Security of vehicles: Pakistan won't deploy forces

News Paper: Business Recorder

ISLAMABAD (July 20 2010): Pakistan will not deploy its forces for security of vehicles to be used in Afghan-Pakistan Transit Trade, but satellite tracking technology will be used to ensure the security of these vehicles. Every vehicle, which will pick cargo from Wahgah or Karachi Port will have an electronic-chip which will be monitored through satellite, instead of deployment of security personnel on a route which is difficult to police, sources in the Interior Ministry said.

The tracking system will not only help secure these vehicles but also help curb smuggling. In the past products transited through Pakistan disappear in the Pakistani markets thereby hurting local business community and economy of the country. Afghan drivers will be allowed to enter/exit Pakistan on permits, identified by the biometric devices installed at the entry points.
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Trade deal a major step: Afghanistan

News Paper: Business Recorder

KABUL (July 20 2010): Land-locked Afghanistan on Monday said a transit deal with neighbouring Pakistan that finally gives it access to the sea and markets in India was a major move towards developing the region and boosting commerce. The agreement, signed late on Sunday, also won enthusiastic support from the United States, which hopes it will bring the two closer to fight militants operating on both sides of the border and help counter the Taliban-led insurgency in Afghanistan.

"(President Hamid) Karzai ... congratulated people of both countries on the signing of the agreement and called it a major step for the regional trade and for the path of its development," his office said in a statement following the signing of the pact late on Sunday.

Afghanistan has long demanded its trucks be allowed to transport goods to India through Pakistan via the sensitive Wagah land route. It also gives it access to the sea, an Afghan official said. Pakistan has fought several wars with India and remains deeply suspicious of its larger neighbour. Critics accuse Islamabad of treating Afghanistan as "strategic depth" in case of further conflict.

The Pakistani government said the transit trade deal would, in turn, allow Pakistan to export its goods to Central Asia through Afghanistan. However, it said India would not be allowed to use the Pakistani land route for trading with Afghanistan.

"It has been agreed that no Indian export to Afghanistan will be allowed through Wagah," the Pakistani commerce ministry said in a statement, referring to the border crossing between Pakistani city of Lahore and India's Amritsar. A US embassy statement called the transit deal one of the most important achievements between the two countries in nearly 50 years and their most significant bilateral economic treaty.

It needs to be ratified by both parliaments. More exports would help Karzai counter a Taliban insurgency by improving economic conditions, an important goal for Washington as it looks ahead to President Barack Obama's July 2011 target date to begin withdrawing US troops.

Almost 50 percent of Afghanistan's trade is with its five neighbours - Pakistan, Iran, Tajikistan, Turkmenistan and Uzbekistan. Trade between Afghanistan and Pakistan is worth more than $1 billion annually. The deal comes ahead of an international conference in Kabul on Tuesday at which donor countries and Karzai's government will try to chart a path forward for the conflict-torn country.

Afghanistan hopes its strategic geographic position will make it a regional transit hub for trade with Central Asia, South Asia, the Middle East and China, if the country becomes stable. US officials say the new deal will reduce average transit costs between the two countries by half, lower import costs and make exports more competitive, along with helping employment prospects on both sides of the border.
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'APTTA will be counterproductive for local importers, manufacturers'

News Paper: Business Recorder

KARACHI (July 20 2010): The latest Afghanistan Pakistan Transit Trade Agreement (APTTA) would prove counterproductive for the local importers and manufacturers and catalyse smuggling, the business fraternity observed Monday. The authorities should have held deliberations with us before agreeing on the controversial Afghanistan-Pakistan transit trade, they added.

They were amused by Pakistan's decision to allow Afghanistan a thoroughfare from Wagah to India and also on Pakistan getting a thoroughfare from Afghanistan to Central Asia as the country (Pakistan) is already trading with the Central Asian Republics (CARs) which have levied 10 percent as service charges.

The business fraternity said the APTTA has been abused by the unscrupulous element to import products way above their actual demand in Afghanistan; meant only to return them back to Pakistan for personal gains. Due to the APTTA the locally manufactured products and imports would be undermined, depriving the government of substantial investments, corporate taxes and duties, they said.

President Karachi Chamber of Commerce and Industry (KCCI) Abdul Majid Haji Mohammad said such a decision is strange as already there are talks regarding putting quantitative restrictions on the imports through sea, as last year only more than 10,000 containers were imported by Afghanistan out of which 6,500 were of commercial nature. The KCCI firmly believe that this is not the quantum and quantity which is required by Afghanistan whereas majority of these goods are re-routed to create problems for the manufacturing sector of the country, he added.

Abdul Majid said in many meetings held in Kabul and Islamabad, private sector was very well represented by Muhammad Zubair Motiwala (former President-KCCI) and while representing the KCCI he specified all the possible negative impacts such an agreement could have on the business fraternity of Pakistan. He further said both the governments officially recorded minutes of those meetings. President KCCI opined the Afghanistan-India trade should be done under the international laws through sea via Karachi.

According to a KCCI report, prepared by its member of managing committee Qamar Usman, Pakistan is losing approximately 2 to 3 billion dollars in tax revenue ie Customs duties, GST and a total estimated volume of illegal transit trade (under the ATT) estimated to be 10 billion dollars in the last few years.

Massive scale smuggling of back tea, vehicle tyres, electronic goods, kitchen items, home appliances and other goods were done, the report noted. It also noted the people in Afghanistan prefer to drink green tea and not black tea and their market was just not able to absorb the quantity of electronics and other goods booked in great volumes, clearly indicating that something fishy was going on.

It further noted, under the ATT, Afghanistan was bound to facilitate Pakistan transit trade with CARs, but instead it imposed a number of restrictions on Pakistanis trading with CARs via Afghanistan. Afghanistan's government has made it mandatory for Pakistani traders to get their trade contracts with their Central Asian counterparts, registered with various ministries of Afghanistan.

A Pakistani trader has to pay 2000-3000 dollars per container, besides waiting for more than 15 days to get the cumbersome formalities completed. Similarly the Afghanistan government charges 300 dollars from Pakistani traders per truck on transit consignment through Afghanistan from or to CARs.

Moreover, an amount equivalent to 110 percent of Afghanistan's Customs duties has to be deposited with the authority at the time of Pakistani transit goods' entry into their country, which is refunded with a deduction of 20 percent of the deposited amount, it noted.

Referring to India and Nepal transit trade, the report noted that India prior to signing a transit trade agreement insisted on signing a bilateral trade agreement, an agreement which was negotiated well and then signed, had a clear objective towards the Indian perspective to develop and dominate Nepal's trade and industries making it totally dependent on the goods manufactured in India. A second agreement related to transit trade under the title of "treaty of transit trade" was signed afterwards.

While the bilateral trade agreement restricts Nepal to export only those products which are of Nepalese origin and no other goods could be exported to India, the transit trade agreement further strengthened this status, as it imposes a compulsory condition that imports would only be allowed by Nepal only against an authenticated import license issued by the government of Nepal and mostly against a letter of credit through a reputed commercial bank in their country.

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Trade deal termed serious blow to trade, businesses

News Paper: Business Recorder

KARACHI (July 20 2010): The business fraternity on Monday termed the new Afghanistan Pakistan Transit Trade Agreement (APTTA) a 'serious blow' to the already crumbling business activities in the country. Businessmen expressed serious reservations over the APTTA and said the agreement, singed by the neighbouring countries, looks to have been influenced by the United States of America.

They said the agreement would enhance smuggling and the Indian products would overflow the Pakistani markets, which are already flooded with substandard Chinese goods. "The Indian products would be available on cheap rates, as a result the imported ones would struggle to compete with the unwanted supply," said an importer in a reaction to the agreement.

An importer of spices said the agreement would increase the smuggling of seasonings from India and as a result their huge annual imports would suffer. "Afghanistan's market is not considered to be a spices consumer market, therefore the commodities would flood Pakistan's markets," he expressed concerns.

"There is no mechanism that could stop the smuggling of Indian products, which would subsequently be available on cheap rates against several imported items of the same nature," he said. Importers dubbed APTTA as a 'bad diplomacy' by Pakistan and said the agreement would harm the national economic interest of the country without giving any trade benefits in return.

Whereas, small traders said the move would prove to be a "last blow" to the trades and businesses of the country which were already bearing the brunt of prolonged outages and an abysmal law and order situation. The APTTA would further increase the trend of under invoicing by local importers to compete with the smuggled products, and as a result the national treasury would lose a sizeable chunk of revenue, they said.

They also said the agreement would only benefit India as compared to Afghanistan, as the latter has nothing special other than dry fruits to export to the former. The agreement does not enshrine Indian trade and is confined to Afghanistan's exports through Wagha land route to India and in return according to the agreement, Pakistan would use Afghanistan as a transit route to supply its commodities to the Central Asian markets. The lack of understanding of the agreement has spread panic not only amongst businessmen but also has shocked the consumers.

However, the facts relating the smuggling of tea, spices and other commodities into Pakistani markets through the Afghan Transit Trade (ATT) cannot be denied, despite the latest agreement is different from the last one.
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Rs 277 billion projects' financing: Sindh to take up issue at ECC meeting today

News Paper: Business Recorder

KARACHI (July 20 2010): The Sindh government would take up the issue of financing Rs 277 billion federally funded projects in the Economic Co-ordination Committee (ECC) of the Cabinet today (Tuesday), said Advisor to Chief Minister for Planning and Development Dr Kaiser Bangali.

Dozens of development schemes are being executed by the federal government's funding, however, after signing of the 7th National Finance Commission (NFC) Award and approval of 18th Amendment of the Constitution, the Centre has transferred these schemes to Sindh government, saying that province could arrange funding, he added.

He stated this while addressing a meeting of Sindh Advisory Group on Federalism in Pakistan: Impacts and Implication of the 7th NFC Award and 18th Amendment, organised jointly by Centre for Civic Education Pakistan Forum of Federation at a local hotel on Monday.

The advisor said Islamabad had refused to provide funds of Rs 277 billion for its underway projects in the province and putting extra burden of financing of Rs 277 billion was sheer injustice with Sindh. "The Sindh government take up the matter in the ECC meeting to be chaired by Prime Minister Syed Yousuf Raza Gilani and urge the Centre to ensure release of funds for the federally funded projects till their completion", Bangali informed.

This year, the Sindh government has enhanced budget for the Annual Development Programme (ADP) from Rs 90 billion to Rs 133 billion, he said, adding that the government was also paying special attention to improve water distribution system, develop better highways, generation power and education.

The watercourses in the province would be brick-lined, each district would be connected with other high-speed dual carriageway to provide better transportation facilities. The literacy ratio in Sindh is very low and the government would shortly launch a multi billion Comprehensive School Programme in which students from class 1 to 10 would be provided with free education with pick and drop facilities, he said.

Dr Kaiser said that the Sindh government was focusing to generate its own electricity by developing vast reserves of Thar Coal as it had remained ignored in the past due to political reasons. About the current status of the General Sales Tax (GST) on Services, the advisor said that the Centre was authorised to collect it till October 1, 2010. The central bureaucracy was deliberately sabotaging the decision of the government such as flaws in the NFC Award documents .

Under the 18th Amendment, the provinces have been made the signatory in any exploration agreement with the multinational oil and gas companies, however, in past the concerned province did not have information about any deal. "Sindh has been fighting for its fundamental right and it would continue to do so as things can not be changed overnight", he says.

Former Senator and General Secretary Pakistan Peoples Party (PPP) Taj Haider opined that the NFC Award should have been signed after the 18th Amendment to avoid implication in the implementation process. Sindh government has constituted an implementation committee headed by Advisor to CM for planning and development Dr Kaiser Bangali that would meet the implementation deadline, ie June 30, 2011, he informed.

The GST on Services was the provincial subject according to 1973 Constitution of Pakistan, however, Sindh should have tried to transfer sales tax on goods. "The leakages in the sales tax on services is high and more than Rs 60 to Rs 70 billion can be achieved after removing tax evasion", he said, adding that the Council of Common Interest (CCI) had further been empowered to resolve inter-provincial disputes. Punjab is the most tax-evader due to which the Tax-to-GDP ratio is low, he said.

Moreover, Taj Haider said that 50 percent ownership on oil and gas had been transferred to provinces under the 18th Amendment and the provinces have the right of information about any agreement with the national and multinational companies and added that there was a dire need of special attention to 18 explored gas fields to contain gas shortage. The gas is being wasted and the people would suffer badly in coming winter as there would be no gas, he noted.

He also suggested establishment of the provincial electricity generation and distribution authority to promote Thar Coalfields, besides setting up of a small port at Ali Bunder, Thatta to export coal. Taj also vehemently criticised the bureaucracy for what he termed "deliberate attempts" to sabotage the government and the system as well, adding that flaw admitted in the Presidential Order and Irsa's decision of reopening of Chashma Jhehlum Link Canal was part of it.

MQM's parliamentary leader in the Sindh Assembly Syed Sardar Ahmed also criticised the bureaucracy by saying that it should refrain from doing politics and creating hurdles for the elected government. "Sindh has been striving to get right over sales tax on services since 1990 but making the federal government agree in principle is a major achievement of this government that ensures fiscal federalism", he added.

Now Sindh can levy and collect sales tax and it is expected that the goal would be achieved gradually, said Sardar Ahmed. He said the civil society and people belonging to different walks of life should support the government to overcome the persisting crisis, which the country was facing nowadays.

PPP MPA in Sindh Assembly Humera Alwani said the major achievements of present government were Balochistan Package, consensus on NFC Award, 18th Constitutional Amendment. At least 47 departments and 24 institutions currently working under federal government's control would be transferred to Sindh government by June 30, 2010, she said.

After transfer, the Jinnah Postgraduate and Medical Center (JPMC), National Institute of Children Health (NICH) and National Institute of Cardio Vascular Diseases (NICVD) would cost Sindh more than Rs 2 billion. "There is a dire need to train and inform the elected representatives about the mechanism to run these institutions by the provincial authorities", she added.

Abrar Kazi, a politician and technocrat, said that the proper implementation of the 18th Amendment would remove duplication of departments while the provinces have also been empowered for International Financial Institutions (IFIs) for project assistance.

"There should be representation of the provinces in the Planning Commission, which should work with the Planning and Development Departments of the provinces", he suggested. Besides, in order to ensure fiscal federalism, there should be equal distribution of jobs in the Armed Forces and Federal Government's institution on the basis of population, he said.

Earlier welcoming the participants, Executive Director, Centre for Civic Education Pakistan, Zafarullah Khan said the country was experiencing a major transformation of its fiscal system and structure. The 7th NFC Award and elements related to fiscal federalism in the 18th Constitutional Amendment have significantly changed resource distribution criterion, ownership of natural resources, cost of governance after abolition of the Concurrent List and overall fiscal management including province's power to raise domestic and international loans and provide guarantees, he added.

These significant changes require deeper understanding of the issues associated with this transformation. Equally important is to examine the overall impact and implications of this fiscal restructuring, he said. Khan said it was also important to access the state of preparedness in terms of human and institutional capacities and resources. A number of politicians, journalists and civil society representatives participated in the meeting
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Seven uplift schemes of water, power completed in Bajaur Agenc

News Paper: Business Recorder

PESHAWAR (July 20 2010): Government has completed two electrical distribution schemes, rehabilitation of four drinking water supply schemes, and a short-term employment scheme in different villages of Bajaur Agency to provide electricity and clean drinking water facility to the local people. These developmental schemes would benefit thousands of locals in the area.

The developmental schemes, include rehabilitation of electrical distribution scheme in Inzari village of Losium area where six transformers of 100-KVA, 50-KVA and 25-KVA along with transmission poles have been installed. While rehabilitation of electrical system in Tang Khatta of tehsil Khar is also completed where one 25-KVA transformer and two 50-KVA transformers have been installed in the area. By rehabilitation of these electrical distribution schemes in the area more than 5600 locals would get better facilities in the summer season.

Four drinking water schemes have also completed in different villages of Bajaur Agency. In Pajigram Dheri area one surface tank of 1000 gallons constructed, one pump machine installed and 600 feet delivery pipe line connected with main water source. A clean drinking water scheme in Bar Saparai in tehsil Barang has also completed where four surface tanks of 1000 gallons capacity constructed and 6000-feet pipeline connected to rehabilitate the drinking water supply system. One tube well with a pump is also installed in Gul Karim Korona Sadiq Abad Pattak Mohalla of tehsil Khar to provide clean drinking water to the local communities.

In this area three water storage tanks, one pump house constructed and 2226 metres pipeline were connected. A drinking water scheme is completed in Nari Shah Village where one tube well with a machine and one 50-KVA transformer installed while one pump house, one water storage and four distribution tanks were constructed and pipeline were connected.

A short-term employment scheme has also completed in Loisum area to rebuild livelihoods. In this scheme 50 wheel barrows, 70 digging tools and 50 shovels were provided to the local labours. This project created hundred of short-term labour days for Bajaur residents, who cleared debris and rubble from over 12 villages, to jumpstart rehabilitation efforts in the area. These seven development schemes would benefit more than 15 thousands of locals in the area
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Piaf criticises Pak-Afghan transit trade deal

News Paper: Business Recorder
 

LAHORE (July 20 2010): Pakistan Industrial and Traders Associations Front (Piaf) has criticised US backed Pak-Afghan Transit Trade deal and termed it against Pakistan's business interests. In a statement issued here, Piaf Acting Chairman Shahzeb Akram, LCCI former SVP Tahir Javed Malik and LTIA Chairman Zaheer Bhutta said that the opportunity given to Afghanistan to export goods to India was also likely to be misused as had been in vogue for the last many years.

They said that Pak-Afghan Transit Trade deal done under US pressure would be benefiting India in a big way while Pakistan would be loser as it carries negative consequences for Pakistan. They said that it would have been better if the stakeholders are taken into confidence before finalising any such agreement.

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