The CPEC phase–II to emphasis on B2B excluding ML and hydropower projects. Board of Investment and Ministry of Planning, Development and Special Initiatives to formulate mechanisms to boost B2B cooperation. Paper works for Third party projects in CPEC are about to complete in the first week of June 2024, prior to visit China this year. Discussion on diverse topics including CPEC, development of Gwadar, trade and investment, financial relationship, mineral cooperation, ICT, agriculture, Science and Technology, inclusion of Diamer Bhasha Dam in the CPEC framework and security of Chinese nationals. The CPEC regional scope expanded by improving connectivity of neighboring countries and regions with Pakistan’s sea ports as both countries support the extension of the CPEC to wider areas through land route transportation.
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THIRD PARTY PROJECTS IN CPEC
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The exports of cement observed a rise of 35.92 per cent in ten months of the financial year 2023-24, as against the exports of the corresponding months of last year. According to the Pakistan Bureau of Statistics (PBS), the cement exports from the country were documented at US $204.546 million during July-April (2023-24) against the exports of US $150.488 million during July-April (2022-23). In terms of quantity, the exports of cement also gushed by 63.51 % going up from 3,242,161 MT to 5,301,161 MT. Meanwhile, year-on-year basis, the exports of cement also seen strengthening of 66.61 % in the month of April 2024 as compared to April 2023. The exports of cement from the Pakistan during April 2024 were recorded at US $25.074 million against the exports of US $15.049 million in April 2023.On a month-on-month basis, exports of cement improved in April 2024 when compared to the exports of US $15.572 million in March 2024 by 61.02 %.
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Pakistan exported more rice in the first 10 months of the current fiscal year, shipping out 5.087 million tons valued at $3.283 billion, marking an 80% increase compared to the previous fiscal year (2022-23), which saw exports worth $1.822 billion and 3.270 million tons in quantity, Achieving another historic milestone. This noteworthy accomplishment was achieved despite the high export refinance rate, a policy rate, and a stable rupee against the dollar during the period. Increase in cultivation area and per-acre yield resulted in increased Exports of coarse rice varieties. Basmati, has faced a loss of its major traditional markets, from, GCC countries, U.A.E to Saudi Arabia, and the largest Basmati consumer market, Iran. Despite exporting more rice this year at higher prices in comparison to last year, both Basmati and non-Basmati rice prices have unpredictably fallen in the domestic market. This difference specifies that rice hoarders and stockiest were less motivated to hoard due to high interest costs, while constricted border security measures lessened rice smuggling.
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RICE EXPORT: RISK AND OPPORTUNITIES
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RESEARCH AND DEVELOPMENT IN HORTICULTURE TO ENHANCE EXPORT
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The need for introducing new varieties of horticulture through widespread research and development (R&D) work has been proposed by The All Pakistan Fruit and Vegetable Exporters and Importers Association (APFVEA), while presenting budget proposals for fiscal year 2024-25. New varieties should be developed for fresh mandarin to enhance export of the citrus fruit by allocating Rs200 million for R&D. The aseptic bags are being used in the pulp industry to boost the shelf life of products; aseptic packaging bags are used but these are not manufactured locally. Hence, processing plants have no other choice, but to import the bags which eventually increases to the price and spare parts used in juice processing, these may be exempted from import duty. The cost of phytosanitary certificates should be revised to a reasonable level. The horticulture industry had been omitted from the FASTER tax refund system of the Federal Board of Revenue (FBR) with its benefits restricted to only five major export-oriented industries and called for withdrawing the 20% federal excise duty (FED) executed on fruit juice industry in the previous budget as its sales had plunged 40% over the last year.
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Special Investment Facilitation Council has been placed the Mining and Mineral sectors on the significant list and a significant improvement has also been achieved in this sector. Pakistan has invited China to make investment in Mining sector of Pakistan and assured provision of all-out facilitation in this connection. The Chinese firm MCC Tongsin Resources, which has been enlisted among the major Metallurgical Construction Contractors of the world and, is a research and investment company expressed intense interest in investment in Pakistan’s mining and minerals sectors. Company briefly discussed with Mining sector of Pakistan about its plans for investment in in Pakistan’s mining and minerals sectors. The visit of the Chinese company to Pakistan is intended at strengthening ties between China and Pakistan and to assure that Pakistan would ensure safety and security of Chinese nationals, working in different development projects.
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CHINESE INVESTMENT IN MINING SECTORS OF PAKISTAN
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OIL, GAS SECTOR ANOMALIES EXCAVATED
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Numerous nonconformities from related policies, laws, rules, and regulations in dealings with oil and gas exploration companies has been discovered in an examination of annual data on oil and gas production and the absence of incorporation among various E&P policies and deprived liaison. Performance Audit for the period from 2010-11 to 2019-20, from September 8, 2020 to October 16, 2020 of Management of Leases and Licenses has been conducted. The main objective of the audit was to evaluate the effectiveness and efficiency to manage leases and licenses to promote the exploration and production of indigenous hydrocarbon resources within the country. The audit was steered in accordance with international auditing guideline. Over the past five years divulges a decline in gas and crude oil production by around 11%. Precisely, gas and hydrocarbons production declined between 2015-16 and 2019-20. These deviations also resulted in significant losses due to the unauthorized grant of price incentives to Exploration & Production (E&P) operators. The non- approval or delayed approval of applications for renewal of leases by the regulator caused in irregular production, non-deposit of social welfare obligations by E&P companies, unpromising investment firms (both local and overseas), and attractive possible litigation.
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The Federal Board of Revenue (FBR) has decided to transform WeBOC customs clearance system and launch the new customs digital management system. This project of customs transformation encompasses placement of hi-tech tools which would empower Pakistan Single Window Company. This would help Customs to substitute WeBOC system with an extra robust and wide-ranging digital system to advance compliances and facilitate of doing business. Pakistan Customs has successfully completed business process mapping of its core functions, in the next phase all core function will be up graded and redesigned as recommended by WTO, WCO, UN as per international standards and best customs administration practices will be adopted in collaboration with technical experts from KGH and Maersk. The project would re-align the legal framework, legislative structure and operational model of Pakistan Customs, Upgradation of risk management, post-clearance audit capabilities, use of technology and elimination of redundant tasks would enable Customs to transmit it resources in the direction of more critical functions.
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TRANSFORMATION OF CUSTOMS OPERATIONS SYSTEM
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The Petroleum Division has drafted new LPG policy 2024 but it sparked concerns among different stakeholders. The policy predicts that LPG producers should allocate up to 10% of their production, primarily for use in LPG air-mix plants in remote areas to Sui companies without any bidding and 5% of production to marketing companies will be dedicated without bidding for supply in specific areas like Azad Jammu and Kashmir and Gilgit-Baltistan. The Special Investment Facilitation Council (SIFC) has required an update from the Petroleum Division and desired to advance the LPG infrastructure to boost supplies across the country. In addition to the smooth supply, it is also looking for investment in the sector. Under the new policy, LPG producers have the opportunity to sell remaining production to their marketing firms under long-term agreements, provided they confirm gas supply without reselling. Any excess LPG will be sold through competitive bidding to the licensed marketing companies to promote transparency and efficiency.
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Federal Board of Revenue (FBR) has been advised to raise taxes on all kinds of tobacco products. The industry has tendency to absorb at least a 40% increase in taxes, in budget (2024-25) and the IMF and World Bank have recommended Pakistan introduce a single-tier tax structure for cigarettes. This increase in tax will be helpful for increase revenue and will be helpful to reduce consumption of tobacco and tobacco related products in Pakistan. In response to price changes suggests an enormous potential to discourage smoking in Pakistan, cigarette prices in Pakistan are still relatively low compared to other countries, indicates that there is room for adjustment without causing significant economic strain on consumers. The reported decline of 19.2% in cigarette consumption is a positive sign that high tobacco taxation can indeed be an effective measure in combating smoking habits. This not only has implications for public health but can also lead to savings in healthcare costs associated with smoking-related illnesses.
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INCREASED TAX IN TOBACCO PRODUCTS
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EXPORT-ORIENTED INDUSTRIES IN PAKISTAN
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Determination to bring institutional and structural reforms, resolve energy and tariff issues, enhance regional connectivity, and diversify exports to ensure sustainable growth and stabilize the economy are the top priorities. It has been proposed for the development of modern industrial zones dedicated to garment manufacturing offering state of the art infrastructure with plug & play facilities ensuring highest standards in security, amenities, hospitality, housing, etc., with less energy intensive and will pose no additional burden to grid in the country. It has also been proposed to increase cap on solar net-metering for industrial consumers from 1MW to 5MW. The restoration of zero rating, more than two third of textile production is exported. Present system of collecting sales tax at several phases like ginning, spinning, weaving, processing etc., causes tremendous economic liquidity and encourages fraudulent.
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