Seven international investors have expressed interest in Pakistan’s national flag carrier and airports which the South Asian nation has put up for sale, the aviation ministry said. Islamabad plans to sell the Pakistan International Airline (PIA) and outsource three of its airports in a bid to stem losses and generate foreign exchange reserves. An adviser for the deal told ministry of defence production and aviation that “seven international investors including Germany, France, Netherlands, Qatar, UAE, Malaysia and Turkiye have shown their interest” besides local groups. The ministry did not clarify whether the investors are companies or governments. Islamabad has engaged the World Bank’s International Finance Corporation (IFC) as an advisor for the outsourcing process, and EY for the airline deal.
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Seven global investors express interest in PIA, airports
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Bidding deadline for airports’ outsourcing extended
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The government has decided to extend by two months the deadline for submission of bids for the outsourcing of management and operations of the country’s three major airports following the requests of foreign investors and recommendations of the International Finance Corporation (IFC). The decision was taken at a meeting of the steering committee on outsourcing of Islamabad, Karachi and Lahore airports held under the chairmanship of Foreign Minister Ishaq Dar. The IFC official recapitulated the progress made on the project of airports’ outsourcing and informed the committee that multiple efforts of continuous engagement with prospective investors have yielded positive results and with the new political government in office, the confidence of investors to invest in Pakistan has augmented. With this intent, international bidders from Qatar, the UAE, Germany, Turkiye, the Netherlands and Malaysia and local consortia have requested for an extension in the bid submission timelines to complete their due diligence, the meeting was told. The foreign minister assured the meeting of his ministry’s fullest support in engaging the investors through economic diplomacy and expeditious process for achieving successful outcome of the project. Considering the requests made by the interested bidders and recommendations by the IFC, the committee decided to extend the bid submission date for 60 days till May 15.
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In a significant development, Foreign Minister Ishaq Dar expressed intentions to reconsider trade relations with India, suspended since India's controversial move to revoke the special autonomous status of Indian Illegally Occupied Jammu and Kashmir (IIOJK) in August 2019. Dar made these remarks during a press conference in London, following his participation in the Nuclear Energy Summit in Brussels. He highlighted the eagerness of Pakistan's business community to resume trade activities with India, indicating a potential shift in diplomatic stance towards its neighbouring nation. The strained relations between Pakistan and India ensued after India's unilateral action in August 2019, prompting then-prime minister Imran Khan's government to downgrade diplomatic ties with India. “We will seriously look into matters of trade with India,” he said while responding to a question. The foreign minister mentioned that the relations between the two neighbouring countries faced a setback after India revoked the constitutional and legal status of IIOJK in August 2019.
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FM says govt to ‘seriously’ consider reviving trade with India
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Draft policy to be made on production of Liquid Gas from Thar coal
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Sindh Minister of Energy, Development and Planning Syed Nasir Hussain Shah decided that a provincial level and draft policy will be made in relation to the production of Liquid (GAS) and (REA) fertilizers from Thar coal. A detailed briefing was given in the meeting regarding producing gas from coal. According to the test results, the consultant submitted a new report according to which Thar coal was declared subject for gasification in the international laboratory of South Africa. The meeting was also informed that as a result of gas production from coal. The country can save about 500 million dollars in foreign exchange annually. In terms of gas import, if we build an energy system from Thar's 175 billion tons of coal reserves and we can reduce the energy import bill by 50 percent, while green Pollution can also be avoided with coal technology.
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Pakistan and China intensified efforts to establish a Working Group on five new economic corridors under the second phase of the China-Pakistan Economic Corridor (CPEC), aligning with the 5Es framework prepared by the Planning Ministry. During a meeting between the Federal Minister of Planning, Development & Special Initiatives, Ahsan Iqbal, and the Chinese envoy, Jiang Zaidong, both sides agreed to expedite the second phase of CPEC and establish a working group on five new economic corridors, including the Corridor of Job Creation, Corridor of Innovation, Corridor of Green Energy, and Inclusive Regional Development. Both the Planning Ministry and the National Development and Reform Commission (NDRC) of China will prepare separate concept papers on the new economic corridors, providing a clear roadmap for each sector in the future. These concept papers will be consolidated for presentation at the upcoming Joint Coordination Committee (JCC) meeting expected in 2024, stated the Planning Ministry. The Planning Ministry has already initiated the implementation of the 5Es framework, which includes Export, Energy, Equity, E-Pakistan, and Environment. The Chinese envoy appreciated Pakistan’s efforts to implement the CPEC, particularly the initiation of phase 2. Addressing Pakistan’s need to boost the efficiency of SEZs to increase foreign exchange, the Chinese envoy suggested that officers in charge of SEZs must visit Chinese industrial parks to observe firsthand the efficiency measures practiced by Chinese authorities.
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Phase 2 of CPEC accelerated with new economic corridors
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Refineries mull import delays as diesel demand dips
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The refining sector is contemplating a delay in crude oil import schedules amid low domestic consumption and high stocks of high-speed diesel (HSD), industry officials said. The excess supply has led one refinery to consider a temporary halt in operations as early as next week, they added. "Pakistan Refinery Limited (PRL) has warned about the shutdown of its plant next week due to the slow uptake of high-speed diesel (HSD) in a communication to the Ministry of Energy and Oil & Gas Regulatory Authority," a source said. The PR's HSD stock has reached its maximum storage capacity of 14,000 tonnes. "Our daily production of HSD is around 2,500 tonnes against the daily uptake of around 1,000-1,200 tonnes," the PRL said in the letter. The refinery is constrained to reduce the refinery throughput, effective from March 22, 2024, and is trying to secure rental storage for storing HSD. “If the current demand pattern for HSD continues, we will be forced to shut down the plant next week,” the PRL said, adding that it will face ullage issues for incoming crude cargoes and will have to pay demurrage to the vessels. “We are trying to defer our crude consignment for the month of April.” The other refineries are also facing the same situation, as officials in the refining sector said that refineries are planning to defer crude oil imports as "diesel consumption has dropped to the lowest level despite the harvesting season in the country." The state-owned oil marketing company has placed these orders in view of the perceived high demand for diesel due to the harvesting season in March and April, however, the ground situation is contrary to the demand, industry officials said.
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The Federal Board of Revenue (FBR) has made it mandatory for foreign exchange dealers/exchange companies, clubs, private educational institutions, private hospitals, restaurants/hotels/guest houses/marriage halls, courier services, beauty parlours, health clubs, medical services, pathological laboratories, chartered accountants and retailers to electronically integrate with the FBR and register all their points of sales (POS). From July 1, 2024, the Integrated Enterprises shall make all payment counters comprising of point of sale at each outlet available for installation of the systems, the FBR said. These taxpayers and service providers will install such fiscal electronic device and software, as approved by the Board. The businesses shall notify to the Board, through the Computerized System, of all the establishments, from which they intend to carry on business and shall register each point of sale (POS). In a bid to comply with the demand of IMF, the government has launched registration of Tajir Dost Scheme in six largest cities of the country, including four provincial capitals and Rawalpindi as well as in Islamabad. The cities where Tajir Dost Scheme has been launched includes Karachi, Lahore, Islamabad, Rawalpindi, Quetta and Peshawar in the first phase. Under Tajir Dost Scheme, the retailers will kick start registration from April 1, 2024 and then the tax collection will take place from July 1, 2024. The FBR will take online marketplace platform into the tax net as well under this scheme. “We intend to bring one million retailers into the tax net,” said one top official of the FBR.
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POS electronic integration with FBR
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PAMA says used car imports jump eightfold, local manufacturers at risk
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The auto industry is reeling from a surge in imported used vehicles, following the government’s removal of protective taxes, which has led to skyrocketing old car imports and intensified competition for domestic manufacturers already struggling with reduced output and sales, an industry official said. “The SROs 1571/22 and 1572/22 are no more; as such, the regulatory duty (RD) and additional customs duty (ACD) that were levied on used vehicles have come to be free of that tax burden, placing locally produced vehicles at a competitively disadvantageous position for which revised higher taxation has not been reverted," Abdul Waheed Khan, director general of the Pakistan Automotive Manufacturers Association (PAMA), said. "Furthermore, the SRO 577/2005 prescribing duties and taxes on used vehicles was last amended about ten years ago, in 2014 and 2015, to the extent of items at serial nos. 3 to 6 of the said SRO, which consequently resulted in lower duties calculation and further aggravated the situation when 60 percent depreciation of duties and taxes is applied." Khan said the government policy always stands against the import of used vehicles in the country. "It is the circumvention of the policy, with impunity, that has seen the entitlement of overseas Pakistanis illegally purchased by traders for bulk import of used vehicles," he added. Auto industry forced to slash prices Auto experts state that a combination of factors, including weakened purchasing power, heavy taxation, rampant inflation, and currency devaluation, has compelled auto companies to slash prices. This move, while reducing profit margins, benefits customers and lends support to the struggling industry. Expressing frustration with poor economic policies, market analysts told that the recent government decision to hike sales tax on vehicles with engine sizes of 1,400CC and above, as well as those priced above Rs4 million, from 18% to 25%, has adversely affected the auto sector. They highlight that this increase in sales tax, enforced by the government and the Federal Board of Revenue (FBR), prompted auto companies to lower prices, sacrifice profit margins, and devise customer-friendly strategies.
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