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Patron Chief Editor Editor Mian Muhammad Adrees, President FPCCI M. A. Lodhi, Secretary General Syed Nasir Ali Mirza, ASG ACTIVITIES OF FPCCI
1. Govt expresses inability to cut sales tax to single digit researchers, businessmen and students will also be opened. The minister said that it is a forum for promoting and Finance Minister Ishaq Dar said it is difficult for the facilitating economic progress of developing countries through government to cut sales tax rate to single digit. Dar, addressing transfer of technology. Similarly, diffusion of knowledge is very members and office bearers of the Federation of Pakistan important especially for the South Asian region. He stressed on Chambers of Commerce and Industry (FPCCI), said they have devising national strategies for the human resource to be ready to pay the cost for overcoming energy crisis. development and promotion of Science and Technology. The Earlier, President FPCCI Mian Muhammad Adrees said out of minister said that arrangement of such types of forums in 17 percent sales tax, the government is getting only five which businessmen, students of both the countries can percent, while 12 percent is gone in settlement. “We want to exchange their ideas and also discuss relevant issues to pay taxes and assist government if tax collecting machinery is develop mutual trust for increasing trade activities in both fair and clear,” Adrees said. He added that tax collection should countries. be broadened and it should not be a burden. Minister Dar said the work on 3,600 megawatts of power generation projects are 3. Rupee appreciation adversely affects the export­
under way. They will become functional by 2017, he added. He oriented Industries, FPCCI said the government is in talks with China to initiate 14,600MW of power projects. “We have eliminated terrorism The Federation of Pakistan Chambers of Commerce & Industry at a larger scale and will further eliminate it. There will be no (FPCCI) in a statement demanded compensation to the compromise,” he said.“Operation against terrorists is not exporters who are facing great deal of problem in the wake of against any political party or any religious sect.” Pak rupee appreciation against foreign currencies. They said that the exporters are of the view that the appreciation of 2. Pak­China business forum provides podium to boost Pakistani rupee against the foreign currencies has adversely bilateral trade ties affected export‐oriented sectors, including textiles, and the Finance Ministry should look into resolving these issues. They The Pak‐China Business Forum provides businessmen from the said that if government ignored this impact of the rupee two countries the opportunity to improve bilateral trade appreciation it would cause closer of various textile units in the relations and boost economic activities between the two country. countries. This was stated by Mian Muhamamd Adrees, President of Federation of Pakistan Chamber of Commerce and FPCCI further said that the export‐oriented industries already facing Industry (FPCCI) while addressing the inaugural session of a 4‐
severe problems due to shortage of energy, liquidity crises and now day Pak China Business Forum organized by COMSATS financial losses due to rapid appreciation in the exchange rate of Institute of Information Technology. Minister for Science and rupee. They also informed that in the current scenario they are Technology, Rana Tanveer Hussain was the chief guest on the forced to get their working capital from other sources on higher occasion. Mian Idrees said this forum would prove as a catalyst rates. for promoting bilateral trade relations. He said Pakistan’s top leadership has given high priority to boosting good relations FPCCI urged to revisit the foreign exchange policy and allow with China and the mega project of China‐Pak Economic exchange rate to find its own equilibrium. However, the exporters Corridor (CPEC) was reflective of the government’s should be given some benefits in the form of rebate so that the commitment. He said that trade volume between the two country’s export may not be affected and the exporter may feel countries has increased manifold after the signing of Free comfortable at the time of receiving their payments. Trade Agreement between the two countries. “Current trade volume of trade between the two countries stands at $15 4. Pakistani business community considers UAE as their billion which is much higher that of $5 billion before signing of second home which can be witnessed by frequent flights Free Trade Agreement around 8 years ago”, the FPCCI from Pakistan to UAE. President added. He said this forum will open up new era of trade relations with China. Pakistani business community considers UAE as their second home which can be witnessed by frequent flights from Pakistan to UAE. Minister for Science and Technology, Rana Tanveer Hussain This was stated by Abdul Rahim Janoo, Sr. Vice President FPCCI in a said that Pak‐China Business Forum 2015 will explore new meeting with Khalid Bardan, Country Manager Emirates Airline who opportunities for educational institutes and new avenues for visited FPCCI to meet the office bearers and members of FPCCI. The FPCCI Fortnightly E- Newsletter
Issue for 16 to 31 March, 2015
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meeting was also attended by Ikram Rajput, Vice President and Incharge FPCCI Sindh Region, Muhammad Waseem Vohra, Vice President, Mr. Rafiq Suleman, Chairman REAP, Haji Siddique Suleman, Saeeda Bano, President WCCI and others. Rahim Janoo further said that the business community prefers to travel abroad by Emirate airlines and most of them are holding the status of frequent flyer. He appreciated the services and facilities of Emirates airlines and said that there is still room for further improvement in services, meal and separate lounge at airport in Pakistan. He further suggested new destination for opening at Mombasa where most of Pakistani businessmen visit for business purpose as Mombasa is the trade and industrial hub of Kenya. Rahim Janoo emphasized on the special services for the members of FPCCI and suggested to sign an MOU with Emirate Airlines. The meeting also discussed the possibility of facilitation to the members of FPCCI trade delegation, participants of trade fair and special package for cargo of exhibits. Khalid Bardan appreciated the views of the Senior Vice President FPCCI and assured best services with improvement as notified to him. He also agreed on having an MOU between FPCCI and Emirate Airline for cooperation and facilitation to business community. He further assured his support and full cooperation to FPCCI’s trade delegations and cargo facilities to the exhibitors. 5. Pakistan’s Ambassador/ (Designate) informed that Nigeria is fastest growing economy in African region. Africa is a big market and European countries, China, India are focusing on huge potential market of Africa. Pakistan should also come forward and penetrate this market through aggressive marketing, investment and joint ventures. This was stated by Lt. Gen. (R) Agha Umer Farooq, Pakistan’s ambassador designated to Nigeria who visited FPCCI to meet Mian Muhammad Adrees, President FPCCI and other members. The meeting was also graced by S. M. Muneer, Chief Executive, TDAP, Ishtiaq Baig, Abdul Sami Khan, Saleem Sheikh and Ms. Naheed. The Ambassador informed that Nigeria is fastest growing economy in African region. He said that despite the fact of poor law and order condition and high level of corruption, India, China, Germany and other countries having strong trade ties with Nigeria. He emphasized on enhancement of bilateral trade and economic relations on the lines of other countries. He also advised the business community not to utilize Nigerian their local banking channels but work through international banking channels. He also suggested that fertilizer sector in Nigeria is very attractive for Pakistani business community to invest in this sector. He further said that Pakistan’s pharmaceutical, motorcycle, rickshaw, cutlery, plastic, surgical, sports and textile have wide potential in Nigerian market. He also informed that he will allocate a specific space for the display of Pakistani products in Pakistani Embassy as it is the first step towards introduction of Pakistani potential in the Nigerian market. Mian Adrees, President FPCCI appreciated the endeavors of the designated ambassador and said that FPCCI has been playing important role in enhancing bilateral trade with other countries. The President assured the ambassador for his cooperation in all matters related to trade and industry. He further said that FPCCI will also plan to undertake a trade delegation and to hold Pakistan’s Single Country Exhibition in Nigeria as per the advice of Pakistan Embassy. 6. Formation of Pak­ Sri Lanka Business Council of FPCCI The Federation of Pakistan Chambers of Commerce & Industry (FPCCI) ‐ the apex trade body of Pakistan places extreme importance on improving trade and business ties between Pakistan and Sri Lanka. To fulfil this objective the Federation of Pakistan Chambers of Commerce and Industry has recently formed Pak ‐ Sri Lanka Business Council of FPCCI for the year 2015 with a proactive Board of newly elected Directors. The formation of Pakistan Sri Lanka Business Council is a pioneering step towards enhancing trade ties between the two countries. Pak‐Sri Lanka Business Council held its first meeting Chaired by Mr Imran Khalil Naseer Chairman Pak Sri Lanka Business Council – FPCCI. Nine Directors have also been elected whose names are as follows: Mr Danish Ahmed, Mr Habibullah Waseem Vohra, Mr Syed Mohammad Ali Abbasi, Mr Ahsan Jabbar, Mr Khalid Saleem, Mr Omar Khalil Malik, Mr Furrukh Imdad, Mr Jehanzeb Mirza, Mr Khalid Saleem, Mr Mehmood Arshad (co‐opted). The Council in its first meeting held at Federation House Karachi, agreed to improve direct communication with our business and Federation counterparts in Sri Lanka. The Council is eager to explore trade and investment opportunities and improve business relations between the two countries. It also agreed to identify areas of co‐operation, where both business communities would benefit. Various suggestions of Council members were put forward for consideration. These will be shared with the relevant government authorities to enhance investments and minimizing trade barriers between the two countries. 7. FPCCI to support all women empowerment initiatives CEO Trade Development Authority of Pakistan (TDAP) and Patron‐
in‐Chief, United Business Group SM Muneer has said that government is taking significant steps to empower women which is a prerequisite for the national development. Government had taken remarkable steps for empowering women in the country while paying special attention to businesswomen in urban and rural areas, he said while speaking at a function organised in his honour by Islamabad Women’s Chamber of Commerce and Industry (IWCCI). President FPCCI Mian Muhammad Idrees, SM Naseer, VP FPCCI Mian Akram Farid, President IWCCI Dr. Zakia Hashmi, founder president IWCCI Samina Fazil and others were also present on the occasion. SM Muneer said that TDAP and FPCCI will fully support expo being organised by IWCCI on April 18‐19 in Islamabad to express our commitment to strengthen the women entrepreneurs. He said that expos are a good tool to empower women and that they would not be treated fairly unless they become economically sound and independent. President FPCCI Mian Idrees said that business community should support women entrepreneurs, strive to end gender discrimination and mobilise the collective strength of women to turn fate of this country around. FPCCI wants active participation of the private sector to boost capacity of the women to ensure good future for our next generations. Lauding the initiatives of the government to empower women, he said a lot is to be done to invest in women development without which goal of national development is not achievable. He said that women are still much more likely than men to be poor and illiterate with little access to medical care, property ownership, credit, training and employment. 2
Indian High Commissioner visited FPCCI: The Indian High Commissioner Mr. T.C.A Ragvan visited FPCCI with his team and during his meeting with Business Community, he appreciated role of FPCCI in the economic growth, increasing trade relations between Pakistan and India and resolving the problems of Business Community. Speaking On the occasion, the President FPCCI shared his feedback and experiences of his recent visit to India and sought support of the Indian High Commissioner in issuance of visas and said Increasing trade activities between Pakistan and India would be beneficial for masses of both the countries. He added the technical barriers should be simplified now and political hurdles need to be addressed. Nevertheless, the Business Community requested for Fast Track Medical Visas, to organize Indo‐Pak young entrepreneurship conference, to encourage banking sector, to increase the trades and number of products as per market demands, to soften the visa issuance policy for business community, to increase the cultural activities etc 9. Additional IG Police called on Business Community at FPCCI: The Additional IG Police, Sindh Mr. Abdul Qadir Thebo, called on the Business Community members at FPCCI Office, Karachi. During his visit, he said Karachi is the 'Commercial Hub' and 'land of opportunities’; therefore, the law & order situation is equally important for trade related activities otherwise the common man would suffer at the most. He carefully listened the problems of Business Community members and assured the problems would be resolved soon. The President FPCCI briefed the forum about the current factors and statistics pertaining to law & order situation of Karachi and applauded the Sindh Police and government by taking on board businessmen community as stakeholders due to which law and order situation is improving day after day. 10. Tajikistan ambassador met with President FPCCI: H.E Mr. Jononov Sherali, the Ambassador of the Republic of Tajikistan to Pakistan called on FPCCI President at his office to discuss the bilateral relations and to enhance trade linkages between both countries. The Ambassador emphasized on the promotion of trade and signing MoUs between the National Chambers of both countries. He said Pakistan is most important country for us therefore, his government always showed deep interest in bilateral relations and trade related activities between two countries. He said initially Karachi was the trade hub of Tajikistan and after independence Pakistan was the first country to which Tajikistan built her relations. He informed that in last one year more than 11 Pakistan’s officials visited to Tajikistan including seven visits of Ex‐President time to time. He also invited Business Community to visit his country and play its role in the making of trade network and increase trade channels as there are various investment opportunities available in Tajikistan. The Ambassador informed that the Honourable President of Tajikistan will visit Pakistan to sign numerous MoUs and they have already started to work on the Agendas. The upcoming 8.
visit of President showed the importance of Tajikistan to Pakistan as both are Islamic countries with same culture and same people, he added. On that occasion, the President said that the FPCCI has gathered entire Business Community at one platform to uplift trade for local and international markets. He added both Tajikistan and Pakistan are Muslim brother countries and their relations are essential for mutual economic growth. He shared the Tajikistan repleted with the natural resources of energy, coal, natural gas, petroleum etc and suggested that both countries should promote and work on infrastructure, tourism, science and technology, accessibility of markets, increasing trade activities, arranged exhibitions and boost private sector. 11. Visit of Federal State Education Minister to FPCCI: The Minister of State for Federal Education and Professional Training, Muhammad Baligh ur Rehman visited the FPCCI to attend the meeting pertaining to Human Resource Development & Technical Vocational Education and Training‐ TVET. During his visit, he gave detailed briefing and presented the entire picture of the education system of our country and also shared the hurdles in our technical education system and government strategy to cope up with these issues. By sharing his views, the President FPCCI said that the Technical Education programs will help to eliminate poverty and improve the standard of living among the poor people. Also, such programs are providing huge relief to the private sector as people may start their own business and earn a respectable livelihood. He emphasized on improving overall Technical Education system for better utilization of Human Resource. 12. Inter­active session on Revamping of Business Councils: The President, FPCCI Mian Muhammad chaired and addressed the Inter‐active Session on Revamping of Business Councils of FPCCI and Joint Chambers held at FPCCI Head Office, Karachi. Large number of participants were present in the session including FPCCI Vice Presidents, Chairmen, Directors, members of Business Councils and the business community of Islamabad and Lahore via Video Conference. The President in his speech appreciated the role of Business Council in enhancing the trade relations and economic cooperation. He emphasized that Business Council must arranging visits of Trade Delegations and organize exhibitions. He said, we have to take up the matter of our exports seriously and adopt the culture of professionalism via objective oriented work, technical expertise, arranging exhibitions and sending delegations to numerous countries. On the occasion, various decisions were taken on the recommendations of members of Business Councils. 13. FPCCI to Participate in 'Global Exhibition on Services': The Federation of Pakistan Chamber of Commerce and Industry (FPCCI) is participating in 'Global Exhibition on Services' being organized by the Confederation of Indian Industry (CII) that is scheduled to be held between 23th and 25th April 2015, at Pragati Maidan, New Delhi, India. The 3
Prime Minister of India Mr. Narendra Modi to inaugurate the exhibition. The objectives of the exhibition are to provide a global platform for trade in services amongst major players by focusing the sectors of IT and Telecom, Tourism, Media and Entertainment, Healthcare, Logistic, Professional Services, Education, R & D, SME Services etc. In this regard, the FPCCI has already connected with its trade bodies and all concerned companies across Pakistan, inviting applications from all interested companies. The Pakistani Companies can avail extensive opportunities for B2B meetings and networking with their counterparts in India. ECONOMIC WATCH
International News
1 Southeast Asia attracts more FDI Southeast Asia’s major economies drew more foreign direct investment combined than China for the second straight year in 2014, as growth in their giant neighbour cooled. But by country, inflows into the region were uneven, swayed by political change and the varying costs of doing business. Overall FDI into Singapore, Indonesia, Malaysia, the Philippines, Thailand and Vietnam rose to a record $128 billion in 2014, estimates compiled by Thomson Reuters show. That surpassed the $119.56bn that flowed into China. FDI into the Philippines grew the fastest, at 66 per cent, while in Thailand, where the military seized power last year, inflows fell. FDI into Indonesia, the region’s biggest economy, rose around 10pc even though it was an election year. As China’s troubled manufacturing sector loses momentum, Chinese businesses will be venturing abroad to cut operating costs and to search for new markets, economists say. Manufacturing powerhouses in Southeast Asia should pay heed. 2 China’s ambitious IT sector lays claim to global role China’s huge IT sector is out in force in Germany, signalling to the world it is ready to not just copy but lead as a tech superpower. Bucking China’s economic slowdown, information and communication technology are booming in the world’s largest smartphone market, which also boasts the highest number of Internet users.“China is the second‐biggest IT market in the world after the US, it’s very dynamic, it’s still developing,” said Angela Stanzel, China expert at the European Council on Foreign Relations.“There’s a kind of start‐up culture developing right now, an unlimited pool of young entrepreneurs, there are many reasons why China is attractive to Germany. 3 American investments in Pakistan While addressing the 3rd Pakistan‐US Business Opportunities Conference in Islamabad, the visiting US Secretary Commerce, Penny Pritzker, underlined security, unfair taxation and bureaucratic procedures as key impediments to doing business in Pakistan for Americans. Further, she urged the Government of Pakistan to improve the business climate by implementing measures to increase transparency, enforce contracts and streamline bureaucracy. The government of Pakistan leadership while responding to the US investors’ concerns came up with a rhetoric, which one hears again and again – a promise of good governance and transparency, reforms to support investment and ease to do business in Pakistan, Pakistan cited as the prime destination for investors with abundance of natural resources and strategic location and more of such promises and meaningless big talks, which no serious investor buys. This rhetoric has not worked before nor will it work in future. The investor has far more in depth knowledge about the country they focus to invest in than the superfluous and all is good information they are provided by our government functionaries. What they want to hear is more of implementations and a balanced and fair analysis of shortcomings and in categorical terms how the concerns will be addressed under a defined road map. The concerns expressed by the US Secretary Commerce are also the observations of other foreign investors specially the ones from OECD countries. During the visit of Prime Minister Nawaz to Germany in November 2014 Chancellor Merkel, at a joint press conference, expressed similar concerns related to the German investments in Pakistan. Both the US and Germany have repeatedly pledged their sincere support to facilitate investments from their countries, but, in an enabling environment to be provided by the state in Pakistan. But, not much has happened so far. We sincerely need to set our house in order. With FDI hovering around pathetic US $ 1 million and Pakistan’s global ranking being at the bottom 50% in most of the performance indicators in ease of doing business as per the World Bank’s report “Doing Business 2015” it is apparent that Pakistan’s endeavours to attract FDI are flawed and not working and much of it has to with the implementation part of the investment policies. 4 IMF inclusion of yuan ‘very live’ issue Britain weighed in to the debate on anointing the yuan as a major reserve currency, saying the issue was “very live” after Beijing asked the IMF to include the currency in its Special Drawing Rights (SDR) basket. The yuan is the world’s fifth most‐used currency in trade, and Beijing has made almost weekly strides this year in introducing the infrastructure needed to float it freely on global capital markets. That has increased speculation that the yuan would join the dollar, yen, pound and euro in the SDR basket, which defines the value of the IMF’s reserve asset unit. Chinese state agency Xinhua said Premier Li Keqiang had asked the head of the International Monetary Fund, Christine Lagarde, to include the yuan.“China will speed up the basic convertibility of yuan on the capital account and provide more facility for domestic individual cross‐border investment and foreign institutional investment in China’s capital market,” Xinhua paraphrased Li as saying, in a report late .Li added that “China hoped to, through the SDR, play an active role in the international cooperation to maintain financial stability and promote the further opening of China’s capital market and financial area,” the report said. Lagarde said the yuan would at some point be incorporated in the SDR basket but whether this was the result of this year’s five‐yearly review of the basket would depend on members’ views. 5 Britain launches Europe’s first yuan money­market fund Britain deepened its financial links with China with the launch of Europe’s first yuan‐denominated money market fund, which allows investors to get direct exposure to China’s interbank 4
lending market. The exchange‐traded fund from China Construction Bank International, China’s second largest bank, is listed on the London Stock Exchange and can be traded in sterling, euros and yuan, Britain’s government said. London has been keen to attract Chinese banks and encourage offshore trade in the yuan to bolster its position as the world’s main centre for foreign exchange trading. Last year Britain became the first Western government to issue a yuan‐denominated bond. the finance ministry’s chief economist said he viewed the yuan’s possible inclusion in the International Monetary Fund’s currency basket as a “very live” issue. 6 US caught off guard by success of new China­led bank The success of the new China‐led development bank has caught the United States off guard, after it fought the project and now finds itself increasingly isolated. Britain, Germany, France... the United States has watched, helpless and dumbfounded, as its European allies flocked to join the Asian Infrastructure Investment Bank, seen as a potential rival to the World Bank and the Asian Development Bank, both institutions under powerful US influence. The list does not stop there. Other US allies, like Australia and South Korea, are considering joining the AIIB, which already has about 30 member nations and the blessing of International Monetary Fund chief Christine Lagarde. 7 Negotiations on trade deal ‘changing gears’: WTO World Trade Organization chief Roberto Azevedo said efforts are intensifying to end more than a decade of stalemate in negotiations for global trade liberalisation.“The negotiations are changing gears, very visibly, very clearly,” Azevedo told reporters in Geneva. The WTO launched the Doha Round of trade liberalisation talks in 2001, with the stated aim of underpinning development in poorer nations. The talks have repeatedly faltered, but the organisation’s 160 members have given themselves until the end of July to agree on a way forward by finalising a work programme for the negotiations .Azevedo said member countries up until the end of last year had simply been identifying problems and restating their positions and concerns. “That clearly changed,” he said: “Right now you will see a number of delegations exploring new approaches... Proposals are being put on the table.” 8 EU to probe cross­border e­commerce barriers Brussels announced a probe into efforts by the retail industry to stop shoppers using websites outside their own countries, in the latest step towards a single digital market across the EU.EU Competition Commissioner Margarethe Vestager said she expected to complete a general investigation by mid‐2016, adding that it could lead to later cases against specific companies. In the EU’s crosshairs are the cross‐border “geoblocking” barriers that often prevent consumers from seeking cheaper prices abroad online, or which stop them using services such as the BBC iPlayer or Netflix when they travel.“I, for one, cannot understand why I can watch my favourite Danish channels on my tablet in Copenhagen — a service I paid for — but I can’t when I’m in Brussels,” said Vestager, a former economy minister.“Think of a French tourist who buys a pair of Italian shoes in Rome. Why is she re‐routed to a French website when she tries to buy them online from home? “Vestager said in a speech in Berlin. 9 Pak­Japan Bilateral Political Consultations held in Tokyo The ninth round of Pakistan‐Japan Bilateral Political Consultations was held in Tokyo and reviewed the entire spectrum of bilateral relations including political, economic and investment co‐operation. Foreign Secretary Aizaz Ahmad Chaudhry and Deputy Foreign Minister of Japan Shinsuke Sugiyama led their countries in the talks. They also exchanged views on regional and global issues as well as discussed co‐
operation at multilateral forums. Aizaz Chaudhary briefed Japanese Deputy Foreign Minister on Prime Minister's vision of a peaceful neighbourhood underscoring the efforts made by Pakistan to promote friendly and co‐operative relations with all neighbours. He also briefed on the government's economic and structural reforms and the efforts being made to counter terrorism with full support of the whole nation. The two dignitaries expressed their satisfaction at current trajectory in the bilateral relations and agreed to maintain the momentum through continued high level exchanges and concrete steps to further improve commercial and investment relations between the two countries. 10 Life in Vietnam, Asia’s reborn tiger economy THE death of Singapore’s much acclaimed statesman Lee Kuan Yew has spotlighted world attention on tiny Singapore’s transformation from a tropical backwater to an affluent global city in just one generation. Certainly, Singapore stands tall in Asia as a formidable city state which proves that sometimes in geopolitics size does not matter. But in South‐East Asia, it’s not just Singapore that impresses. Travelling in Vietnam, it’s striking just how quickly this once war‐devastated country has dusted off a bloody past, in favour of a new life and persona as one of this region’s most exciting economies. Ho Chi Minh City, formerly Saigon, buzzes with excitement as cars, motorcycles, buses weave their noisy way around surprisingly green urban centres — and some very narrow streets. Cafes, restaurants and bars are heaving with people. New businesses keep popping up, old ones are still thriving. 11 South Korea seeks to join China­led bank South Korea announced it would seek membership of the Chinese‐backed Asian Infrastructure Investment Bank (AIIB), despite US opposition to the new multinational lender which Washington sees as a threat to the World Bank. Joining the AIIB as a founder member would strengthen South Korea´s influence in the international banking sector and help domestic firms participate in large‐scale regional infrastructure projects, a finance ministry statement said. The question of joining the bank had posed something of a quandary for Seoul, which had to balance competing pressure from its main military ally, the United States, and its largest trading partner, China. The ministry said the decision to sign up as a founder member came after China had addressed a number of outstanding governance issues regarding the new lender 12 Chinese yuan falls in global payment rankings China´s yuan has dropped to seventh place among the world´s payments currencies, global transactions organisation SWIFT 5
said, even as Beijing tries to push greater international use of the unit. The yuan — also known as the renminbi — held a 1.81 percent share in world payments based on value in February, SWIFT said in a statement, down from 2.06 percent in January, when it stood in fifth place. The Swiss franc and the Canadian dollar overtook the Chinese currency last month, SWIFT data showed. It attributed the weaker showing to the “seasonal effect” of the Chinese New Year, when business slows because of a week‐long holiday. But the demotion also comes amid mounting worries over China´s slowing economy, though officials have denied strong capital outflows. China keeps a tight grip on the value of the yuan out of concerns that unpredictable currency inflows and outflows could harm the economy and weaken its financial control. At the same time, Beijing is seeking to make the yuan used more internationally in line with its standing as the world´s second‐largest economy. Some analysts predict the unit will one day rival the US dollar. ECONOMIC WATCH
Local News
1 Local industry seeks withdrawal of duty on sorbitol import The National Tariff Commission (NTC) is considering a demand of local industry to withdraw concessionary duty on import of sorbitol as it was causing injury to ingenious industry. The local industry approached the commission for tariff protection by seeking exclusion of sorbitol from the list of items importable on concessionary rate of customs duty under the South Asia Free Trade Area (Safta).The industry also demanded increase in the current MFN‐based customs duty from 20pc to 30pc and removal of the exemption of sales tax on local purchase and import of sorbitol to pharmaceutical. An official statement of the NTC issued said that Habib‐ADM Limited, Karachi, a manufacturer of sorbitol solution 70pc (sorbitol) (PCT No 2905.4400 and 3824.6000) has approached the NTC for protection against cheap imports. 2 FDI rises 11pc to $615m in July­Feb Foreign direct investment (FDI) increased by 11 per cent in the first eight months of this fiscal year, but the level of inflow remained insufficient in the face of country’s piling up foreign debt liabilities. Total FDI during July‐Feb 2014‐15 was $615 million compared to $553m in the same period of last year. “The increase in FDI is way less than the country needs. The elected government has completed 20 months in power but has yet to achieve a breakthrough as far as the foreign investment is concerned,” commented an analyst. The State Bank reported that total foreign inflows, including the foreign debt securities, rose to $1.776 billion; in terms of percentage the total inflows jumped by 168pc.Debt securities are the debts issued by a government or corporation that may be traded. The original buyer of the debt security lends the issuer money in exchange for the security. 3 Taxation protocol signed with Austria Pakistan and Austria signed an additional protocol amending the agreement on Avoidance of Double Taxation (ADTA) that would facilitate hassle‐free exchange of information and help ensure transparency in tax related matters.FBR Chairman Tariq Bajwa and Austrian Ambassador Brigitta Blaha signed the document. Finance Minister Ishaq Dar was also present on the occasion. Austria and Pakistan have been treaty partners for the last 10 years as they signed the Convention on Avoidance of Double Taxation in August 2005 which was enforced in 2006.An official statement said that transparency and exchange of tax information was now a rising concern in the changed international scenario where the world was moving towards the automatic exchange of information through Organisation for Economic Cooperation and Development (OECD) sponsored concerns like Global Forum and Multilateral Convention. 4 TDAP to hold international exhibition in UK In order to get maximum benefits from the GSP Plus status, Trade Development Authority of Pakistan (TDAP) has planned to hold an international exhibition in UK to attract European buyers. S.M Muneer, Chief Executive (CE) TDAP during his visit at Karachi Press Club said that "Aalishan Pakistan" exhibition will be held in June this year in London and Prime Minister Mian Nawaz Sharif has been requested for inauguration this mega event. "This exhibition will help Pakistani exporters to get maximum benefits from GSP plus status, granted by EU for ten years", he added. Talking the major hurdles in the economic revival, he said that uncertain economic policies, poor law and order situation, energy crisis and political uncertainty are directly hurting the industrial and economic growth. However, he appreciated the federal government's efforts to end energy crisis and said that govt has initiated several new power projects, which will help to enhance domestic industrial productivity. Muneer said that delay of refund payment is hampering Pakistan's exports. The country can enhance its exports by 4 to 5 billion dollar in next couple of years by settling pending refund claims, he added. He said that TDAP has been making efforts for timely release of refund claims and hopefully this issue will be resolved soon. Replying, a question he said that Karachi operation is a good initiative by the federal and provincial govt and all law enforcement agencies are making efforts to restore peace in the economic hub of the country. 5 South Africa wants to boost trade relations: HC High Commissioner of South Africa to Pakistan, M Pendulo Jele has said that his country is focusing on bolstering mutual economic and trade relations with Pakistan, and asked both the countries to take steps for enhancement of existing bilateral trade volume to give further boost to their relations. He was speaking to members of business community during visit to Khyber Pakhtunkhwa Chamber of Commerce and industry (KPCCI). The chamber president Faud Ishaq, vice president Muhammad Iqbal Afridi, former president Safi Bashir Ahmad, executive members, industrialists and traders were present on the occasion. Both sides have agreed to make efforts for enhancement of bilateral trade relations, exchange of business‐delegations, and cooperation in field of investment. The diplomat invited the Khyber Pakhtunkhwa companies to make investment in South Africa and assured that his country would provide all facilities and incentives to business community of brotherly Pakistan. Though, he said the South African investors have well‐known about the investment 6
opportunities in the country, but they have also some reservations after reports about occurring incidents of terrorism. Pendulo Jele said there would be lot of opportunities to enhance existing bilateral trade volume between two‐
friendly countries South Africa and Pakistan. He, however, said both countries needed to take steps for removal of impediments in promotion of mutual trade relations. 6 TDAP planning to send market exploration delegation to Nigeria TDAP is planning to send a market exploration delegation to Nigeria very soon as CE TDAP S M Munir wants to establish direct linkages between business communities of both countries. S M Munir was exchanging views with Agha M Umer Farooq on his appointment as Ambassador of Pakistan in Nigeria. The Ambassador showed keen interest in the imports of engineering goods and cement from Pakistan and services of HR experts and many other goods. The Ambassador suggested that the single country exhibition would help in introducing the Pakistan goods and increasing its trade with Nigeria. It was also informed by Ambassador that a new Commercial Section is also being opened in Embassy of Pakistan Abuja. 7 Pakistan ranks 86 in ecommerce index: UNCTAD Ecommerce activities in Pakistan have been ranked at 86 of the 130 in business to consumer (B2C) ecommerce index report released by the United Nations Conference on Trade and Development (UNCTAD), while rank of other economies include, China 65, Sri Lanka 79, India 83 and Afghanistan 102.The ranking is based on multiple factors including share of population having parcels delivered at home, share of individuals with credit cards, share of individuals using internet and secure servers/million people. Out of ecommerce index value of 100, Pakistan’s score were 36.2, China 50.8, Sri Lanka 43.8, India 40.6 and Afghanistan 27.1.Small European countries topped the ranking of 130 economies according to their readiness for business‐to‐consumer (B2C) ecommerce, the study showed. The highest ecommerce readiness was found in Luxembourg with 91.7 points, Norway 88.3 points and Finland 88.3 points. The index revealed that in Pakistan 95 percent of the population gets parcels delivered at home compared with 100 percent in China, 98 percent in Sri Lanka, 100 percent in India and 66 percent in Afghanistan. Only 0.7 percent of the individuals in Pakistan have credit cards compared with 8.6 percent in China, 3.5 percent in Sri Lanka, 1.8 percent in India and 0.8 percent in Afghanistan. People using internet in Pakistan constitute only 10 percent of the population while it is 44.1 percent in China, 18.3 percent in Sri Lanka, 12.6 percent in India and 5.5 percent in Afghanistan. There are 39.2 secure servers/million people in Pakistan while 48.1 in China, 54.9 in Sri Lanka, 48.2 in India and 37 in Afghanistan. 8 Pakistan’s economy shows signs of recovery: ADB Pakistan’s economy is showing signs of recovery underpinned by falling global oil prices and the expected uptick in regional economic growth, the Asian Development Bank (ADB) said in a report released The Asian Development Outlook 2015, ADB’s flagship annual economic publication, forecasts Pakistan’s economic growth in 2015 to modestly improve to 4.2 percent and to 4.5 percent in 2016, “subject to steady progress in macroeconomic and structural reforms, and stable security, political, and weather conditions.” In 2014, the country exuded renewed confidence with higher foreign exchange reserves, lower fiscal deficit and moderate inflation. However, gross domestic product (GDP) growth is still below the rate required to absorb a growing labor force, the report said.“We expect Pakistan’s economy to continue push forward with a modest growth trajectory. Pakistan needs to attract investments to create jobs, reduce poverty and boost economic growth, which to a great extent depends on continued stability, a better investment climate and enabling policy reforms,” said Werner Liepach, Country Director for ADB in Pakistan. “Ongoing efforts to make the power sector financially viable and reforms of public sector enterprises through restructuring and/or privatization are vital for macroeconomic gains.” 9 Pak scientists visit Belarus, sign MoUs on higher education A two‐member delegation of scientists has returned home after a visit to Belarus during which memorandums of understanding (MoUs) were signed for exchange of scholars and students and for finding common ground for promotion of higher education. Prof Mansoor Akbar Kundi, executive director, Higher Education Commission (HEC), and Prof Zabta Khan Shinwari, chief academic secretary of the Pakistan Academy of Sciences, visited Belarus for three days on the invitation of the National Academy of Sciences of Belarus. This was the first visit of a Pakistani scientific delegation to Belarus. The visit was arranged by the newly opened Belarusian embassy in Islamabad. It may be added that the President of Belarus is also scheduled to visit Pakistan in the near future. Prof Kundi and Prof Shinwari paid visits to the National Academy of Sciences of Belarus and its organizations, including the Scientific and Practical Centre for Agriculture Mechanization, the Institute for Soil Science and Agro‐
chemistry, and the Institute of Genetics and Cytology. 10 Islamic finance has great potential: SBP Governor Governor, State Bank of Pakistan, Ashraf Mahmood Wathra has said that Islamic finance has witnessed tremendous growth in the last four decades and its outreach currently spans across the globe. Speaking at the State Bank of Pakistan, Karachi on the occasion of the opening ceremony of proposals received to establish a Centre of Excellence for Islamic Finance, he said that Islamic finance had great potential and presently its global asset base reached $ 1.8 trillion. "Having established itself as a viable alternative during the last financial crises, standard‐
setting bodies are increasingly viewing Islamic finance as means to promote broad‐based inclusive economic growth," he said. Islamic banking industry in Pakistan has also grown significantly since its re‐launch in 2001, he said and added that presently some 22 Islamic financial institutions are operational across the country with over 1500 branch network. Governor SBP said that given its growth trend, growing interest in this banking segment and commitment of the government, the future outlook of the industry looks quite positive. "The industry is likely to exceed the target of acquiring a 15 percent share in the overall banking industry by 2018 as envisaged in its strategy plan 2014‐18," he added. 11 China offers to export 4,000MW to Pakistan China has offered to export 4,000MW of electricity to Pakistan for which a memorandum of understanding will be signed in a 7
couple of days, Prime Minister Nawaz Sharif gave a go‐ahead to 14. Applause for economy his economic team for early finalisation of the accord.“We have received a draft MoU from China,” an official of the ministry for The economy has been receiving quite an ovation in the last water and power said. An official delegation had gone to few days. First the State Bank applauded how more indicators Beijing to discuss the draft with officials of the State Grid China, are moving “in a favourable direction” in its last Monetary he said. Also read: Chinese president likely to visit in AprilThe Policy Statement. Then Moody’s upgraded the outlook on legal team of the Private Power and Infrastructure Board and Pakistan’s credit rating, from positive to stable, pointing the National Transmission and Despatch Company had towards a strengthened external position, efforts towards proposed some changes in the draft, the official said, adding fiscal consolidation and steady performance under the IMF that the 4th meeting of Pakistan‐China Joint Cooperation programme. The latest to join the applause is the IMF itself, Commission to be held in Beijing on March 25 would review where the Executive Board issued an upbeat assessment of the the proposed changes. The meeting would also finalise the government’s “strong performance”. Three major institutional agreement for signing during the coming visit of Chinese voices, representing diverse sets of interests, have each President Xi Jinping to Pakistan, he said. pointed out that the economy is on the mend through fiscal consolidation and the strengthening of external accounts. 12 Duty imposed on hot rolled products 15. Lower exports The Federal Board of Revenue (FBR) imposed 12.5 per cent regulatory duty on imports of hot rolled products, pipes, etc. Commerce Minister Khurram Dastgir reportedly rejected the The duty was imposed on import of flat‐rolled products of iron conclusions drawn by his own ministry with respect to the or non‐alloy steel (width of 600mm or more) hot‐rolled, not reasons behind a decline in exports. The Commerce Minister clad, plated or coated; tubes (pipes and hollow profiles) of cast directed his team to seek exporters' views ‐ the major iron; tubes, seamless, of iron (other than cast iron) or steel; stakeholders ‐ while preparing the presentation on the reasons other tubes and pipes (like welded, riveted or similarly) having behind a decline in exports. This is sound advice and circular cross‐sections, the external diameter of which exceeds unfortunately reflects the lack of coordination between the 406.4mm, and other tubes, pipes and hollow profiles (like open policymakers and the stakeholders that has visibly been the seam or welded, riveted or similarly closed) of iron or steel, major impediment to enhanced productivity in all our sectors according to an SRO issued. The duty would also be applied on during the third time of Nawaz Sharif administration. The the import of galvanised steel tubes, metals shells and HRC. trade deficit has risen since the PML‐N government took over power on 6th June 2013 and is borne out by data released by 13 Nigerian market has huge potential for Pakistani the State Bank of Pakistan. In fiscal year 2013 trade balance exporters: envoy was negative 16.9 billion dollars while in 2014 it rose to 19.2 billion dollars. The total deficit during the first eight months of Newly designated Pakistani Ambassador to Nigeria Lieutenant the current year has been estimated at negative 12.8 billion General Agha M Umer Farooq (Retd) visited Pakistan dollars ‐ marginally lower than the negative 13 billion dollars Readymade Garments Manufacturers and Exporters estimated in the comparable period last year. This Association (PRGMEA) and said that Nigerian market has huge improvement, to the tune of 125 million dollars, is attributable potential for Pakistani exporters, textile products, spinning, to a highly significant decline in the international price of oil pharmaceuticals and agricultural machinery, readymade (registering lower total imports of goods) while services garments traditional and western wear, therefore Pakistani imports rose from 5.26 billion dollars to 5.35 billion dollars businessmen should avail the opportunities in these areas in with the major contributor being transport. general and readymade garments in particular which consisting 50 percent Muslims population. While speaking on the occasion when Chairman PRGMEA (South Zone) Jawed Suleman asked Agha about the scope of readymade garments in Nigerian markets, he replied that garments exporters may easily strong their feet in Nigerian market since they are best in cotton growing but not good in manufacturing, so exporters may take advantage in this respect, besides in spinning. He said that Pakistan's business community is well aware of the market size of Africa and Nigeria could serve to be the best destination to exploit the potential. He said that Pakistan has a strong agro and industrial base. It has a vast potential to export most the products imported by Nigeria from other countries. On the question of Customs clearance he informed that he will meet ANF Director General in this regard. Jawed Suleman advised that there is need to adopt "Scanning System" for checking. Agha agreed with him. 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Newsletter are solely to keep members abreast with latest development and don’t necessarily reflect the view points of FPCCI. 8