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News Clips 28 January, 2016

[ Cut in industrial power tariff: APTMA chief seeks notification ]
[ Panel formed to address issues facing textile industry ]
[ Govt fails to unveil package to arrest fall in exports ]
[ BOI plans to improve ease of doing business in Pakistan ]
[ 2014-15 unemployment rate ‘highest in 13 years’ ]

Cut in industrial power tariff: APTMA chief seeks notification   [ top ]

Business Recorder, January 28, 2016
All Pakistan Textile Mills Association (APTMA) Chairman Tariq Saud has sought immediate issuance of notification for reducing industrial electricity tariff in line with a landmark announcement of Rs 3 per kilowatt hour from January 1, 2016 by the Prime Minister. 

"The export-oriented textile industry in particular as well as the industry in general had taken a sigh of relief over the announcement made by the PM in December 2015. But no notification has been made public so far," he said. He further expressed his worries over a cold shoulder response from the ministry as well as the National Electric Power Regulatory Authority on the exact status of said notification. 

He said the export-oriented textile industry is in a state of fix whether to exclude Rs 3 per kwh from the production cost or not while quoting rates for its export products to its foreign buyers. Consequently, export orders are not being processed. The prevailing industrial tariff for December FPA adjusted comes to about Rs 11.60 per kwh. The announced reduction of Rs 3 per kwh will bring it down to below Rs 9 per kwh and get arched with electricity tariff of competitors in the region. 

"Already, a production capacity worth US 3.7 billion dollars has been closed down. One major reason for this is the unaffordable power tariff, resulting into an exorbitant production cost. Furthermore, liquidity crunch being faced by the industry and the exporters is also due to the pending refunds of industry accumulated to the tune of Rs 200 billion on account of sales tax, customs, income tax and textile policy initiatives," he mentioned. 

"It is yet a regretful fact that the exports are also being further burdened with incidentals of various taxes, levies and surcharges," he added. He said the world economic forum at the Davos is considering "fourth industrial revolution" and Pakistan is on the back slide by failing to ensure a congenial environment for industrialisation. The government and the industry can jointly reverse the situation by working in tandem. 

Panel formed to address issues facing textile industry   [ top ]

Business Recorder, January 28, 2016
The Standing Committee on Textile Industry Wednesday constituted a sub-committee to address the issues facing the textile sector. The standing committee met under the chairmanship of Member National Assembly (MNA) Khawaja Ghulam Rasool Koreja at the conference room of Pakistan Hosiery Manufacturers and Exporters Association (PHMA), Karachi to discuss the issues being faced by the textile sector. 

The committee members including MNA Sardar Muhammad Shafqat Hayat Khan, Rana Umer Nazir Khan, Haji Muhammad Akram Ansari, Mian Shahid Hussain Khan Bhatti, Malik Shakir Bashir Awan, Abdul Rashid Godil and Romina Khurshid Alam were present in the meeting. Muhammad Jawed Bilwani, Chief Coordinator, Value Added Textile Association and Chairman, Pakistan Apparel Forum briefed the Standing Committee on Textile Industry and highlighted the issues and problems faced by the value added textile sector which contributed $11.43 billion (46 percent of total exports and 85 percent of total textile export) and generates 42 percent of the total employment included female workers. 

He informed the meeting that in 1990, export of Pakistan stood at $4.9 billion, Bangladesh $1.6 billion and India $16.6 billion and in 2015 the export of Pakistan stood at $23.8 billion with 385 percent growth; Bangladesh $30.1 billion with 1,781 percent surge and India's exports are $310.3 with 1,769 percent growth. Bilwani said that in 2015 cotton production stood at 9.3 million bales which shows a decrease of 33.51 percent compared to last year's production of 13.98 million bales. Therefore, to support cotton growers, the government should provide free cotton seeds to growers and purchase 

cotton from growers at the international price. This will surely result much better yield and production, he added. "We clearly warned the government during a meeting of budgets that vital exports will plunge approximately 20 percent further if the draconian sales tax imposed on the exports is not withdrawn and if cost of doing business is not brought at par with regional competitors," he added. Now it has been proved that during July to December 2015-16 despite grant of GSP, total exports have declined 14.46 percent and textile exports 9 percent. 

The standing committee agreed with the viewpoint of the value added textile sector and also seconded the proposals floated by the chairman of the value added textile association. Bilwani proposed "No payment no refund" system as prevailed prior to March 2013 for exports to save futile exercise wasting precious time of the FBR as well as exporters. In addition, tariff of power and gas should be brought down at par with regional competitors declaring textile sector as separate head of account in tariff structure, he added. 

He suggested that top priority given to export-oriented industries in the supply of all utilities 24/7 365 days to run the industries without the least interruption, besides immediate refund of all outstanding claims of sales tax, Drawback on Local Taxes and Levies (DLTL) and customs rebate, etc. 

Bilwani demanded that customs rebate should be refunded along with the export proceed realisation and refunds of sales tax on packing material be decided on a fix percentage basis and be refunded along with export proceed realisation. The committee constituted the sub-committee to resolve the issues being faced by textile sector. The sub-committee will discuss the matters of value added textile associations. Haji Muhammad Akram Ansari will be the convener of the sub-committee, while Romina Khurshid Alam, Malik Shakir Bashir Awan and Abdul Rashid Godil will be its members. 

Govt fails to unveil package to arrest fall in exports   [ top ]

The Nation, January 28, 2016
The government has yet to announce a long-awaited package to boost country's exports.

On September 11, 2015, Prime Minister, in a meeting with the heads of chambers of commerce and other representatives of industrialists and exporters, had promised that a strategy would be chalked out in light of the recommendations given by the businessmen and exporters. However, the government has neither announced any package nor much-delayed Strategic Trade Policy Framework (STPF) 2015-18 amid declining exports. 

The government was supposed to implement new trade policy from July 2015, as the previous STPF expired in June. Pakistan exports had gone down by over 14 percent to $10.3 billion during July-December of FY2016 from $12.06 billion of the corresponding period of the previous year. The country's exports are continuously declining fro last one and a half years due to the internal as well external issues. Exports were on the decline despite the fact that country was granted GSP Plus status by the European Union from January 1, 2014. However, the government is reluctant to come up with a strategy to enhance the exports.

"Exports have continued to decline reflecting lower commodity prices, weakening external demand, ongoing energy shortages, security and business climate challenges, and the significant appreciation of the real effective exchange rate (10 percent year-on-year in August 2015," the government had stated. 

"Prime Minister had assured us to give package to increase the country's exports by considering the recommendations of the businessmen and exporters," said a representative of the All Pakistan Textile Mills Association (APTMA) while talking to The Nation. He further said that we had asked the government to resolve the issues of electricity prices, tax refunds and zero rating of sales tax. However, the government had not accepted these demands but imposed 10 percent regulatory duty on imports of cotton yarn, grey and processed fabric. The interest rate on the Export Refinancing Facility was cut by 1pc to 3.5pc and interest rate of the Long Term Finance Facility from 6pc to 5pc, he added.

The business community has long been asking the government to take urgent remedial measures to arrest dangerous trend of tumbling exports. The Islamabad Chamber of Commerce and Industry has shown concerns over the decline of exports, which came down to $10.322 billion. Exports of Bangladesh exceeded $16 billion during first half of current fiscal year, showing an increase of about 8 percent, while Pakistan's exports were on the decline despite the fact that country was granted GSP status by the European Union from January 1, 2014.

The International Monetary Fund (IMF) in its report stated that Pakistan lags behind most of its regional peers in terms of growth and level of exports. The country's exports are highly concentrated, with textile and clothing accounting for about a half of total exports of goods. Moreover, Pakistan's world market shares, both for these products and across the full spectrum of exported goods, have been either stagnant or declining in recent years. 

BOI plans to improve ease of doing business in Pakistan    [ top ]

Daily Times, January 28, 2016
ISLAMABAD: The Board of Investment (BOI), in coordination with the World Bank, is working to improve the ease of doing business ranking of Pakistan. In this connection, World Bank Group Trade and Competitiveness Global Practice Director Cecile Fruman visited BOI and met with BOI Chairman and Minister of State Dr Miftah Ismail.

The BOI chairman on the occasion said that Pakistan is one of the few South Asian countries, which ranks high in the World Bank indicators of ease of doing business.

The pursuits of policies of liberalisation, deregulation, delicensing and disinvestment during the last two decades have brought about significant improvements in domestic and foreign investments, he added.

Furthermore, he said considering the importance of business environment and human resource governance for enhancing investment levels in the country, BOI has developed a plan to improve ease of doing business ranking of Pakistan in consultation with all federal and provincial stakeholders.

The action plan of BOI, he said is focusing on simplifying business registration, digitalising registering property, streamlining construction permits, simplifying tax regime, simplifying procedures for getting electricity, improving investment regulatory framework for resolving insolvency, getting credit and resolving disputes, improving trading across the borders, promoting alternate dispute resolutions (ADRs), and simplifying work visa & branch/liaison offices procedures.

"Our plan is to focus on streamlining of procedures by setting up one-stop shops, making procedures simpler and faster by introducing technology and reducing or eliminating minimum capital requirements. We have extensive programs to address solvency laws, Bankruptcy laws, enforcing contracts and protecting investors," he remarked.

The focus of our plan is introducing transparency through simplification of rules and regulations, automation and training and skills development, he said.

The World Bank representative informed that the VOSS integration registration system of FBR, SECP & EOBI, is not operational/accessible.

In response, BOI Secretary Iftikhar Babar informed them that virtual one-stop-shop (VOSS), integrating registrations of SECP, FBR and EOBI has already been launched/became operational a day before and the BOI has also linked the VOSS on BOI website to facilitate the investors/business community to use one web portal for registrations of their businesses in Pakistan.

The World Bank delegation intimated that they intend to make ease of doing business report 2016, highlighting different economic indicators of Pakistan and also to collect government departments quality data, provide technical and financial support, and coordinating with all the agencies i.e. their action plans, human resources so that to achieve the result of medium and long-term planning and promote foreign direct investment (FDI).

Dr Miftah Ismail also informed them about some major achievement and progress made so far, and elaborated that to facilitate registering property, digitalisation / computerisation of land record in three provinces are almost completed.

He added that Lahore Development Authority is working to streamline the whole procedure, integrating required NOCs from different organisations.

FBR, he said, has launched the integrated end-to-end IT solution (IRIS) on the eight processes i.e. registration, declaration, audit / assessment, rectification, penalty, default surcharge, refunds; and exemption certificates.

Dr Ismail further said that the provincial governments were also working on the concept of streamlining provincial taxes to eliminate or merge those taxes which have fewer contributions in the provincial revenue and also establishing citizen facilitation centres for paying different taxes, fees and contributions at one place.

He added that new web-based software for custom clearance (WeBOC) has been launched in the Port Qasim to improve the customs clearances. The BOI chairman said that FBR with the support of World Bank initiated a pilot reforms project at Wagah Border to facilitate importers and exporters.

At the end, the BOI chairman thanked Cecile Fruman for visiting BOI and appreciated their efforts and intention to boost investment in Pakistan through their positive step for improvement. 

2014-15 unemployment rate ‘highest in 13 years’: IPR   [ top ]

The Nation, January 28, 2016
LAHORE - The Institute for Policy Reforms has released a fact sheet on employment situation in Pakistan. The IPR refers that the Pakistan Bureau of Statistics has released recently the findings of the latest Labor Force Survey of 2014-15. The Bureau must be complimented for undertaking this survey, more or less, annually and publishing the findings quickly. This enables timely monitoring of the employment situation in the country.

Thirty three such surveys have been carried out by PBS.

The coverage is nationwide.

The sample size was 42,108 households in the 2014-15 survey. Information is provided on the level and characteristics of the labour force and employment, the level of unemployment, the number of hours worked, the occupational distribution and wages.

IPR fact sheet focuses on developments in the labour market of Pakistan. IPR added that between 2012-13 and 2014-15 only 1.

3 million workers apparently entered the labour market. Historically, the number entering used to be 1.

5 million workers per annum. Therefore, given the conditions in the labour market, almost 1. 7 million potential workers have either opted not to join the labour force or there has been a major understatement of the labour force size by PBS.

According to IPR fact sheet, between 2012-13 and 2014-15 the number of jobs created was 1. 4 million.

Accordingly, the decrease in the number of unemployed workers was 100,000. As such, by the end of 2014-15, the number of unemployed workers was 3. 6 million.

However, if the number of discouraged workers is included and the normal increase in labour force allowed for, the total number of unemployed rises to 5. 3 million.

According to IPR fact sheet the reported unemployment rate is just under 6%. Apparently, it has fallen slightly from the level in 2012-13. However, if appropriate adjustment is made the unemployment rate rises to 8. 5% in 2014-15.

This is the highest rate of unemployment in the last thirteen years. An extremely worrying feature of the current unemployment situation is that the rate among literate workers is more than twice that among illiterate workers.

In fact, the highest rate of unemployment, three times above the national average, is observed in the case of highly educated workers with either degree or post-graduate qualifications.

Similarly, the unemployment rate among female and young workers is also relatively high. There is little difference in the unemployment rate between urban and rural areas of the country. After 2012-13, the unemployment rate has improved the most in Khyber-Pakhtunkhwa. However, employment growth has been the fastest in Punjab.

IPR fact sheet added that significant changes have occurred in the sectoral distribution of employment. Employment has fallen somewhat in agriculture.

The positive finding is that almost two-thirds of the new jobs created during the last two years have been in the manufacturing sector. Only one-third of the additional jobs are in the services sectors, which largely fall in the informal economy.

The prospect of finding `decent work` is much higher in the formal sector. Currently, about 27% of the workers are engaged in the formal sector.

IPR further added that an important development is the trend towards increased labour force participation rate of women in Pakistan, which is currently one of the lowest in the world.

It has risen significantly after 2008-09 by almost three percentage points, to reach 22%. Meanwhile, the labor force participation rate for males has actually fallen by 1. 5 percentage points.