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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 - May.~ June. 2020 - Page # 08
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 - May.~ June. 2020 - Page # 09
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 - May.~ June. 2020 - Page # 10
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 - May.~ June. 2020 - Page # 11
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 - May.~ June. 2020 - Page # 12
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 - May.~ June. 2020 - Page # 13
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)
TRADE CHRONICLE - May.~ June. 2020 - Page # 14
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 - May.~ June. 2020 - Page # 15
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.
TRADE CHRONICLE - May.~ June. 2020 - Page # 16
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 - May.~ June. 2020 - Page # 17
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 - May.~ June. 2020 - Page # 18
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 - May.~ June. 2020 - Page # 19
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.
TRADE CHRONICLE - May.~ June. 2020 - Page # 20
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 - May.~ June. 2020 - Page # 21
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.
TRADE CHRONICLE - May.~ June. 2020 - Page # 22
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 - May.~ June. 2020 - Page # 23
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.
TRADE CHRONICLE - May.~ June. 2020 - Page # 24
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 - May.~ June. 2020 - Page # 25
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 - May.~ June. 2020 - Page # 26
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 - May.~ June. 2020 - Page # 27
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."
TRADE CHRONICLE - May.~ June. 2020 - Page # 28
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)
TRADE CHRONICLE - May.~ June. 2020 - Page # 29
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.
TRADE CHRONICLE - May.~ June. 2020 - Page # 30
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,
TRADE CHRONICLE - May.~ June. 2020 - Page # 31
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.
TRADE CHRONICLE - May.~ June. 2020 - Page # 32
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