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Tag: export

  • SBP hikes export financing markup rates from 11% to 13%

    The State Bank of Pakistan (SBP) has revised the rates of specialised lending schemes in accordance with its increased monetary policy rate of 16 per cent.

    SBP said it had decided to reduce the gap between its policy rate and the Export Finance Scheme (EFS) and Long-Term Financing Facility (LTFF) rates from the existing 5 per cent to 3 per cent, according to a circular released by the central bank.

    The notification stated that the revised tariffs will be effective from December 30, 2022.

    “Further, as mentioned in above referred circular, in [the] future with any change in the SBP policy rate, markup rates for EFS and LTFF will be revised automatically so that the gap between [the] policy rate and EFS & LTFF rates is maintained at 3 per cent,” the central bank added.

    Exporters and industrialists, who are already feeling the strain of strong inflationary pressures together with record increases in energy costs, are anticipated to see a rise in the cost of doing business as a result of higher financing rates.

  • SBP to lift import restrictions next week

    SBP to lift import restrictions next week

    The government has lifted import restrictions on commodities intended for vehicle manufacturing, mobile production, solar power equipment, and nuclear reactors for power generation projects commencing in 2023, despite Pakistan’s limited foreign exchange reserves.

    Simultaneously, authorised dealers (ADs – largely commercial banks) have been encouraged to prioritise the import of food and energy products. They should consider enabling the import of non-essential and luxury products after first providing for the necessities.

    The State Bank of Pakistan (SBP) reminded ADs on Tuesday that for the past eight months, they had been required to obtain prior permission from the Foreign Exchange Operations Department, SBP-BSC, before initiating any import transaction involving HS Code Chapters 84, 85, and certain items of Chapter 87.

    “It has now been decided to withdraw instructions (of prior permission) with effect from January 2, 2023. Consequently, requests for import transactions already submitted to SBP-BSC pertaining to referred HS codes stand returned to the ADs for appropriate disposal at their end,” the SBP said in the circular.

    Arif Habib Limited (AHL) Head of Research Tahir Abbas said that the import system may “continue to work in its present form. The removal of restrictions will not re-open imports in a full-fledged manner.”

    He stated that due to the country’s short foreign exchange reserves, the government has encouraged banks to first allow the import of necessary items before catering to others.

    The SBP advised ADs (commercial banks) to “prioritise and facilitate the import of essential sectors such as food (wheat and edible oil) and pharmaceuticals (raw material, life-saving or essential medicines, and surgical instruments, including stents).”

    According to Express Tribune, the second priority of ADs is to focus on energy imports “like oil, gas, and coal” (for power projects based on the merit order of the Ministry of Energy).

    Imports for export-oriented businesses should be prioritised as well. They should facilitate “imports, especially of raw materials, input goods, and spare parts, by the export-oriented industries,” stated the SBP. Imports of agri-inputs should be the fourth priority of ADs, as explained by SBP: “import of items required as inputs for agriculture (seed, fertilizers, and pesticides).”

  • Russia may send natural gas supplies to Pakistani markets in long term: Russian Deputy PM

    Russia may send natural gas supplies to Pakistani markets in long term: Russian Deputy PM

    According to Russian Deputy Prime Minister Alexander Novak, Moscow is ready to resume gas supplies to Europe via the Yamal-Europe Pipeline and can also send supplies to Pakistan and Afghanistan in the long term.

    “The European market remains relevant, as the gas shortage persists, and we have every opportunity to resume supplies,” TASS cited Novak as saying in remarks published by the agency on Sunday.

    “For example, the Yamal-Europe Pipeline, which was stopped for political reasons, remains unused.”

    The Yamal-Europe Pipeline normally flows westward, but it has been mostly reversed since December 2021, when Poland chose to draw on stored gas in Germany rather than buy from Russia.

    Warsaw canceled its arrangement with Russia in May, after previously rejecting Moscow’s demand that it pay in roubles.

    Gazprom, Russia’s largest supplier, responded by cutting off supply and announcing that it would no longer be allowed to export gas through Poland after Moscow slapped sanctions on the company that operates the Polish section of the Yamal-Europe pipeline.

    Novak also stated that Moscow is exploring increased gas deliveries via Turkey following the establishment of a hub there.

    He also stated that by 2022, Moscow intends to have exported 21 billion cubic meters (bcm) of liquefied natural gas (LNG) to Europe.

    “This year we were able to significantly increase LNG supplies to Europe,” Novak said. “In the 11 months of 2022, they increased to 19.4 bcm, by the end of the year 21 bcm are expected.”

    Novak also stated, in a wide-ranging interview with the TASS news agency, that in the long run, Russia can provide natural gas to the markets of Afghanistan and Pakistan, either through Central Asian infrastructure or through an exchange from Iranian territory.

    He also stated that Russia and Azerbaijan have agreed to enhance gas supplies for domestic usage.

    “In the future, when they increase gas production, we will be able to discuss swaps,” he said.

    Moscow is also discussing higher supplies of its gas to Kazakhstan and Uzbekistan, he said.

  • ‘90% of fish consumed in Pakistan is unfit for human consumption’: WWF

    ‘90% of fish consumed in Pakistan is unfit for human consumption’: WWF

    An official at World Wide Fund (WWF) has revealed that approximately 90 per cent of the fish consumed in Pakistan is contaminated and unfit for human consumption.

    Muhammad Moazzam Khan, WWF’s technical advisor on marine fisheries, made the statement at a seminar titled “Blue Economy: An Avenue for Development in Pakistan” held at the Pakistan Institute of International affairs.

    He said that most of the fish sold on roadside carts is unhealthy for health because of lack of proper processing. He suggested that fish should be stored between 0 to 5 degrees Celsius to keep it from rotting.

    “Fish are very delicate protein items and putrefy very quickly if not iced or frozen as soon as possible,” said Khan. “It is usually kept at room temperature and sometimes at above 40 degrees Celsius and vendors sprinkle water on them to make them look fresher and keep them from decaying. But they have already become unfit for consumption, yet people buy and consequently, fall sick.”

    He also mentioned that the export of seafood was increasing but due to a lack of processing facilities and low-quality control, we were unable to achieve higher numbers. Pakistan exported around 10 per cent of the produce and the rest was degraded or damaged as most boats lacked deep freezers and other storage facilities.

  • ECC lifts import ban on goods except CBU vehicles, mobiles and appliances

    ECC lifts import ban on goods except CBU vehicles, mobiles and appliances

    The Cabinet’s Economic Coordination Committee (ECC) has decided to lift the import ban on all items other than completely built units (CBUs) of automobile, mobile, and home appliances and to permit the import of 200,000 metric tonnes of wheat.

    The increase in petroleum dealers’ margin from Rs4.90 per litre and Rs4.13 per litre, respectively, to Rs7 per litre was also approved at the meeting chaired by Finance Minister Miftah Ismail.

    The Pakistan Petroleum Dealers Association (PPDA), according to sources, has asked the government for an immediate revision of their margins due to inflation, increases in staff salaries and utility costs, etc.

    They have asked that the margins be revised to Rs6.90 per litre including 15 per cent profit (effectively Rs7.94 per litre). The PPDA then used the media to announce a nationwide strike that would begin on July 18, 2022, with the demand that their margins be increased to 6 per cent of the current selling price (effectively, Rs13.81 per litre for MS and Rs4.16 per litre for HSD).

    On the orders of the prime minister, Musadik Malik, the minister of state for petroleum, and Shahid Khaqan Abbasi, the former minister for petroleum, immediately began communication with the PPDA. On July 16 and 17, 2022, several rounds of negotiations took place in Karachi.

    During negotiations, the Secretary of Petroleum and the Chairman of OGRA both remained present. The PPDA changed its position during negotiations and requested that the margins be raised to Rs9.23 and Rs9.46/litre on MS and HSD, respectively, with immediate effect.

    The negotiating team acknowledged that a dealer with daily sales of less than 200,000 litres cannot operate the business profitably on current margins, and that such losses serve as a motivator for dishonest behaviour.

    After lengthy negotiations, the PPDA finally agreed to margins of Rs7 per litre for both MS and HSD. Based on this agreement and the promise that the revised margins will take effect in August 2022, the PPDA cancelled its call for a strike on July 18, 2022.

    The commitment made to the dealers in November 2021 is still less than this agreed-upon margin (4.4 per cent of sales price).

    The 4th international wheat tender for 2022, which was announced and opened on July 25, has prompted the Ministry of National Food Security and Research to ask for urgent advice. The Trading Corporation of Pakistan (TCP) issued its fourth tender on May 19, 2022, in order to secure 200,000 metric tonnes of imported wheat on a CFR basis, it was announced at the meeting.

    The ECC has approved the direct payment of $11.6 million as compensation/goodwill to the company M/s China Gezhouba Group International Engineering Co. Ltd (CGGC) through the Ministry of Foreign Affairs in response to a proposal from the Ministry of Water Resources for a compensation package for the Chinese casualties at the Dasu Hydro Power project.

    The ECC determined that the compensation/goodwill package’s amount, which is US$ 11.6 million, will remain the same as per the ECC’s earlier decision from January 21, 2022.

    it also approved the proposal to switch both the Fatima Fertilizer (Sheikhupura Plant) and Agritech plants to domestic gas on a summary moved by the Ministry of Industries and Production.

    According to the ministry, RLNG is provided to both SNGPL-based plants on a cost-sharing basis, and the gas rate for running these plants is calculated using a variable contribution margin (VCM).

    Both plants have asked the Ministry to revise the VCM and cap the GST at the price paid by the plants due to rising fuel prices and other factors. The proposal to switch both plants to domestic gas was approved by the ECC following discussion in accordance with the Federal Cabinet’s and ECC’s earlier decision.

    The Ministry of Petroleum, Ministry of Finance, Ministry of Food Security, and Ministry of Industries & Production were further instructed by the ECC to determine the gas price/VCM for the fertilisers The ECC also decided that sales tax could be applied to the actual gas cost that the company is paying.

    The Ministry of Commerce also provided a summary stating that the Cabinet approved the ban on the import of approximately 33 classes/categories of goods in order to reduce the current account deficit (CAD), which was on the rise.

    The decision caused an overall decrease in imports of the prohibited goods of over 69 per cent, or from $399.4 million to $123.9 million. Due to serious concerns expressed by significant trading partners regarding the imposition of the ban and taking into account the fact that the ban has had an impact on supply chains and the domestic retail industry, a review meeting was also held to review the ban after two months.

    The government’s ongoing efforts have resulted in a significant decrease in imports, so the ECC decided to lift the ban on imported goods other than auto, mobile, and home appliance CBUs.

    Additionally, all held-up shipments (aside from those that still fall under the banned category) that arrived at the ports after July 1, 2022, may be cleared with the payment of a 25 per cent surcharge.

  • Hyundai sedan prices raised up to Rs830,010 amid rupee devaluation

    Hyundai sedan prices raised up to Rs830,010 amid rupee devaluation

    Hyundai Nishat, like other automakers, has announced a major hike in costs for the Elantra and Sonata variants as a result of the unstable local currency and increased tax rates.

    The updated price for the Hyundai Elantra 2.0 is Rs5,499,000 (including CVT) compared to the old rate of Rs4,998,490 after an increase of Rs500,510. The new price for the Hyundai Elantra 1.6 in Pakistan is Rs5,099,000 (including CVT) compared to the old rate of Rs4,341,9900 after an increase of Rs757,010.

    The revised price of the Hyundai Sonata 2.0 is Rs7,899,000 (with CVT) in Pakistan, up Rs830,010 from the previous rate of Rs7,068,990, while the updated price of the Hyundai Sonata 2.5 is Rs5,499,000 (including CVT), down Rs571,510 from the previous rate of Rs7,927,490.

    Due to local currency devaluation, logistical expenses, tax rate increases, and overall economic uncertainty in the nation, Pakistan’s auto sector is struggling.

    During intraday trade today, the Pakistani Rupee (PKR) lost value against the US Dollar (USD) and fell below the Rs238 mark. The local currency was trading at Rs238.50 in the open market at noon after losing more than Rs5.57 in relation to the dollar.

    Major automakers have been compelled by these problems to lower their production goals in Pakistan. While Honda Atlas Cars Limited (HACL) and Kia Lucky Motor Corporation Limited (KLMCL) are switching to single-shift manufacturing schedules, Toyota Indus Motor Company (IMC) has ceased production for an unknown length of time.

  • OGRA lowers RLNG cost by $4.6 per MMBTU

    OGRA lowers RLNG cost by $4.6 per MMBTU

    Re-gasified liquefied natural gas (RLNG) will cost consumers of public gas utilities 20.57 per cent less in July 2022 than it did in June, according to a notification from the Oil and Gas Regulatory Authority (Ogra).

    The government has set the RLNG price for Sui Northern Gas Pipelines Limited’s (SNGPL) customers at $17.4603 per metric million British thermal units (MMBTU), according to a notification released on Friday.

    Compared to the rate of $20.7691 per MMBTU for June 2022, the new price is $3.3088 less. The general sales tax (GST) is not included in the weighted average sale price.

    The RLNG price will be $17.9575 per MMBTU for Sui Southern Gas Company (SSGC) customers as opposed to the SNGPL consumer price, which represents a $4.6501 per MMBTU decrease for July over $22.6076 per MMBTU.

  • Pakistani mobile manufacturing businesses are laying off workers due to economic challenges

    Pakistani mobile manufacturing businesses are laying off workers due to economic challenges

    There has been significant upheaval in the economy as a result of the new tax structure, rising inflation, and the power shortage.

    The Samsung mobile factory, which is owned by Lucky Motors, experienced a similar situation when it had to lay off a number of employees because Pakistan was short on raw materials.

    In addition to Samsung, there have also been reports of firing close to 1,000 workers at the Vivo mobile factory.

    Lucky Motor Corporation was permitted by PTA to manufacture Samsung mobile devices in August 2021, which sounded like a great news in terms of job creation and GDP contribution, among other things.

    In various economic sectors, each economic measure can have numerous impacts. As per economic theory, a nation’s high rate of inflation discourages investment since it makes it less certain that those investments will be lucrative. Humongous unemployment is being caused by this, along with an import ban and a recently implemented “super tax” in Pakistan.

    Additionally, businesses like Careem and Airlift recently stopped operating in some sectors and let go of a number of employees.

    In the year 2020, Careem fired 31 per cent of its workforce due to a pandemic. A number of the staff members at SVWL, Airlift, and Careem Food were let go in 2022. limited their operations or nearly shut down.

  • More than 40 life-saving drugs short in Pakistan

    More than 40 life-saving drugs short in Pakistan

    Due to the imposition of GST, the pharmaceutical industry is no longer importing raw materials, resulting in a shortage of 40-50 life-saving drugs.

    Mansoor Dilawar, Chairman of the Pakistan Pharmaceutical Manufacturers’ Association (PPMA), stated that 40 to 50 medicines are in short supply and that the number will soon exceed 100.

    According to Brecorder, the pharmaceutical industry has been waiting for Rs40 billion in sales tax refunds since January 16, 2022. However, the FBR has denied that any refunds were held by the tax authority.

    Unavailable drugs

    Alp tablets for anti-depression, Dexamethasone for asthma, cancer, and joint pain, Epitab for epilepsy, Nervin for depression, Epival, Fexet D, Nitronal, Ventoline tablets and injections are among the medicines in short supply on the market.

    Furthermore, Epival In, Myrin P, Ketasol Inj, Loprin, Silver tab, phenergen Elixir, Tixylix Lincitilus, Chlooriptics Drops, systane drops, Rivotril drops, Dormicum tablets, Winstor, Tritace, Sodamint, Schazobutil, Jardymet, and Brufen are said to be in short supply.

    There are also no Lomotil, Panadol, Tan Primolut B, Progynova, Stilnix, Glucobay, Zentel, Avor, Gravibinan, Syp Gaviscon, Lipofundin, or Sorbid Injection available.

    According to the PPMA chairman, the industry is halting production of low-margin items after the Federal Board of Revenue (FBR) imposed taxes that increased the industry’s cost of production by Rs60 billion to Rs70 billion.

    Read more: FBR collects highest-ever tax of Rs6 trillion in FY22

    “Because drug prices are capped, the pharmaceutical industry cannot pass on higher production costs to consumers,” he explained.

    “As a result, the industry has been forced to halt production of low-margin medicines, which have become unviable due to tax increases,” Dilawar added.

    According to Dilawar, the industry pays a 17 per cent refundable GST at the import stage and raw materials are subject to a 1 per cent non-refundable tax. The government then imposed a 1 per cent tax on the sale of medicines. This forces the industry to pay taxes ranging from Rs60 billion to Rs70 billion per year.

  • Pakistan notifies revised export control lists of goods

    Pakistan notifies revised export control lists of goods

    Pakistan has notified revised control lists of goods, technologies, materials, and equipment subject to the Strategic Export Control Division (SECDIV) license for export.

    This was done in accordance with the Export Control on Goods, Technologies, Materials, and Equipment related to Nuclear and Biological Weapons and their Delivery Systems Act of 2004.

    “The act empowers the government to control the export, re-export, trans-shipment, and transit of goods, technologies, materials, and equipment related to nuclear and biological weapons and their delivery systems,” it added.

    According to the statement, the Ministry of Foreign Affairs’ Strategic Export Control Division (SECDIV) revised/updated the control lists in consultation with other relevant ministries and departments as part of the regular review process.

    In the Pakistani Gazette S.R.O. 551(I)/2022 dated April 12, 2022, the revised control lists were announced. The control lists were first published in 2005 and later updated in 2011, 2015, 2016, and 2018, the statement said.

    According to the notification, the updated lists are in compliance with the standards and lists of these export control regimes. Over the years, Pakistan has improved its export control system, streamlined and strengthened it, and increased its interaction with international export control systems like the Nuclear Suppliers Group, the Missile Technology Control Regime, and the Australia Group.

    The notification emphasises Pakistan’s continued commitment and strategy as a responsible nuclear state to advance the common cause of non-proliferation and strictly uphold its commitments, the statement said.