Business Forum (PBBF) to bid farewell to the outgoing envoy here. in his address to the well-attended gathering, Kint thanked PBBF for organizing a function in his honour. Underlining the importance and growth of the bilateral relationship between Belgium and Pakistan, the ambassador expressed optimism that the bilateral ties between the two countries would keep thriving. He acknowledged that PBBF played a vital role in these developments as PBBF was a dynamic and proactive organization. Kint also inaugurated the revamped official website. Sameer Hamid dodhy, PBBF President, welcomed the ambassador and highlighted the friendly relations between Pakistan and Belgium. He said Kint was a good friend and a staunch supporter of the PBBF. Mohammed A. Rajpar, PBBF vice President, presenting vote of thanks, appreciated the Belgian envoy’s contribution with utmost dedication and sincerity for the last four years in bringing Pakistan and Belgium even closer together in trade and business. He thanked Kint for his cooperation extended to the PBBF during his stay in Pakistan.
ISMAIL DILAWAR/ ZAIN ALI
S expected the democraticallyelected PPP-led coalition government’s fifth consecutive fiscal plan for Financial Year 2012-13 dismayed the traders, industrialists and the businessmen in this commercial capital of the country. The stock brokers and analysts, however, seemed positive about the new budget saying its impact on the bourses would range from “neutral to positive”. Most critical were the small traders of this violence metropolis who termed the budget as “traditional and political” in nature. The industrialists also condemned the federal government’s decision to impose an infrastructure tax on the already ailing industries saying the move would increase the cost of doing business in the country. Sensing, perhaps, such feelings some analysts and businessmen claimed the government would find it hard to achieve its ambitious budgetary targets for FY13. “The budget is not as per expectations,” said Mian Abrar Ahmed, President Karachi Chamber of Commerce and industry (KCCi). dubbing the budget targets as “unrealistic”, the trader said some new taxes in the budget were unexpected. Seeing some “indirect” benefits of the budget incentives, the KCCi chief doubted that the allocated Rs 183 billion were enough to plug the huge 4000MW energy shortfall. “The post-budget wave would be the final thing to be seen,” he remarked. in a joint statement, Chief Patron Korangi Association of Trade and industry, S M Muneer, Chairman Ehtesham Uddin, President, All Karachi industrial Alliance, Mian Zahid Hussain, vice Chairmen, Hasham A Razzak, Tariq Malik and Chairman Media Standing Committee on Press and Media, Syed Johar Ali Qandhari condemned the new budget that lacked any incentives for the industry. instead, they said, the document overburdened the industrialists with the imposition of infrastructure tax on Cng and natural gas that would bring another wave of spiral in the cost of doing business. “no commitment has been fulfilled,” the industrialists said. They said the export sector had not received any incentive, something that would render the country’s exports uncompetitive. The industrialists were not sure without levying the long-awaited agri tax the government would be able to meet its revenue targets. Chairman All Karachi Tajir it-
tehad (AKTi) Atiq Mir termed the budget as “traditional and political” saying the proposed fiscal plan had nothing to offer to the small traders and business who were worst hit by a poor law and order situation, specially in this violence-hit metropolis. “The budget offers no remedy for the problems of SMEs which are suffering from a poor law and order, load-shedding etc.,” said chief of the AKTi, the representative body of over 300 market associations. Advisor to Sindh Chief Minister Zubair Motiwala said the 10-minute budget speech was not enough there were things that were hidden in the budget documents. “We have to focus the Afro-American and European countries which are very important for Pakistani exporters,” he added. The government should provide more relief to the exporters like our competing countries like
india, Bangladesh, vietnam and Sri Lanka who have give special incentives to the industry that has significantly reduced the coast of doing business in those countries. “The government included the KCCi’s proposals in the budget; which is a good sign for business community,” Motiwala said. Terming the energy crises a big issue for the country’s trade and industry, the advisor said the government should take immediate measures to resolve the crises as without energy the export targets could not be achieved. Calling for the curtailment of government’s current expenditures, Chairman Businessmen group BMg Siraj Qasi Teli said the government in the new budget announced a lot of things that were not practicable given the present state of country’s economy. “in few months they would come up with a mini budget,” he viewed.
Unsatisfied with the reduction of gST to 16 percent, Teli said the government should further bring down the tax rate. “We need two or three-day time for analyzing the new budget as this budget speech was incomplete,” the businessman said. Acting President KCCi Younus Bashir said in current fiscal year the country’s exports shrank to $ 24 billion from the targeted $ 25 billion which was not a good sign for the trade and industry. demanding the government of incentives on the utilities front, the trader said local industry was breathing hard under acute energy shortages like that of electricity, gas and water. He also called for the government’s action to curb its huge bank borrowings that he said was leaving little or no cash with the banks for the growth-oriented private borrowers. Former President KCCi Anjum nisar commented that there was nothing in the budget for this metropolis. government announced the packages and subsidies for the industry. nisar was also concerned about the energy crises that he quoted the federal finance minister as saying that had cut the country’s gdP growth by two percent. in 2004, the foreign investment ratio in Pakistan was over 24 percent which, in current fiscal year, had decreased to 12.5 percent. “This is a negative sign for country,” he warned. The analysts at stock market said “few demands met, few not,” by the government in the new budget. Muhammad Sohail, a senior analyst and chief executive of Topline Securities told Profit that the government had done in the the Finance Bill the Capital gains Tax part as well as reduction in the turnover tax. While the Federal Excise duty on cement sector was also decreased. Asked about the possible impact on the equity market, Sohail said it would range from “neutral to positive”. Khurram Schehzad, head of research at the investCap, said the abolishment of FEd on Asset Management Companies (AMCs) and increase in tax exemption limits to stock market would attract investors to the bourses. “The abolishment of FEd on AMCs and increase in limits to stock market both are positives for the investors,” he told Profit. Mazhar A. Sabir and Abdul Azeem, analysts at investCap Research, said better equity performance was expected after the budget announcement as the investors were not expecting new taxes. They said the budget target for FY13 would set the direction of the equity market going forward.
Fixed investment declines 0.6pc in FY 11-12 ISLAMABAD ONLINE
Fixed investment trend has been remained depressive as it showed 0.6 per cent decline in the current financial year 2011-12 as compare to last fiscal year. Fixed investment declined to 10.9 percent of gross domestic Product (gdP) in 2011-12 from 11.5 percent of gdP last
year. According to the Economic Survey 2011-2012, Real investment has also declined from 13.1 percent of gdP last year to 12.5 percent of gdP in 2011- 12,similarly Private investment also contracted to 7.9 percent of gdP in 2011-12 as compared to 8.6 percent of gdP last year. Public investment as a percent of gdP is 3.0 percent in 2011-12 against the 2.9 percent last year. national savings are 10.7 percent of gdP in 2011-12 as
compared to 13.2 Percent in 2010-11. Foreign direct investment stood at $ 668 million during July-April 2011-12 as against $ 1293 million last year. The capital flows were affected because of global financial crunch and euro zone crisis. oil and gas Exploration remained the major sector for foreign investors. The share of oil and gas Exploration in total Fdi during July-April 2011-12 stood at 70 percent.
KARACHI STAFF REPORT
Power tariﬀ hike adds 1.15pc to May inflation KARACHI STAFF REPORT
Last month saw the Consumer Price index (CPi) inflation stand at a surprising 12.29 percent against 11.15 percent in the preceding month (April). This, the analysts said, was well above the market consensus of 11.23 percent. The year-onyear increase has occurred after a gap of 10 months. on a month-on-month basis, inflation went up significantly by 1.15 percent on account of 16.38 percent increase in electricity charges pushing the housing related head up by 2.82 percent, 29.4 percent weightage in CPi basket. The authorities have taken in the effect of 16 percent increase in the electricity tariff announced by the nEPRA on May 16 which has created deviation from the market consensus. Food inflation (34.8 percent weightage in CPi basket) clocked at 0.15 percent with perishable food items depicting a decline of 2.46 percent, while transportation declined by 0.01 percent. Average CPi inflation during 11MFY12 stood at 10.98 percent as against 13.69 percent recorded in the same period last year. “Though average FY12 inflation is expected to be on the lower side of the SBP’s expectation range of 11-12 percent, but persistent high MoM inflation is expected to be a source of concern for the policy makers,” viewed nauman Khan, an analyst at Topline Research.
Budget announcement puts FCCI on festivity mode g
Hails increase limit of with holding tax from 25,000 to 50,000 FAISALABAD INP
The federal Minister dr. Hafiz Sheikh presented the 5th tax free Federal budget of 2012-13 in which government increase the limit of with holding tax from Rs 25,000 to Rs. 50,000. it is very good sign to give the honourary cards the income tax payers, obtaining facilities in government departments as well public places, these views expressed by the President FCCi Mr. Muzammil Sultan.
calls for an end to mini budgets which create problems for business community
in a reaction to the federal bbudget announced on Friday he said, the gdP growth has reached 3.7% as compared to 3% last year. He added, agriculture grew by 3.13%, manufacturing sector grew 3.56%, while mini budgets are coming continuously which are creating many problems for business community as well as for a common man. Therefore the series of mini budgets must be stopped strictly. Rehan naseem Bharara, vice President FCCi expressed his views regarding the federal budget 201213 that the country’s economy has been growing at an
average growth rate of almost 3% for the last 4 years and demand of energy both at the production and consumers end is increasing rapidly. Moreover, the government shows a lost of confidence in the energy recovery plan along with working on different gas pipelines as well as import of Liquid natural gas (Lng) , LPg and a shrinking of private investment from 8.6% last year to 7.9% this year. Former President of FCCi Mian Muhammad Adrees said, due to the high rate of inflation domestic savings rate shrieked from 13.2% last year to
10.7% this year. due to the country level energy crises fiscal deficit recorded at 5% of dgP during July-March 2011-12 contracting favorably to 5.5% during the same period last year he added. They said that the increase of 28% in national exports this year as compare to the last year. it is pertinent to mention that the govt. withdraw federal excise duty on 10 more items, allocated heavy amount for resolve the energy crisis and given subsidy for solar tube wells. Moreover Pak foreign exchange reserve declined due to all above said problems.
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Saturday, 2 June, 2012
there’s enough sugar on the table g
annual committee on sugarcane meets ISLAMABAD APP
Budget rag draws bulls out of the closet g
Annual meeting of the Standing Committee on Sugarcane headed by Abdul Basit Khan, Acting Secretary, Ministry of national Food Security and Research was held here to discuss the crop situation and availability of sugar. The meeting was attended by Progressive Farmers, Farmers Associations, Chambers of Agriculture, Representatives of Provincial Agriculture departments, Federal institutions dealing with Agriculture Trade also attended the meeting. Abdul Basit welcomed the farmers and other stakeholders and appreciated their contribution in the production of bumper cane crop and record sugar production in the country. Basit informed the participants about the importance of the Standing Committee Meeting of the sugarcane and sugar sectors. He asked the participants about the crop situation and availability of sugar and its domestic and international prices. He also thanked the professionals of the institution for maintaining the cane and sugar price in the country. He said that with the grace of Allah and efforts of stakeholders the government was able to maintain the availability of sugar at the reasonable price in the country. The thirst of the meeting was on the determination of support price level by considering the farmers cost of production estimates, situation of the current sugarcane crop, prospects for the next crop, consideration of all other competing crops and keeping in view the import parity and export parity prices. Farmers also raised the reservation on various issues including rising cost of inputs, appearance of middlemen in the market, under weighment of cane and unnecessary cuts due to cane quality, non payment of sugarcane dues of farmers worth by four billion in the Punjab and non-payments of quality premium. The Acting Secretary assured the participants that their concerns and views would be sent to Cabinet for their resolution. The meeting ended with the vote of thanks to and from the chair.
BacK WitH a Bang
govt’s ‘business friendly’ decisions lift index up 90 points KARACHI STAFF REPORT
FTER traversing extensive pressure and relentlessly putting the investors off, the Karachi Stock Exchange (KSE) finally recovered today and witnessed a healthy buying trend, pushing the market 90.35 points higher. According to the market sources, the optimism among the investors prevailed amid the business friendly decisions taken on part of the government in the federal budget announcement. The confident investors induced buying and pushed the Karachi Stock Exchange benchmark 100-index up by 0.66 percent or 90.35 points. Ahsan Mehanti, director at Arif Habib investments Limited Pakistan stated that the stocks closed higher in pre -budget rally at KSE led by oil and cement stocks amid renewed foreign interest and institutional support. With this positive trend, the market closed at 13,876.97 with a trading volume share of 78.168 million as compared to yesterday’s 13,786.62 points. The market capitalisation increased to Rs 3.552 trillion from Rs 3.527 trillion a day earlier. He added that the recovery in global commodities on expectations for ease in euro-zone debt crisis speculations amid
federal budget announcements due this week played the catalyst’s role in bullish sentiments. The free-float KSE-30 index also gained 105.37 points to close at 12,056.44 points against the previous 11,951.07 points. d.g.K Cement was the day’s volume leader counting its traded shares at 11.931 million with the opening and closing rates standing at Rs 41.14 and Rs 42.61, followed by Fauji Cement, Engro Corporation, Jahangir Siddiqui Company Limited and Lafarge Pakistan with a turnover of 10.491 million, 6.183 million, 5.919 million and 4.971 million shares respectively. Mehanti added that the trade remained thin on cautious activity as extracts of budget speech of finance minister appeared positive for the corporate sector amid hopes for early resolution of nATo supply issue leading to release of US military aid to Pakistan. on the future market, the turnover down by over 3 million shares to 10.250 million against 13.488 million shares of last working day of the week Friday. The Unilever Pakistan Xd and Pakistan State oil Xd, up Rs 19.13 and Rs 6.14, led highest price gainers while, Unilever Food Xd and Colgate Palmolive, down Rs 136.60 and Rs 47.51 respectively, led the losers.
KaracHI: Meezan Bank – Pakistan’s first and largest islamic commercial bank acknowledged Athar Ali Khan for his winning the World of Betters global contest by Western Union. World of Betters is a global contest held by Western Union in which consumers were asked to submit ideas on how they would use USd $ 1,000 to benefit the world. ideas by contenders were posted on the website with 100 ideas being selected as winners based on the quality of submission and number of votes. Meezan Bank was selected by Western Union, the Bank’s business partner for real-time money transfer facility, to award the prize to the winner of the World of Better global contest in Pakistan. Arshad Majeed, group Head operations - Meezan Bank, awarded Athar Ali Khan the prize money at an award ceremony held at Meezan House, Karachi. Athar Ali was congratulated for his winning the competition and his ideas were discussed with the team who appreciated his ideas to contribute towards the future betterment of society. Meezan Bank has a remittance payment arrangement with Western Union since 2011 based on which Meezan Bank provides money transfer services at all Meezan Bank branches. Money can be transferred in real-time to Pakistan within minutes via any of the Western Union service providers located in over 200 countries worldwide. Meezan Bank, is Pakistan’s premier and leading islamic Bank, offering a complete range of islamic banking products and services through a retail banking network of 288 branches in 88 cities of the country, supported by over 200 ATMs, Meezan viSA debit Cards, internet Banking, SMS Alerts and a 24-hour Call Center. The Bank has been consistently recognized as the best islamic Bank in Pakistan by various local and international institutions over the past several years including ‘Best islamic Financial institution in Pakistan’ by global Finance magazine and ‘Best islamic Bank in Pakistan’ by islamic Finance news of REd money group, Malaysia.
SecP clears Letter of agreement to ijarah KaracHI: The SECP has got the ‘Letter of Agreement to ijarah’ approved from the Religious Board for Modarabas. The SECP circular stipulates that the Modarabas extend ijarah financing facility to their clients on the basis of ijarah agreement duly approved by the Religious Board. However, sometimes ijarah assets are not readily available and the Modarabas have to make ad-
UniLever PakXD P.S.O. XD Shezan Inter. Sanofi-Aventis Pak Abbott Laboratories
7170.57 246.28 210.18 185.38 112.00
7300.00 253.38 218.00 194.00 117.60
7100.00 246.00 202.05 184.00 112.00
7189.70 252.42 216.14 190.35 116.42
19.13 6.14 5.96 4.97 4.42
31 514,571 2,143 280 17,975
Major Losers Unilever FoodXD 2895.13 Colgate Palmolive 959.51 Nestle Pakistan Ltd. 3858.00 Rafhan MaizeXD 2735.70 Indus Motor Company 284.87
3000.00 912.01 3875.00 2775.00 289.99
2750.38 912.00 3850.00 2720.00 280.00
2758.53 912.00 3850.00 2730.00 280.01
-136.60 -47.51 -8.00 -5.70 -4.86
28 100 37 25 3,279
Volume Leaders D.G.K.Cement Fauji Cement Engro Corporation Jah.Sidd. Co. Lafarge Pakistan
41.14 6.15 107.60 14.85 4.54
43.19 6.49 109.10 15.48 4.97
40.76 6.15 105.90 14.71 4.50
42.61 6.44 106.63 15.12 4.84
1.47 0.29 -0.97 0.27 0.30
11,931,319 10,491,747 6,183,294 5,919,815 4,971,814
Interbank Rates US dollar UK Pound Japanese Yen Euro
93.7531 143.3486 1.2001 115.5226
Dollar East US Dollar Euro Great Britain Pound Japanese Yen Canadian Dollar Hong Kong Dollar UAE Dirham Saudi Riyal Australian Dollar
93.70 115.55 143.26 1.1879 89.41 11.91 25.42 24.91 89.79
94.30 117.11 145.16 1.2035 91.10 12.13 25.73 25.20 92.44
CORPORATE CORNER Meezan Bank hosts award ceremony for World of Betters
vance payment to supplier/manufacturer of the said assets without any legal agreement with the client, as the Sharia does not allow execution of an ‘ijarah Agreement’ with the customer in the absence of physical existence of the assets. This situation exposes the lessor (Modaraba) to the risk of refusal from the client at the time of actual delivery of assets. in order to overcome the practical difficulties, the ‘Letter of Agreement to ijarah’ has been certified and unanimously approved by the Religious Board of Modarabas at its 37th meeting as a risk-management tool to bind the customers to take the assets on an ijarahbasis on the date of delivery. This is expected to facilitate Modarabas in undertaking ijarah transaction and work as a risk-mitigating tool for the ijarah transactions to be undertaken by Modarabas with their clients.
cathay Pacific boosts services between Seoul and Hong Kong to six flights a day KaracHI: Cathay Pacific Airways today announced that it will increase its services between Seoul and Hong Kong from five to six flights daily from 15 July 2012. The latest addition means Cathay Pacific will offer the most number of flights between the two cities, bringing benefits to both business and leisure travellers. As the foreign airline with the longest history of operation in Korea, Cathay Pacific has seen continuous growth in the number of passengers travelling between Seoul and Hong Kong over the years. The last frequency increase on the route was in January 2006 when the airline began offering five daily flights to Hong Kong. Cathay Pacific Country Manager Korea Clarence Chung said: “We are delighted to be able to provide even more flight options for business and leisure travellers going to Hong Kong and beyond with this new flight. We are also seeing rapid growth in the popularity of Korea as a holiday destination, and this additional service will help to bring more tourists into the country.” The new flight, CX439, will depart incheon international Airport at 13:25 and arrive in Hong Kong at 16:00, while the return flight, CX434, will depart Hong Kong at 07:40 and arrive in Seoul at 12:15. The enhanced schedule will offer more choices for travellers visiting Hong Kong or other cities in Cathay Pacific’s extensive international network during the peak summer season.
chairman nomination for Pak-Saudi arabia Business council of FPcci IslamaBad: Shah Faisal Afridi – The President & CEo of Ruba SEZ group & Haier Pakistan has been elected as the Chairman of
Pakistan-Saudi Arabia Business Council of FPCCi (Federation of Pakistan Chambers of Commerce and industry) in the elections held on 21st May, 2012. With a rich business experience and his exposure to the international trade, Mr.Faisal will add value to the PakSaudi ties and would help promote joint ventures and collaboration between the two nations. The business community at both ends will immensely benefit from Mr.Faisal’s appointment as the Chairman.
Budget was the honey; bears hogged the money
allied Bank honours its employees
laHore: Allied Bank recently held a special event to recognize the performance of its employees who did exceptionally well during the year 2011. The grand ceremony was organized at a local hotel which was also attended by members of the Board and senior management of the Bank. Tellers, branch managers and regional heads from across the country were rewarded in recognition of their commitment and efforts in various categories. The awards were distributed amongst employees for excellence in service and over-all business growth. All the Top performing employees from every corner of the country were present to celebrate their achievements. The event was attended by the Board of directors, Chairman and the CEo along with senior executives of the Bank who cherished and appreciated the efforts of staff in making Allied Bank a success story during the last 7 years.
chenone announces mid-season sale laHore: one of Pakistan’s leading fashion brand and life style store “Chenone” has announced Mid Season Sale for celebrating its 15th anniversary. As a trend setter of Pakistan, Chenonewill be providing the customers with varieties of gents, ladies, kid garments, accessories, bed linen,home furniture, kitchen accessories, crockeries, bathroom accessories and decoration accessories.get amazing discount offer on them. Chenone Mid Season Sale is on 20 stores in 15 cities of Pakistan, withan amazing discount offerfrom first June till 23rd June. Speaking on the launch of the Mid Season Sale, Chenone’s CEo, Mr. Mian Muhammad Kashif Ashfaq stated Chenone’s commitment to providing with world class products along with discounts and sales to customers to make visits toChenone a amazing and fulfilling experience. Later, he expressed his hope that this Mid Season Sale, like other Chenone promotions, will also be successful as well.
Budget apprehension dropped Karachi stocks down by 1.5pc KARACHI STAFF REPORT
The recently concluded month of May is mostly regarded as a dull period as far as activity at the stock market is concerned, viewed the equity market observers. “After showing a remarkable performance since Jan-12 to Apr-12, the market maintained upward trajectory with better volumes,” said the analysts at investCap Research. during the month, they said, looming budget related uncertainties were generally held responsible to make the investors shy from the investment path with conspicuously low volumes. in the same vein, during the month activities at local bourse turned out to be quite as the index shaded 1.5 percent MoM with market volumes decreasing by a significant 38 percent on average basis as compared to last month's average volumes. However, the benchmark KSE-100 index still provided a solid 21 percent YTd return (+16 percent YTd in dollar terms) when compared with the december index level. Even so, better equity performance is expected after the budget announcement where no new taxes are expected to be incorporated going forward. in regional terms, the month in review saw only two countries in the Asian region, namely vietnam +3 percent and China 1 percent, posting positive returns. However, Pakistan’s equities remained above the average Asian regional equities performance of negative 9 percent and posted -1.5 percent during the month. Even better, though at much smaller scale, Pakistan equities stood amongst the top three equity markets standing in the green zone as far as foreign flows towards equities are concerned (receiving $39 million net inflows during May totaling $77 million YTd, as against Asia Pacific’s total net outflows of $8.5 billion in May this year. going forward, the KSE100 behaviour is largely related to the budget announcement. However, the economic survey of Pakistan revealed a gloomy picture of the country where the government missed most of the key economic targets of FY12. in the middle of murky economic indicators, the current appreciation in USd against PKR (4.5 percent FYTd) is also a big concern for the economy. However, budget target for FY13 should set the direction of the equity market going forward.