Telecom: PTA’s new system to curb grey traffic up and running

The new system is working efficiently and has the ability to even remotely block illegal gateways. If that doesn’t work, the authority then files a complaint with the FIA that conducts the raid. PHOTO: FILE

KARACHI: 

In what may be seen as a positive step towards controlling the grey traffic, Pakistan Telecommunication Authority (PTA) has equipped itself with a more efficient system to identify international calls illegally terminated by the country’s gateway exchanges.

A recent raid on the office of Wisecom, one of Pakistan’s 14 long distance international (LDI) operators based in Islamabad, demonstrates that the newly acquired technology has already started to pay off.

PTA and Federal Investigation Agency (FIA) raided Wiscom’s office in the federal capital on Monday. The telecom sector’s regulatory body found that the company was illegally terminating international telephony traffic in Pakistan – a practice commonly known as grey traffic – thus evading government taxes in excess of $11 million a year or $31,000 a day.

The company, according to a PTA official, was found terminating approximately 360,000 illegal international minutes on a daily basis, which were shown as local traffic thus evading government levies on international calls landing in Pakistan.

This was possible with the help of a new technology – grey traffic monitoring equipment – that PTA installed early this October. The system is capable of identifying international minutes that are shown as local minutes by the gateway exchanges involved in grey trafficking.

Using the newly installed system, PTA analysed Wisecom’s traffic patterns and found anomalies, thus filing a complaint with FIA. Later on, the two regulators conducted a joint raid on the company’s head office.

The acquisition of this new technology by the telecom regulator, which has failed to control grey traffic so far, may help the government increase its revenues.

According to industry estimates reported by The News in its April 7th edition, grey market for telephony – which is about 400 million minutes per month or more than 50% of the overall monthly international traffic coming to Pakistan – causes over Rs3.5 billion or $35 million in losses a year to the national exchequer.

This loss is caused by illegal gateway exchanges that bypass legal gateways to terminate or originate international telephony traffic by using voice-over-internet protocol (VoIP) gateways, wireless local loop (WLL) phones and mobile phone SIMs.

The old systems were obsolete, making it easy for telecom gateways to bypass the system without coming onto the regulator’s radar, the PTA official said.

PTA had installed and tested the new grey traffic monitoring equipment one month ago, the official said. Although it identified several illegal gateways this was the first case, since the installation of the new system that a licensed LDI operator was found involved in grey telephony traffic.

Explaining, the official said there are two types of gateways that terminate international calls in the country. The first type is licensed LDI operators who have legal mandate to terminate international calls in Pakistan while the other type is the illegal exchanges or gateways without a government license.

Although Wisecom had a license to terminate international calls, it was under-declaring its traffic by showing international minutes as local traffic, the official said, which leads to tax evasion.

The new system is working efficiently and has the ability to even remotely block illegal gateways, however if that doesn’t work, the authority then files complaint with FIA that conducts the raid on the offender’s offices, he said.

Earlier in October, Minister of State for Information and Technology Anusha Rehman directed PTA to block all illegitimate IPs being used for grey trafficking with the help of the new equipment

After remaining stable, rupee starts losing value again

Dealers say the government needs to reassure investors and take initiatives to stabilise the currency. PHOTO: FILE

KARACHI: Pakistani rupee weakened against the dollar in interbank dealings on Tuesday and closed at 107.35, a fall of 35 paisa compared to Monday’s close of 107/107.10.

According to currency dealers, the rupee is declining continuously against the greenback and on an average it has dropped 10 to 15 paisa daily in the last few days.

Similarly, in the open market, the rupee fell to 107.70/80 against 107.30/40 a day earlier.

After remaining relatively stable in October, the rupee has started shedding value again. It stood relatively firm last month when the United States released the Coalition Support Fund (CSF), dealers say.

Continuous improvement in remittances from overseas Pakistanis has also provided significant support to the currency in previous months.

“The rupee will weaken further in coming weeks and may come down to 110 to a dollar as almost all economic indicators have shown downward trend in the last few months,” a leading currency dealer said.

Dealers say the government needs to reassure investors and take initiatives to stabilise the currency because no good news is coming from the current economic situation of the country.

Pakistan’s foreign currency reserves have been persistently under pressure primarily because of continuous repayment of loans to the International Monetary Fund. Consequently, the rupee dropped about 5% in the last fiscal year.

Real estate: Construction industry eyes low-cost housing

Private contractors have already chalked out a plan for the execution of the project, which will allow them to construct 100,000 housing units per year for five years. PHOTO: REUTERS

LAHORE: 

The housing sector in Pakistan is underperforming, primarily due to the reduced government attention in the sector, specifically the lack of urgency in pushing banks to issue soft mortgage loans for the low end segment.

However the announcement made by the government in the recent budget to construct 0.5 million housing units for middle and low income groups creates hope within the construction industry that the plan, if executed, will bring a rapid change in the current deteriorating economic scenario by adding jobs, and increasing production in allied industries like cement, steel and paint.

The construction sector will be the main stakeholder in the execution of this project since the Ministry of Housing and Works alone cannot handle this entirely. Private contractors have already chalked out a plan for the execution of the project, which will allow them to construct 100,000 housing units per year for five years.

“We already made two models for the execution of this mega project. One model is if the government provides land to private developers and constructors at market price through a transparent mechanism with time-bound conditions to develop the housing and sale at pre-determined prices under the supervision of the Ministry of Housing and Works. The second, if the government facilitates private contractors, like providing better infrastructure and by removing official bottlenecks within the departments,” said Akbar Sheikh, Regional Chairman Association of Builders and Developers (ABAD), North region while talking to The Express Tribune.

The Pakistani housing market requires one million units yearly to meet growing demands, but currently only 0.3-0.35 million units are being delivered. The main reason for this is that around 80% of demand of housing units is for low cost housing units, which private developers hesitate to construct due to smaller profit margins. Sheikh believes that this would be a perfect chance for private developers to play a vital role in the housing industry.

“What the government needs is to facilitate private contractors in some manner, the rest will be their responsibility,” Sheikh added.

Currently the government is earning around 30% of the total cost of a complete unit: 6% in the shape of income tax on construction, 4% as provincial services tax, plus 16%-17% as general sales tax on all inputs used like cement, steel and paint. After construction of the house the governments take 2% as stamp duty, 2% as capital value tax and 2% as district tax. It means that for a unit which completes at a cost of Rs10 million, the government earns Rs3 million in shape of different taxes. The allied industries also pay to the government huge revenues in shape of different taxes which contractor pays while purchasing such materials.

Private contractors suggest declaring houses of up to 4 marla and costing up to Rs2 million as low cost houses. This should be coupled with the State Bank of Pakistan (SBP) pushing banks to provide soft loans to this category, according to Sheikh who sets the maximum interest rate on these loans at 8%.

The cost of interest rate subsidy will be more than compensated by the taxes generated by the economic activity resulting from the construction of these houses. Government and banks can earn huge profits with this, Sheikh added.

This project, according to Sheikh, will add 1% to GDP growth
.

IMF wants govt to tax the rich

If the government decides to keep the exemptions, it will have to levy more taxes in order to fulfil a broader condition of increasing tax revenues by 0.75% of the total size of the economy. DESIGN: FAIZAN DAWOOD

ISLAMABAD: 

The International Monetary Fund (IMF) has sought assurances to implement a plan of withdrawing tax exemptions granted to affluent people as the government buckles under the pressure from industrialists and traders – the traditional vote bank of the ruling party.

The visiting delegation of the IMF has asked Pakistan not to limit its ongoing exercise to just indentifying loopholes created in the tax system to appease various lobbies. It has, instead, sought the government’s concurrence of the plan to withdraw identified exemptions; otherwise Islamabad will have to levy more taxes, according to officials privy to the developments.

Assurances were sought while discussing the first review of the $6.7 billion IMF programmewhich began early last week and will continue for at least two more days.

In July this year, IMF asked Pakistan to carry out a detailed exercise to identify tax exemptions granted through Statutory Regulatory Orders (SROs) and complete the process by December this year. The identification exercise was a structural condition aimed at ensuring the government was committed.

The FBR is expected to complete the work by end of this month; in December, it would have to seek agreement from ministries of commerce, industry, textile, finance, the Board of Investment (BOI) and the Engineering Development Board (EDB). Exemptions have to be withdrawn from July next year.

Officials said IMF has gone a step further and asked Pakistani authorities to provide concrete assurances that these exemptions would be withdrawn through Parliament from the next financial year.

If the government decides to keep the exemptions, it will have to levy more taxes in order to fulfil a broader condition of increasing tax revenues by 0.75% of the total size of the economy (Rs190 billion at the current size of economy).  The beneficiaries of the SROs are politically well connected, giving rise to fears that it will be difficult for the government to withdraw all of these exemptions, according to FBR officials.

The government’s own track record of the last five months showed that it did not have the mettle to sustain pressure exerted by these people.  Its four major initiatives – broadening the tax base, checking tax evaders by getting access to their bank accounts, filing wealth statements and paying income support levy on movable assets – have not met success.

The business community and industrialists, having a strong backing of the Punjab government, have forced the FBR not to implement new measures, according to FBR officials.

Interestingly, the FBR has not responded to the question of presenting an implementable plan to the IMF. But the plan to withdraw Customs duties exemptions suits the FBR, which is struggling hard to meet its targets, because the imports have significantly plunged, causing a decline in sales tax at the import stage as wells as custom duties.

The IMF programme is also focusing on eliminating exemptions and concessions to gradually move the General Sales Tax (GST) to a full-fledged integrated Value Added Tax (VAT) indirect tax system.

Another FBR study says as many as 86% of the customs tariff lines are currently governed through SROs, which are individual industry specific.

IMF has asked Pakistan that no concession should be governed through the SROs and, if the government wanted to retain any of them, they should be made part of the Customs Tariffs and available to all.

In last fiscal year, the FBR gave Rs119.7 billion worth of exemptions on account of the customs duties, according to the Economic Survey of Pakistan. Except for concessions granted under various bilateral trade arrangements, most of these relaxations were given to specific industries.

Mandela film gets White House treatment

'Mandela: Long Walk to Freedom' will get a presidential screening this week.
United States leader Barack Obama, who enjoys a friendship with the film's subject Nelson Mandela, will host a special screening of the new biopic at the White House in Washington, DC, on Thursday (07.11.13), with stars Idris Elba and Naomie Harris in attendance.
The A-list screening will also be attended by Mandela's daughters Zindzi and Zenani Mandela.
The film's producer Harvey Weinstein said: 'Knowing what a strong relationship President Obama has with President Mandela, it's an honour for this film to be shown at the White House.'
The presidential screening of the film gives it good steam heading into the awards season, where 'Mandela: Long Walk to Freedom' is highly tipped to be an Oscar contender.
Last year, the White House held a special screening of Steven Spielberg's biopic, 'Lincoln', about the 16th president of the United States, Abraham Lincoln.
The new movie received a premiere in Mandela's native South Africa over the weekend, which was attended by his former wife Winnie.
'Mandela: Long Walk to Freedom' will also have a royal premiere in Britain on December 5 as it has been selected as this year's royal film performance. Members of the British monarchy are expected to walk the red carpet along with Elba in London's Leicester Square.

Egypt’s Muslim Brotherhood loses appeal on group ban

Egypt's Muslim Brotherhood lost an appeal on Wednesday against a court decision to ban the group and seize its funds, court sources said.

A court in September banned the Brotherhood, Egypt's oldest and most influential Islamist group, after Islamist President Mohamed Morsy was ousted by the army following mass protests against his rule on 3 July.

In addition to confiscating the Brotherhood's liquid assets, authorities also seized real estate and mobile assets, rented or owned by the group, as well as those owned by its members.

The court also ordered the formation of an independent committee to manage the funds, real estate and assets confiscated until rulings had been issued in cases dealing with the Islamist group and its members, who face charges related to threatening national security.

An appeal lodged by the Muslim Brotherhood's legal team later challenging the ruling.

Renaissance Dam to start generating electricity next year, says official

Ethiopia's National Coordination Office for the Grand Renaissance Dam said the dam could start generating electricity by next year.

The office's deputy director general, Zadig Abraha, told state TV on Tuesday that the project is finalizing preparations to start generating 700 megawatts of electricity by next year.

Abaraha added that those involved in the project are working round the clock to meet that deadline.

25.4 percent of work on the dam has already been done, he said, adding that the project has so far created 6,000 jobs, which is expected to double in the end.

The project will be the biggest dam for generating electricity in Africa.

Egyptian, Ethiopian and Sudanese water ministers said during their meeting in Khartoum on Monday that they are commited to working together through constructive dialogue.

Edited translation from MENA