Updated on: Sat, December 5, 2009, 13:30 (PST) Arrows of currency trend in the chart show forex exchange rates compared with the latest forex exchange rates Following are indicative forex exchange currencies rates Courtesy : ECAP
Remittance	Buying	Selling	Trend
US Dollar DD	0.0	0.0
US Dollar TT	0.0	0.0
Currency Notes
US Dollar	83.45	83.75
Kuwaiti Dinar	285.94	292.46
Malaysian Ringgit	0.0	0.0
Norwegians Krone	14.68	14.89
UK Pound Sterling	137	138
Saudi Riyal	22.02	22.27
Singapore Dollar	0.0	0.0
Swedish Korona	11.99	12.17
Swiss Franc	82.49	83.61
U.A.E Dirham	22.51	22.77
Bahrain Dinar	218.35	221.50
NewZealand $	43.5	43.8
Omani Riyal	213.84	216.99
Australian Dollar	76.16	77.31
Danish Krone	16.68	16.91
Euro	124.50	125.50
Thai Bhat	0.0	0.0
Canadian Dollar	78.10	79.00
Hong Kong Dollar	10.51	10.78
Qatari Riyal	22.54	23.02
Indian Rupee	1.58	1.68
China Yuan	0.0	0.0
Japanese Yen	0.9350	0.9450
Forex Open Market Analysis

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KARACHI: Prices of various varieties of rice have declined by Rs2 to Rs10 per kg, while supply of sugar from the mills has resulted in some stability in its wholesale rates. A wholesale rice trader said that the price of a normal variety fell to Rs48 from Rs50 per kg, while Basmati (ponia) rice is now available at Rs45 as against Rs50 earlier.

He said the new 386 Punjab variety now sells at Rs35 as compared to Rs40 per kg, Kernal Basmati price fell to Rs75 from Rs80 per kg, while Kernal special Basmati rate has declined to Rs90 from Rs100 per kg. A retailer said that Kernal Basmati super rate is now tagged at Rs120 as compared to Rs125 per kg. Irri-6 price

fell to Rs24 from Rs26 per kg while Basmati sela rate plunged to Rs95 from Rs115 per kg. Shopkeepers said that the prices had declined owing to some declining trend in rice exports from July onwards. As a result ample supplies of various varieties of rice had arrived in the local markets. Figures of Federal Bureau of Statistics (FBS) gave a dismal picture of rice export. Pakistan s total rice exports (basmati and others) fell by 33.4 per cent in value during July-Oct 2009, fetching only $537 million (809,872 tons) as compared to $806 million (787,222 tons) in the same period of 2008. Basmati exports fell by 51 per cent in value and 33 per cent in quantity to $240 million (228,991 tons) in July-Oct, 2009 as compared to $488 million (342,350 tons) in the same period of 2008. Exports of other varieties stood at $296 million (580,881 tons) in July-Oct 2009, as compared to $318 million (444,872 tons) in the corresponding period of 2008. However, vice-chairman Rice Exporters Association of Pakistan (Reap), Rafiq Suleman said exports had been going up. He claimed that during July-Nov 2009, non-basmati exports went up by 32 per cent to 993,617 tons as compared to 751,770 tons in the same period of 2008. Basmati exports, however, went down slightly by six per cent to 372,686 tons during July-Nov, 2009 as compared to 398,327 tons in the same period of last year. Rafiq added that as exports are picking up, total exports of rice in the current financial year is likely to achieve target of $2.2 billion while in the last fiscal year, exports fetched $2.04 billion. Sugar The wholesale sugar price is now quoted at Rs51-52 per kg as compared to Rs58 per kg a month back but the retailers are not ready to pass on this impact to the consumers. Majority of the retailers are charging Rs60 per kg in many areas, while some are demanding even more than Rs60 per kg. Wholesalers said if the supply of sugar from the sugar mills improves further in coming days, the rates would further fall.

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Tuesday, September 08, 2009

Karachi Electric Supply Company (KESC) has paid Rs1.34 billion to Sui Southern Gas Company (SSGC), out of the total amount of Rs4 billion of the monthly bill charged for the month of August. The outstanding dues of Rs13.65 billion has yet to be paid by the KESC to SSGC, the source disclosed. “The KESC has the monthly gas bill of around Rs3 to Rs4 billion that is separate from the sum accumulated as liabilities, which is Rs13.65 billion.

During the month of August, the KESC has made payments twice, one on August 15 and the other on August 26. Nothing has been paid for the month of September, it was decided between the two utilities that the KESC will pay Rs550 million from the arrears along with the current bill. But the payments made in August are apt to explain the situation,” said the source. He added that the company understands that the KESC is facing financial crisis but at the same time it should be kept in mind that SSGC is also a utility, and if payments are not made on time, SSGC will also face financial problem. “The claim that the gas pressure is low is incorrect. SSGC has agreed to supply 256 MMCFD of gas to the KESC, but on Friday when the three units of Bin Qasim Power Plant and Korangi Thermal Power Plant went off, SSGC was supplying 270 MMCFD of natural gas. After those units were closed for maintenance, KESC is now receiving 235 MMCFD of gas for power generation. The SSGC is facilitating KESC as much as possible but the utility should also realize the situation,” he further added.

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Saturday, September 05, 2009

KARACHI: The National Investment Trust (NIT), a leading mutual fund company being managed by the government, formally announced plans on Friday to diversify its product base from a single equity fund to a bond and income fund. According to NIT Chairman and MD Tariq Iqbal Khan, the Trust was going to introduce two new mutual funds, but these would not be belonging to the equity segment this time. One of these would be a bond category fund while the other would be an income fund, he said. The difference among above mentioned three categories of funds is that the received money from unit holders in the equity fund is invested in the stock market; the bond funds are invested in bond markets, while income funds are invested in some fixed-income schemes. All the three categories have different level of risk and reward as well. Talking to a group of reporters in his office, Khan said the Securities & Exchange Commission of Pakistan (SECP) has given go-ahead single to the Trust to launch its bond fund, the NIT Government Bond Fund (NIT-GBF). Today in the afternoon, we are going to register NIT-GBF with the registrar and its Initial Public Offering (IPO) is expected to take place sometime after Eid. We, therefore, are trying our best to bring its prospectus in the market before Eid, he explained. As far as the introduction of another fund in the income segment i.e. NIT Income Fund (NIT-IF) is concerned, work on this product is also under way simultaneously and approval for the fund has also been sought from the SECP, which is expected any moment, he said. Since NIT was subject to be sold into the private sector in the near past so that it was not striving to expand operations at that juncture of business.

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Saturday, September 05, 2009

KARACHI - State Bank of Pakistan on Friday announced a new financing facilities scheme for cotton ginners with a view to modernize their factories to produce quality ginned cotton for the textile value chain and to minimize electricity consumption. This scheme is only available for SME borrowers, as defined in Prudential Regulations for SMEs. This scheme has been effective from September 04, 2009 (Friday) and shall remain valid only up to December 31, 2010 on first come first served basis and subject to availability of funds under the Scheme. In a circular issued by central bank, it was stated that financing under the scheme would be available for a maximum period of seven years including a maximum grace period of six months. Financing facilities under the scheme shall be provided through all commercial banks and Development Finance Institutions (DFIs). According to SBP, financing shall be available only for Balancing, Modernization and Replacement (BMR) of Cotton Ginning Factories. SBP further said cotton seeds crushing machinery installed in the premises of ginning factories shall also be eligible to avail financing facilities under the scheme. Financing shall be available for purchase of only new locally manufactured plant, machinery & equipment. Financing for purchase of new generators up-to a maximum capacity of 500 KVA shall also be eligible. The capacity of generator shall, however, not be in excess of the ginning factory s in-house energy requirements or upto 500 KVA, whichever is less. As per details, SBP announced different mark-up rates for different periods for financing this scheme, for instance, for the tenure of 3 years, banks will charge 6 per cent rate of refinance, 2 per cent spread with 8 per cent end users rate while over 3 years and up-to 7 years period, this facility will be available on paying 6.50 per cent rate of refinance, 2.5 per cent bank spread and 9 per cent end user rate from the borrowers. Over 5 years and up-to 7 years rate of refinance will be 7 per cent, spread 3 per cent and 10 per cent end users rate respectively. It is important t note that financing rates shall be revised on annual basis effective from July each year and mark-up shall be paid on quarterly basis.

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Thursday, September 03, 2009

LONDON: Gold hit a four-week high of $966.20 an ounce as concerns over falling equities pushed the metal through technical resistance levels in the wake of US jobs data, and amid weakness in the dollar index. Spot gold was bid at $964.90 an ounce at 1257 GMT, against $955.85 an ounce late in New York on Tuesday. US gold futures for December delivery on the COMEX division of the New York Mercantile Exchange rose $10.20 to $966.70. Equities were already weak yesterday, with rumours about further problems in the banking sector around. That definitely spurred some safe haven buying in gold, said Alexander Zumpfe, a trader at precious metals house Heraeus. After $960 broke, technical buying came in, he said. The dollar index, which measures the US unit s performance against a basket of major currencies, weakened after data showed US private employers cut 298,000 jobs in August, fewer than a revised 360,000 jobs in July. The stronger than expected jobs number failed to ease investor concerns about broader market sentiment. Oil prices fell, extending Tuesday s hefty 3 per cent slide to slip below $68 a barrel. Gold prices often track moves in oil, as the metal can be bought as an inflation hedge.

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Monday August 31, 2009

KARACHI : Trade Development Authority of Pakistan (TDAP) has invited expression of interest (EoI) for development, maintenance and hosting of its web portal. According to TDAP here Saturday, the pre-qualified, reputable and experienced firms will be eligible to apply for this task. Bidding will be held on September 10 at its head office.

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Monday August 31, 2009

KARACHI - NIB Bank and Bank Alfalah have announced their financial results for the first half of 2009 (1HCY09), whereas, National Bank of Pakistan is expected to its results for 1HCY09 on Saturday (today). According to the results, NIB has declared consolidated profit before tax of Rs1.5b, while Bank Alfalah posted a significant decline of 39pc in its net earnings. On the other hand, NBP is likely to post profit after tax (PAT) of Rs7.1b (EPS Rs6.60). For the first half of 2009, NIB Bank earned a consolidated profit before tax of Rs1.5b and a consolidated profit after tax of Rs 1.04b. On a standalone basis, profit before tax was Rs1b and profit after tax was Rs 580m. Mark up earned by NIB Bank in the first six months of 2009 at Rs 9.4b was Rs 2.2b; higher than for the first six months of 2008. This was a result of a growth in the loan book of the bank as well higher loan yields. The bank also achieved an appreciable reduction in its cost of funds for the current financial year, which helped contain the increase in mark up expense to Rs 1.9b. Fee income in the first half of 2009 also increased by 9pc over the first half of 2008. While recording a strong growth in its balance sheet, the bank succeeded in reducing administrative expenses by 9pc in the first half of 2009 compared to the first half of 2008.

This was achieved despite high inflation and rising utilities costs, given the very strong focus placed by the Bank on improving operating efficiency. During the second quarter of 2009, the Bank commenced the rollout of its new Core Banking with 77 branches already converted and a plan to complete the migration to the new banking platform before the end of 2009. Similarly, Bank Al-Falah has announced its 1H2009 results. The bank posted a significant decline of 39pc in its net earnings at Rs1.1b (EPS Rs0.82) versus Rs1.8b (EPS Rs1.35) in the similar period of last year. Both net interest income (NII) and non-interest income remained lower at 1pc and 5pc respectively. Interestingly, non-interest income was higher than the expectations due to above anticipated income from dealing in foreign currency and capital gain income. Moreover, the bank s Net Interest Income (NII), during 1H2009 stood at Rs5.3b (1pc lower on YoY basis). In 2Q2009, NII dropped by 5pc over the same quarter of last year at Rs2.5b; mainly due to squeezing margins. The decline in NII is also evident on sequential quarter basis and 2Q2009 interest based income is 6pc lower than 1Q2009. The bank s non interest income also dropped by 5pc to Rs 2.7b. Decline is largely attributable to lower fees, commission and brokerage income; however, this is 15pc higher than our estimate of Rs 2.4b. In our opinion, the deviation in estimate is primarily due to higher income from dealing in foreign currencies and above than expected realized gain on sale of securities , said Kamran Rehmani at FCEL. Moreover, one of the leading blue-chip banks of Pakistan economy, National Bank of Pakistan Ltd (NBP) is scheduled to announce its results for 1HCY09 on Saturday (today) and the Board of Directors of the bank will be meeting today. NBP is expected to post a PAT of Rs7,105m (EPS Rs6.60), translating into a decline of 10pc on YoY basis.

Despite significant increase in fund cost, we expect bank s NII to grow by 6pc YoY on the back of 38pc YoY increase in interest income , said analyst Abdul Shakur at InvestCap Research. On QoQ basis, the bottomline is expected to decline by 31pc YoY to Rs2.89b (EPS Rs2.69) in 2QCY09. Provisions, which remain the concerning factor for NBP as being the public sector entity, are expected to increase by 12pc YoY with further deterioration in the asset quality. NPLs are expected to increase by 20pc in 1HCY09 (NPLs to loan ratio expected at 14.1pc). Moreover, provision for Dewan group would further suppress bank s bottomline as estimated exposure of Rs5bn of Dewan s group is expected to be provided going forward. Due to lower dividends and equity gains, the non interest income of the bank is expected to remain dry, to decline by 2pc YoY. Admin charges are expected to grow by 27pc YoY resulting in inflating cost to income ratio to 42pc compared to 30pc in 1QCY09. No cash of stock dividend with the result is expected according to the experts.

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Monday, August 31, 2009

KARACHI - Pakistan Petroleum Limited (PPL), in its FY09 financial results, posted profit of Rs 27.7b (EPS Rs33.4), up by 41pc versus earnings of Rs19.7b (EPS 23.8) in FY08. The company has also announced 20pc bonus shares and Rs 3 per share final cash dividend with the results taking cumulative cash payout to Rs 13 per share in FY09. According to the FY09 financial statements, total receivables of the company have reached Rs 27.8b compared to last year s of Rs13.2b. Sui Northern Gas (SNGPL) remained the major debtor with Rs13.6b (in FY08 it was Rs5.1b) followed by Sui Southern Gas (SSGC) Rs 8.8b (in FY08 it was Rs 2.7b), Wapda Rs 3.5b against Rs3b in FY08 and Attock Refinery (ARL) Rs 1.8b which was Rs 2.2b in FY08. This is due to prevailing circular debt situation, driven mainly by power sector. As a result, total cash position of the company has greatly suffered. Total cash of the company is standing at Rs 14.6b (Rs17.6 per share) compared to Rs 21.8b (Rs26.3 per share). The company believes that the government would settle this amount soon.

According to the results, the total cash payout stood at 39pc versus 2-year historical average payout of 55pc mainly due to persisting circular debt trap in the energy chain. The growth in company s bottom line was mainly supported by 35pc revenue growth. Though oil revenues (crude oil +NGL+ condensate) of PPL dropped by 9pc amid lower realised crude oil prices (approx. $58 per barrel compared to $85 per barrel in FY08), gas revenues rose by significant 43pc on the back of improved wellhead gas prices of Sui and Kandhkot fields (higher by 56pc YoY). Thus, sharp decline in oil prices during FY09 did not affect the overall revenues due to higher share of gas in its hydro-carbon as gas prices are fixed for 6-months (time lag impact). Secondly, 20pc devaluation of Pakistani rupee against dollar which improved rupee based revenues. During FY09, though oil production remained flat, however, gas sales dropped by 3pc (average 955mmcfd) mainly due to decline in production from its famous Sui gas field. Interestingly, the affect of higher field expenditure was mitigated through increase in other income.

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Friday, August 28, 2009

KARACHI - Pakistan Petroleum Limited (PPL) top line registered a growth of 34.7 per cent to Rs 61.6 billion on year-on-year basis; primarily owing to a surge in gas wellhead prices by 30pc YoY in FY09. According to the financial report of the PPL, the increased gas wellhead price mitigated the effect of accumulated decline of 5pc YoY in oil and gas production (as per company management). Oil production surged by 2pc YoY benefiting from improved production from Mela (23pc YoY), while gas production marginally slid by 3pc YoY main culprit being Sui (-6pc YoY), Sawan (-10pc YoY) and Makori (-18pc YoY) fields. Furthermore, royalty payment surged by 35.3pc YoY in the resonance of the increase in the top line. On one hand, according to the reports the field expenditure inflated by 23.1pc YoY to Rs 7.5b on account of expensing out of 5 exploratory dried wells. While on the other hand, inflationary impact on other major heads of field expenditure, as per the company management. Other noticeable change from last year was the surge in financial cost by 40.5pc YoY to Rs 93.6m, early pointers towards encompassment of E&P sector towards circular debt. In this regard, according to news reports, PPL receivables from gas distribution companies stand at Rs 16.2b while WAPDA has to pay Rs 5.8b.

Tax-to-operating profit also slid by 138bps YoY to 33.9 pc in FY09 benefiting from lower tax liability due to unsuccessful drilling activities during the year. PPL s bottomline witnessed a mammoth growth of 40.6pc YoY to Rs 27.7b (EPS Rs33.37) in FY09. In addition, company also declared cash divided of Rs 3/share which translates into a full-year payout of Rs13/share along with 20pc bonus shares. According to company notice, PPL s board of directors has recommended an increase in authorised ordinary share capital to Rs 15.0b (1,500m ordinary share at Rs10 par value) from Rs 10.0b (1,000m ordinary share at Rs10 par value). The increase is deemed to be a direct outcome of PPL s announcement of 20pc bonus shares which will increase it s paid up capital to Rs 9.9b. Therefore, this rise in authorised capital would provide room for future enhancement of paid-up capital in the form of bonus shares or secondary offerings. However, this change is of natural and would not have any impact on company s valuations. The borated international crude oil prices in 2HFY09 would render into 27pc HoH reduction in Sui and Kandkot (combined contribution 79pc in PPL s gas production) wellhead gas prices, which is expected to suppress company s FY10 earnings. However, increased gas production from Hala and Manzalai fields coupled with resurgence in international oil prices (currently at $70/bbl) will more than offset the aforementioned impact and will provide impetus for future growth. Furthermore, company plans to drill 10 wells in FY10, which would also augment company s oil and gas production.

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Friday July 03, 2009

NEW YORK: Dollar borrowing costs between banks fell again on Thursday, hitting the latest in a series of all-time lows, but dismal US jobs data raised doubts over when the easy money would lift the economy. This took the shine off news that closely-watched London interbank offered rates for bank-to-bank lending fell to another record low. It also reminded analysts this had been achieved mainly by massive and continued Fed support.

"I do think overall it's a positive to have Libor coming down from the abnormally-distressed levels that we've seen over the last year, but I'm a little cautious because it is also a medicated market," said Jeff Given, a portfolio manager for fixed income with John Hancock Funds in Boston. Three-month dollar Libor fell to 0.5775 percent, a record low, from 0.5875 percent.

Driving the decline has been the Fed's zero-rate monetary policy and its myriad programs and facilities designed to pump money into a financial system that suffered its worst crisis since the Great Depression of the 1930s. A key gauge of risk aversion also reflected the continued normalisation of financial conditions. The TED spread remained pegged at levels that prevailed just before the start of the financial crisis nearly two years ago.


(Reuters)

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Friday July 03, 2009

KUALA LUMPUR: Foreign investment in Malaysia has plummeted this year, Trade Minister Mustapa Mohamed said Thursday after the government announced liberalisation measures aimed at luring investors. "Foreign direct investment for 2008 was 46 billion ringgit (13 billion dollars) and for January to May this year we have only seen 4.2 billion ringgit," Mustapa told reporters.

Wahad Hamid, deputy head of the Malaysian Industrial Development Authority, said the investment climate was extremely tough despite a strong performance by Malaysia in the three previous years. "Last year, total investment was about 62 billion ringgit but this year we are only targetting half of that, about 30 billion ringgit," he told reporters.

Mustapa said he was confident that liberalisation measures announced by Prime Minister Najib Razak this week would help bring in more funds, amid forecasts of a 5.0 percent economic contraction this year. "We are confident that investor sentiment will improve, we are encouraged by all the measures taken by the government," he said.

The liberalisation moves targeted a decades-old policy of positive discrimination for Muslim Malays, which critics say is making Malaysia uncompetitive. Najib scrapped a rule requiring initial public offerings to reserve 30 percent of stock for Malays - who dominate the population of the multicultural nation - and dumped regulatory approval for foreign property purchases.

However, Mohammed Ariff, head of the influential Malaysian Institute of Economic Research, said the measures were poorly timed and would not bear fruit until the global economy recovers. "The liberalisation announcements should have been made in the good times instead of now, as there would have been a lot of responses from foreign investors," he told AFP.

Ariff said that despite hopes for a recovery next year, Malaysia's economy is unlikely to really get back up on its feet until 2012. "To me real recovery is not just positive growth but going back to the growth we are used to, of around six percent, and that is way off - until 2012," he said.

(BRecorder)

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Friday July 03, 2009

BEIJING: Pakistan and China would intensify their efforts to increase bilateral trade through land route, Ambassador Masood Khan said on Thursday. Ambassador Khan who led a delegation to the fifth Central and South Asian Commodity Fair organised by Kashgar prefecture told APP after three day visit to Kashgar.

He said that two more delegations from Pakistan participated in the fair. Syed Ahmed Hussain Shah, NWFP Industries Minister, and Babar Yaqoub Fateh Muhammad, Chief Secretary Northern Areas, led these delegations in the trade fair, which was largely attended by diplomats and delegations of several Central Asian and South Asian countries.

Besides, official delegations, hundreds of Pakistani businessmen participated in the seminar. There were about more than 80 Pakistani exhibitors who established their stalls in the international fair. During his visit, Ambassador Masood Khan said he held in-depth talks with Commissioner of Kashgar Akbar Gopur to explore ways and means to strengthen economic and trade ties between Xinjiang and Northern Areas of Pakistan.

"Border trade right now constitutes merely 5 per cent of the overall trade. Both sides are keen to enhance overall trade and increase the volume of bilateral trade which has immense potential", Ambassador Khan observed.

The border trade takes place through Karakoram Highway (KKH) also known as Pakistan-China friendship highway. Extensive work is being done to repair and upgrade the KKH of the Pakistani side. The repair and upgradation is likely to be completed by 2011-2012, Khan said. "With upgradation of KKH, the volume of trade would increase, the speed of transportation would pick up", the Pakistani Ambassador said.

Ambassador Masood Khan visited Pakistani stalls, mingled with Pakistani businessmen and talked about trade potential between Pakistan and China and how it can further be enhanced.

He also visited Pakistan trade house in Kashgar and addressed a large gathering of Pakistanis. The gathering was hosted by Zahid Traders, a leading Pakistani enterprise doing business in Pakistan, Xinjiang, and Central Asia. Kashgar government also organised a culture evening during, which a popular Xinjiang Singer Muhammad Amin sang Pakistan's national song "Ye mera Pakistan he; ye tera Pakistan he", this made all Pakistanis proud and several of them rushed to the stage to sing and dance with Chinese singer.


(APP)

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Friday July 03, 2009

KARACHI: Pakistan's foreign exchange reserves rose by 70 million dollars to 11.84 billion dollars in the week that ended on June 27, compared with 11.77 billion dollars the previous week, a central bank spokesman said on Thursday. The State Bank of Pakistan's reserves edged up to 8.55 billion dollars from 8.45 billion dollars a week earlier.

Reserves held by commercial banks fell to 3.29 billion dollars from the previous week's 3.32 billion dollars, the spokesman said. Foreign reserves hit a record high of 16.5 billion dollars in October 2007, but fell steadily to 6.6 billion dollars by November last year, largely because of a soaring import bill. Pakistan agreed in November to an International Monetary Fund (IMF) emergency loan package of 7.6 billion dollars to avert a balance of payments crisis and shore up reserves.

(Reuters)

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Friday July 03, 2009

ISLAMABAD: The Federal Board of Revenue (FBR) has admitted that the taxpayers have misused the Universal Self Assessment Scheme (USAS), reflecting serious weakness in the voluntary payment system. According to the FBR latest quarterly review, the misuse of the USAS is evident from the fact that despite increase in number of returns for the last three years, there was 71 percent decrease in the income tax payments made during this period.

Some of the weaknesses in the taxation system need to be addressed immediately. It has been noted that shortfall in direct taxes is mainly due to lesser growth in voluntary payments and withholding taxes. A careful, detailed analysis and monitoring of withholding agents should be envisaged on priority basis. Similarly, it appears that the USAS has been misused by the taxpayers, needs attention through strict audit.

The objectives behind introduction of USAS were primarily to minimise interface between the taxpayer and tax administration, repose confidence in the system and inculcate self-realisation among the taxpayers. The initial years witnessed a success in this system with regard to the voluntary compliance, but during the last couple of years, there has been a poor compliance of taxpayers in this head. The two major factors behind the decline in voluntary payment (VP) are poor tax facilitation and weak audit system. The poor or inappropriate tax facilitation has been the major cause to inculcate self realisation among the taxpayers. Then as a result of weak audit and enforcement, there is little deterrence and check on the taxpayers of the tax authorities.

The overall growth in the VP has been only 9 percent for 2008-2009 as compared to 2007-2008. Further, the comparative analysis of the payments with returns has registered a growth of 65 percent as compared to the previous year. But, surprisingly by comparing the VP collections of 2008-2009 with 2006-07 reveals a different picture, which is quite appalling as it depicts an overall negative growth of 19 percent in VP collection even after two years. The perusal of collection with return when compared with 2006-07 reveals that even in the 2008-09 FBR is still 71 percent deficient of what was collected two years back. In figures the payment with returns was at Rs 47.9 billion during July-March 06-07 to only Rs 14.06 billion during 2008-09, thus yielding a decline of Rs 33.84 billion.

While analysing the growth in the number of returns submitted over the last three years, also does not give us an encouraging figure, thus further pointing towards the weaknesses in the USAS mainly owing to the voluntary payment scheme. The analysis when comparing the returns filed in 2006-07 to 2008-09 reveals an increase of 5.3 percent and 34,079 returns in absolute terms.

The point to ponder is despite the increase in number of returns for the last three years, why there has been a decrease in the payments at 71 percent over three years? One apparent reason is the major decline in the payments received from the corporate sector and secondly the poor check and deterrence through audits, particularly of the corporate entities. The second component of Voluntary Payments ie advance tax has not shown any encouraging growth. As compared to the 2007-08 the growth has been nominal ie only 4 percent, the report added.


(BRecorder)

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Thursday July 02, 2009

ISLAMABAD: The Ministry of Industries and Production is said to be manipulating to fix ethanol price, on behalf of some manufacturers, sources in the Ministry told a local English daily. The Cabinet has imposed 15 percent regulatory duty (RD) on export of ethanol, a demand by a powerful lobby backed by the Industries Ministry. The benefit of this RD, as was expected, is reportedly nil.

The Industries Ministry has already been strongly criticised by Pakistan Sugar Mills Association (PSMA) and Ministry of Commerce (MoC) for attempting to increase recently imposed 15 percent regulatory duty on molasses in a blatant effort to benefit ethanol manufacturers.

The imposition of regulatory duty will harm trade relations between Pakistan and the European Union (EU), as exporters have finalised several memoranda of understanding (MoUs) with EU partners and, therefore, the date of effectivity of the regulatory duty will have impact on these agreements.

Sources said that opponents of this duty proved with facts and figures that the logic of value-addition given by the ethanol manufacturers was far from reality. Last year, sugar mills exported 10,774,98 tons of molasses, which is equal to 25,237 tons of ethanol.

Analysts say that imposition of RD on molasses export will have a negative impact on Pakistan's exporters who will have to cancel deals with their European buyers, and renegotiate with them. The money earned from export of molasses was much higher than the ethanol manufacturers earned through so-called value-addition.

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Thursday July 02, 2009

ISLAMABAD: India has improved its revenue collection remarkably from service tax which has become an example for countries like Pakistan to introduce such kind of tax on services. The FBR quarterly review issued on Wednesday thoroughly analysed service tax structure in India with viable recommendations to implement the same in Pakistan.

In line with the Indian service tax, Pakistan should endeavour to improve the contribution of indirect taxes from services sector. It means during 2007-08, there was a potential to realise Rs 100 billion but only Rs 66 billion was actually collected. It implies that roughly, there is a further potential of Rs 34 billion in Pakistan, which could be generated additionally.

In India, around 63 percent of service tax collection emanated from 10 services and remaining 40 percent has been spreading on remaining services. Like Pakistan, telephone services contributed the top collection. Surprisingly, while comparing Indian service tax top 10 revenue generating services, only two categories telephone, banking and insurance services have been taxed in Pakistan.

Interestingly, the contribution of telecommunication has been 70 percent of the total collection of services in indirect taxes in Pakistan against only 17 percent in India. Prima facie, this is a case of limited tax base of services as well as enforcement issue. Interestingly, tax compliance by the taxpayers from 2001-02 has been up to the mark in services as tax returns have been regularly filed. Actual issue is the low contribution of service sector in tax revenues.

The tax base of services is extremely narrow. There is an immediate need to augment the scope of services in tax net of FED in VAT mode. The most prolific services in Indian service tax which are out of tax net in Pakistan are suggested to be brought in the fold of FED VAT mode such as business auxiliary service, goods transport agency, insurance auxiliary service, maintenance or repair services, stock broker, consulting engineers and commercial or repair service. With the passage of time, gradual extension of base would be a great source of revenue generation among the service untaxed.


(BRecorder)

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Thursday July 02, 2009

ISLAMABAD: The Federal Board of Revenue (FBR) has failed to achieve the policy objective of sales tax zero-rating for the textile sector, as the amount of refund claimed by this sector is still very high. The FBR has admitted this fact in the Third Quarterly Review issued here on Wednesday, reflecting non-compliance and low tax contribution by the textile sector due to non-existent audit.

The level of compliance is evident from the fact that 65 percent textile units, who declared nil income during 'Tax Year 2008', have claimed refund to the extent of Rs 430 million. The FBR further admitted that the zero-rating of textile sector has broken the VAT chain and eroded the tax base. Unfortunately, the decision of zero-rating seems to be ineffective. The FBR paper strongly recommended creation of 'Textiles Industry Group', including stakeholders like taxpayers and representatives of government to prevent tax evasion and improve compliance.

The report highlighted serious tax gaps in the biggest sector with huge contribution in exports. It is hard to believe that the industry with huge investment contributes negatively. It said that the sector is paying nothing, instead getting back billion of rupees every year in the shape of refund/rebate.

(BRecorder)

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Thursday July 02, 2009

LONDON: European stock exchanges surged ahead on Wednesday in line with a robust opening on Wall Street and in response to some positive US economic data despite worse-than-expected unemployment figures.

The London FTSE 100 index added 2.15 percent to close at 4,340.71 points while in Paris the CAC 40 rose 2.43 percent to reach 3,217. The Frankfurt Dax gained 2.0 percent to end the session at 4,905.44.

There were gains of 1.18 percent in Madrid, 2.12 percent in Brussels, 1.99 percent in Milan and 2.19 percent in Amsterdam.

Wall Street shares earlier in the day opened a new month and quarter on an upbeat note, with the Dow Jones Industrial Average up 1.36 percent at 8,561.57 at mid-day. The tech-heavy Nasdaq had risen 1.24 percent to 1,857.77.

Wall Street looked to overseas markets for early cues, shrugging off an early report showing a weaker-than-expected US labor market.

"Some upbeat manufacturing data from China and Europe are helping soothe concerns that the economic reality has fallen behind the recent rally in the equity markets since mid-March," said analysts at Charles Schwab & Co.

That helped offset a survey from payrolls firm showing the US private sector shed 473,000 jobs in June.

"The ADP report for June wasn't as dire as the initial headlines indicated," said Patrick O'Hare at Briefing.com

"Nonetheless, it isn't good news. It is a sobering reminder that the labour market is weak and that there is a heightened risk of disappointment in the (official) nonfarm payrolls number that will be reported Thursday."

But gains accelerated on a report showing the US manufacturing sector showed signs of emerging from its slump in June, after similar reports from Europe and China.

The US Institute of Supply Management said its index of the sector also known as the purchasing managers (PMI) index, increased to 44.8 percent from 42.8 percent in May.

It was below the 50 percent level that separates expansion and contraction, and just under the 45 percent expected by private economists.

But Ryan Sweet at Moody's Economy.com said the ISM report "suggests that the worst of the manufacturing contraction is behind us. The details of the report were much more upbeat than the headline number would suggest."

In Asia on Wednesday, Japanese share prices ended slightly lower as investors took profits after a key index of business confidence rose by less than expected, dealers said.

Tokyo's benchmark Nikkei-225 index lost 18.51 points, or 0.19 percent, to end at 9,939.93, a day after ending at a two-week high.

The Nikkei topped 10,000 points at one point during the day but failed to hold above the key level.

"As the index topped 10,000, it was a good time to sell," said Hideaki Higashi, a strategist at SMBC Friend Securities.

The Bank of Japan said in its quarterly Tankan survey that business confidence among major Japanese manufacturers had improved for the first time in two-and-a-half years.


(AFP)

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Thursday July 02, 2009

NEW YORK: US stocks rose on Wednesday, the start of the third quarter, as reassuring manufacturing data from China, Europe and the United States reinforced hopes that the world's economy is on the road to recovery.

A day after the benchmark S&P 500 wrapped up its best quarter in a decade, investors plowed new money into stocks, boosting growth-sensitive sectors like energy, industrials, technology, materials and consumer discretionaries.

But with the release of the all-important June non-farm payrolls data just a day away, some caution prevailed, causing indexes to finish sharply off their highs.

A weaker US dollar underpinned stocks of multinational companies such as Coca-Cola, up 2.5 percent at $49.18, as investors bet the U.S currency's decline might boost overseas earnings. Coca-Cola is one of the best-known defensive stocks, which are shares of companies deemed better able to withstand an uncertain economy.

General Mills Inc, the maker of Cheerios cereal, also gave investors more reason to be optimistic about the economy after the food company forecast a stronger-than-expected annual profit, sending its stock up 3.9 percent to $58.18.

"There are clearly signs that we are emerging from the recession," said Maury Fertig, chief investment officer of Relative Value Partners in Northbrook, Illinois. "We think the economy has bottomed out and we'll see some positive GDP this quarter."

Even so, volume was light because of the absence of most market players in a holiday-shortened week. US financial markets will be closed on Friday for the US Independence Day holiday.

The Dow Jones industrial average rose 57.06 points, or 0.68 percent, to 8,504.06. The Standard & Poor's 500 Index gained 4.01 points, or 0.44 percent, to 923.33. The Nasdaq Composite Index shot up 10.68 points, or 0.58 percent, to 1,845.72.

Earlier in the session, indexes had risen more than 1 percent, but pared gains heading toward the close as apprehension about Thursday's non-farm payrolls data crept into the market.

The initial estimate, according to a Reuters poll of economists, called for payroll losses of 355,000 non-farm jobs last month. But an updated poll this week of 76 economists raised the figure to 363,000 jobs. The department said in May that 345,000 positions were eliminated by employers.

The unemployment rate is expected to have crept up to 9.6 percent -- its highest since June 1983 -- from 9.4 percent in May.

The jobs data is due at 1230 GMT on Thursday.

Kraft Foods Inc, another major US food company, jumped 5 percent to $26.61, following the outlook of General Mills. Kraft topped the Dow's list of major advancers.

Chip makers ranked among the Nasdaq's biggest boosters, with Intel Corp up 3 percent at $17.04.

In the latest readings on the global economy, surveys from Europe showed manufacturing was shrinking less than initially thought and in China's case, growing modestly.

Other data on Wednesday showed the US manufacturing sector contracted in June but at a slower pace than in May. The Institute for Supply Management said its index of national factory activity edged up to 44.8 to in June from 42.8 in May.

Additionally, global outplacement consultancy Challenger, Gray & Christmas data showed planned layoffs at US firms fell to a 15-month low in June. That news eclipsed the ADP Employer Services payroll survey showing that private employers cut 473,000 jobs in June.

Prospects for a better world economy lifted commodity prices, boosting stocks in natural resource companies, including miners, with Newmont Mining Corp up 3.2 percent at $42.18.

Shares of Chevron Corp rose 0.4 percent to $66.52, while Exxon Mobil added almost 1 percent to $70.56. Both stocks were off their best levels, however, after crude oil futures reversed an initial climb that sent them above $71 a barrel earlier on Wednesday.

US front-month crude slipped 58 cents to settle at $69.31 a barrel, after rising as high as $71.85 earlier.


(Reuters)

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