Tax details of parliamentarians to be made public by Feb 15: Ishaq Dar

Finance Minister Ishaq Dar. PHOTO: AFP

ISLAMABAD: Amid a firestorm over the tax returns filed by elected public representatives, Finance Minister Ishaq Dar told the Senate on Monday that tax details of all tax payers, including parliamentarians will be made public by February 15,  Radio Pakistan reported.

Earlier, taxpayers were found understating their assets and incomes in an attempt to cheat the Federal Bureau of Revenue and causing losses to the exchequer.

He added that the Federal Board of Revenue has been directed to issue national tax numbers to all the parliamentarians by the end January.

Dar assured that all parliamentarians are paying tax as it is deducted from their salaries directly. He said the tax details of all the Parliamentarians were also collected by the Election Commission of Pakistan at the time of the elections.

Security situation

Earlier‚ the House started a discussion on a motion moved by Mian Raza Rabbani regarding the current political and security situation in the country with particular reference to Balochistan‚ FATA and Rawalpindi.

During the discussion, Farhatullah Babar said that security establishment must be brought under the oversight of the parliament and structural reforms in this regard should be completed at the earliest. He said better management of the borders is also imperative to control the movement of the miscreants.

Abdul Rauf said that it is the responsibility of the elected representatives of all the political parties to work hard for provision of better security to the masses.

Furthermore, Mushahidullah Khan also that the government is making efforts to improve the law and order situation in the country. He said due to the measures of the government the law and order situation has improved in Karachi and improving in rest of the country.

Khan said that it is first time in history that the government has shown courage to try a dictator. He stated that Pervez Musharraf’s case is sub-judice and the court will decide his fate.

Shift of SBP head quarters

Later on, the House started a discussion on a motion moved by Haji Mohammad Adeel regarding the situation arising out of non-shifting of headquarters of the State Bank of Pakistan from Karachi to Islamabad.

Initiating the debate‚ Haji said that after the creation of Pakistan the capital of the country was in Karachi and as a result headquarters of all the Federal institutions and departments were in Karachi.

He said that after the shifting of the Capital from Karachi to Islamabad‚ the headquarters of almost all the national institutions were shifted to the new capital. Due to the negligence, the headquarters of the State Bank of Pakistan (SBP) could not be shifted to Islamabad.

He said as a national institution, the SBP should be shifted to the capital to boost the economy of the country.

Colonel Tahir Hussain Mashhadi said that Karachi is the business hub of the country; therefore‚ headquarters of SBP should not be shifted to the federal capital.

The Constitution Twenty-second Amendment Bill‚ 2013 was introduced in the House on Monday.

The bill provides to amend the Articles 177‚ 193 and 240 of the Constitution.

Saudi jails 5 for up to 30 years on Qaeda charges

Saudi jails 5 for up to 30 years on Qaeda charges. PHOTO: FILE

RIYADH: A Saudi court has jailed five people for up to 30 years on charges including plotting to blow up an oil refinery on behalf of al Qaeda, state media reported Monday.

The official SPA news agency gave no details of when the alleged plot against the refinery in the Red Sea port of Yanbu took place.

But the trial is believed to be the latest in a series of prosecutions begun in July 2011 for alleged offences committed during the peak of al Qaeda violence in the kingdom between 2003 and 2006.

The court found that some of the defendants had “plotted to blow up the Yanbu oil refinery and participated in preparing car bombs to that end,” SPA reported.

“Some have joined al Qaeda and are linked to its most dangerous leaderships,” it added.

Other defendants were convicted of lesser arms possession charges and received shorter jail terms, one of just five months.

The court did not pass sentence in Sunday’s hearing against two other defendants who were not brought to the hearing, SPA reported, without elaborating if they were tried in absentia.

Al Qaeda’s now slain historic leader Osama bin Laden was Saudi-born and 15 of the 19 perpetrators of the September 11, 2001 attacks in the United States were Saudis.

Saudi authorities launched a massive crackdown on the network over the past decade that prompted many of its militants to shift base to neighbouring Yemen.

The merged franchise they formed, al Qaeda in the Arabian Peninsula, is regarded by Washington as one of the network’s most dangerous.

Closure of mission: In Ireland, thousands of Pakistanis left in the lurch

Pakistani migrants protest against the closure of Pakistan’s Embassy in Dublin. PHOTO: DEPT OF JUSTICE, IRELAND

ISLAMABAD: 

The closure of Pakistan’s diplomatic mission in Ireland has left thousands in the lurch as the Pakistani Diaspora in the country doesn’t know who to contact for visa-related issues.

“One week has passed. We don’t know where to go. Dozens of families are still wondering which mission will resolve their visa-related issues,” says Umar Mehmood Khan, Member of the Ministerial Council Office for Promotion of Migrant, Department of Justice, Ireland.

In a letter to The Express Tribune, Khan said that after the closure of Pakistan’s mission last week, more than 18,000 Pakistanis are stranded in Ireland.

A big axe fell on foreign diplomatic missions when the government, as part of its austerity campaign, decided to close down missions in Ireland and Chile and eight commercial wings by abolishing dozens of posts of press attaches, labour officers and community welfare officers.

“People have to travel with their families outside Ireland to get visas, which is a nightmare for the community,” Khan stated.

He appealed to Prime Minister Nawaz Sharif to reopen the embassy as the Pakistani community in Ireland deserved a small mission for visa facility. “We are ready to facilitate the government for this small embassy that can be managed in a cost-effective manner,” he toldThe Express Tribune by phone.

Majority of Pakistanis living in Ireland are highly qualified and sent $125 million remittances this year which is the second largest annual remittances to Pakistan from any European country, he said.

After establishing its embassy in Dublin in 2001, Pakistan closed its mission at a time when the Irish government is planning to open its embassy in Islamabad, said Meraj Abid, a senior broadcast journalist in Ireland.

“If Pakistan does not reopen its embassy in Dublin, it will send a really negative signal to the international diplomatic circle,” he said.

Ireland has supported Pakistan on several diplomatic platforms. Most recently it backed Pakistan in Brussels for European initiative of duty exemption, he added. After the 2005 devastating earthquake, Ireland provided around $7 million to Pakistan in relief aid, he recalled.

The decision to close two missions in Chile and Ireland was taken on the recommendations of a special committee formed by Prime Minister Nawaz Sharif, said Foreign Office spokesperson Tasnim Aslam.

“It’s a temporary closure. There will be some rationalisation in big foreign missions,” she toldThe Express Tribune. “It’s a part of austerity measures too,” she added.

Responding to a question about the possibility of reopening these missions, she said it depended on Pakistan’s economic recovery.

When contacted, Pakistan’s Ambassador to Ireland GR Malik did not comment on this issue. “Ambassador Sahib will come back to you soon,” said his Staff Officer Javaid. This is a small embassy where four to five persons, including Ambassador Malik and Admin Attaché Athar Qureshi were working, he explained

Looking ahead: Hybrid technology may be the way forward

Sports Hybrid vehicls are now being produced. PHOTO: FILE

LAHORE: 

Hybrid technology seems to be the new ‘in’ thing.

In Pakistan, however, it is still in its infancy. But, for several people, this is the way to go forward. Car manufacturers are fully aware of the consumers’ needs and are planning on how and when to introduce such vehicles in the country. This is one way they will ensure being a step ahead of competition.

One such example is Honda which introduced its first 1,500cc hybrid car in Pakistan. The product introduced, however is designed as a ‘sports’ car.

While it may be tagged that, the company will closely monitor the sales after which a decision will be made on further diversification in family cars, said Takeharu Aoki, president and chief executive officer of HACPL, in an exclusive interview with The Express Tribune.

“More practical hybrid cars would depend on demand,” said Aoki. “We may have to check the demand of the recently-launched CR-Z sports hybrid. If the response is good, we may consider a family hybrid car.”

Aoki said the HACPL is planning innovations for the future with the support of Honda Japan. One proof is the launch of the sports hybrid vehicle. “We really want to contribute to Pakistan’s economy and we will introduce new features in the four-wheeler industry.

“Our policy is to introduce the latest technology coupled with safety, luxury and our track record proves this.”

However, like other car manufacturers, the HACPL is also facing an issue of negative profits, rupee devaluation, energy crisis and increased inflation.

Despite the issues, the HACPL has turned things around after a while, reporting Rs244 million as profit-after-tax for the year ending March 2012-13, up from a loss of Rs532 million the previous fiscal year. The company, for the first six months of the current fiscal year, has posted a profit- after-tax of Rs314 million.

Aoki credited the profitability to its brand, Honda Civic, which the company launched in September 2012. The car outperformed and took the lead in overall revenue generation for the company as it produced 13,627 units, the latest figure available.

According to Aoki, the sales volume of Honda Civic in the country is second after Thailand in the Asian region. The current market share for Honda cars in Pakistani market is 20%.

Meanwhile, the company claims that the increase in per-unit price has not helped them improve profitability, blaming rupee devaluation, energy crisis, and inflation as offsetting any profits there were to make.

“One of the main hurdles for us is how to tackle fluctuation in exchange rates and to offer the product at the best rate. This is a challenging task but we have to manage this in order to be competitive.”

The company also claims that the percentage increase in the price-per-unit is ‘nothing’ compared to the overall inflation and fluctuation in exchange rates.

“The recovery the rupee has shown is also nothing. We are absorbing these issues within the company by taking different measures and passing on a very low percentage to our customers. We normally increase prices when the exchange rate fluctuates around 3%.”

To tackle the issues, the company is now focusing on localisation. Currently 40% of parts used by the company are locally manufactured with the remaining 60% being imported.

The chief also said that the company at this stage is not looking to export vehicles. “We are focusing on the Pakistan market. Once we are successful, we will cater to others. Right now we’re only exporting parts to Malaysia

Privatisation: A bold step, but companies must have been carefully selected

Plan to sell profitable state enterprises, like PSO, is incomprehensible. ILLUSTRATION: TALHA KHAN

KARACHI: 

The government’s decision to privatise a significant number of non-performing public sector enterprises (PSEs) is undoubtedly a bold step. But then instead of slowing down, the process should be put on fast track.

Feeding white elephants at the cost of public money for ever is criminal. Earlier, heads were rolled to make these organisations efficient and self-sustaining, but all such efforts proved futile, suggesting that there is some structural weakness that requires complete overhauling and cleansing.

So, there cannot be two opinions about selling stakes in these PSEs, which have become a liability. Companies like Pakistan Steel Mills are beyond repair, the sooner we get rid of them the better.

The government has directed the Privatisation Commission to immediately start the process of sale of PSEs through initial and secondary public offerings and transfer of 26% shares along with management control to the private sector.

It had committed to announcing a strategy for the sale of 30 companies by the end of September 2013 before the disbursement of second loan tranche by the International Monetary Fund (IMF). Privatisation plan for the remaining, out of the total of 65 entities, had to be announced before the close of 2013.

Profit-making PSEs

However, the inclusion of highly profitable enterprises like Pakistan State Oil (PSO) in the list is incomprehensible. Only, if we take into account PSO’s performance in the last six months (July-December) of 2013, it is something the PML-N government can really boast of. In fact, all such state enterprises should be given required support and encouragement.

PSO Managing Director Amjad Parvez Janjua disclosed that during five months (July to November) of financial year 2013-14, the oil marketing giant recorded a turnover of approximately Rs621 billion compared to Rs550 billion in the same period of previous year, representing a growth of 12%.

In the first quarter (July-September 2013), PSO reported highest-ever quarterly after-tax earnings of Rs7.8 billion compared to Rs4.3 billion in the corresponding period of previous year, showing a significant growth of 81%.

As far as recoveries were concerned, Rs8.2 billion was received as interest income from Hubco and Kapco during the quarter. Current recoveries are Rs484 billion, received against supplies made during July to November 2013. Some Rs69 billion has been recovered against old receivables of Rs75 billion as of June 30, 2013.

In the July to November period, the company did not default on bank payments pertaining to retiring letters of credit because of prudent fund management.

PSO’s performance as an organisation based on modern corporate concepts is also appreciable. A web-based application OOMS (Online Order Management System) was launched in July 2013, automating the entire sales order process to facilitate the dealers in placing orders and making payments online.

A human resource development initiative for building capacity and developing leadership was undertaken with the signing of an MoU with Suleman Dawood School of Business of the Lahore University of Management Sciences (LUMS). An internship programme for the students of universities across Balochistan was also launched.

The credit definitely goes to the current MD, who has set the company’s corporate strategy and developed a robust, forward-looking and cohesive strategic framework, which has become a popular topic of case studies in Pakistan and abroad.

What more can be expected from a state-owned organisation keeping in view the track record of Pakistan Steel Mills, Pakistan Railways, PIA and other such institutions.

Favourites hired

The problem with PSEs is nothing but the appointment of favourites as chief executives, who have no sound understanding of the business, product and services offered. Moreover, most of them are not well-versed in IT management and lack knowledge of latest developments in the corporate world.

There is a need to revisit the list of enterprises earmarked for privatisation and it should be done in phases. The unit that is in the worst state should be privatised first as such Pakistan Steel Mills should be sold immediately followed by PIA and others.

Over the years, PSEs have continued to struggle to copes with challenges of defining and managing their high performance. Many different definitions of a high performance organisation can be found in literature. However, there is not yet a consistent definition.

Corporate gurus are unanimous that organisations that stop generating profit for a period of time and fail to recover even after pumping substantial cash on a regular basis must be declared beyond repair and closed as soon as possible.

So, it is necessary for the growth of economy to sell all those state enterprises which are not making any profit for quite some time and leave all those which are earning profit or at least break even. All that is required is to place competent, honest and professionally sound persons, purely on merit, to run these units.

The writer is a freelance contributor and a PR consultant

Reducing cost of governance with gradual tax hikes

It should be considered how much burden the population can bear, so smart and logical measures need to be taken. PHOTO: FILE

KARACHI: Over long periods of uncertainty in most of the countries, people who pay taxes on time bear the brunt of this situation. Yet in most societies, we are left with little to act upon as no policy exists to determine how close we are to social and demographic meltdown.

During recent trips abroad, I had the opportunity to explore a foreign land and take a close view of the policy measures being undertaken for the benefit of consumers and taxpayers.

In Pakistan, yearly audit reports are seldom reviewed by the government, leading to deficiency in policy-making. Though taxes provide revenues, the state does not take steps to tackle efficiency loss and higher costs and almost always focuses on increasing taxes on goods and services. Even change in procedures can help save costs and reduce wastage.

Per capita income is not rising at the desired pace and is instead being increasingly taxed. Ordinary people are paying most of the taxes. They acknowledge that the government needs more and more money in order to step up development work, invest in infrastructure, spread education and create jobs. But what they see is that the tax money does not find its way to such activities.

Nepotism and black marketing are prevalent in our society where not so highly educated people rule the roost and occupy major decision-making positions. To gauge their performance, their work should be audited.

A way out

A gradual tax increase makes sense. It should be considered how much burden the population can bear, so smart and logical measures need to be taken.

Is there a proper economic policy in place? Few would have the right answer. The government often wastes money because it is not much concerned about returns on its expenditure. It should reduce the cost of governance.

The cost of living should be kept in view while going for development work. For example, taxpayers cannot suddenly spare money most of the time to pay new taxes as their income is not enough to meet all their costs. Here, we need to revisit the minimum wage criterion.

Increasing minimum wage to at least Rs13,000 per month could be the first step. This should not be limited to people earning below that mark, as others getting more must also be given pay raise accordingly. This way, the lower and middle classes will be able to boost savings and pay higher taxes on commodities, food and water supply.

Top-tier government officials often fail to notice that the cost of doing business has jumped sharply, which will in turn increase the cost of producing goods and services. This will lead to a further spike in the cost of living for most citizens.

A way out is to increase taxes in phases, spreading and reducing the burden over time. For instance, if fuel prices are to be increased, the process should be gradual and spread over three to six months.

Keeping healthcare, education and vocational training free, or at least affordable, during economic slowdown helps the country grow. It has been found in different surveys that crisis-stricken people cuts down medical care and medicine consumption significantly.

The 2010 and 2011 floods in Pakistan sparked unparalleled emergency in most of the small cities of Punjab, Khyber-Pakhtunkhwa and Sindh, causing fears about spread of different diseases.

People were even vulnerable to minor ailments because of lack of focus by the government and social development institutions.

We are facing a major brain drain as working class is leaving the country or turning to shortcuts to make money through corruption. So, tax increase in stages is the preferred option compared to a sudden rise that kills the enthusiasm of people who live and earn here.

Raising tax gradually is more viable today as it may not hurt the government much.

The writer is a banker and media broadcaster and comments on international relations and public policy

Bridging gaps: Economic growth on back of foreign capital

Increasing integration of countries through growth in trade and foreign capital flows has been a special characteristic of recent times. CREATIVE COMMONS

FAISALABAD: 

Foreign capital refers to the investment in a country that comes from non-residents. It has a crucial role in development of every national economy, irrespective of its level of development.

For developed countries, it is essential to maintain sustainable development whereas for developing states, it is utilised to create conditions favourable for rapid economic growth with an increase in the pace of investment.

For transition countries, foreign capital provides necessary support for carrying out reforms to shift from a closed to an open economy, tackle long-term problems and create conducive environment for a stable and long-term economic growth.

Most of the under-developed countries have inadequate domestic capital formation because of the vicious circle of poverty. With low incomes, savings and investments, they have to face savings-investment deficit and balance of payments problems.

Under such conditions, most of these countries rely on external sources of financing in order to generate sufficient savings to fill savings-investment, import-export and balance of payments gaps.

Standard economic theory predicts that international capital flows give a boost to investment in developing countries and, hence, improve their growth performance.

According to the theory, developed nations have sufficient savings, but due to the existence of already high capital per worker, return to investment is low. On the other hand, in developing states, savings are insufficient but due to low availability of capital per worker, return to additional investment is high.

Hence, by allowing free movement of foreign capital across national boundaries, some portion of the savings of rich nations may be invested in poor nations. As a result, the rate of investment would be less than the savings rate in developed countries.

Increasing integration of countries through growth in trade and foreign capital flows has been a special characteristic of recent times. Access to foreign financial resources enhances growth process of recipient countries through increase in output and income. Actual role of foreign capital in the growth process is debatable as it differs widely across countries according to their economic circumstances.

Pakistan’s potential

Gross domestic production (GDP) of Pakistan is estimated at Rs20.654 trillion. Foreign direct investment (FDI) stood at $1.293 billion in 2012-13 compared to $668 million in 2011-12. Capital inflows were affected because of the global financial crunch and euro zone crisis.

However, worker remittances grew to around $14 billion in 2012-13. The upsurge in remittances is attributed to the government’s efforts to redirect these flows from informal to formal channels.

Exports have grown to around $25 billion. Almost 50% of total exports are shipped to five markets – USA, UK, Germany, Hong Kong and UAE. Despite the euro zone crisis, impacting the demand for goods, Pakistan has successfully maintained its exports.

Economic theory states that financial globalisation may bring capital, knowledge and discipline to a country and improve efficiency and productivity. However, in practice, it does not produce straightforward results.

One channel through which exposure to financial globalisation can carry a downside is increased vulnerability to a financial crisis. This is thought to be more relevant if the composition of capital inflows is skewed towards non-FDI types such as bank lending and portfolio flows. International bank lending and to some smaller extent portfolio flows are more likely to be reversed than FDI.

Like many other developing countries, Pakistan is also undertaking a wide range of structural reforms, which are favourable for both local and foreign investors, along with sound macroeconomic policies in order to achieve high economic growth. It is trying hard to increase FDI inflows because it is a major source of bringing foreign capital and modern technology along with the skills needed to achieve sustained growth in technologically backward countries.