Category: Business

The most important business news, explained in a young, easy to understand way. News that affects young career professionals.

  • SBP shortens car loan tenure to deflate import bill

    SBP shortens car loan tenure to deflate import bill

    The State Bank of Pakistan (SBP) decreased the consumer lending duration for vehicles on May 24, bringing it to a maximum of three years for cars with engine displacements greater than 1,000cc and five years for those with engine displacements less than 1,000cc.

    “The maximum tenure of auto finance facility is reduced from five (5) years to three (3) years for vehicles above 1,000 cc engine displacement and from seven (7) years to five (5) years for vehicles up to 1,000 cc engine displacement,” read the circular.

    The SBP decided to change the Prudential Regulations for Consumer Financing (PRCF) in its circular Letter No. 19 of 2022:

    Other amendments issued previously, via BPRD Circular Letter No. 29 dated September 23, 2021, will now be applicable on financing for all locally assembled/manufactured vehicles, including financing for vehicles with up to 1,000 cc engine capacity and locally assembled/manufactured electric vehicles, according to the central bank.

    “However, the regulatory treatment of Roshan Apni Car product communicated earlier to RDA participant banks will continue to remain effective,” read the circular.

    “The maximum tenure of auto finance facility is reduced from five (5) years to three (3) years for vehicles above 1,000 cc engine displacement and from seven (7) years to five (5) years for vehicles up to 1,000 cc engine displacement,” read the letter.

    Other amendments issued previously, via BPRD Circular Letter No. 29 dated September 23, 2021, will now be applicable on financing for all locally assembled/manufactured vehicles, including financing for vehicles with up to 1,000 cc engine capacity and locally assembled/manufactured electric vehicles, according to the central bank.

    “However, the regulatory treatment of Roshan Apni Car product communicated earlier to RDA participant banks will continue to remain effective,” read the circular.

  • A Chinese company will invest $50 million to enhance Pakistan’s agricultural sector

    A Chinese company will invest $50 million to enhance Pakistan’s agricultural sector

    Optima Integration Group of China and Asia Pak Investments of Pakistan agreed on May 23 to invest $50 million in the first stage to enhance agriculture, power, and logistics sector in Gwadar and Karachi.

    The Board of Investment (BoI) facilitated the signing of a memorandum of understanding (MoU) in this respect between the two businesses, which may result in the creation of more than 100 job vacancies in Gwadar and Karachi, as well as the establishment of a high-tech processing facility and technology transition.

    The event was attended by Federal Minister Board of Investment Chaudhry Salik Hussain, who signed the MoU with Optima Integration Group Chairman Sam Siu and Chief Executive Officer of Sino Pak Optima Technologies (SPOT) in the spirit of strengthening business-to-business (B2B) agricultural collaboration among the two nations. Ms Fareena Mazhar, Secretary of the BoI, was also present at the occasion.

    Under the terms of the agreement, the two parties would establish an end-to-end supplier base for seafood [79 breeds of fish have been certified for exporting from Pakistan to China by the General Administration of Customs of the People’s Republic of China (GACC)].

    In the long term, the initiative would grow from fish to beef and goat, beginning with cold chain transporting beef and then expanding with Chinese standard breeding, feedlot operations, immunizations, track and trace technologies, and slaughter and pack facilities in Karachi.

    Read more: SBP hikes interest rate by 150 basis points to control inflation

    Addressing the gathering, Minister Chaudhry Salik Hussain praised the Chinese government’s involvement in Pakistan’s agriculture and livestock sectors, notably the fish and seafood business.

    He briefed the attendees regarding the formation of the Pakistan-China Business and Investment Forum (PCBIF), which was the outcome of a collaboration between the BoI, the Chinese Embassy, and the All-Pakistan Chinese Enterprises’ Association (APCEA). He informed Chinese investors that the BoI would take deliberate steps to assist interested investors.

  • The recent ban on imports might barely make a dent

    The recent ban on imports might barely make a dent

    On Thursday, May 19th, 2022, the federal cabinet issued a list of 41 items which will be banned from being imported for two months. This is in an attempt to address the current account deficit. The list of products is banned from being imported into the country, which means that essentially any shops or restaurants which rely on using these products will be forced to find local alternatives.

    These products will be banned regardless of what branding or packaging they use and only on the basis of whether the specific product is imported or not. Even products which are imported from abroad but packaged locally, will now be banned.

    Officially released list of imported non-essential luxury items

    Economists, university professors and business journalists took to Twitter to analyze and assess the merits and demerits of this decision. The discussion around luxury products and the fact that a lot of products which are labelled as “luxury items” are actually essential. Sanitary imports, valued at $16.4m are wrongly categorized as non-essential and although local alternatives also exist but it is definitions like these which disallow such decisions to be founded in research and expertise.

    The valuation of these imports which was published by the Pakistan Bureau of Statistics, was being quoted to ridicule the decision by many. What’s interesting to note is that most brands which appear to be entirely local, import a major chunk of their supply and will now be forced to smuggle goods instead.

    Only from the data shared by PBS it becomes clear that for the fiscal year 2022, June to March, the total value of petroleum imports was $11 billion, while the total value of banning all these non-essential “luxury” items is a total $984 million, which forms only about 8.9% of the total value of petroleum imports.

    In conversation with Profit Magazine’s Ariba Shahid, she clarified that this would still prove to be a largely fruitless move since the most significant chunk of the import bill is still being used up to run the energy sector without any thought being given to the humongous fuel subsidies . “For a very long time the State Bank of Pakistan has been talking about how if we remove the oil component from it, the current account deficit is improving, which is true and basically means that people are not spending money to buy other items and most of the import bill is petrol and soy bean oil.”

    Economists Ammar Khan and Atif R Mian also took to Twitter to analyze this decision of “patchwork economics”. Commenting on this unsustainable gap in Pakistan’s balance of payment, on April 15th, 2022 during a discussion on Pakistan’s economy at Princeton University, he explains that for Pakistan to grow it is a necessary condition for Pakistan to deal with this problem and digs deeper into the structure of the economy. He particularly takes apart urban land reforms, the necessity to levy a capital gains tax on speculative real estate transactions and analyzes how Pakistan is not even economically stable enough to grow at the rate of India and Bangladesh and it is primarily due to the elite capture of the economy that disallows the economy to attempt to fix its loopholes.

    Echoing similar sentiments, Ariba Shahid explained that due to a weaker economy, the import bill is not as significantly high due to a reduced demand pull because of a lowered purchasign power and hence banning these products will be insignificant and might barely make a dent in the current account deficit. “The need of the hour is to reverse the fuel subsidy,” says Shahid, “This decision will swell up the grey market economy and smuggling will increase.”

  • NAB reports Rs864 billion recovery since inception

    NAB reports Rs864 billion recovery since inception

    Since its formation, the National Accountability Bureau (NAB) has recovered Rs864 billion from corrupt elements, directly and indirectly.

    The anti-graft watchdog, NAB has collected Rs584 billion during the tenure of incumbent Chairman Justice Javed Iqbal.

    Due to the NAB’s aggressive prosecution, the Accountability Courts penalized 1,405 accused persons and imposed substantial fines on them, as per a NAB spokesman.

    In the Accountability Courts, NAB has a 66 per cent overall conviction rate. NAB received a total of 405,768 complaints since its formation. A total of 405,212 complaints were handled. The inquiry of 556 complaints is still ongoing.

    100,865 complaints have been acknowledged by the NAB. There were around 100,425 complaints investigated. While 779 complaints were still being investigated. 9883 queries have been approved by NAB.

    8,953 queries were followed through to completion. A total of 930 inquiries were investigated.

    NAB allowed 4,547 investigations since its establishment. A total of 42,100 investigations have been completed. While working on 346, the probe is still ongoing. Since its founding, the NAB has filed 3,645 referrals in accountability courts. 2,398 references were disposed of in accordance with the law. Currently, 1,237 referrals worth Rs1,335 billion are being tried in various accountability courts.

  • Fighter-jet gifting businessman Mohammad Zahoor and a 1990s scandal

    Fighter-jet gifting businessman Mohammad Zahoor and a 1990s scandal

    Pakistani-British businessman and former Kyiv Post owner Mohammad Zahoor has made headlines again, with his decision to buy fighter jets for Ukraine. But this is not the only time Zahoor was the talk of the town. Earlier in the 1990s he was also probed for fraud and misappropriation of funds and later, his name appeared in the Panama Papers pertaining to Ukraine. In 2015, Ukraine’s weekly magazine, Focus had marked Zahoor’s net worth at $500 million. 

    On May 18th 2020, news broke in the cybersphere that Mohammad Zahoor had bought two fighter jets for Ukraine, to help in their war against Russia. On Wednesday Ukraine’s TSN reported that Zahoor’s wife, Ukrainian singer Kamaliya Zahoor appeared in the program ‘Morning with Ukraine’ and announced that her husband gave two fighter jets to Ukraine to help fight the war with Russia which has now entered its 12th week. 

    Formerly, Zahoor was a formidable figure in the Ukranian media. Born in 1955, at the age of 19 he first headed to Ukraine on a Pakistan steel mills scholarship to study metallurgy after which he returned back to his homeland only to go back when the Iron Curtain fell in 1991.The same year, he invested in steel and set up ISTIL Group – originally a producer and trader of steel and steel products, ISTIL has now diversified its portfolio, holding investments in growth industries and sectors across the world.

    However, back in 1998, Mohammad Zahoor turned up as a principal target of an investigation linking Ukrainian politicians to a fraud investigation involving the United Energy Systems of Ukraine, which has been long drawn out for almost 15 years now. During the investigation it was discovered that two companies owned by Zahoor appeared to have a documentary trail connecting them to the fraudulent Ukrainian politicians. This was extensively reported by the Organized Crime and Corruption Reporting Project (OCCRP). 

    One of these companies, Metalsrussia Group Ltd, was later renamed to ISTIL Group. And the authorized capital of the company as per a certificate of incumbency attached here was $5 million. Another one of his companies South East Asia Metal Limited owned a majority stake in one of the oldest metallurgic enterprises in southeastern Ukraine, the Donetsk metallurgical plant. 

    Eventually the police case against him was dropped for a lack of evidence but Zahoor’s name was listed among two dozen individuals related to Ukraine who were revealed in the hoard of documents called the Panama Papers in 2016.

    He was also involved in mobilizing funds for the aid and resettlement of Ukrainian refugees and is also currently constructing a £1m housing project in Germany. 

  • Govt bans import of ‘luxury items’ to fight economic crisis

    Govt bans import of ‘luxury items’ to fight economic crisis

    For the first time in Pakistan, luxury or non-essential commodities have been completely banned in the country to help the nation emerge from its financial crisis. Minister of Information Marriyum Aurangzeb confirmed the economic strategy established by the federal government on Thursday.

    The Information Minister stated that this is an emergency situation and Pakistanis will have to make sacrifices under the economic plan. This will have a quick impact on foreign reserves. The ban will have an impact of $6 billion.

    Aurangzeb went on to say that the government’s priority was to cut imports, thus it was going to implement an export-oriented policy that would help local industry and producers.

    Prime Minister (PM) Shehbaz Sharif is working “day and night” to stabilise the economy, according to the information minister, and has decided to ban the import of all commodities that are not in common use.

    Food, decorating, and luxury automobiles were among the imports, according to Aurangzeb, who emphasised that the country was in a “difficult economic condition” as a result of the previous government’s policies.

    Here’s a detailed list of banned goods:

    1. Cars
    2. Mobile phones
    3. Home appliances
    4. Private weapons and ammunition
    5. Fruits and dry fruits (except Afghanistan)
    6. Crockery
    7. Shoes
    8. Chandeliers and lighting (except energy savers)
    9. Headphones and loudspeakers
    10. Sauces, ketchup etc.
    11. Doors and window frames
    12. Travelling bags and suitcases
    13. Sanitary ware
    14. Fish and frozen fish
    15. Carpets (except Afghanistan)
    16. Preserved fruits
    17. Tissue paper
    18. Furniture
    19. Shampoos
    20. Confectionary
    21. Luxury mattresses and sleeping bags
    22. Jams and jelly
    23. Cornflakes
    24. Bathroom ware/toiletries
    25. Heaters/blowers
    26. Sunglasses
    27. Kitchenware
    28. Aerated water
    29. Frozen meat
    30. Juices
    31. Pasta etc
    32. Ice cream
    33. Cigarettes
    34. Shaving goods
    35. Luxury leather apparel
    36. Musical instruments
    37. Saloon items like hairdryers etc.
    38. Chocolates

    The declaration, according to the information minister, is part of the present government’s fiscal plan to combat the PTI’s incompetent policies.

    Aurangzeb chastised the PTI for criticising the incumbent administration over the country’s economic woes, claiming that the Imran Khan-led government had raised inflation, taken historic debts, committed “economic terrorism,” and manipulated the economy by subsidising gasoline prices.

    By subsidising the price of petroleum goods, the PTI administration broke its agreement with the International Monetary Fund (IMF), according to the Information Minister.

    Via: Geo

  • Pakistani rupee tumbles to Rs200 versus US dollar in the interbank

    Pakistani rupee tumbles to Rs200 versus US dollar in the interbank

    The lack of clarity on both economic and political fronts worsened the Pakistani rupee’s (PKR) difficulties, as the local currency sank to Rs200 against the US dollar during intraday trading in the interbank market on Thursday, May 19.

    Pakistani currency officially breached the 200-barrier in the open market on May 18, closing at Rs198.39 after a day-on-day devaluation of Rs2.65 or 1.3 per cent.

    Investors, on the other hand, are concerned about the reactivation of the stalled $6 billion Extended Fund Facility (EFF) programme due to the government’s inability to implement IMF conditions. Meanwhile, market sentiment was severely harmed by continued domestic political uncertainties.

    Pakistan and the IMF are holding talks in Doha as the South Asian country wants to revive the IMF programme. On Wednesday, Federal Minister of Finance and Revenue Miftah Ismail met virtually with IMF Mission Chief Nathan Porter.

    During the meeting, Ismail underlined the government’s resolve to implement the IMF’s reforms and meet the program’s structural goals.

    He stated that the administration recognises the need to make difficult decisions while minimising the impact of inflation on the middle and lower income groups.

  • Pakistan faces Rs615 billion annual deficit due to tobacco consumption

    Pakistan faces Rs615 billion annual deficit due to tobacco consumption

    Pakistan has a substantial Rs615 billion annual deficit owing to diseases caused by smoking and overall tobacco usage, with only Rs120 billion earning in tax revenue from the product.

    The government is expected to improve revenue by raising the tax on cigarettes by 30 per cent according to The Nation.

    This was voiced by speakers at a major symposium held in Islamabad on May 18. The Pakistan National Heart Association (PANAH) held a seminar on the theme ‘Harms of Tobacco Products and the Importance of Tax Policy,’ which was presided over by Patron General (R) Ashraf Khan and hosted by General Secretary Sana Ullah Ghumman.

    As per the speakers at the event, tobacco usage is a major cause of serious heart, lung, and cancer diseases in the country. A fact sheet on the health and economic costs of cigarette usage was released by the Social Policy and Development Centre (SPDC).

    According to the survey, tobacco is used by 31 million persons over the age of 15. More than 260,000 people are predicted to start smoking in the country if tobacco taxes are not raised in the budget for 2022-23.

    Engineer Iqbal Zafar Jhagra, the former governor of KP and a senior PML-N leader, was the special guest at the event. Nisar Cheema, a member of the National Assembly, was also present.

    Read more: Tobacco companies in Pakistan may bump cigarette prices

    PANAH Patron General (R) Ashraf Khan congratulated the attendees and informed them of the organization’s goals and objectives.

    Smoking was declared the primary cause of deaths from non-communicable diseases (NCDs) such as heart, cancer, respiratory, and chronic diseases, according to participants, with an estimated 163,360 persons dying in 2017.

  • Toyota Camry after a hike of Rs2 million, priced at Rs23.3 million

    Toyota Camry after a hike of Rs2 million, priced at Rs23.3 million

    Toyota Indus Motor Company (IMC) has announced a massive price hike for all completely built-up (CBU) units offered by the Japanese automaker in Pakistan. The price of Toyota Camry is upped by Rs2 million and will now cost Rs23.3 million

    The only variant of the popular hybrid model, Toyota Prius received a hike of Rs1.26 million and will be sold for Rs14.65 million. Toyota’s crossover SUV, Corolla Cross (top trim) is now priced at Rs13.4 million after a hefty increase of Rs1.17 million in its earlier price.

    Finally, the automatic version of Toyota Rush will now be offered at Rs8.33 million following an increase of Rs710,000.

    Read more: Hyundai Sonata 2.5 will now cost Rs7.85 million

    Toyota IMC’s CBU models, in particular, have become nearly unobtainable following the recent price jump. The government’s main purpose in the auto sector, however, is to discourage CBU imports and increase sales of locally produced vehicles. This means that all other CBUs are on the verge of suffering the same fate as Toyota.

  • Musk says no Twitter deal without clarity on bot accounts

    Musk says no Twitter deal without clarity on bot accounts

    The tech mogul Elon Musk and Twitter CEO Parag Agrawal are arguing about bots, which Musk has made a core issue in his acquisition of the microblogging site.

    On the other hand, Agrawal outlined Twitter’s approach to spam accounts and the obstacles it faces in dealing with them in a series of tweets on May 16.

    Every day, Twitter suspends almost half a million spam accounts, according to Agrawal. He reaffirmed Twitter’s long-held estimate that less than 5 per cent of its daily active users are spam accounts, which Musk mentioned on Friday when declaring that his $44 billion proposal to buy Twitter was temporarily on pause.

    That estimate, according to Agrawal, is based on ‘many human reviews of thousands of users’ picked at random, but it’s impossible to know which accounts are counted on any given day.

    While Twitter feels its estimations are realistic, the measures were not independently validated, and the actual number of bogus or spam accounts could be greater.

    Believe it or not, Musk responded to Agrawal’s first 13 tweets with a ‘faeces emoji’.

    Musk then asked a more thought-provoking inquiry about how can advertisers know what they’re getting for their money as this is essential Twitter’s financial health.

    Tesla’s CEO has been vocal about bots and spam accounts on Twitter, describing bitcoin spam and bots as the most aggravating issue on the network.

    Read more: Musk postpones Twitter acquisition after discovering number of fake accounts

    Anyone who has seen the answers to Musk’s tweets knows that they are full of such con artists, many of whom try to profit from Musk’s fame.

    However, other analysts believe that the world’s richest man is leveraging the bot issue to lower the price at which he would purchase the platform, whether as an unusual bargaining ploy or out of necessity.