Trade Chronicle May - June 2020

www.tradechronicle.com Vol 67-Issue Nos. 05 & 06 - May - Jun. 2020 Rs. 250/-

th

67 -

Federal Minister for Industries and Production, Hammad Azhar

presenting the Federal Budget for the fiscal year 2020-21.

Punjab Finance Minister Makhdoom Hashim Jawan Bakhat

presenting the budget for 2020-21.

Sindh Chief Minister Syed Murad Ali Shah presenting

the budget 2020-21 in Sindh Assembly.

Balochistan Finance Minister Zahoor Ahmed Buledi

presenting the budget in the provincial Assembly in Quetta.

KPK Finance Minister Taimur Saleem Jhagra

presenting the budget 2020-21.

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Vol. 67 Issue Nos. 05 & 06

May - June 2020

Federal Budget FY 21 draws mixed reaction from the Industry

ARTICLES & FEATURES

Hammad Azhar presents a tax-free budget in the Parliament

Pakistan Economic Survey FY20 - Key Highlights

Makhdoom Hashim presents Rs2.2 trillion Punjab budget 2021

KPK budget focuses on health, tax relief

No new tax in Sindh Budget 21-2020, says Sindh Chief Minister

Balochistan unveils deficit budget

Plot No. 10,

yahoo.com

Editorial Representative in

Islamabad

Ajaib Malik

0300-5259936

Rs.250/-

1,200/-

Key features of budget 2020-21

By: Dr Hafiz A Pasha

Impact of Budget 2020-21 on Textile sector of Pakistan

By: Muhammad Nawaz Iqbal

The sugar crisis

By: Mahmood Hasan Khan

LEATHER INDUSTRY

PTA urges government to announce relief package for leather industry

Honour contracts' pleads CLE as India loses $1bn in leather orders

Chinese co to set up $1.02m leather industry at Chattogram EPZ

Bangladesh leather export falls in 10MFY20

PORTS & SHIPPING

KPT continues to operate despite the global pandemic

Uzbekistan looks to Pakistani ports

Gwadar has transshipment potential: Razak

PIBTL shows consistent performance

India invites global vessel owners to register ships in country

Turkey to enhance cooperation in Maritime Sector

Bulk ship with fertiliser for Afghanistan berths at Gwadar Port

DP World successfully concludes acquisition of TIS container terminal, Ukraine

Automobile News, Banking & Insurance News, Cement Industry,

People Events, Telecommunication News & Travel World

TRADE CHRONICLE - May.~Jun. 2020 - Page # 05

TRADE CHRONICLE

We begin with the name of Allah the Magnificient

Federal Budget FY 21 draws mixed reaction from the industry

Federal Minister for Industries and Production, Hammad Azhar presented the tax-free Federal

Budget for the Fiscal Year 2020-21 in the Parliament on 12th June. Initial impressions from

Research Houses suggest that various measures proposed in the budget would have an impartial

impact on Banks, Fertilizer, Power, Autos, and OMCs but, looks suitable for Cement, Steel, and

Consumers. However, it will prove unproductive for the Tobacco industries. The government has

allocated PKR 70bn to cater to any emergency requirements as a result of the COVID-19

pandemic. Moreover, social spending under various programs such as the Ehsaas Programme,

Sehat Card, and Kamyab Jawan has been ensured for the needy public. Hopefully, people would

get the benefits from the measures.

As expected, the government neither levied new taxes nor announced any significant incentives for

the industries. Experts believe that the apparent reason is that before the pronouncement of the

budget, the Central Bank has already launched a series of relief measures, including the

surprising successive cut in markup rates to negate the adverse impact of COVID 19 on the

economy.

From

the editor’s

desk

ABDUL RAB SIDDIQI

Experts comment that amid a pandemic outbreak and limited fiscal space, the government

announced a federal budget where it had to work on reviving the weak economic growth while

maintaining the financial discipline. Consequently, no new taxes were levied in the budget, while

the tax collection target for FY21 was increased by 27% against the provisional tax collection

figures for FY20. The size of the outlay shrank by 11% YoY to PKR7.2trn, while the fiscal deficit is

estimated at 7.0% and the GDP growth is estimated at 2.1%; moreover, inflation is expected to

remain around 6.5%. Experts questioned the government’s capability of achieving the set targets

of the budget. Consequently, it may lead to the announcement of a supplementary budget in the

middle of the financial year.

Faced with an unenviable challenge of reviving the growth, while gaining fiscal prudence, the

Federal Government has announced a public budget that incorporates some head-scratching

anomalies. While the budget carries an aspirational tax collection target of PKR4.9trn, the fact

that no new taxes have been levied makes the challenge of achieving the goal reasonably irrational.

Overall, the budget falls short of expectations in terms of any new initiatives for reviving growth or

even meeting the revenue collection target. The CNIC condition has also been increased to

PKR100,000 (from the previous PKR50,000) in the face of fierce resistance from the retailers.

Still, according to the observation of experts, it will hamper the stated long-term objective of

increasing the tax net. As usual, the budget draws out positive and negative sentiments of

industrialists, businesses, and people. The government did not restore zero status to five export

sectors — textile, sports, surgical goods, leather, and carpet industry, which lead to unrest among

these export-oriented industries.

Overseas Investors Chamber of Commerce and Industry (OICCI) has pointed out that the vital

concern of all business entities regarding the minimum tax regime (MTR) has not been addressed

in the budget, despite clear documentary evidence that MTR is discriminatory for organizations

with large turnovers but limited profit. Karachi Chamber of Commerce & Industry (KCCI) has

stressed that the rate of GST should be reduced by 3% to 14% from the current 17%, which will

have a very positive impact on the sentiments of the business entities. It would trigger demand in

the domestic market, besides providing much-needed relief to trade, industry, and consumers. We

hope that the government looks into these useful suggestions.

Korangi Association of Trade & Industry (KATI) has termed the federal budget as ‘balanced’ and

applauded the government for not putting new taxes in the finance bill. It further added that

giving relief to the industry in duties on raw materials and other incentives are also commendable.

However, the Sialkot Chamber of Commerce and Industry (SCCI) urged the government to

announce a relief package for exporters and ensure early clearance of refunds.

In a nutshell, to increase our exports, we have to be regionally competitive in all aspects to export

from Pakistan. Energy Price, Interest Rates, and Zero-Rated Sales Tax Facility for exports are the

key points. It should be noted that the prevailing Regional Discount Rate is 4% and needs to be

brought down to the same level within the next quarter. The minimum trade deficit will put less

pressure on foreign exchange reserves and somewhat balance the rupee-dollar parity.

TRADE CHRONICLE - May.~Jun . 2020 - Page # 06

TRADE CHRONICLE

The PTI gover nment

presented a tax-free budget

with a wide fiscal deficit for

2020/21, proposing no

increase in salaries of its

employees and pensioners,

rise in levies on luxury

products, and tax relief for

cement sector, sanitary

w e a r s a n d l o c a l l y -

manufactured mobile

phones.

Hammad Azhar presents

a tax-free budget in the Parliament

The government presented

the federal budget 2020/21

with a total outlay of Rs7.136 trillion, a

little expansionary for economic recovery

as the economy has contracted in the

outgoing fiscal year for the first time since

1952 due to COVID-19.

Tax revenues have been targeted at

Rs5.464 trillion against the revised

estimates of Rs4.208 trillion for the

outgoing fiscal, depicting an increase of

29.8 percent. The FBR’s collections

target has been increased by 27 percent

to Rs4.963 trillion against the revised

estimates of Rs3.91 trillion.

Increase in tax will put more burden on

existing taxpayers. Besides, the

development budget has been reduced

during the last year.

percent.

Minister for Industries and

Production Hammad Azhar,

while presenting the budget

in the National Assembly,

termed it as crisis budget

due to coronavirus that is

adversely affecting the

economy.

Azhar said that current

account deficit will be

contained at $ 4.4 billion for

fiscal year 2020/21, while

foreign direct investment

will be increased by 25

Non-tax revenues have been targeted at

Rs1.109 trillion against the revised

estimates of Rs1.296 trillion in the current

fiscal year. The provinces will get a share

of Rs2.874 trillion in the next fiscal year.

External receipts (project loans, program

loans, grants) have been targeted at

Rs810 billion against the revised

estimates of Rs2.27 trillion. Besides,

provincial surplus has been estimated at

Rs242 billion, bank borrowing at Rs889

billion and privatisation proceeds at

Rs100 billion.

Current expenditures (spending on

interest payments on loans, pension,

defence affairs and services, grants and

transfers, subsidies and running civil

government) will be Rs6.344 trillion in

Fy2021. The interest payment on local

and foreign loans will be the biggest

expenditure head of the total amount as it

alone will consume Rs2.946 trillion.

Defence expenditure is the second

biggest head, for which Rs1.1289 trillion

have been earmarked against the revised

estimates of Rs1.227 trillion in the

outgoing fiscal year.

For running civil government, Rs475.7

billion and for grants and transfers

Rs843.4 billion have been allocated. The

government also reduced the spending

on subsidies to Water and Power

Development Authority, K-Electric, Utility

Stores Corporation, Pakistan Agricultural

Storage and Services Corporation by

40.2 percent to Rs209 billion. Federal

PSDP has been earmarked at Rs650

billion against last year’s allocation of

Rs701 billion.

The discouraging fact regarding the

budget for the public sector employees is

that the government has not increased

salaries and pensions and has also frozen

the minimum wage.

Besides, the government has not

changed the taxable income slabs of the

salaried class.

To mitigate its negative impacts,

government approved stimulus package

Pakistan Economic Survey

FY20 - Key Highlights

Provisional GDP growth rate clocks in at -

0.38% for FY20. GDP growth for FY19

was revised down to 1.9% from 3.3%

earlier.

Pakistan's GDP is now worth USD 264bn

(PKR 41,727bn)§ Key growth sectors:

Services -0.59%, Industrial -2.64% and

Agriculture 2.67%. § Major crops (wheat,

rice, maize, sugarcane, cotton) witnessed

a rise of 2.90%.

Wheat production increased by 2.5% to

settle at 24.9mn tonnes while rice

production increased by 2.9% to clock in

at 7.4mn tonnes. Maize output is up 6% to

reach 7.2mn tonnes.

The cotton output dropped by 6.9% YoY

to 9.2mn bales while sugarcane

production declined by 0.4% to 66.9mn

tonnes.

Agriculture credit as at 9MFY20 stood at

PKR 912bn, 13.3% higher than SPLY. The

federal government launched the “Prime

Minister Agriculture Emergency

Programme” worth PKR 277bn to support

and uplift agriculture and livestock.

As per 9MFY20, Investment to GDP ratio

clocked in at 15.4% vis-à-vis 15.6% last

year. National Savings to GDP stands at

13.9% for 9MFY20 compared to 10.8%

last year.

Average National Consumer Price Index

(CPI) clocked in at 10.94% (as per

11MFY20 PBS data). FY20 average

inflation is expected to settle at 10.7%.

Fiscal deficit for FY20 is expected to clock

in at 9.2% of GDP (PKR 3,850bn).

Remittances have clocked in at USD

18.8bn as per 10MFY20 SBP data, up

5.5% YoY.

Foreign Direct Investment (FDI) clocked in

at USD 2.3bn during 10MFY20, up 127%

YoY.

Current Account Deficit has clocked in at

USD 3.3bn (1.5% of GDP) as per

10MFY20 as per SBP data, down 71%

YoY. During 10MFY20, imports have

clocked in at USD 43.4bn while exports

have clocked in at USD 24.3bn.

Trade deficit during 11MFY20 stands at

USD 21.1bn vis-à-vis USD 29.2bn SPLY.

FOREX reserves stand at USD 16.9bn (as

of 29-May-19, up 16.8% (FYTD).

Provisional Income per capita during FY20

stands at USD 1,355 (down by 7% YoY),

compared to USD 1,455 last year.

TRADE CHRONICLE - May.~ June. 2020 - Page # 07

TRADE CHRONICLE

of more than Rs1.2 trillion. The

component of Rs875 billion has been

funded through the federal budget

comprising: Rs75 billion allocated for

purchase of medical equipment,

protective kits and payments to health

workers, Rs 150 billion allocated for 16

million vulnerable families and Panagah,

Rs200 billion allocated for cash transfer

to daily wage workers/employees, Rs50

billion allocated for Utility Stores for

provision of subsidised goods, Rs100

billion allocated for FBR and Ministry of

Commerce for issuance of refunds to

exporters, Rs100 billion allocated for

power and gas bill deferral, Rs50 billion

for payment of electricity bills of three

months of three million small businesses,

Rs50 billion allocated for farmers for

fertiliser subsidy, loan remissions and

other relief and Rs100 billion allocated for

establishment of emergency fund.

Besides tax relief of Rs15 billion on food

and health items, there will be a payment

of Rs280 billion to farmers for wheat

procurement. Price of petrol was reduced

by Rs42 per litre and diesel by Rs47 per

litre, which provided relief of Rs70 billion

to the people.

The minister said that no new tax has

been levied. For protection of vulnerable

segment of society, budget allocation for

Ehsas program has been increased from

Rs187 billion to Rs208 billion. This

includes various social safety initiatives

including BISP, Pakistan Bait-ul-Mal and

other departments.

Higher education budget has been

increased from Rs57 billion to Rs64

billion. An amount of Rs30 billion has

been provided to Naya Pakistan Housing

Authority. Moreover, an amount of Rs1.5

billion has been allocated for low cost

housing through scheme of Qarz-e-

Hasna of Akhuwat Foundation.

To provide relief to the agriculture sector

and withstand the threat of Locust, funds

to the tune of Rs10 billion have been

allocated.

In energy sector, Rs80 billion has been

allocated for power expansion and

improving transmission and distribution

system to minimum circular debt. For

water sector projects, Rs69 billion has

been earmarked.

The government has allocated Rs118

billion to National

H i g h w a y s

Authority, and Rs24

billion to Pakistan

Railways for the

development of its

i n f r a s t r u c t u r e

including ML-1. For

o t h e r

c o m m u n i c a t i o n

p r o j e c t s , a n

amount of Rs37

billion has been

allocated.

Sales tax on point

of sales has been

reduced from 14

p e rc e n t t o 1 2

p e r c e n t . T h e

government wants

t o i n c r e a s e

installation of point

of sales to 15,000

by next year against

the current 6,616

points.

Al ready minimum

t a x o n h o t e l

industry has been reduced from 1.5

percent to 0.5 percent.

Raw materials for chemicals, leather,

textiles, Rubber and fertilisers have been

exempted from all custom duties. They

constitute around 20,000 items and form

20 percent of the total imports.

Custom duty on raw materials and

intermediary items for 200 tariff lines has

been substantially reduced. These

include bleaching and rubber and home

appliances. On hot rolled coils regulatory

duty has been reduced to 6 percent from

12.5 pc that would help boost steel

pipes, underground tanks and boilers

industry. To safeguard clothes, sanitary

wares, electrodes, blankets and pad

locks industry. Regulatory duty has been

reduced.

To support poor for diagnostic of

coronavirus and cancer, duties have been

removed on its kits. Federal excise duty

on imported cigarettes, Beri, cigars has

been increased from 65 percent to 100

percent. E-cigarettes have also been

included in it.

FED on caffeine drinks has been

increased from 13 percent to 25 percent.

Aerrated drinks are already under 13

percent FED. Taxes on double cabin

pickups have been equalised with the

other vehicles of the same price. FED on

cement has been reduced from 2/kg to

Rs1.75/kg. Sales tax on locallymanufactured

cell phones has been

reduced. Income tax on raw material

imports has also been reduced from 5.5

percent to 2 percent and on machinery it

has been slashed to 1 percent from

previous 5.5 percent. No advance tax will

be levied on auto rickshaw, motorcycle

rickshaw and up to 200cc motorcycles.

To encourage the residential buildings

under REIT scheme, the profit achieved

from immovable property sale has been

exempted from tax, provided that the

buildings are completed till June 2020,

but now this time has been increased to

June 2021. On toll manufacturing, tax

has been reduced from 8 percent to 4

percent for companies and 4.5 percent

for others. Capital gains tax duration on

immovable property has been reduced

from 8 years to 4 years. Every year CGT

rate will decrease by 25 percent. Besides,

50 percent reduction has been made in

CGT.

(Courtesy: The News)


TRADE CHRONICLE

Makhdoom Hashim presents

Rs2.2 trillion Punjab budget 2021

The total outlay

of the Punjab

budget 2020-21

i s a r o u n d

Rs2240 billion.

"The provincial

tax collection

r e c o r d e d a n

increase of 13

p e r c e n t ,

whereas, Rs144bn were distributed

amongst the needy under the Ehsaas

Program," said Bakht. He said that

collections' revenue worth Rs4,963bn

from Federal Divisional Pool is expected

while Punjab will be provided with

Rs1,433bn under NFC Award during the

next fiscal year. He said that a target of

Rs317bn has been fixed for Own-

Resources Revenue.

The minister said that special funds on a

priority basis have been allocated for

eleven important sectors including

education, health, and employment

generation.

The provincial government has proposed

to allocate Rs8.73 billion for the forest

department. Furthermore, Rs13.30 billion

has been allocated for the livestock

sector; meanwhile, Rs31.73bn has been

allocated for the agriculture sector.

Tax Relief

After the Coronavirus pandemic, the

Punjab government further strengthened

its business-friendly policies and

announced a tax relief package of over

Rs56 billion for the next financial year.

"This tax relief package is the largest tax

relief package in the history of Punjab,"

said the minister.

The tax rate on more than 20 services is

proposed to be decreased from 16

percent to 5pc including small hotels and

guest houses, wedding halls, lawns,

venues, tent services, and caterers, IT

services, tour operators, gyms, property

dealers, rent a car service.

The budget 2020-21, proposed to

reduce the sales tax on services including

health insurance and doctor's

consultancy fees and hospital fees, which

were 16pc and 5pc, respectively, to zero

percent. The government has proposed

to levy 16pc tax on restaurants and

beauty parlors customers on cash

payments and 5pc tax on credit or debit

card payments which will help document

the economy.

He said that Rs2bn has been allocated for

religious tourism and setting up new

tourist centers, whereas, the salary

budget has been frozen at Rs337.60bn.

The entertainment duty rate is proposed

to be reduced from 20pc to 5pc. All

cinemas are proposed to be exempted

from entertainment duty till June 30,

2021.

Taxation on real estate

The minister added that property tax for

the next financial year can be paid in two

installments. In case of full tax payment by

September 30, 2020, taxpayers will be

given a 10pc discount instead of 5pc and

a surcharge for the financial year 2020-

21. There will also be a full rebate on

receipt, he said.

Hashmi said that the revenue collection

from the Board of Government Land

Lease, Tenancy, Sale, etc. (Land

Utilization Policy) is expected to reach

Rs20bn. The minister informed that the

government has proposed to slash the

current rate of stamp duty from 5pc to

1pc in the next financial year. The

construction industry will flourish and new

jobs will be created, he added.

Business Facilitation

The minister told the assembly that in line

with the vision of the Prime Minister of

Pakistan, another historic step has been

taken to facilitate business by reducing

the business license fee to zero percent

from local government revenues.

Development Budget

A total of Rs337 billion is allocated for the

development budget for the next financial

year. Rs97.66 billion has been earmarked

for the social sector in the annual

development program; whereas,

Rs77.86 billion has been earmarked for

infrastructure development.

Projects under PPP

Under the Public-Private Partnership

Authority, megaprojects worth Rs165

billion have been identified for the next

financial year including, Lahore Ring Road

SL-4, Multan Vehari road diversion plan,

construction of Nala Lai Expressway, the

supply of water meters, and construction

of Rawalpindi Ring Road.

Education

Bakht said that more than Rs391bn is

allocated for the education sector. For the

financial year 2020-21, Rs350.1 billion

has been allocated for the School

Education Department. "This amount will

be used to provide scholarships to more

than 500,000 students and free

textbooks to all students," said the

minister. Whereas, Rs13.50 billion has

been earmarked for school councils.

Health Sector

Punjab Finance Minister said that an

amount of Rs284.2bn has been allocated

for the health sector for the next fiscal

year.

KPK budget

focuses on health, tax relief

The Khyber Pakhtunkhwa government

unveiled the Rs923 billion budget for the

financial year 2020-21 which focuses on

improvement in the health sector and tax

relief for businesses hit hard by the Covid-

19 pandemic.

KP Minister for Finance Taimur Saleem

Jhagra presented the budget in the

provincial assembly. He told media that

fundamentally the biggest challenge in

the wake of Covid-19 was to anchor fixed

costs of the government. He said that the

cost of unfunded pensions was huge;

Rs86bn allocation for pension in 2020-21

was one per cent back in 2005 that has

now risen to 15pc.

Budget documents estimate the

province’s overall expenditure at

Rs923bn, which includes Rs739bn for

settled districts and Rs184bn for merged

districts. Revenue estimates put the

federal transfers at Rs477.5bn, which

include the province’s share in the

divisible pool, straight transfers and 1pc

share from the divisible pool for war on

terror.


TRADE CHRONICLE

No new tax in Sindh Budget 21-2020,

says Sindh Chief Minister

The total outlay of the

Sindh budget for Financial

Year 2020-21 stands at

Rs1.24 trillion, with a

deficit of Rs18.38 billion. "I

am proud to be presenting

the budget for the eighth

time," said Murad Ali

Shah.

Expenditure

CM Sindh said that the

n o n - d e v e l o p m e n t

e x p e n d i t u r e w a s

estimated at Rs968.99

b i l l i o n w h i l e t h e

development expenditure was estimated

at Rs232.94 billion and the capital

expenditure was estimated at Rs39.19

billion.

Tax Collection

No new tax has been introduced in

Budget 21-2020, said the Chief Minister.

According to the CM, total receipts were

estimated to be Rs1.22 trillion, including

federal receipts at Rs760.30 billion which

account for 65 percent, provincial

receipts at Rs313.39 billion or 26.8

percent, capital receipts at Rs25 billion i.e

2.1 percent and other receipts at (FPA &

PSDP) Rs69.05 billion (5.9 percent).

The minister informed that the overall

f e d e r a l r e c e i p t s

decreased by Rs71.72

billion i.e. 9pc lower than

the current financial year

2019-20. Whereas, the

overall provincial receipts

w e re e s t i m a t e d a t

Rs313.4 billion, showing

an increase of 9 percent

than the current financial

year.

Poverty Alleviation

Rs3 billion has been

earmarked for poverty

alleviation programs for

small businesses in urban areas.

Agriculture

The budget of the agriculture department

has been increased by 40% to Rs 15.84

billion, Sindh Chief Minister said. The

main reason for this is the subsidy

package for small farmers and locust

heart control, Sindh Chief Minister said.

He informed that the Sindh government

has allocated Rs440 million for locust

control.

Rs1 billion has been allocated to small

farmers as a concession for quality rice

seeds. Rs1 billion has been allocated for

fertilizer subsidy to small farmers, he said.

Rs1 billion has been allocated to small

farmers as subsidy for pesticides, Sindh

Chief Minister said.

Rs5 billion allocated for a soft loan

program for small and medium

enterprises through Sindh Bank said CM

Sindh.

CM informed Rs700 million is proposed

for IT Technology Intervention and

Innovation Solution, whereas, Rs500

million has been earmarked for startups

incubators and accelerators based on

supporting technology.

Health

The budget of the health department has

been increased by 16.1pc to Rs139

billion to deal with epidemics and

contagious diseases.

Education

The budget of education departments

has been increased by 10.2pc to Rs243

billion for quality education and to

address post-epidemic education

challenges, Sindh Chief Minister said.

Grant to local councils increased by 5pc

to Rs78 billion.

Annual Development Program

Provincial ADP is estimated at Rs155

billion, whereas, District ADP is estimated

at Rs15 billion, Sindh Chief Minister said.

The Opposition continued to raise

slogans throughout the budget session.

Balochistan unveils

deficit budget

Amid the impacts of

c o r o n a v i r u s , t h e

Balochistan government

unveiled its relief-oriented

but deficit budget for the

upcoming fiscal year

2020-21, with a total

outlay of Rs465.528

billion.

Presenting the budget

before the provincial

a s s e m b l y, F i n a n c e

Minister, Mir Zahoor

Baladi said the total

revenue target for the

upcoming year had been estimated at

Rs377.914 billion, so the budget deficit

would be around Rs87.614 billion.

He said the revenues would include

Rs302.904 billion

federal transfers,

R s 4 6 . 4 0 7 b i l l i o n

provincial receipts,

Rs3.538 billion Foreign

F u n d P r o j e c t s

Assistance (FPA),

R s 1 4 . 6 9 8 b i l l i o n

Capital receipts, and

Rs10.366 billion Cash

Carry Over.

The minister also

a n n o u n c e d

Rs118.256 billion

development budget under Public Sector

Development Programme which include

Rs12.177 billion Foreign Fund Projects

Assistance (FPA).

He said under the development budget,

Rs50.875 billion would be spent on about

934 ongoing schemes where Rs57.381

billion had been earmarked for 1634 new

projects.

He said the outlay of non-developmental

funds for the next fiscal year 2020-21

would be Rs309 billion.

The minister said this time, the budget

was being presented in a situation when

coronavirus had engulfed the whole

world and also affected Pakistan.


TRADE CHRONICLE

Key features of budget 2020-21

By: Dr Hafiz A Pasha

The objective of this article is to highlight

the key features of the Federal and

Provincial Budgets for 2020-21, starting

with revenues, moving on to issues of

expenditure and concluding with the

size and financing of the budget deficit.

The economy is expected to recover in

2020-21. The GDP growth rate is

projected to rise strongly from negative

0.4 percent in 2019-20 to 2.1 percent in

2020-21. This is in contrast to more dire

projections of growth in 2020-21 of

minus 0.2 percent by the World Bank

and minus 1 percent by the UN. The

outcome will depend on when the peak

of Covid-19 occurs and the pace of

recovery thereafter.

Revenues

The three year budgetary framework

developed by the Ministry of Finance is

ambitious. It envisages a rise in the taxto-GDP

ratio from 11 percent in 2019-

20 to 14.5 percent by 2022-23.

Simultaneously, current expenditure of

the Federal and Provincial Governments

combined will be brought down from

20.9 percent to 18.8 percent of the GDP

while the level of development spending

will be raised from 2.6 percent to 3.3

percent of the GDP. Consequently, the

budget deficit is targeted to fall from 9.1

percent of the GDP in 2019-20 to 4.8

percent of the GDP in 2022-23.

However, contrary to the earlier

budgetary frameworks, the tax-to-GDP

ratio at the Federal level has fallen

sharply from 11.2 percent of the GDP in

2017-18 to 9.3 percent in 2019-20.

Earlier it had risen significantly from 8.4

percent of the GDP in 2012-13.

The federal government claims to have

presented a 'tax-free' budget, yet tax

revenues are expected to rise by 27

percent in 2020-21. The fastest growth

is expected in sales tax of over 34

percent, followed by 26 percent

increase in income tax revenues. The

two major tax bases are large-scale

manufacturing and imports. According

to the Annual Plan for 2020-21, both

these tax bases are expected to

contract in real terms next year.

Therefore, the FBR revenue target is

extremely ambitious. There could be a

shortfall of over Rs 750 billion. As such,

there is an expectation that once the

peak of COVID-19 is over, the Federal

Government will have to announce a big

'mini' budget.

Non-tax revenues reached a record level

of Rs 1.3 trillion, as compared to the

budget estimate of Rs 0.9 trillion. This

was primarily due to the highest ever

profit of Rs 785 billion by the central

bank, which contributed to restricting

the size of the primary deficit to 2.5

percent of the GDP despite a record

budget deficit of 9.1 percent of the GDP

in 2019-20. However, non-tax revenues

are expected to fall by 15 percent in

2020-21, due to the return of SBP

profits to a more normal level following

the sharp drop-in interest rates.

Expenditure

Given the tendency for runaway budget

deficits, it was reassuring to hear in the

Federal Budget Speech that 100

organizations were either being shut

down, privatized, transferred to the

Provinces or merged. There is a need to

inform the Parliament the names of

these organizations and the likely annual

budgetary savings. The budget

documents also indicate that the

number of Divisions will be down from

42 to 39 next year. The three Divisions

which have ceased to exist are

Statistics, Textiles and Capital

Development and Administration.

The cost of salaries and allowances of

Federal Government employees has

been doubling every five years while

pensions are rising even faster and

doubling once every four years.

Inclusion of operating costs raises the

total budgetary allocation for these three

heads to Rs 2204 billion in 2019-20.

This implies a growth rate in 2020-21 of

3 percent, even though no salary

increases have been granted in the

budget. These three heads combined

constitute almost 29 percent of Federal

expenditure. Ten years ago, the share

was 24 percent.

Rising current expenditure and falling

revenues as a percentage of the GDP

have left increasingly less 'fiscal space'

f o r d e v e l o p m e n t s p e n d i n g .

Consequently, the level of development

expenditure by the Federal and the

Provincial Governments combined was

5.0 percent of the GDP in 2012-13

which is now half the level, at 2.5 percent

of the GDP. This is one of the major

reasons for the secular decline in the

GDP growth rate. Despite a high level of

relief spending required to mitigate the

negative impact of Covid-19, there is

likely to be a fall of 40 percent in

subsidies and of 23 percent in grants in

2020-21. Clearly, the redistributive role

of fiscal policy will diminish. In fact, the

Budget Speech of 2020-21 claimed that

the budget is a 'relief' budget. This is

contradicted by the 15 percent decline

in cash transfers to the poor and other

pro-poor initiatives in the Benazir

Income Support Program and for Social

Protection' in comparison with the

actual expenditure in 2019-20.

The cost of debt servicing has increased

exponentially in the last two years, from

Rs 1500 billion to Rs 2709 billion in

2019-20, a big jump of 81 percent. Both

bigger primary deficits and higher

interest rates have contributed to this

jump. Debt servicing is now the largest

component of Federal expenditure with

a share of 46 percent.

However, the rate of increase is

expected to moderate to 9 percent in

2020-21. There was, in fact, an

expectation that it would fall next year

given the big decrease in the policy rate

of the SBP from 13.25 percent to 8

percent in the last few months.

Unfortunately, this has not happened

because of a seriously flawed policy of

debt management whereby long-term

bonds continued to be floated when

interest rates were at peak rather than

opting for short-term borrowing. This

has created a strong 'lock-in' effect. In

2019-20, over 70 percent of the

domestic borrowing was in the form of

PIBs. As such, there will be a delayed

reduction in debt servicing costs.

There was also a big shortfall in

development spending of over 32

percent in 2019-20 in relation to the

budgetary targets. The contraction was

greater in the case of provincial

governments because of the big

shortfall in Federal transfers. The total

development spending proposed for


TRADE CHRONICLE

2020-21 remains 17 percent short of the

budgeted level in 2019-20. It is lower by

26 percent in the case of the Provinces

and by 7 percent at the Federal level.

The priorities in the Federal PSDP of Rs

650 billion of 2020-21 are highways with

share of over 18 percent. Power

distribution projects have a share of only

6 percent and water resources, 12

percent. The time has come to shift the

focus of CPEC towards development of

the SEZs and construction of dams in

which Chinese contractors have

enormous expertise.

The unfortunate reality is that if the

budgetary strategy had not been

severely constrained by the IMF then

one of the prime levers for revival would

have been expenditure on more laborintensive

projects with short-gestation

periods. This includes lining of irrigation

canals, construction of rural roads, tree

plantation, etc. The annual development

outlay should have been fixed at above

Rs 1.6 trillion as compared to budgetary

target in 2020-21 of just over Rs 1.3

trillion.

Budget deficit

T h e p r i m a r y r e a s o n f o r t h e

transformation of the Provincial

Governments from being cash surplus

to having cash deficits is the big shortfall

in transfers. According to the 2019-20

Budget the level of Federal transfers was

expected to be Rs 3411 billion. The year

will end with actual transfers of Rs 2512

billion, implying a huge shortfall of

almost Rs 900 billion. Consequently, the

revised estimates for 2019-20 indicate

that the combined deficit of the

provinces will be Rs 81 billion. The IMF

estimate is much higher at Rs 205

billion.

The greater uncertainty in federal

transfers has motivated the Finance

Advisor to suggest that the provincial

governments may take their own

estimates of the likely magnitude of

Federal transfers in 2020-21 and frame

their budgets accordingly. This is

contrary to good financial practices in a

Federation.

Further, the four Provincial Governments

are now expected to generate a cash

surplus of Rs 242 billion in 2020-21. This

will only happen if the budget growth of

27 percent in Federal transfers is

achieved. However, the Sindh Budget

for 2020-21 is in deficit even with the 27

percent growth in transfers. Fortunately,

the Punjab Government with the same

expected growth in transfers has been

able to show a cash surplus of Rs 125

billion in its budget for 2020-21. Khyber-

Pakhtunkhwa has produced a balanced

budget while Balochistan has also

announced a deficit budget.

The MoF has claimed that a primary

surplus was generated in the first three

quarters of 2019-20. This is the

difference between revenues and

expenditure, excluding the cost of debt

servicing. The magnitude was 0.6

percent of the GDP. The Budget Speech

has made the claim that this is the first

time a primary surplus has been

generated. This is not factually correct. A

similar primary surplus was generated in

the first three quarters of 2015-16.

The reported consolidated budget

deficit for 2019-20 at 9.1 percent of the

GDP could be even higher and

approach 10 percent of the GDP.

Revenues have probably been

overstated by 0.2 percent of the GDP

and provincial deficit understated by 0.6

percent of the GDP. If the release of data

subsequently on fiscal operations

confirms the higher deficit, then this will

be the first time that the deficit has

approached a double-digit level. The

fact that revised estimates for 2019-20

have not been made available in the

primary budget document, Budget in

Brief, does create the perception that

the deficit this year has been significantly

understated.

A similar problem is likely to arise with

the estimation of the consolidated

budget deficit at 7 percent of the GDP in

2020-21. FBR tax revenues have been

overstated by almost 1.5 percent of the

GDP while the level of development

spending is likely to be higher by almost

0.6 percent of the GDP given the larger

size of ADPs announced by the

provincial governments in relation to the

level envisaged. Also, if other

governments come under pressure to

grant a similar wage increase as Sindh,

the current expenditure could be 0.5

percent of the GDP higher than

p ro j e c t e d . C o n s e q u e n t l y, t h e

consolidated budget deficit could once

again approach 9 percent of the GDP in

2020-21. It will be interesting to see how

the IMF reacts to this slippage,

especially in the Provincial budgets.

Public debt will approach Rs 38 trillion

by the end of 2019-20. This will be

equivalent to 90 percent of the GDP, way

above the limit set by the Fiscal

Responsibility and Debt Limitation Act.

In absolute terms, it will increase by Rs

12 trillion during the first two years of the

PTI government. Earlier, the increase

was almost Rs 11 trillion during the fiveyear

tenure of the PML(N) government.

The former increase has been

accelerated by almost Rs4.5 trillion due

to the big escalation in interest rates and

rapid depreciation of the rupee.

The Budget of 2019-20 had set a very

ambitious target of almost $20 billion for

gross inflow of external assistance from

diverse sources. This would have

implied a net inflow of $12 billion after

external debt repayment. However,

estimates are that the net inflow will be

$5.8 billion, less than half the targeted

amount. This vividly highlights the

growing difficulties in accessing external

financing after the Covid-19 and more

negative perceptions of Pakistan's

economy. Even after the receipt of $1.4

billion from the IMF Rapid Financing

Facility foreign exchange reserves have

fallen close to $10 billion. This is barely

adequate to provide import cover of two

months.

Apparently, there was an understanding

with the IMF that no salary or pension

increases will be announced in the

budgets. Overall, the Federal Budget of

2020-21 is relatively passive and

lackluster. Given the prevailing

conditions, the expectation was that the

Budget will be designed to focus on

revival of the economy and on mobilizing

the required resources through a

redistributive fiscal policy, broad-basing

and strong measures against tax

evasion. This has not happened.

Consequently, there has been increase

in uncertainty about the state of the

economy during and after Covid-19 and

about the future of the IMF Programme.

(Courtesy Business Recorder)


TRADE CHRONICLE

Impact of Budget 2020-21

on Textile sector of Pakistan

By: Muhammad Nawaz Iqbal

Pakistan's textile sector is the essence of

this country since independence. It is the

most significant manufacturing industry in

the country. It considered being the

backbone of the economy. According to

the Federal Bureau of statistics, textile

exports stood at $751.28 million in May

2020, or a 37% decline when compared

to the exports worth $1.185 billion in May

of last year. Experts pointed out that this

was the second successive month of a

massive reduction in textile exports amid

the global pandemic. Whereas, in eleven

months (July –May 20) export reached $

11.567 billion, recording a decline of over

6 per cent on YoY basis. Thus, a high

hope pined by textile exporters with the

upcoming budget.

Association has requested the expulsion

of obligation on cotton imports and a

discount of five per cent on material fares.

This request came at once with the

closure of around 110 factories because

of different boundaries to development

due to the vital emergency. Due to the

global outbreak of COVID-19, like other

sectors, the decrease in textile fares had

additionally declined the nation's general

traditions obligation on the import of

crude material utilized in the assembling

of interlining to lessen the expense of

creation. Government has been

amazingly responsive and have been

tuning in to the ventures and taking

measures on a continuous premise, like,

reshuffling of GST rates from 17 to 4,

permitting discount collected expenses, if

there should be an occurrence of

materials and so on. The textile industry is

expecting a severe global recession in

upcoming months which will not only

mark a negative impact on production but

also leads to downsizing. This impact will

The Federal Budget contents some relief

on domestic sales of garments but offers

lesser incentives for the export sector.

Hence, All Pakistan Textile Mills

Association (APTMA) has rejected the

budget for FY 20-21 remarked that it

failed to address serious industry issues in

the light of the negative impact on exports

from the worldwide Covid-19.

Pakistan is additionally third-biggest

exporters of Cotton in the World. Textile

contains 57 % of Pakistan's export

earnings. Butt lately, export revenues

have declined fundamentally. Textile

export revenues were recorded at

$11.625 billion in 2014-2015, which

further declined by 7.7% to $10.395

billion in 2015-2016.

Rightly, the Pakistan Textile Exporters

Association (PTEA) as of late mentioned

the administration to take noteworthy

measures to guarantee the development

of material fares and support the work

given by the division.

In particular, the PTEA has mentioned:

zero-rating on sending out worth chain

(for example no expense, no discount) to

support trade development sponsor a

lessening in cost of creation to support

the seriousness of Pakistani fares

gracefully guarantee vitality to material

factories at serious rates.

Besides, the Pakistan Textile Mills

fares during the month of March.

The nation's fare of merchandise had

declined by 8.46 per cent year-on-year to

$1.807 billion in March, from $1.974

billion amid conclusion of retail outlets.

Due to such a scenario, the textile sector

has expected the significant budget to lift

the industry, but Pakistan's Textile sector

did not accept the Budget 2020-21. Due

to the terrifying impact of COVID-19, the

textile sector needs and expected much

relief in budget 2020-21.

Besides the historical tax-free budget,

APTMA still not found any possible

solution for business hurdles that keep

the industry running with significant pace.

The government of Pakistan has

bolstered the material business by

absolving 5% customs obligation on

imports of crude material i.e polyester for

button makers which will probably

support small material players. Yet, the

administration likewise decreased

severely hit the SME's who played a

significant contribution to textile exports.

The Federal administration is entirely

mindful about the circumstance and

conditions made because of Corona

Pandemic, whereby, the worldwide

financial log jam has additionally

influenced the economy of Pakistan. The

government needs to help the business

to elevate the national economy, which

has been confronting the unique

arrangement of difficulties.

Textile exports contribute around 12 per

cent to the country's GDP, and in fact, the

sector needs more room to stretch the

business for better financial outcomes.

In last, APTMA urged that new textile

policy, implementation of which is in

principle approved should be applied in

true letter and spirit for Pakistan to

maintain and increase employment and

exports.


TRADE CHRONICLE

The sugar crisis

By: Mahmood Hasan Khan

In recent weeks, I followed with great

interest the stories about the

disappearance of flour and sugar from

the market and the surge in their prices.

In the case of sugar, apparently it was

allowed to be exported with a subsidy at a

time when there was a shortfall in output

to meet the domestic demand. The

exporters obviously made a killing in the

market thanks to the export subsidy and

the devalued rupee. But the sugar

problem is far more serious than what has

appeared in the press so far.

The structure of production of sugarcane

and sugar in Pakistan has been a drain on

society since at least the mid-1970s. I

recall a research study I did around thirtyfive

years ago – it was published in Food

Policy (Vol 11, Issue 3, August 1986, pp

253-258).

According to my estimates then, there

was a high private return on investment in

sugar, but the industry was not profitable

for society. I found that, given the disparity

between the domestic and international

prices, there was a welfare loss of Rs5.48

billion (in 1986 prices), but producers

made about Rs2.36 billion in profits and

the government gained Rs321 million in

revenue. I also estimated that about onethird

of the sugarcane area could have

been used for other crops.

My conclusion was that Pakistan should

focus on increasing the yield level and the

sucrose recovery rate, at the same

reducing the area given to sugarcane. In

the meantime, Pakistan would have been

better off importing sugar than producing

it at home at a much higher cost.

The situation today seems not much

different. First a few facts about the

sugarcane grown in Pakistan. Pakistan

produces 20 to 30 percent less

sugarcane per hectare than the average

reported for other countries. Second, the

varieties of sugarcane grown in Pakistan

have a 15-20 percent lower sucrose

recovery rate than in the major

sugarcane-producing countries.

Third, sugarcane uses a lot more water

per hectare than any of its competing

crops and it occupies the land area for a

longer period in the year. Fourth, for the

farmer, it is a far more profitable crop than

its competitor, thanks to the price support

and subsidies on inputs (water in

particular). Fifth, the average price

received by the sugarcane grower is

higher than the international price by a

significant margin while there has been no

significant increase in the output of

sugarcane per hectare. (On the other

hand, the competitive crops have shown

increased yield levels and their domestic

price has not been higher than the

international price.)

In light of these facts, Pakistan would be

far better off by reducing the land area

used for sugarcane. The focus should be

on improving the yield level and the

sucrose recovery rate and on reducing

the price subsidy going to the growers.

I n t h e s u g a r- m a k i n g i n d u s t r y,

government support to the owners of

nearly 91 sugar mills comes in many

forms, including cheap bank loans,

subsidised import of

equipment, zoning

o f m i l l s f o r

sugarcane, and a

guaranteed return

on equity. The millzoning

system gives

each mill a monopoly

to receive the cane

grown within the

zone. This deprives

the grower from

choosing a mill for

f a i r p r i c e a n d

convenience. In fact,

the cane growers are

dependent on the mill owners for loans,

inputs, and extension services.

The result of this is that mill owners make

a hefty profit, the government acquires

substantial revenue in taxes, but the

consumer ends up paying a price

significantly higher than the international

price of sugar. Considering the welfare

loss to society, the government should

discourage the production of sugarcane

in the country, particularly in Khyber

Pakhtunkhwa and parts of Punjab, and

allow import of sugar to compete with

domestic producers.

The government should reduce the tax

burden on domestic sugar – which in any

case falls on the consumer – and use a

flexible tax regime on the export and

import of sugar. It should remove the

sugarcane zoning requirements and

reduce the availability of cheap bank

loans and other subsidies to the mill

owners. There is no reason to grant new

licences for mills and a guaranteed return

on equity. There is a need is to promote

efficiency in the production of sugar and

price stability in the market.

As a short-term policy measure, the

government should liberalise the import

of sugar. This will soften the domestic

market and provide competition to the

local producers, helping them to become

better users of the country's resources.

Imported sugar at the world market price

could be sold with an import tax as a

source of revenue to the government as

long as, the selling price is somewhat

lower than the domestic producer price.

A policy of liberalised import, with duty on

the imported sugar, would allow the

government to reduce the current high

tax on domestic sugar, and hence benefit

both producers and consumers of sugar

in Pakistan. In the long run, public policy

should aim at reducing the area used for

sugarcane, increased productivity –

which means higher output per hectare

and higher sucrose recovery rate,

reduced dependence on subsidised

inputs (water in particular) and a supportprice

regime in line with the border price.

Along with this policy, the government

should dismantle the zoning system for

sugar mills, make the licencing system

competitive, limit the access to cheap

loans, and give no guarantee of return on

equity to the mill owner, but create market

conditions that give a fair return on

investment. Frankly, for too long have

consumers of sugar have been held

hostage by sugarcane growers and

owners of sugar mills. It’s time the

government comes to the rescue of these

hostages. One last point for consumers

to ponder: too much sugar and salt is not

good for anybody's health. Governments

should help people learn to consume less

of both.

(Courtesy The News)


Leather Industry

PTA urges government to

announce relief package for leather industry

Chairman Pakistan Tanners’ Association

(PTA), Sheikh Afzal Hussain has urged

government to support leather industry

with the announcement of “ Relief

Package for survival of industry after

negative impact of Covid-19.

While talking to the print media, he shared

the salient features of the proposed

Federal Budget for the year 2020-21,

presented on 12th of June 2020 in

National Assembly, he said that budget

lacked the core demands for the leather

sector of Pakistan, which were

negotiated & submitted to MoC, FBR &

other government departments for

incorporation.

Chairman, PTA Sheikh Afzal Hussain said

that during meetings & oral discussions

already made before the budget with the

Advisor to PM on Commerce & Textile,

Abdul Razak Dawood, a firm assurance

was given to PTA for the desired inclusion

of core demands of the industry, which

are vital & mandatory under the present

plight of the industry specially under

Covid-19.

This vital Industry of the country being

2nd biggest export oriented value added

Industry of the country is kept in isolation

almost from the beginning. Despite all

assurance for the due attention

resultantly the Leather Sector is in

continuous declining trend. Now the

situation is getting from worst to

deteriorated gradually, because of severe

adverse impact of COVID-19 such as

future export orders of leather are

jeopardized for cancellation, ongoing

shipments are being halted by the foreign

customers, due payment against the

shipped shipments are stopped/pending

by the foreign customers in result of

which the Leather Sector is in severe

financial crisis.

In this context, the Chairman, PTA,

Sheikh Afzal Hussain strongly

emphasized the utmost need to

incorporate the following short listed

essential demands of the Leather

Industry in the proposed Federal Budget

for the year 2020-21 as was already

ensured to PTA for the inclusion: -

01.Reinstate the Zero Rated Status for

L e a t h e r

Sector of

Pakistan”

among rest

five sectors

o f t h e

c o u n t r y

w i t h

immediate

e f f e c t

along with

restoration

of SRO #

1 1 2 5 ,

which was revoked earlier by the

Government OTHERWISE to consider

reduction of Sales Tax from 17% to 5%

atleast for Leather Sector of Pakistan,

which is 95% export oriented sector of

the country.

02. To reduce / remove CD, ACD & AGST

on fundamental 8 Tanning Chemicals

with H.S. Code Nos. 3202.9010 /

2915,1100/3202.1000/3403.1110/340

3.9100/3204.1200/3204.1400/3402.13

00/3210.0020 & 3809.9300.

03. Removal of further collection of 1%

withholding Tax on export proceeds for at

least upcoming 3 years.

04. Removal of further collection of EDS

@ 0.25% on export proceeds for atleast

upcoming 3 years.

05. The Government has proposed 2%

withholding tax on import of basic raw

materials for the Leather Industry by

withdrawing the facility for issuance of

“Exemption Certificates” on import of

basic raw materials. WHERES the

Leather Sector is more than 90-95%

export oriented sector of the country and

fall within the fixed regime and

accordingly cannot be adjusted. As a

result the huge funds on account of 2%

withholding Tax on import of basic raw

materials by our member exporters for

this export oriented industry would

ultimately be blocked. The Government

on account of refunds, which could have

long pendency for the release with other

funds on account of Sales Tax & Income

tax etc. and finally this export oriented

Industry would be stranded with further

financial crunches/crisis, which is already

severely facing.

The removal of proposed 2% withholding

tax on import for Leather Sector is

UTMOST necessary to be made by the

Government to keep the same mode

earlier (before the budget) for the import

against “Exemption Certificates” by our

member exporter for those whose

exports is not less than 80% i.e. case to

case basis.

06. Effect major cut in the Utilities Bills for

Electricity & Gas, which are already on

very higher side as compared to regional

competitors to enable our member

exporters to compete in International

market for fetching precious foreign

exchange in terms of export orders, as

the production cost is already exorbitant

in Pakistan.

07. Re-include “dyed/Finished finished

leather” in the new DLTL scheme for the

year 2018-21 with retrospective effect

from July’2018 without incremental

obligation to avoid discrimination attitude

as “dyed/Printed Fabric” is already

included in the new DLTL scheme for

textile sector and the Mother Industry of

Leather Sector is deprived for the basic

incentive.

Sheikh Afzal Hussain, Chairman, PTA

APPEALED to the Honourable

Prime Minister of Pakistan, Mr. Imran

Khan and Advisor to PM on Commerce &

Textile, Mr. Abdul Razzak Dawood for

incorporation of all above short listed core

demands for this vital Industry of the

country. To save it from further collapse it

is essential to provide level playing field in

comparison with the neighbor competing

countries for one common motive for the

promotion of leather sector exports,

which is desperately required by the

country for the national exchequer.


TRADE CHRONICLE

Honour contracts' pleads CLE as

India loses $1bn in leather orders

Chinese co to set up $1.02m leather

industry at Chattogram EPZ

India's leather sector has lost an

estimated $1 billion in orders for export

due to the global fallout from the

cornonavirus, according to the country's

Council for Leather Exports.

Its Chairman, Aqeel Ahmed Panaruna,

stressed that buyers need to honour

contracts that have been agreed so that

raw materials and chemical companies –

and employees – can be paid. He said:

“We understand the closure of retail

stores and consequent downsizing of

orders by buyers. However, the buyers

need to honour the business contracts

which have been agreed.

"Future business contracts/negotiations

can always be firmed up on mutually

acceptable terms as cancellation of

contracts will cause a massive loss to our

industry and affect the livelihoods of

thousands of workers who belong to

economically weaker sections.”

This sector in India employs 4.42 million

people and more than 90% of businesses

are in the Micro Small and Medium

Enterprises segment. Mr Srinivasan of

Prime International, Chennai added: “The

tanneries today have stocks of raw

materials both imported and domestic

and also have lot of chemical inventories

and this lockdown with a 50%

cancellation of orders today will put every

tannery in deep trouble.”

The lockdown also means tanneries and

production units are all closed and export

shipments lying ready are stuck. Indian

tanners called on buyers to act

responsibly.

Mr Panaruna added: “The abrupt

cancellation of export orders by overseas

buyers is causing financial catastrophe to

our exporters and rendering their

employees jobless and hence, buyers

need to honour the contracts.

“The Indian leather, leather products and

f o o t w e a r i n d u s t r y ( i n c l u d i n g

components) takes this opportunity to reaffirm

its commitment for further

enhancement of trade ties with all buyers

in the long term and wishes for a speedy

return to normalcy in all countries.”

The Bangladesh Export Processing

Zones Authority (BEPZA) and Chinese

company M/s Unicorn Leather Goods

Factory Limited signed an agreement

under which the company will establish a

leather and artificial leather products

manufacturing industry at the

Chattogram Export Processing Zone,

said press release.

B E P Z A m e m b e r ( e n g i n e e r i n g )

Mohammad Faruque Alam and Unicorn

Leather Goods Factory managing

director Kang Yanhong signed the deal

Bangladesh leather export

falls in 10MFY20

As per data released by Bangladesh

Export Promotion Bureau (EPB),

Bangladesh government recorded a

significant fall of 13.09 per cent to

US$29.49 billion in the first ten months of

the current 2019-20 fiscal year (FY),

against US $33.93 billion in the

corresponding period of last FY.

Exporters and experts attributed closure

of factories, lockdown in major export

destinations followed by slow demands

and orders cancellation and hold up due

to ongoing Covid-19 pandemic for the

drastic fall in performance. The slides in

export of all commodities were observed

including leather industry.

Bangladesh leather industry has earned

an export revenue of US $700.93 million

on behalf of their respective organisations

at the BEPZA Complex in Dhaka.

The company will invest $1.02 million to

produce 1 million bags, belts, wallets and

various leather items annually and

employ 764 Bangladeshi nationals.

BEPZA secretary, Md Nabirul Islam,

general manager, (public relations)

Nazma Binte Alamgir and general

manager (investment promotion), Md

Tanvir Hossain were present, among

others, at the signing.

during the first ten months of July – April,

FY 2019/20 as compared to US$ 837.7

million earned in same months last year. It

translates a fall of 16.26 percent on YoY

basis due to drop in earning of finished

leather, products and footwear during

this period, according to data of EPB.

The break down shows that Bangladesh

exported US$ 90.47 million of finished

leather compared to US $ 147.09 million

in year ago ten months export period. It

shows a fall of 38.49 per cent. The leather

footwear exports also decreased by

15.86 percent to US $ 413.15 million

from US$ 491.05 million during this

reporting period.

The exports of leather products have also

decreased to US$ 197.30 million from US

$ 198.94 million of same months last

year. It translates a decline of .82 percent

on YoY basis.

The Bangladesh Export Promotion

Bureau (EPB) has set an export target for

leather industry at US $1.093 billion for

financial year 2019-20 (July – June)

compared to US $1.110 billion

earmarked for the previous fiscal year.


Ports & Shipping

KPT continues to operate

despite the global pandemic

Karachi Port Trust (KPT) is

operating round the clock

even during the pandemic

Covid-19 lockdown situation.

Port activities have been

declared by federal and

provincial governments as

essential services to keep the

economic wheel of the

country in momentum.

Being the economic gateway

of Pakistan, KPT has taken all

r e q u i s i t e o p e r a t i o n a l

measures in liaison with concerned

government departments to ensure that

cargo handling at the port remains

unaffected during the lockdown period.

Special storage and warehousing is

provided to the cargo being handled at

the port under the complexities arising as

a result of lockdown. Additionally, KPT has

given unprecedented waiver in

demurrage period to the trade

community.

Under the policy guidelines and

the port.

c o n t i n u o u s

supervision of the

honourable Minister of

Maritime Affairs, Mr Ali

Haider Zaidi, KPT is

m e e t i n g t h e

requirements of all the

stake holders and Oil

Marketing Companies

( O M C s ) t h r o u g h

efficient and vigilant

handling of incoming

oil tankers arriving at

OMCs are receiving their respective

shipments without any delay on part of the

berthing and decanting arrangements.

Declaration of Karachi Port Services as

essential services by Federal Government

and complete support of the Provincial

Government in facilitating Port Operations

highlights the importance of essential

requirement of continuing imports &

exports for sustaining daily life and

economic activities, especially under the

global COVID-19 dilemma. Under these

daunting challenges of COVID-19,

numerous complications are emerging

including petroleum shortages.

About 56% petroleum products are

imported through shipping berthed at

KPT. KPT has instituted proactive

measures to enhance its liquid cargo

handling capacity. While ensuring

Government's directions for enhanced

precautions and reduction in non essential

staff at work to minimise spread of the

ongoing pandemic. KPT staff is

relentlessly performing to maintain the

port operations at its full potential rather

more efficiently. More so, under the

current petrol crisis situation in the

country, KPT is ensuring that no delay

takes place on its part in handling of POL

carrying ships. KPT has made all possible

arrangements for uninterrupted berthing

of tankers by using port's available

potential for smooth and quick decanting

of POL products without delay by giving

priority to MOGAS carrying vessels. KPT

management is undertaking all possible

efforts to ensure its traditional

commitment to serve the nation through

uninterrupted supplies, with least costs.

Uzbekistan looks

to Pakistani ports

accession to QTTA, and share its

experience on achieving the Generalised

System of Preferences Plus status.

Uzbekistan has formally sought

Pakistan`s support for accession to the

Quadrilateral Traffic in Transit Agreement

(QTTA) in a bid to utilise Karachi and

Gwadar ports for its trade operations.

The formal request was made by Uzbek

Deputy Prime Minister, Sardor

Umurzalcov during a video conference

with Adviser to the Prime Minister on

C o m m e r c e , R a z a k D a w o o d .

Uzbekistan`s Ambassador to Pakistan,

Furgat Sidikov also joined the meeting

held at the Ministry of Commerce in

Islamabad.

The QTTA is a transit trade deal among

Pakistan, China, Kyrgyzstan and

Kazakhstan to facilitate the passage of

goods and traffic. A road project under

the China-Pakistan Economic Corridor

will provide access to China and the

Central Asian States to Pakistani ports.

Responding to the request, Dawood

assured Pakistan`s support for

Uzbekistan in QTTA.

Pakistan plays a central role in the QTTA

which is believed to be an alternative

route bypassing Afghanistan and relying

on the Karakoram Highway via China to

r e a c h C e n t r a l A s i a n S t a t e s .

U z b e k i s t a n a l s o s o u g h t t h e

establishment of Joint Working Group for

trade and investment cooperation.

An official statement following the

meeting said that Uzbekistan requested

Pakistan to support its cause in

Dawood apprised the Uzbek side that a

memorandum of understanding (MoU)

for Pakistan-Uzbekistan Joint Working

Group on Trade and Investment will be

ready for signing after seeking approval

from the cabinet of Pakistan.

During the meeting, it was resolved that

all out efforts would be made to enhance

bilateral trade relations, establishing joint

ventures in various areas including

agriculture, textile, pharmaceuticals,

t o u r i s m a n d c o n s t r u c t i o n .

Pakistan`s exports to Uzbekistan stood at

$13.190 million in FY19 as against

$9.254m over the previous year.

Similarly, Pakistan`s imports from

Uzbel(istan are very negligible as it stood

at $5.449m in FY19 as against $3.640m

over the previous year.


TRADE CHRONICLE

Gwadar has transshipment

potential: Razak

Adviser to the Prime Minister on

Commerce, Razak Dawood asked

relevant stakeholders to reduce dwelling

time of cargo handling at ports to facilitate

trade. The direction came from the

adviser while chairing a meeting on the

country`s transshipment potential at the

Ministry of Commerce.

The meeting was attended by

representatives of relevant ministries and

Federal Board of Revenue. At the

moment, port charges and inefficiencies

resulting in more time in cargo handling

are the major issues, the adviser pointed

out, adding these need to be resolved to

improve the operations.

Dawood said the government can play

the role of a facilitative regulator, providing

a flexible environment to boost the

transshipment industry as per the

available potential. `There is a lot of

potential for transshipment in Pakistan

which can be exploited with the right

policies and government support,` he

added.

Talking about the importance of the

strategic location of Pakistan, the adviser

said that Gwadar port can act as a sister

port to a number of other important ports

in the region, which can complement

each other in transshipment activities.

He further emphasised that Pakistan can

reach its true potential of transshipment

when China, Afghanistan and other

Central Asian economies are connected

with Gwadar through land routes.

C o n s i d e r i n g d i f f e r e n t p o l i c y

recommendations, the adviser noted that

a little value addition can be beneficial in

p ro m o t i n g a n d i m p ro v i n g t h e

transshipment industry. He asked the

s t a k e h o l d e r s t o c o n s i d e r t h e

recommendations and resolve the

identified issues for the benefit of ports

and shipping industry in Pakistan.

Va r i o u s s t e p s f o r m a x i m i s i n g

transshipment potential were also

discussed. It was emphasised that by

streamlining the government procedures

and by implementing the TIR Convention-

Internadonal Transport of Goods, there

can be tremendous benefits to the

economy of Pakistan.

PIBTL shows

consistent performance

The Directors of the Company have

presented the Financial Statements of

Pakistan International Bulk Terminal

Limited (PIBT) (the Company) for the

period ended March 31, 2020.

handled 6,581,546 tons cargo against

6,759,033 tons in the same period last

year depicting consistent performance.

The management of the Company is

focusing on strategies to bring more

efficiency in cargo handling operations,

with the objective of providing

unparalleled services to its customers.

During the period, the Company has

improve shareholders' return in the

future.

The global landscape, including Pakistan,

is currently in the grip of COVID-19

pandemic, which is predicting a sharp

economic downturn across the world,

and its impact has been deepening

further in the wake of lockdowns, both

BUSINESS REVIEW

The Company has entered into a Build

Operate Transfer (BOT) contract with Port

Qasim Authority (PQA) on November 06,

2010 for construction, development,

operations and management of a coal

and clinker / cement terminal at Port

Muhammad Bin Qasim for a period of

thirty years.

During the period, the Company has

posted net profit after taxation which also

includes finance cost and impact of

c u r re n c y d e v a l u a t i o n o n U S D

denominated foreign loans.

GOING FORWARD

The Company has shown improvement

in revenue, gross profit, EBITDA and

profit after tax, and constantly endeavors

to further optimize costs which will help

locally as well internationally. Since the

Company is a Port Operator, it continues

to remain operational being termed as

essential services in pursuance of the

directives of the Government Authorities.

However, the Company's operations are

dependent largely on the import of coal,

which is directly linked to the health and

activity of the industries that import coal.


TRADE CHRONICLE

India invites global vessel owners

to register ships in country

The government of India has invited

global vessel owners to flag their

ships in India to take advantage of

the ‘Make in India’ policy.

The government has recently revised

its ‘Make in India’ policy for public

procurement, under which no global

tender enquiry will be issued, except

with the approval of the competent

authority, for the procurement of all

services with estimated value of less

than ₹200 crore.

“It is estimated that the ‘Make in

India’ policy will provide an

opportunity to at least double the

number of Indian flag vessels in the

immediate term - from the present

approximately 450 to at least 900

Turkey to enhance cooperation

in Maritime Sector

Turkish Ambassador to Pakistan, Hsan

Mustafa Yurdakul, called on Federal

Minister for Maritime Affairs, Syed Ali

Haider Zaidi, in Islamabad to discuss

widening the Pak-Turkish cooperation in

maritime sector.Since the Turkish

Minister for Transportation, Mr. Cahit

Turhan, supported the proposal for Visa

facilitation to Pakistani seafarers during

his visit to Pakistan in February 2020, the

matter was also brought into discussion.

Pakistan is also expected to benefit from

the vast experience of Turkish ship

building and maintenance of pilot boats

and tug boats. Further SOPs are

underway to attract Turkish collaboration

in the Maritime Services company in the

domain of dredging etc. Materializing the

vision of Minister for Maritime Affairs to

turn Pakistan into Maritime Nation,

Pakistan is actively developing its

industrial zones ancillary to ports hence,

the meeting also included discussion on

Pak-Turkish cooperation in development

of the joint Industrial port city.

T h e T u r k i s h

c o m p a n i e s w i l l

b e n e f i t f r o m

establishment of

industrial units in

Gawadar Free Zone

and Bin Qasim

Industrial Zone with

t h e i r p r o d u c t s

having expeditious

access to eastern

and western China

once the CPEC is

fully operational.

Bulk ship with fertiliser for Afghanistan

berths at Gwadar Port

and more over a period of 3 years -

leaving further scope for additional

investment in the Indian flag

tonnage,” Ministry of Shipping said

in a statement.

W i t h a m o d e r n m a r i t i m e

administration, continuous supply of

trained seafarers, ship management

skills are already available, ship

owners worldwide are invited to now

flag their ships in India to take

advantage of the Make in India policy

in respect of transportation of

government cargoes.

Shipping Minister, Mansukh

Mandaviya, has reviewed the

readiness of Indian shipping for

implementation of the government’s

Cargo Transportation Policy, the

statement said.

A ship carrying 16,400 tonnes of DAP

fertiliser for Afghanistan anchored at the

Gwadar Port on 29.5.2020.

The ship brought fertiliser from Australia

under the Pak-Afghan Transit Trade

Agreement. This is the first time Gwadar

port is being used for import of urea by

t h e A f g h a n

government.

T h e c h a i r m a n o f

Gwadar Port Authority,

N a s e e r A h m e d

Kashani, said that with

the arrival of the urealoaded

ship, the

Gwadar Port had been

opened for Afghan

transit trade.`Another

ship loaded with 16,000 tonnes of urea

and 500,000 tonnes of sugar and wheat

would reach the port next month,` Mr

Kashani told Dawn, adding that urea

consignment would be sent to

Afghanistan by road.

The opening of Gwadar Port for

Afghanistan`s import and export of goods

would create a lot of job opportunities for

the people of Gwadar and Makran.

`We are happy to see start of trade

activities at the Gwadar Port which will

improve the living standard of the local

people,` Muhammad Essa Baloch, who

runs a small business in the area,said. He

said that the opening of the port would

also help the transport sector to flourish in

the area and would provide jobs to the

local people.


TRADE CHRONICLE

DP World successfully concludes acquisition of

TIS container terminal, Ukraine

Dubai-based provider of worldwide smart

end-to-end supply chain logistics, DP

World, with a global network of 123

business units in 54 countries, has

announced the completion of its

acquisition of 51% stake in TIS Container

Terminal in the Port of Yuzhny, Ukraine.

This follows satisfaction of specific

conditions including confirmation of

regulatory approval from the relevant

government authorities.

This project will be DP World's second

partnership with TIS shareholders, the first

DP World joins with tradeLens

to digitise global supply chains

DP World, a leading enabler of global

trade, has completed the early stages of

integration with TradeLens, a blockchainbased

digital container logistics platform,

jointly developed by A.P. Moller -

Maersk (MAERSKb.CO) and IBM

(NYSE: IBM).

TradeLens brings together data from

the entire global supply chain

ecosystem including shippers, port

operators and shipping lines. It also

aims to modernise manual and paperbased

documents, replacing them

with blockchain enabled digital

solutions.

For DP World the data from its

integration with TradeLens will improve

operational efficiency with earlier visibility

of container flows across multiple carriers.

Such visibility includes confirmation of the

transport modality that follows the port

stay for each container, which in heavy

transhipment or rail ports enables better

yard planning. It will also expand the

capabilities of DP World's digital platforms

created to move online the management

of logistics. The DF Alliance, SeaRates,

being their very successful

partnership in the P&O Maritime

Ukraine which provides harbour

towage services in the principal

Black Sea ports in the Ukraine.

The Ukrainian container market

with growth of over 20% in 2019

is an attractive market to enter.

TIS Container Terminal with

excellent maritime and landside

connectivity including the market leading

rail connectivity is an ideal facility for DP

World in the country.

Following DP World's acquisition of

SeaRates.com, a digital platform that

enables customers to transport cargo

worldwide, along with LandRates.com

and AirRates.com. DP World has also

created the Digital Freight Alliance which is

an online association that brings freight

forwarders globally onto one platform,

giving them access to new tools, routes

LandRates and AirRates enable shippers

to move cargo to and from anywhere at

the click of a mouse, across DP World's

network and beyond.

Sultan Ahmed Bin Sulayem, Group

Chairman and Chief Executive Office of

DP World said: "Our decision to team up

with TradeLens is driven by our vision for

intelligent logistics, reducing costs and

creating value. DP World is working to

deliver integrated supply chain solutions

to cargo owners, backed by our global

network of ports, terminals, economic

zones and inland operations. By working

with TradeLens we will accelerate the

digitisation of global trade. Modernising

the processes by which logistics operate

is critical to building more robust and

and services, and enabling them to do

more business anytime anywhere, which

can be harmonised with DP World's

Ukraine footprint. Under the terms of

agreement, DP World has acquired a

majority stake and will take control of the

terminal operations going forward. DP

World will be a key player in the region and

will look to expand the catchment of the

terminal using its market leading rail

connectivity. Commenting on this

important step forward, Sultan Ahmed Bin

Sulayem, Group Chairman and CEO of

DP World, said, "Today ushers in a new

and promising era, as we expand our

global portfolio in Ukraine. We are excited

about this important milestone and this

acquisition supports our long-lasting

commitment to enabling global trade. This

acquisition establishes DP World in a

highly attractive market, we look forward

to contributing our experience, expertise

and resources to the continued

development and growth of the TIS

container terminal. In doing so we will look

to build on and expand the commercial

success that TIS Container terminal has

achieved".

more efficient supply chains which will

help economic development and

generate more prosperity."

"It is very encouraging to see the

continued adoption of the TradeLens

platform among global logistics players as

it helps global supply chain customers

expand and explore the benefits of

digital documentation flows. In turn,

the broadened geographic scope of

t h e p l a t f o r m p r o v i d e s n e w

o p p o r t u n i t i e s f o r Tr a d e L e n s

ecosystem participants to innovate

and develop digital offerings on the

platform," said Vincent Clerc, CEO of

Ocean and Logistics, A.P. Moller -

Maersk.

"At its core the TradeLens business

model is an open and neutral platform

to spur collaboration and digitisation

between all parties in the supply chain

ecosystem. We are excited to welcome

DP World and eagerly await the creation

of new potential ways of working for

shippers and consignees in global trade.

With 4 of the 5 largest global port

operators actively engaged with

TradeLens, the coverage of the

ecosystem continues to expand rapidly,"

said Mike White, CEO GTD Solutions and

Head of TradeLens.


People & Events

Shahera Shahid assumed charge as

PIO Press Information Department

Before joining

h e r n e w

assignment,

Ms Shahid, a

G r a d e 2 1

o f f i c e r o f

I n f o r m a t i o n

Group, was

t h e p r e s s

secretary to

t h e p r i m e

minister since August 2019.

Ms Shahid had also served as the

Director General Directorate of Electronic

Media and Publications (DEMP) and as

the Head of the Pakistan Broadcasting

Corporation (PBA).

Shahera Shahid is the second female

PIO of Pakistan after Ms Rizwan Khan,

who was posted as PIO on April 29,

2008. The appointment of new PIO

comes within days after the change of

guards at the top level in the information

ministry as senator Shibli Faraz has been

made Minister for Information and

Broadcasting and retired Gen Asim

Bajwa as the Special Assistant to Prime

Minister on Information.

Shakeel Ahmed Mangnejo

assumes the charge

of Chairman PNSC

I n p u r s u a n c e o f

Establishment Division

N o t i f i c a t i o n M r.

S h a k e e l A h m e d

Mangnejo an officer of

P a k i s t a n

Administrative Service

BS-21 has assumed

t h e c h a r g e o f

Chairman Pakistan National Shipping

Corporation (PNSC).

He has replaced Mr. Rizwan Ahmed, who

served as PNSC Chairman for more than

two years from 04-12-2017 to 08- 06-

2020.

Haleeb Foods appoints

Syed Mazher Iqbal as CEO

The Board of directors of Haleeb Foods

Limited (HFL) appoints Syed Mazher

Iqbal as CEO effective

April 2020; Mr. Iqbal is a

certified director and a

fellow member of the

Institute of Chartered

Accountants of Pakistan.

Mr. Iqbal brings to HFL

over three decades of

s e n i o r m a n a g e m e n t

experience of local and

multinational companies

including manufacturing

concerns as well as

c o m m e r c i a l a n d

investment banks. He has been

associated with the company previously

and under his leadership during 2015-17

Haleeb Foods achieved historical

milestones of sales and profitability

records.

Malik, Ghulam Ali nominated

President, VP of SAARC Chamber

Prominent businessmen including

Iftikhar Ali Malik and Haji Ghulam Ali

have been nominated as President and

V i c e P re s i d e n t s o f

SAARC Chamber of

Commerce and Industry,

respectively.

According to a press

release issued here by

Federation of Pakistan

Chamber of Commerce

and Industry (FPCCI),

n o m i n a t i o n o f H a j i

Ghulam Ali and Ifitkhar

Malik was made with

consensus.

Other office bearers of the association

include Wali Muhammad, Shaheen

Nadeem, Khawaja Shahzeb Akram,

Zubair Ahmad Malik, Hamid Akhtar

Chattah, Haji Nasim ur Rehman, Amir

Atta Bajwa and Dr Shela Akram who

Mr. Iqbal was also instrumental in

financial and operational turnaround of

two large listed manufacturing

companies namely Pioneer Cement

Limited and General Tyres Pakistan

Limited. Some of the other companies he

has previously worked for, include,

Kuwait Finance House -

an Islamic bank, Kuwait

N a t i o n a l P e t r o l e u m

C o m p a n y , O r i x

Investment Bank and ICI

Pakistan Limited.

Haleeb Foods Ltd. is one

of the pioneers of the dairy

sector in Pakistan. With a

strong emphasis on

nutrition, health and wellbeing

of its consumers,

Haleeb Foods Ltd. uses world-class

dairy processing methods. Their portfolio

includes many of Pakistan's favorite

brands, comprising of a diverse portfolio

of delicious and quality products ranging

from milk to juices and pure ghee.

were nominated as executive

members. While Qaiser Khan Daudzai,

Muhammad Shoaib Khan, Maryam

Sabah and seven others were

nominated as General Assembly

Members. These nominations were

made in pursuance of ruling of

S u p r e m e C o u r t o f

Pakistan given in a

petition filed by Daud

K h a n A c h a q z a i ,

challenging nominations.

Talking to newsmen

outside Supreme Court,

H a j i G h u l a m A l i

expressed the desire of

m a k i n g e f f o r t s o n

SAARC platform for

solution of problems

being faced by business community of

the country.

He said it is a matter of great pride for

Khyber Pakhtunkhwa province for

getting representation in SARRC

Chamber of Commerce and Industry.


TRADE CHRONICLE

Syed Masood Hashmi

elected President of

(MAP) unopposed

Recipient of Tamgha-e-Imtiaz, Syed

Masood Hashmi, Chief Executive,

Orientm McCann, has been elected

unopposed as President of Marketing

Association of Pakistan (MAP) at the

50th Annual General Meeting.

This is the 12th time that Syed Masood

Hashmi was elected as unopposed

President of MAP.

Previously, he also held the position of

President of the International

Engro commits PKR 40 million to enhance

COVID-19 testing capacity in Punjab

As part of the PKR 1 billion Hussain

Dawood Pledge, Engro Foundation – the

social investment arm of Engro

Corporation – has provided an additional

PKR 40 million to extend its partnership

with Shaukat Khanum

Memorial Cancer Hospital

and Research Centre for

expansion of COVID-19

t e s t i n g c a p a c i t y i n

Southern Punjab.

In the first phase of the “Southern Punjab

Screening Program - Free of Cost”

campaign, Engro had provided PKR 20

million in financial assistance to Shaukat

Khanum Memorial Cancer Hospital &

Research Centre to launch COVID-19

testing interventions across Southern

Punjab. Under the initiative, 2400 tests

were completed in the major cities of

Multan, Dera Ghazi Khan, Layyah,

M u z a ff a r g a r h , B a h a w a l p u r a n d

Bahawalnagar. The reported positive

cases were advised to seek medical

advice and follow Government’s

recommended protocols.

In the second phase, PKR

40 million will be utilized by

S h a u k a t K h a n u m

Memorial Cancer Hospital

& Research Centre to

leverage its existing

network of pathology

laboratory collection centres to conduct

4700 more tests in these same cities,

which have shown a high COVID-19

incidence rate.

According to Ghias Khan, President &

CEO of Engro Corporation, “We are

pleased to extend our partnership with

Shaukat Khanum Hospital based on

successful results of the COVID-19

testing campaign’s first phase.

Masroor Mahmud appointed

as GE's CEO for Pakistan

Advertising Association (Pakistan

Chapter) for 2 years. He has been the

President of the Management

Association of Pakistan for two years

and also held the position of the

elected Head of the Arts Council of

Pakistan, for 3 consecutive terms

moreover, he also served as Chairman

o f t h e P a k i s t a n A d v e r t i s i n g

Association. His father, late S. H.

Hashmi was pioneer of the advertising

industry in Pakistan.

Other elected members of MAP

include: Vice President Imran Ahmad,

Honorary Secretary Amer Pasha and

Honorary Treasurer Ali Hasan Naqvi.

Elected council members include Mrs

Shamsah Virani (AKUH), Mr Amer

Pasha (Marketing & Fintech

Consultant), Syed Talib Karim (IoBM),

Mr Sikander Sultan (Shan Foods), S.

M. Salahuddin (Ehtesham Process).

GE has announced the

appointment of Masroor

Mahmud as its CEO for

Pakistan. He is mandated

with driving the company's

growth in the country and

aligning business strategy

across all GE sectors with

the government's vision for

development.

In addition, Masroor will

focus on enhancing talent

d e v e l o p m e n t , e n s u r i n g r i s k

management, and building a strong GE

brand, through long-term, strategic

partnerships.

A GE veteran of 14 years, Masroor has

held several leadership roles in finance,

commercial, and operations, working

across the Middle East, Africa, Europe

and the U.S.

He began his career with GE in 2006,

when he joined the Financial

Management Program in Europe.

Subsequently, he was selected in the

Corporate Audit Staff where he

progressed to take on

m u l t i p l e g l o b a l

a s s i g n m e n t s i n t h e

A v i a t i o n , P o w e r ,

Corporate, and Research

divisions.

Nabil Habayeb, President

and CEO for GE in the

Middle East, North Africa

and Turkey, said that "GE

has had a presence in

P a k i s t a n s i n c e t h e

country's formation and has partnered

on ambitious infrastructure projects in

energy, healthcare, and transportation

sectors.

With the focus of the country on

achieving self-sufficiency and boosting

growth, GE is focused on supporting

their partners in the public and private

sectors with advanced technology and

service delivered by strong local teams.

Masroor has a proven track record and

competencies in driving collaboration

and innovative solutions, which will be a

strong asset in creating additional value

to their customers and the economy.


Telecommunication News

USF awards contract to Telenor Pakistan for

providing hi-speed Broadband in Sanghar

The Universal Service Fund (USF) awarded contract

worth PKR 588 Million to Telenor Pakistan for

providing hi-speed broadband in Sanghar Lot

(Sindh). Federal Minister IT& Telecom, Syed Amin ul

Haque inaugurated the Next Generation

Broadband for Sustainable Development project in

Sanghar (Districts of Sanghar and Umerkot) in a

ceremony held at Ministry of IT & Telecom recently.

The contract was signed by Haaris Mahmood

Chaudhry, CEO USF and Irfan Wahab Khan, CEO

Telenor Pakistan. Secretary IT, Shoaib Ahmad

Siddiqui was also present at the ceremony.

PTC Group (Holding company) is

composed of PTCL (fixed line,

broadband and other telecom services)

and three wholly owned subsidiaries,

namely Ufone, Ubank and DVcom that

provide telecommunication, financial and

broadband internet services in Pakistan.

Ufone is a cellular service provider and

was among the first telecom operators in

Pakistan to provide 3G services. It has

international roaming facility and

coverage in more than 10,000 locations

as well as a mobile financial services

wing. Ubank on the other hand, is also a

wholly owned subsidiary providing

Microfinance (micro loans, deposit

products) and Branchless (Bill payments,

Money transfers) banking services with a

network of over 201 branches, c.840,000

deposit customers and c.314,000 loan

customers.

PTC derives its revenue from three key

segments, namely retail, corporate and

wholesale. The retail segment comprises

Wire line, Voice and Wireless data

services. The company acts as the

backbone of telecom services within the

country by providing wholesale services

based on IP gateway, bandwidth and

other line services where the key clients

include Jazz, Zong, Telenor, Wi-tribe etc.

The company has bouquet of services

that fall under the corporate sector

ranging from banking to health and

PTCL:

a review of performance

education. It provides vertical, cloud and

business connectivity solutions by

working alongside partners such as IBM,

Huawei, and Microsoft.

In terms of technological infrastructure,

PTC has 3,000 BTS sites, 6,200 MSAGs,

49,600km fiber network and 333 NGN

e x c h a n g e s . M a j o r i t y o f P T C ’s

shareholding is vested with GoP;

whereas Etisalat holds 26% stake

alongwith management control.

Key result highlights CY19:

PTC posted a consolidated CY19 NPAT

of PKR 2,377mn (EPS: PKR0.47) down

by 58% yoy, compared to NPAT of PKR

5,710mn (EPS: PKR1.12) during CY18.

On a standalone basis, NPAT clocked in

at PKR6,347mn (EPS: PKR1.24) down

15% yoy from 1/2 PKR7,422mn (EPS:

PKR1.46). Topline grew by 2.1% yoy for

the group where all operating companies

contributed to the growth. Ufone’s

revenue grew by 0.8% yoy, where

subscriber base crossed 23mn with a net

addition of 1.8mn, whereas Ubank

witnessed a revenue growth of 48% yoy

backed by an increase in deposit base of

13% and loan base by 27%. 60 new

additional branches were also added,

taking the tally to 201 branches.

On a standalone basis, PTC’s revenue

grew by 0.4% yoy. Wireline data grew by

5% yoy whereas, wireless data and voice

declined by 31% and 12% yoy,

respectively. Corporate & Wholesale

witnessed a 13% yoy increase in CY19;

however, retail dropped 3% yoy.

Fiber to the home (FTHH) observed a

172% yoy growth in revenue due to a rise

in subscriber base. The company has

been investing in upgrading delivery of its

retail services as can be seen through its

fixed assets, which have surged by

P K R 1 0 b n ; w h e re a s , c a s h a n d

equivalents have also gone down from

PKR9.5bn to PKR4.1bn during Cy19.

The company also witnessed improved

operating cash flows due to a change

from advance tax structure to a group tax

arrangement, which has yielded apparent

benefits. Covid-19 has led to an increase

in data rate; however, the data packages

are such that they don’t allow growth in

data to be monetized due to higher usage

limits, as can be observed from data

revenue which has declined by 10% yoy

during 1QCY20.

PTC has a wide multi-path and diversified

submarine network for International

connectivity with a total capacity of

2,820Tbps alongside multiple routes. It

has three existing submarine cables and

is working on a new cable from Africa

AAE-1, which would help in expanding its

footprint.


TRADE CHRONICLE

Telenor Pakistan introduces PIN IT feature in My Telenor

App to enable digital collaboration for everyone's safety

To ensure the safety of Har Pakistani,

Telenor Pakistan has introduced a new

feature called “PIN IT” in its flagship digital

platform, MyTelenor App. This feature

aims to provide users with status of

essential retail store/outlets and share the

much needed clarity that will ensure

everyone's safety during this challenging

time.

With a recent surge in Covid-19

cases, it is more important than ever

before to follow the social distancing

norms and safety precautions while

stepping out of the house.

Uncertainty has been a challenge

with regards to whether certain

outlets are open or not. To combat

this and to prevent the people from

unnecessarily exposing themselves

in search of essentials, Telenor

Pakistan has introduced the PIN IT

feature in MyTelenor App which allows

users to tag the status of outlets including

grocery stores, pharmacies, fuel pumps

and superstores for everyone to see.

Moreover, users can also view the

location and status of Telenor &

Easypaisa retailers hence bringing the

community together to help each other.

“We are proud to bring yet another

industry first initiative to ensure the safety

of millions across the country through the

PIN IT feature in MyTelenor App. At

Telenor Pakistan, we have taken the leap

to enable users to digitally come together

as a community and help each other by

sharing information to stay safe.” said

Umair Mohsin, Chief Marketing Officer

Telenor Pakistan. “MyTelenor App is a

dynamic platform that gives its users the

complete freedom over their connection

from managing their usage, bills and

Jazz continues to be the undisputed leader

of Pakistan’s telecom industry

achievement certified by Ookla four times

in a row, an independent global leader in

internet testing[2]. Recently, the Pakistan

Telecommunications Authority’s (PTA)

Quality of Service survey, also confirmed

Jazz’s network as the best in data quality,

thereby, establishing the progressive and

exponential growth in quality and speed

of Jazz’s cellular services.

offers to providing free entertainment

solutions including movies, games and

music. During these pressing times,

Telenor Pakistan has lived up to the

promise of #TelenorSaathHai by enabling

Har Pakistani.”

To use this feature, update/download My

Telenor App, open the app and go to the

PIN IT feature, select the location on the

map, add the information of the outlets,

update the status and create a pin. The

feature is not limited to Telenor

Pakistan subscribers only; all cellular

service subscribers can also benefit

from this by viewing the status of

retail outlets and stores.

With increased responsibility to

spread awareness and share

information to tackle the ongoing

crisis, Telenor Pakistan has

responded in the truest sense by

providing innovative solutions

throughout this time.

The PIN IT feature is a true embodiment of

empowerment and collective social

action enabled by Telenor Pakistan and

by using this feature, users can become a

part of the social cause of ensuring each

other's safety.

the fastest and undisputed data speeds,

which is why Jazz data is not just any 4G,

it is Jazz Super 4G.

“We take pride in pioneering innovation in

the country and bringing new

technologies to provide a more efficient

digital lifestyle to the people of our

country. We will continue to spearhead

this digital revolution, and build a larger

community of more connected,

empowered individuals,” comments Jazz

CEO, Aamir Ibrahim.

Jazz, Pakistan’s leading digital

communications company has further

cemented its position as the undisputed

telecom industry leader with a massive

on-net family of more than 62 million

subscribers including 18.2 million Super

4G users.

Ever since the launch of Jazz Super 4G in

February 2018, the company has

recorded phenomenal growth in its 4G

user base, proving Jazz to be the best in

class with the fastest 4G in Pakistan – an

As Pakistan’s No. 1 network of choice

serving over 40 million 3G and 4G data

users, Jazz is leading the country’s digital

revolution with every third Pakistani now a

Jazz subscriber. With a prodigious legacy

of over 25 years and an expansive line of

innovative product offerings that provide

everyday communications and financial

solutions to millions nationwide, Jazz

celebrates being ‘HameshaSeyNo1’.

With its unparalleled spectrum holding

and technically superior network, Jazz

continues to dominate the industry with

As a brand, Jazz has always stayed true

to its tradition of groundbreaking

excellence in service and technology. The

brand’s mantra ‘Dunya ko Bata Do’ itself

embodies a message of security,

reliability, and an urge to reach out,

connect, and engage. With more than

80% – 4G ready network and staunch

support towards digitizing various

aspects of the customer’s life, Jazz

continues to bring unparalleled efficiency

and convenience to its valued customers.


Banking & Insurance

Shazad Dada appointed

UBL CEO

I n a l a t e s t

c o r p o r a t e

development,

a seasoned

banker and

capital market

professional,

Shazad Dada

h a s b e e n

appointed as

the President

a n d C h i e f

Executive Officer (CEO) of United

Bank Limited (UBL) with effect from

July 1, 2020 for a period of three

years. He is currently the CEO of

Standard Chartered Bank (Pakistan)

Limited, a position he assumed in

October 2014.

Dada has around 30 years of diverse

experience with renowned financial

institutions in the United States and in

Pakistan. He has been at the helm of

several landmark deals executed on

behalf of Government of Pakistan,

including Ministry of Finance, and

large corporate clients.

An honours graduate from University

of Pennsylvania with Bachelors of

Science and Bachelors of Arts

degrees, Dada did his MBA from the

Wharton Business School.

In October 2014, Dada moved to

Standard Chartered Bank (SCB) as its

CEO which has grown substantially

since then. In 2019, the SCB attained

3rd position in terms of profitability

within the country's banking sector,

posting record profits for the franchise

since incorporation.

During his tenure at the SCB, the bank

increased its total assets, net loans

and deposits by over 50 percent while

undertaking branch optimisation and

growing the bank's digital presence.

NBP announces financial

results for 9MFY20

A meeting of the Board of Directors of

National Bank of Pakistan

was held recently to approve

the financial statements of

the bank for the three-month

period ended on March 31,

2020.

Total income of the Bank

amounted to PKR 24.87

billion which is 4.8% higher

than PKR 23.73 billion

earned during the corresponding threemonth

period last year. For this period, net

interest income closed at PKR 16.57

billion, whereas the non-mark-up /

interest income closed at PKR 8.30

billion, up by 7.2% and 0.4% respectively.

The Bank's profit before provisions and

write-off amounted to PKR 11.06 billion,

being 0.7% higher than PKR 10.98 billion

for the similar period last year. The aftertax

profit for the period under review

Ali Habib appointed HBL’s

Chief Marketing &

Communications Officer

HBL is pleased to announce the

appointment of Mr. Ali Habib as the Chief

Marketing & Communications Officer. Ali

is currently leading the Bank’s Corporate

Affairs function. He will now also lead the

Bank’s marketing efforts, in addition to

his current portfolio. Ali’s appointment,

effective immediately, reflects the Bank’s

strategy of developing and promoting

talent from within.

C o m m e n t i n g o n A l i H a b i b ’s

appointment, Sagheer Mufti, Chief

Operating Officer-HBL said, “We are

delighted that Ali is taking on this critical

closed at PKR 4.12 billion, lower by 1.5%

as against PKR 4.18 billion earned during

the corresponding period of 2019. Drop in

after-tax profit is attributed to higher

provision charge and some increase in

operating expenses.

Going forward, the Bank's business will

focus around innovatively addressing

development finance needs through

reaching and supporting underserved

sectors including SME, Microfinance,

Agriculture Finance and finance for Micro-

Housing on a priority basis. Given the

slow growth of brick and mortar relative to

digital channels, they are realigning their

selves with emerging e-banking realities

with accelerated attention to Digital

Banking solutions.

role for HBL. Ali knows the HBL brand

well, given he is already part of the team.

He brings a rich experience of having

worked in similar roles not only in other

leading banks but also outside the

financial industry. His skills in managing

multi-disciplinary teams and knowledge

of the financial industry is a bonus. We

are confident that under his leadership,

HBL will continue to evolve its brand.”

Ali joined HBL in November 2018 as

Chief Corporate Communications

Officer. Since his joining, he has played

an integral role in building HBL’s profile

externally and developing and enhancing

various communication channels across

the Bank. Ali’s career span’s is 30 years,

in both local and international markets.

During his career, he has been

associated with numerous blue-chip

organizations like Procter & Gamble

(P&G), Reckitt Benckiser, Standard

Chartered, NIB and UBL.

Ali is an alumnus of IBA, Karachi and

Aitchison College, Lahore.


TRADE CHRONICLE

Meezan Bank announces

good results for the 1Q2020

The Board of Directors of Meezan Bank in

its meeting, held on May 05, 2020

approved the financial statements of the

Bank for the quarter ended on March 31,

2020. The meeting was presided by Mr.

Riyadh S.A. A. Edrees - Chairman of the

Board; Mr. Faisal A. A. A. Al - Nassar –

Vice Chairman of the Board was also

present.

The Bank maintained its deposit base at

Rs 928 billion with market share of more

than 6% in the banking industry. Meezan

Bank is the 6th largest bank in Pakistan

with a network of 774 branches in 231

c i t i e s , c o m p l i m e n t e d w i t h a

comprehensive array of digital services,

including Internet Banking, Mobile App,

and other Alternate Distribution Channels

for delivery of seamless Shariahcompliant

banking services to its

customers across Pakistan and around

the globe.

The Bank's net spread grew by 66%

primarily due to higher volume of average

earning assets and higher underlying

Policy Rate, while the Bank's non-funded

income grew by 64% mainly due to higher

foreign exchange income and gain on sale

of securities of Rs 680 million.

Administrative and other operating

expenses increased to Rs 7.1 billion from

Rs 5.5 billion in corresponding period last

year, primarily due to costs associated

with opening of 98 new branches since

March 2019. The Bank's financing

portfolio decreased slightly from

December 2019 mainly due to overall

slowdown in economic activity and

repayment of seasonal financing.

Recognizing stresses in certain sectors of

the economy due to the COVID -19

outbreak, an additional General Provision

of Rs 1 billion was approved by the Board

against any potential non-performing

financings, bringing the Bank's nonperforming

financings coverage ratio to

147% - the highest in the banking industry

while its infection ratio, at less than 2% is

one of the lowest in the industry.

The Bank has taken several initiatives to

safeguard the health of its employees,

their families and its customers during the

current pandemic, including activation of

Business Continuity Plans, deployment of

almost 70% Head Office staff to work

from alternate sites or from the safety of

their homes and mandatory use of face

masks at all times in all its premises so as

to minimize the risk of exposure to the

disease.

Issuance of PKR 200 bn Pakistan Energy Sukuk II – Islamic finance delivers

another milestone transaction for Pakistan in difficult times

through Pakistan Stock Exchange (PSX).

This issue could not have been possible

without the support of the Securities and

Exchange Commission of Pakistan

(SECP), State Bank of Pakistan (SBP) and

Ministry of Finance also played a

significant role in the successful

conclusion of the transaction.

Meezan Bank, Pakistan’s first and largest

Islamic bank has played a leading role in

successfully concluding the issuance of

Pakistan Energy Sukuk (PES) II worth

approximately PKR 200bn by Power

Holding Limited (PHL), a public sector

entity fully owned by the Ministry of

Energy and Government of Pakistan. The

milestone transaction, powered by the

key Islamic finance players of the country

was concluded successfully in May 2020.

The Sukuk aims to help the Government

in addressing the challenges for resolving

circular debt in the country’s power

sector. Meezan Bank acted as an

Investment Agent and Trustee for this

issue. In addition, Meezan Bank was also

the Joint Financial Advisor along with

Dubai Islamic Bank Pakistan and Bank

Alfalah Islamic. This is the second

issuance of this series of Sukuk, bringing

the total size of Shariah-compliant Energy

Sukuk to approximately PKR 400bn.

National Bank Limited along with Taurus

Securities Limited led the Book Building

process to conduct Pakistan’s first and

largest book building for a Sukuk issue

The Sukuk issue was 1.7 times oversubscribed

and the rate of return paid by

PHL was very competitive and saved the

Government significant financing cost.

The Sukuk issuance is a strong indicator

of the potential and feasibility of Islamic

finance and promises immense potential

for delivering large ticket deals to the

Government for the benefit of the

economy. It will also enable the

Government to move away from interestbased

borrowing and shift towards

Shariah-compliant financing as per the

requirement of the constitution of

Pakistan.

The underlying Shariah Structure of the

Sukuk is based on Ijarah Sale and Lease

Back. Transaction is structured for 10

years, with six monthly profit (rental)

payments at a rate equivalent to 6 Month

KIBOR -10 bps, as determined through

the book building process. The entire

issue would be redeemed at maturity i.e.

after the completion of 10 years.


TRADE CHRONICLE

Transfast partners with Habib Bank Ltd

for global remittances

Transfast, a leading cross-border

payments service provider with

presence in over 140 countries, has

partnered with Habib Bank Limited

(HBL), the largest commercial bank with

over 1700 branches in Pakistan, to

facilitate expatriates around the globe

on sending money to Pakistan.

The remittance facility between

Transfast and HBL is now available to

the Pakistani expatriates globally. This

partnership further strengthens

Transfast’s network in Pakistan and

provides an option to customers to

receive money from over 1700

branches of Habib Bank across

Pakistan.

“HBL is one of the most esteemed

financial institutions in Pakistan and it is

an honor to partner with them. Transfast

is fully committed to offer competitive

pricing, fast transfer of funds and

personalized customer engagement,”

said Samir Vidhate, SVP & MD,

Transfast. “Through this partnership we

will provide our Pakistani customer base

with more convenient and accessible

ways to collect money from any branch

of HBL in Pakistan and to send money

to any bank account in the country.”

Faisal Noor Lalani, Head International

Banking, HBL remarked ‘’I would like to

take this opportunity to thank Mr.

Vidhate for coming to Pakistan. I look

forward to giving full support to the

entire teams of both the institutions in

my capacity, to make our partnership

fruitful. This is a proud moment for HBL

as this new arrangement will be

beneficial to all the customers who look

to make fast international money

transfers to HBL Pakistan. Together, we

look forward to providing excellent

services to our customers with

commitment to banking excellence for a

better tomorrow.’’

Remittances account for 6% of

Pakistan’s GDP and the government

has offered several incentives to

encourage even more cash flow into the

country. According to the initial

estimates from the State Bank of

Pakistan, the country received a record

$21.84 billion in remittances in 2019.

That number is expected to go up as

analysts predict that more than eight

million overseas Pakistanis will continue

to send money back home with

remittances poised to hit $23 billion.

Bank Alfalah innovates

to assist Ehsaas beneficiaries

As the Government of Pakistan

continues to assist beneficiaries across

the country under the Ehsaas

Emergency Cash Disbursement

Programme 2020, Bank Alfalah has

introduced an innovative solution to

cater to beneficiaries whose biometric

verification is not possible for multiple

reasons, thus ensuring support for such

beneficiaries for cash withdrawal from

their account.

Many beneficiaries of Gilgit-Baltistan,

Khyber Pakhtunkhwa, and Azad

Jammu & Kashmir as well as migrated

beneficiaries from these regions who

were facing problems in biometric

verification can now visit any of the

designated Bank Alfalah branches open

to facilitate them with their CNIC and

phone. The CNIC number is verified

using NADRA’s Verisys system, and a

two-part One-Time Password (OTP) is

generated. Entering the code and the

Verisys report into the database

confirms the identity of the Ehsaas

beneficiary and subsequently they can

immediately withdraw their funds from

their account from the branch itself.

“We understand that the demographics

of our remote areas are diverse, and we

acknowledge the need to leverage

technology to assist all

our beneficiaries,” said

Yahya Khan, Group

H e a d - D i g i t a l

Banking. “With this

f a c i l i t y, e l d e r l y

beneficiaries or those

w i t h a p h y s i c a l

disability can continue

to benefit from the

G o v e r n m e n t ’ s

scheme; Bank Alfalah is proud to be an

innovator grounded in empathy for its

citizens in this challenging time.”

The Ehsaas Emergency Cash

Disbursement is claimed to be the

largest social welfare fund in Pakistan’s

history, valued at over PKR 144 billion.

Bank Alfalah, an exclusive partner of the

program serving the northernmost

areas of the country, has so far

disbursed over PKR 28.3 billion.


TRADE CHRONICLE

Leading German Private Sector

Development Financier

signs LOI to acquire stake in

TPL Insurance

TPL Insurance Ltd, the insurance arm of

TPL Corp and Pakistan's first direct

insurance company, has signed a Letter of

Interest (LOI) with DEG, Deutsche

Investitions- und Entwicklungsgesellschaft

mbH (“DEG”), a wholly owned subsidiary

of KfW Group based in Cologne,

Germany. The proposed transaction of

acquisition of a minimum 20% equity in

TPL Insurance shall be executed subject

to approval of the Board of Directors',

Shareholders', Securities and Exchange

Commission of Pakistan and other

regulatory bodies.

DEG is reentering the Pakistani market,

and at this time of a pandemic, which will

prompt companies to re- look at Pakistan.

Working with the experience and expertise

of DEG as a major institutional investor,

TPL Insurance will reap the benefits of

customized solutions in all respectable

areas including, but not limited to best

corporate governance practices, business

support, risk management, and

environmental and social matters.

Muhammad Aminuddin, CEO, TPL

Insurance said, “This is the beginning of a

promising future for our organization.

DEG, with a portfolio of EUR 8.6 billion and

a geographic presence in over 80

countries, finances enterprises that focus

on lasting success and operate

responsibly – just as we do. It is indeed our

privilege to play a pivotal role in

strengthening Pakistan's relationship with

Germany, creating jobs to stimulate the

economy and continuing to offer value

added services to our customers. I am

confident that our partnership with DEG

will not only bring growth and prosperity

for Pakistan, but also tell a story about

TPL's commitment to growth and our

mission to provide unmatched service and

product innovations to create sustainable

value for our stakeholders.”

JS Bank witnesses significant

growth in profitability

Growing from strength to strength, JS

Bank reported profit before tax of PKR

628.5 million for the quarter ended March

31, 2020 as compared to profit before tax

of PKR 54.7 million over the

corresponding period last year, an

i n c r e d i b l e

1000% increase.

P r o f i t a b i l i t y

s h o w e d a

marked increase

primarily due to

markup and commission income, FCY

income and gain on sale of securities. The

breakup value per share of the Bank as of

March 31, 2020 is PKR 13.9 with the

earnings per share of PKR 0.29.

In addition, the Bank’s deposits grew to

PKR 379.25 billion whereas advances

level maintained at PKR 235.1 billion,

during the current quarter, which reflects

Strengthening its commitment to

supporting the Pakistani government

during the Covid-19 crisis, Bank Alfalah

has joined forces with Mastercard and

National Bank of Pakistan (NBP) to provide

a safe online donation portal to support

those in need during the pandemic.

Through the platform, people can now

securely donate to Prime Minister Imran

Khan's Covid-19 Pandemic Relief Fund

2020 from anywhere in the world by using

their debit or credit cards.

The initiative is in line with the State Bank of

Pakistan's (SBP) guidelines for banks to

take necessary steps to facilitate

donations to the Prime Minister's COVID-

19 Pandemic Relief Fund 2020.

Commenting on the initiative, Mehreen

Ahmed, Group Head Retail, Bank Alfalah

said: "Bank Alfalah understands the

difficulties that people across Pakistan are

a continued focus of the Bank on prudent

growth and core business activities.

Further, investments increased from PKR

142.6 billion to PKR 183.2 billion during

the same period, up by 28.5%.

With the banking industry facing

continued challenges due to the

economic and financial impact of COVID-

19, JS Bank is revisiting its business

strategy to cater

t o c h a n g i n g

ground realities.

E m p h a s i z i n g

WOW customer

experience, the

B a n k i s

realigning itself into an agile, digital

focused bank targeting well-defined

target markets through a mix of

innovative products and services.

Committed towards its role as a catalyst

towards the progress and prosperity of

Pakistan, the Bank is continuing its

journey of success through shared value

creation.

Bank Alfalah, NBP and Mastercard

unite to facilitate donations

facing in the prevailing circumstances, and

we aim to go beyond our call of duty in

order to help the government during these

unprecedented times."

“As a leading global payments provider,

we're equipped with the technology to

help people during these difficult times,"

said Magdy Hassan, Country Manager -

Egypt and Pakistan, Mastercard. "This is

why we've recently made several

commitments towards combating the

spread and mitigating the impact of Covid-

19, including our most recent commitment

to connect 1 billion people to the digital

economy by 2025" she further added.

Commenting on this partnership Amin

Manji, Head of Technology and

Digitalization NBP said: "National Bank of

Pakistan is The Nation's Bank and has

always led government initiatives

especially those involving social well-being

of the underprivileged. We urge individuals

to donate generously to the PM's COVID-

19 Relief Fund and help those amongst us

rendered destitute as a result of the

Pandemic."


Cement Industry

Pakistan Economic Survey reviews

the performance of the cement industry for FY20

the region increased by 14.3 percent,

from 0.351 Mt in March 2019 to 0.401

Mt in March 2020.

Pakistan government has released

Economic Survey for the year FY 2019-

20 on the eve of Federal Budget FY

2020-21. The survey reviews

government incentives for the cement

industry, account of dispatches,

export, and mining lease issues.

Pakistan labeled the construction and

cement industry a significant source of

growth and investment in the future.

The gover nment has already

introduced an incentive package for

the construction industry in April 2020,

anticipating to help increase local

cement consumption. Package

includes an amnesty scheme, tax

exemptions, and PKR 30 bn subsidy

for Naya Pakistan. Furthermore, the

construction sector was given industry

status.

To promote investment and to boost

the trust of investors, the Punjab Mines

& Minerals Department has lifted a ban

on grant/renewal of mining concession

to the cement sector after almost five

y e a r s ! C u r re n t l y, a ro u n d 2 6

applications are being processed for

the grant of mining concessions of

cement raw material.

Similarly, Balochistan province has

large deposits of Limestone, Gypsum,

and Coal (raw material for cement

manufacturing), and great investment

opportunities for the installation of

cement factories are available. Seven

applications for grant of exploration

and Mining Lease are under process for

cement raw material in Director

General of Mines & Minerals office in

Quetta. After completion of the study

reports, the licenses will be granted.

Dispatches/ Export of cement

Pakistan cement industry has reported

healthy growth during the first nine

months of the current fiscal year, July-

March FY2020. Cement sector

performance is backed by the

increased exports mainly clinker, which

went up by 100 percent during the

period. Domestic demand for cement

has picked up the pace as the

government increased the

development expenditures,

and improved remittances

inflow may have uplifted

private construction activities.

COVID-19, as expected, had

its impact on domestic

consumption of cement

industry that declined by 16.7

percent in March 2020.

Exports also grew at the

slowest pace of 5.27 percent

as the global markets are

equally under pressure due to the same

reason. Total dispatches (local and

shipping) in March 2020 declined by

14.25 percent to 3.721 Mt from 4.340

Mt in March 2019. The pressure was

more substantial from the domestic

market, where the uptake was reduced

3.214 Mt in March 2020 from 3.858 Mt

in March 2019. Exports though inched

up from 0.482 Mt in March 2019 to

0.507 Mt in March 2020.

Northern Region

Domestic consumption in the northern

part of the country declined by 10.48

percent as it was only 2.749 Mt in

March 2020 compared to 3.071 Mt in

the same month last year. Exports from

northern mills also declined by 18.9

percent and reached to 0.107Mt in

March 2020 from 0.132 Mt in March

2019.

Southern Region

Domestic dispatches from mills in the

southern part of the country reduced

by 41 percent and reached to 0.464 Mt

in March 2020 as compared to 0.787

Mt in March 2019 while exports from

Cumulative Dispatches

Total local dispatches during Jul –

March FY20 increased by 3.83

percent, to 30.588 Mt from 29.461 Mt.

Total exports rose to 6.446 Mt (25.63

percent increase) from 5.131Mt during

the same period last year.

The northern region entirely drove the

growth in local sales while the south

contributed to export performance.

According to the APCMA, local

dispatches from the north increased by

12.09 percent, while the southern

region showed a decline of 26.8

percent during July altogether opposite

to local sale. Exports from the south

increased whereas, the northern part

came up with a 3.70 percent decline

during the period.

The export of cement witnessed a

decline of 5.1 percent in value, and its

quantity increased by 7.3 percent

during the period under review.

However, Pakistani cement exports

this year had become more diverse in

terms of market access than last year,

when India was the principal importer

of Pakistani Portland Cement,

importing one-fourth of Pakistan's

quantum cement exports. However,

pulled down by low unit prices.

(A Chronicle Report)


Automobile News

Auto Industry sales cross

the 100k mark in 11MFY20

Pakistan Auto industry sold a mere

4,527 units in May 2020 (down

75%yoy), bringing the 11M sales to

103,175 units (down 53% yoy). This is

a recovery over the previous month’s

sales of 39 units (no cars sold in April),

due to the easing of lockdown from

11th May onwards. PSMC led the

industry sales with 3,600 units sold (

35% up from March sales), while both

INDU and HCAR saw sales decline by

79% compared to March sales.

INDU sold a mere 294 units of Corolla

and an underwhelming 167 units of the

highly-awaited Yaris. Hilux sales were

down by 79% reaching a mere 72

units, compared with March (85%

decline yoy), while Fortuner sales

declined to only 14 units. This brings

INDU’s monthly sales to a total of 547

units (down by 88% yoy). HCAR sold

326 units in the month of May, with

Civic and City sales of 263 units (down

by 90% yoy and 80% lower compared

to March). BR-V sales declined by 84%

yoy to 63 units in May. Recent price

hikes during the lockdown, by both

INDU and HCAR, evidently led

consumers to delay the purchasing of

premium / luxury cars, in our view.

PSMC sold 3,600 units in May backed

by impressive Alto sales of 1,304 units (

48% up from March). Cultus sales rose

30% compared with March (down by

64% yoy) to 922 units, while Wagon-R

sales were up 25% compared to March

(down by 86% yoy) to 386 units. This

may be due to the pent-up demand for

the economy segment; notably.

Auto industry neglected

completely in budget

The government has completely

neglected the auto industry in the federal

budget 2020-21.

Commenting on the

federal budget 2020-21

announced at National

Assembly on June 12,

2020, Mashood Ali

Khan, Director Export,

Mehran Commercial

Enterprises and Former

Chairman Pakistan

Association of Automotive Parts &

Accessories Manufacturers (PAAPAM),

said that the budget was not promising to

the manufacturers.

He said that the auto industry was based

on three triangles like Auto Parts

Manufacturers (APM), Original Equipment

Manufacturers (OEM) and Registered

Tractors’ sales further decline

in May on MoM basis

The sales of tractors witnessed further

decline in May on a month on month basis

due to the non-notification of the subsidy

announced by the government.

According to the industry figures released

by Pakistan Automotive Manufacturers

Association (PAMA), tractors sales were

3,599 units in May 2019 while it declined

to just 1,843 units in May 2020. Last

month, the government announced a

sales tax subsidy on locally manufactured

tractors as part of the coronavirus relief

package.

“The government took a good step to

announce subsidy as a relief to the

industry in these testing times but this

announcement has not been notified yet.

Hence, the customers held back their

money waiting for the prices to decrease

after the subsidy,” sources said.

“Resultantly, tractor sales got hit badly

and this good step of the government has

become counterproductive which may

Dealers Network (RDN). He added that

APM requested the government to abolish

ACD, ASD from imported raw materials,

while OEM suggested to remove FED and

minimum turnover tax from 1.5 percent to

0.5 percent. Morever RDN urged to defer

CNIC at the time of buying at least for one

year. However, no

demand has been

accepted in this budget

that will create more

difficulties for the

manufacturers to revive

the industry.

He questioned that if

the local industry

players had been neglected completely

and the government was unable to

recognize their role and contribution for

the national exchequer. Then, no new

investors will pour investments in the

country and will show their lack of

confidence and trust on governmental

measures.

lead to further production cuts and plant

shutdown,” they added. Earlier, the

tractor industry was hoping that subsidy

on the locally-manufactured tractors will

help the industry to get back on track if

swiftly implemented. However, this delay

in the finalization of the subsidy has been

nullifying all positive impacts of this

announcement for the local tractor

industry.

The industry started production after ease

in the lock-down last month, but the nonnotification

of the subsidy will result in the

increase of inventory of tractors. Since the

farmers were now waiting for the SRO to

become effective to get discounted

prices, the tractor industry had sold

insignificant quantities last month.


Travel World

PIA grounds 141 pilots

Pakistan Inter-national Airlines (PIA) has

grounded 141 pilots whose licences are

suspected to be fake. Subsequently, all

foreign missions, global

regulatory and safety bodies

have been informed by PIA

about the said action with a

view to protect its credibility.

PIA spokesman said that the

airline had immediately

grounded all 141 pilots,

whose names are mentioned

in the list issued by the

ministry of aviation and CEO

PIA, Air Marshal Arshad also

informed about the steps

taken by the PIA to all foreign missions.

He said that the CEO PIA also informed

the Aviation Ministry about airline's

action and added that the names of

senior officials of Pakistan Airline Pilots

Association (PALPA), including its

spokesman, Captain Qasim Qadir, were

also mentioned in the list.

Moreover, he said that out of total 141

suspected pilot license holders, 17

airmen were identified by the airline

almost 18 months ago. He said that

captain Yahya Sindhela, who was

allegedly responsible in the Panjgor air

crash, was also in the list and added that

the scrutiny of pilots' credentials had

been commenced after the Panjgor

crash.

Meanwhile, Captain Chaudhry Salman,

President PALPA, sought the Chief

Justice of Pakistan's (CJP's)

intervention into the matter and

requested him to constitute a Judicial

Commission comprising competent

persons and experts from aviation

industry in order to ensure fair and

transparent inquiry into the suspected

licence case. He said that the

commission should investigate the

proposed list of allegedly fake

pilot licenses and start the

process from Palpa. All PIA

pilots present themselves to

any inquiry under the auspices

of the Supreme Court, he

added. "Our goal is not to

defend the 141 PIA pilots but

to protect Pakistan's identity,

protect the dignity of

Pakistan's aviation industry

and fight for the rights of the

pilot community," he said.

He criticised the aviation

minister for revealing the list and its

contents. He accused the aviation

ministry of issuing the list of pilots having

suspected licences without carrying out

research and investigation "with the aim

to defame pilots' community".

(Courtesy: Business Recorder)

Emirates resumes scheduled

services from Pakistan

Mango exports: PIA announces

up to 30 percent reduction in cargo tariff

Emirates has resumed scheduled services

from Pakistan, operating flights from

Karachi and Lahore to Dubai 09 June

2020. The resumption comes after over

two months of travel restrictions imposed

globally due to the COVID-19 outbreak.

Emirates is operating 14 weekly flights to

Dubai, including seven from Karachi, five

from Lahore and two from Islamabad

using its modern Boeing 777-300ER

aircraft. Passengers can book tickets for

Economy and Business Class. From

Pakistan, the airline is flying UAE residents

and citizens, as well as cargo to Dubai.

From Dubai to Pakistan, the airline is flying

in only cargo. Travellers will only be

accepted on these flights if they comply

with the eligibility and entry criteria

requirements of the UAE government.

Pakistan International

Airlines (PIA) has

announced to reduce

the air cargo tariff for

mangoes exports, up

to 30 percent in

different weight slots

to support governmental efforts for

boosting country's exports amid the

global shutdown.

According to details, the decision was

taken after a series of talks between PIA

and the representatives of All Pakistan

Fruit and Vegetable Exporters, Importers

and Merchants Association, Academia,

and Mango Farmers & Growers. Pakistan

annually exports around 10,000 metric

tonnes of high quality mangoes by air,

mostly to different destinations in Europe,

Americas, Gulf and Middle East regions,


earning handsome

foreign exchange for

the county. However,

with Covid-19 global

economic meltdown

and lockdowns, the

growers were seeking

support from the government for any

stimulus in this regard. Minister for

Aviation Ghulam Sarwar Khan personally

directed CEO PIA Air Marshal Arshad

Malik to analyse and lead the high level

initiative.

Therefore, PIA has decided to reduce the

air cargo tariff for mango exports up to 30

percent in different weight slots in order to

jump start the export process and to

ensure that it is not impacted by the

prevalent crisis.

TRADE CHRONICLE

PIA cuts domestic fares

The national flag-carrier, Pakistan

International Airlines (PIA), has

announced a reduction of fares for

d o m e s t i c f l i g h t s . T h e P I A

s p o k e s p e r s o n m a d e t h e

announcement that Rs12, 000 has

been fixed for one-way ticket

inclusive of all taxes for different

destinations including Islamabad

and other cities. The new fares will

be effective from 29 June, 2020

added the spokesperson.

Earlier on May 17, the national

carrier had announced that all

airlines operating domestic flights

from Pakistan airports will be

charging similar fares.

Giving details amid speculations

over increased fares charged from

airlines for special domestic flights,

the PIA spokesman had said that the

one-way ticket of any Lahore or

Islamabad-bound flight from

Karachi would cost Rs 22,826

including all taxes and Rs22, 108 for

the one-way ticket of a Peshawarbound

flight from Karachi. The one

way ticket of Quetta-bound flight

from Karachi or Islamabad or

Lahore-bound flights from Quetta

would cost Rs 14,448.

According to PIA, all airlines had

decided to charge an equal amount

from the passengers in terms of

tickets after consultation with the

government. The purpose of sharing

details of tickets' fares for domestic

flights was aimed to ensure avoiding

overcharging.

USA permits PIA

for direct flight operations

The United States (US) has

given a year permit to

Pakistan International Airline

(PIA) for direct flights

operation to New York and

Washington DC.

According to details, PIA,

which had stopped its

operations to the US in October

2017, used to operate flights to

the USA with a mandatory

stopover on TSA cleared airports

in UK or Europe for security

clearance.

This is the first time that PIA has

been allowed to operate direct

flights. The direct flights

authorization comes after a series

of TSA team visits to Pakistan

examining preparedness of the

country's airports, overall

Emirates SkyCargo scales

up its operations in Pakistan

Emirates SkyCargo has scaled up its

operations in Pakistan, showing

unwavering commitment to ensure

transportation of essential commodities

such as, food and medical supplies to

and from the country; despite, the

capacity and operational challenges

brought on by the COVID-19 pandemic.

During this operation, the Emirates

SkyCargo has also managed to set two

key industry records.

According to the details, the air cargo

operator is currently

flying four weekly

services to Lahore

and three to Karachi

using the airline's

Boeing 777-300ER

a i r c r a f t , w h i c h

normally has the

capacity to carry

between 40 50

tonnes of belly-hold

c a r g o w i t h o u t

passengers.

Emirates SkyCargo's

airline's security apparatus and

procedures.

PIA has been granted a special

permission to operate direct flights to the

US to repatriate stranded citizens, PIA

spokesman confirmed and added that

it would be the first occasion, whereby

PIA has been allowed to operate nonstop

across the Atlantic. PIA has

been allowed to operate 12

direct flights to the US in a

year time frame starting

from 29 April 2020.

An authorization letter

has been issued by the

Department of Transport

with clearance from the

U S D e p a r t m e n t o f

Transportation as Special

Permission, he said.

CEO PIA, Air Marshal Arshad

Malik, had earlier formally

requested US Authorities for

operating repatriation flights

directly to the US.

two flights from Karachi to Dubai, one on

10 April with a load of 63 tonnes in the

lower deck, and another on 15 April with

a load of 62.7 tonnes in the lower deck,

were considered industry records at the

time.

Emirates SkyCargo is transporting meat,

fish, vegetables, fabric, courier cargo

and sanitizers from Pakistan to the

markets in London, Dubai, Jeddah,

Riyadh, Bahrain and Muscat on its

network. The air cargo operator is flying

in essential medical supplies such as,

pharmaceuticals, medical equipment,

face masks, and lab test kits, as well as

electronics and courier.


34-A/2, Level 2, Lalazar Drive,

Opp Beach Luxury Hotel, Karachi 74000-Pakistan.

Tel: +92-21 35643371-4, Fax: +92-21 35643370

Email: bulkshipping@bulkshipping.com.pk

URL:www.bulkshipping.com.pk

MG

Trade Chronicle May - June 2020

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