Current Final

Category: Business

  • PIA’s privatisation plan gets nod from Cabinet Committee

    PIA’s privatisation plan gets nod from Cabinet Committee

    In a significant development aimed at reviving the fortunes of Pakistan International Airlines (PIA), the Cabinet Committee on Privatisation (CCoP) has given its unanimous approval for the privatisation of the national carrier. The decision was reached during a recent session of the Cabinet Committee on Privatisation, chaired by Finance Minister Senator Ishaq Dar.

    The meeting deliberated on a proposal presented by the Privatisation Commission, advocating for the inclusion of Pakistan International Airlines Co. Ltd. (PIACL) in the ongoing privatisation programme. After thorough consideration and following a crucial amendment in the parliamentary law, the CCoP decided to formally incorporate Pakistan International Airlines Co. Ltd. (PIA) into the list of active privatisation projects.

    A significant aspect of the meeting’s agenda was the Privatisation Division’s detailed presentation on the progress of the Roosevelt Hotel’s privatisation. The Cabinet Committee on Privatisation engaged in an extensive discussion and subsequently granted its consent to the Privatisation Commission’s plan to appoint a Financial Adviser. This Financial Adviser will play a pivotal role in structuring and facilitating transactions related to the Roosevelt Hotel in New York, an asset owned by PIA Investment Limited (PIA-IL).

    Highlighting the urgent need for corrective action, Aviation Minister Khawaja Saad Rafique had previously issued a stark warning regarding PIA’s financial trajectory. If immediate measures were not undertaken, the airline could potentially incur staggering losses amounting to Rs259 billion by the year 2030. Minister Rafique stressed that the transfer of administrative control to the private sector, along with the injection of Foreign Direct Investment (FDI), was essential to mitigate these looming financial challenges.

    In pursuit of this objective, Minister Rafique tabled “The Pakistan International Airlines Corporation (Conversion) (Amendment) Bill, 2023” before the Senate. The proposed amendment to Section 3 of the bill seeks to redefine the ownership and privileges of the company’s shareholders. Additionally, the bill empowers the Federal Government to issue fresh shares or cancel existing ones, further facilitating the necessary structural changes.

    Despite the bold vision presented by Minister Rafique, the bill encountered resistance within the Senate. While emphasising the potential benefits of FDI and private sector involvement, the bill’s proponents faced opposition from certain Senators. In light of these differing perspectives, the Senate Chairman has referred the matter to the relevant standing committee for further deliberation.

    As Pakistan International Airlines embarks on this transformative journey towards privatisation, the nation awaits the outcome of these critical discussions, cognizant of the substantial implications for both the airline industry and the country’s economic landscape.

  • Mysterious closure: Kia Lucky Motors Pakistan closes four showrooms despite rising sales

    Mysterious closure: Kia Lucky Motors Pakistan closes four showrooms despite rising sales

    Lucky Motor Corporation Limited (LMC) shocked the automotive industry in Pakistan with a surprise announcement on Monday. In a press release issued on the same day, LMC revealed its decision to close four of its dealerships in the country, effective immediately.

    The affected dealerships include Kia Motors Hanna Lake in Quetta, Kia Motors Chenab in Gujrat, Kia Motors Avenue in Dera Ghazi Khan, and Kia Motors Gateway in Mardan. While the announcement was unexpected, LMC emphasized its commitment to transparency and customer-centric practices by informing all its customers promptly.

    Curiously, the press release did not provide a specific reason for the abrupt decision. It comes as a puzzling move for LMC, considering the company’s positive performance in 2023. In contrast to its competitors experiencing declining sales, LMC saw a significant boost in sales during the same period.

    According to Mettis Global, Kia Sportage, one of the company’s popular models, saw a notable 4 per cent increase in total sales Month-over-Month (MoM). Furthermore, LMC managed to sell impressive numbers of other models, with 163 Picantos, 53 Stonics, and 72 Sorentos sold in February 2023 alone.

    The closure of these dealerships raises questions among industry experts and customers alike, as the company’s sales figures seemed to indicate a flourishing business. However, without a clear explanation from LMC, speculation continues to circulate regarding the true motives behind this unexpected decision.

  • Sharp rise in petrol price drives weekly inflation up, worsening daily struggles for Pakistanis

    Sharp rise in petrol price drives weekly inflation up, worsening daily struggles for Pakistanis

    The Sensitive Price Index (SPI) in Pakistan has risen by 1.30 per cent compared to the previous week, intensifying the financial burden on the already struggling population. The nation is grappling with ever-depreciating financial resources as it faces a sharp increase in petroleum prices and food inflation.

    One of the major contributors to the rising costs is the persistent increase in petroleum and oil prices over the past year-and-a-half. This increase directly affects commuters who have to bear the brunt of higher transportation costs, making it more challenging for them to manage their daily expenses, particularly when it comes to purchasing essential goods like food items.

    Although the SPI has seen a significant decline since reaching its highest level of 48.35 per cent on May 4, the overall inflation remains a concern. The International Monetary Fund (IMF) predicts the Consumer Price Index (CPI) for the current fiscal year to be 25.9 per cent, which is still high despite being lower than the 29.6 per cent recorded in 2022-23.

    According to the latest data released by the Pakistan Bureau of Statistics, the SPI has witnessed a staggering 29.83 per cent jump compared to the same week last year. This increase followed the government’s decision to hike petrol and high-speed diesel prices by Rs19.95 and Rs19.90 per litre, as well as a substantial increase in the rate of liquefied petroleum gas (LPG).

    The outgoing government, whose constitutional term is about to expire on Aug 12, defended the decision to increase fuel prices, citing the recently reached $3 billion IMF deal as being in the national interest.

    The SPI, which covers 51 essential items, has seen prices of 23 items go up, 7 items go down, and 21 items remaining unchanged compared to the previous week. The largest week-on-week rise was observed in the prices of tomatoes, increasing by 16.85 per cent, followed by chillies powder (7.58 per cent), garlic (5.71 per cent), onions (5.50 per cent), powdered milk (5.17 per cent), eggs (3.86 per cent), and rice basmati broken (2.06 per cent).

    Looking at the year-on-year comparison, the prices of wheat flour have surged by a staggering 131.40 per cent, while rice basmati broken and rice Irri-6/9 have increased by 82.86 per cent and 72.73 per cent, respectively. This is alarming as wheat flour and rice are staple foods for the majority of the population, and such steep price hikes can exacerbate the existing nutritional deficiencies and lack of protein in the daily diet.

    Adding to the concern is the rising cost of pulses, lentils, chicken, eggs, potatoes, and other vegetables, which are crucial components of the daily diet. This trend points towards a looming food insecurity crisis in Pakistan.

    The situation is expected to worsen as Pakistan must implement the harsh IMF conditions, which revolve around higher prices of utilities and fuel. This will make it even more challenging for the inflation-hit people to sustain the required food intake, leading to further hardship for the already struggling population.

  • Pakistan International Airlines faces potential Rs259 billion loss by 2030

    Pakistan International Airlines faces potential Rs259 billion loss by 2030

    Pakistan’s Aviation Minister, Khawaja Saad Rafique, delivered a grave warning on Friday about the precarious financial state of Pakistan International Airlines (PIA). He highlighted that without swift corrective action, the airline could incur staggering losses of up to Rs259 billion by 2030. To salvage the national carrier from its mounting debts, Minister Rafique urgently called for essential measures, including the transfer of administrative control to the private sector.

    Minister Rafique’s concerns were voiced during his address on the Senate floor, where he presented “The Pakistan International Airlines Corporation (Conversion) (Amendment) Bill, 2023.” He stressed the critical need for foreign direct investment (FDI) and the involvement of private entities to ensure the long-term sustainability of PIA, which currently grapples with an overwhelming debt burden of Rs742 billion.

    However, the proposal faced strong opposition from several senators during the proceedings. As a result, the Senate chairman referred the matter to the relevant standing committee for further evaluation, acknowledging the significance of FDI and private sector participation in transforming PIA into a profitable entity.

    The deliberations also witnessed PTI lawmakers raising concerns about the quorum, prompting a fifteen-minute bell ringing to meet the attendance requirement. Once the quorum was restored, House proceedings resumed to discuss the fate of PIA.

    The key provision of the bill proposes an amendment to Section 3, which specifies that the company’s shareholders would retain the same number of fully paid shares while preserving their existing rights and privileges. Additionally, the federal government could, through an official gazette notification, issue fresh shares or cancel existing ones as needed during the validity period.

    The destiny of Pakistan International Airlines now lies in the hands of the standing committee, tasked with thoroughly scrutinising the bill and its proposed amendments. The committee’s decision will significantly impact the future of the struggling airline and determine whether privatisation and foreign investment can pave the way for PIA’s financial recovery.

  • Atlas Honda increases motorcycle prices: CD-70 price hiked to Rs158,000

    Atlas Honda increases motorcycle prices: CD-70 price hiked to Rs158,000

    Atlas Honda, the leading motorcycle brand in Pakistan, has recently announced price adjustments for its bikes. The new prices are set to take effect today, August 5th.

    Here are the latest prices of Atlas Honda motorcycles in Pakistan:

    Motorcycle ModelPrevious Price (Rs)New Price (Rs)Previous Price (Rs)
    CD-70154,900157,9003,000
    Dream 70165,900168,9003,000
    Pridor203,900208,9005,000
    CG-125231,900234,9003,000
    CB-125F387,900390,9003,000
    CB-150F490,900493,9003,000

    The CD-70 model will see an increase of Rs3,000, bringing its new price to Rs157,900. Similarly, the Dream 70 model’s price has been raised by Rs3,000, now priced at Rs168,900.

    For the Pridor model, there has been a significant increase of Rs5,000, setting its new price at Rs208,900. As for the CG-125 model, it will now be priced at Rs234,900. Additionally, the CB-125F model’s price has been adjusted to Rs390,900, and the CB-150F model will now cost Rs493,900.

    These changes in prices reflect the current market conditions and various factors impacting the automobile industry. Customers should be aware of these adjustments while making their purchasing decisions after the specified date.

  • Gold price drops by Rs2,800 per tola amidst Pakistani rupee appreciation

    Gold price drops by Rs2,800 per tola amidst Pakistani rupee appreciation

    Domestic bullion prices in Pakistan experienced a significant drop, with both gold and silver witnessing declines. The 24-karat gold closed at Rs220,200 per tola, falling by Rs2,800, while the price of 10-gramme 24-karat gold went down by Rs2,401, closing the day at Rs188,786 per tola. Additionally, 10-gramme 22-karat gold stood at Rs173,054 per tola, down by Rs2,200.

    The drop in gold and silver prices can be attributed to the recent appreciation of the Pakistani rupee (PKR). The PKR managed to snap a three-day losing streak by appreciating Rs2.18 against the US dollar in the interbank session on Thursday. Since gold is denominated in US dollars, when the PKR strengthens against the dollar, the value of gold in PKR terms diminishes.

    Similarly, the price of silver also witnessed a decline in the domestic market. The price of 24-karat silver fell by Rs50 to close at Rs2,750 per tola, and the price of 10-gramme 24-karat silver closed at Rs2,358 per tola, losing Rs42.86.

    The recent appreciation of the Pakistani rupee, coupled with global interest rate developments, has influenced the decline in gold and silver prices in the domestic market. Investors are now keeping a close eye on economic indicators and global central bank decisions to anticipate potential shifts in precious metal prices.

  • Load shedding and unbearable hike in electricity prices hit Pakistani homes and businesses

    Load shedding and unbearable hike in electricity prices hit Pakistani homes and businesses

    Pakistan is facing an ongoing and unbearable increase in electricity tariffs, causing hardships for the majority of the population. The government justifies these price hikes by claiming they are under pressure from the International Monetary Fund (IMF) to generate more revenue. However, the tariff increase is mainly due to fuel price adjustments and high taxes imposed by the government.

    Consumers, especially low- to middle-class households, are struggling to pay their electricity bills, which have more than doubled. The rise in fuel price adjustments and government taxes further exacerbates the burden on consumers. The government’s commitment to the IMF to implement a fifty per cent increase in the base tariff from July to October contributes to the escalating bills.

    Unfortunately, the increase in electricity prices is expected to continue, and there is no progress in essential power sector reforms to reduce system losses, corruption, power theft, and reliance on imported fuels. As a result, the National Electric Power Regulatory Authority (NEPRA) has raised the average tariff to ensure funds for loss-making power distribution companies, putting additional financial strain on consumers.

    The government claims that the tariff increase is necessary to meet the IMF’s requirements and support energy sector viability. However, the business community also suffers, fearing a loss of competitiveness and increased costs. Industries have cut down production due to high energy prices and inflation, affecting economic growth and job creation.

    Many argue that successive governments have failed to implement essential structural reforms, leading to Pakistan’s economic predicament. The solution proposed by economists involves fixing the energy sector’s deep-rooted issues, taxing sectors adequately, and implementing a credible privatization plan to reduce pressure on the budget.

    In conclusion, Pakistan’s never-ending increase in electricity tariffs has become a major burden for the population, and without significant reforms, the situation is unlikely to improve. The government’s need to meet IMF requirements clashes with the urgency of boosting industrial activity and economic growth, leaving the country in a challenging economic predicament.

  • Pakistan Stock Exchange surpasses 49,000 points, reaches new high since 2017

    Pakistan Stock Exchange surpasses 49,000 points, reaches new high since 2017

    The Pakistan Stock Exchange (PSX) witnessed a remarkable surge on Thursday as it extended its bullish momentum, crossing the 49,000 level and reaching its highest point in six years. This impressive rally was fueled by positive economic data and a series of favourable factors contributing to investor confidence.

    During the intraday trade, the PSX’s benchmark KSE 100-share Index experienced a significant gain of 560.20 points, amounting to a 1.15 per cent increase, ultimately settling at an impressive 49,324.50 points. This milestone represents the index’s highest level since June 9, 2017, marking a notable achievement for Pakistan’s financial markets.

    The impressive growth of the benchmark index has been sustained since Pakistan signed a staff-level agreement with the International Monetary Fund (IMF) for a substantial $3 billion Standby Agreement. Since the agreement’s signing, the market has witnessed an extraordinary upswing, with the benchmark index having gained an impressive 7,871 points.

    Market analysts and experts have identified multiple reasons behind the consistent surge in the market. Among these factors is the State Bank of Pakistan’s (SBP) decision to maintain the policy rate, effectively keeping the status quo. The SBP’s prudent approach to monetary policy has contributed to stability and encouraged investors to take bullish positions in the market.

    Furthermore, the positive economic data, both from domestic and international sources, has also played a pivotal role in bolstering investor confidence. With indicators pointing towards a strengthening economy, investors have been encouraged to increase their stakes in the market, resulting in the record-breaking performance of the Pakistan Stock Exchange.

    As the market continues to show resilience and upward momentum, financial experts and policymakers are cautiously optimistic about the future outlook. They emphasise the importance of sustaining a positive economic trajectory through sound policy measures and a vigilant approach to market dynamics.

    Market participants and investors are closely monitoring the developments and will likely adjust their strategies in response to any shifts in economic indicators and policy decisions. The surge in the Pakistan Stock Exchange serves as a testament to the country’s economic potential and its ability to attract local and foreign investors to participate in its thriving financial markets.

  • Banks will now pay 10% super tax if their earnings exceed Rs30 crore

    Banks will now pay 10% super tax if their earnings exceed Rs30 crore

    The Federal Board of Revenue (FBR) has announced important amendments to the Income Tax Ordinance, 2001 through Finance Act 2023, bringing significant changes to the Super Tax structure. According to the latest income tax circular (2 of 2023), banks will now be required to pay a 10 per cent Super Tax if their income exceeds Rs300 million.

    The Super Tax was initially introduced through the Finance Act of 2022, imposing graduated tax rates ranging from 1 per cent to 4 per cent on income slabs starting from Rs150 million to Rs300 million and above. Certain specified business sectors were subject to a higher Super Tax rate of 10 per cent if their income surpassed Rs300 million.

    New Super Tax slabs

    To enhance the scope of the Super Tax and ensure progressivity and uniformity in the tax rate structure, the Finance Act 2023 has introduced additional income slabs. These new slabs are as follows: Rs350 million to Rs400 million, Rs400 million to Rs500 million, and Rs500 million and above, with corresponding Super Tax rates of 6 per cent, 8 per cent, and 10 per cent, respectively. These new Super Tax rates will apply to all taxpayers across the board for the Tax Year 2023 and beyond.

    Addressing a significant concern, the Finance Act 2023 has also clarified the payment procedure for the Super Tax. The ambiguity surrounding whether the Super Tax under section 4C of the Ordinance should be paid as a lump sum at the time of filing income tax returns or in monthly/quarterly installments of advance tax under section 147 of the Ordinance has been resolved.

    The introduction of a new sub-section (5A) in section 4C now requires Super Tax liability to be paid in conjunction with monthly/quarterly advance tax installments, depending on the taxpayer’s circumstances. Corresponding amendments have been made in section 147 of the Ordinance to facilitate this process.

    This move is aimed at broadening the scope of the Super Tax and making it a more progressive and comprehensive tax measure. The FBR expects these changes to contribute significantly to the country’s revenue collection efforts while ensuring a fair and equitable tax system for all taxpayers.

  • 11-month export decline triggers concerns over industry closures in Pakistan

    Pakistan’s merchandise exports have suffered yet another blow, registering a sharp decline for the 11th consecutive month in July 2023. According to data released by the Pakistan Bureau of Statistics (PBS), exports plummeted by 8.6 per cent year-on-year to $2.05 billion. The decline in export proceeds has raised concerns about the potential closure of industrial units, particularly in the textile and clothing sectors.

    On a month-on-month basis, the situation worsened further, as the export proceeds contracted by 12.68 per cent in July alone. Throughout the entire fiscal year 2023, merchandise exports experienced a substantial dip of 12.71 per cent, falling to $27.54 billion from $31.78 billion in the previous fiscal year (FY22). This significant shortfall of $4.46 billion compared to the $32 billion target set by the government has added to the challenges faced by exporters.

    The government’s projection of a $30 billion export target for the current fiscal year will be a daunting task given the consistent decline in exports and the absence of any concrete measures to address the root causes.

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    Criticism has been directed towards the Commerce Ministry, as it remained conspicuously silent throughout FY23, failing to hold any meetings or issue statements to understand and resolve the export downturn. The Commerce Minister’s focus on frequent foreign tours without addressing the pressing issue of diminishing exports has raised eyebrows among concerned stakeholders.

    Simultaneously, imports have also experienced a sharp contraction, plunging by 26.44 per cent to $3.66 billion in July from $4.98 billion in the corresponding month last year. On a month-on-month basis, imports declined by 13.15 per cent, indicating a slowdown in the domestic economy.

    During FY23, overall imports fell by a staggering 31 per cent, reducing from $80.13 billion in FY22 to $55.29 billion. The government’s projection of a $58.69 billion import target for FY24 reflects a planned increase of $3.4 billion or 8.14 per cent.

    To address the economic challenges and meet the requirements set by the International Monetary Fund (IMF), the government has eased import restrictions and declared that the State Bank of Pakistan will not hinder the opening of letters of credit (LCs) from July 1. This decision was a condition for reaching a Staff-Level Agreement with the IMF for a nine-month $3 billion Stand-By Arrangement.

    The trade deficit, however, showed signs of improvement, decelerating by 41.16 per cent to $1.60 billion in July from $2.73 billion in the same month last year. The trade deficit for FY23 also witnessed a significant decline of 43 per cent, falling to $27.54 billion from $48.35 billion in FY22.

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    The continuous negative growth in exports, with only a minor upswing in August 2022 due to a backlog of orders, has raised concerns about Pakistan’s ability to balance its external account. The decline in textile and clothing exports, which account for over 60 per cent of the total exports, remains a significant contributing factor to the overall export contraction in FY23.

    As Pakistan navigates its economic challenges, the government faces mounting pressure to devise effective strategies and take immediate action to revive the exports sector and stabilise the nation’s external trade.