Caretaker Prime Minister Anwaarul Haq Kakar disclosed on Monday that 27,000 vehicles of smuggled Iranian oil were illegally entering Pakistan daily with the connivance of local officials — a rare admission that also exposes the deep-rooted nexus between the smugglers and their benefactors.
In an informal interaction with media persons, the country’s chief executive further said that the menace of smuggling of goods and foreign currency was posing an “existential threat to Pakistan”.
About 27,000 vehicles of smuggled Iranian oil were entering Pakistan on a daily basis by giving Rs125,000 to Rs150,000 per vehicle bribe to the concerned deputy commissioner, the prime minister revealed. He said that the deputy commissioner was also giving shares to those who were instrumental in these postings.
He said that the illegal cross-border movement of the vehicles has almost been stopped, although not yet to a complete halt.
“Smuggling and illegal foreign currency trade were posing an existential threat to Pakistan and had we not launched the crackdown, the rupee-dollar price would have crossed Rs350 to a dollar”, said the PM.
The military and the civil leadership launched a decisive campaign against the smuggling –the second in the past three years but this time the scale of the crackdown seems larger and deeper.
It was my decision to stop the smuggling of Iranian oil to Pakistan and the military played a major role in the crackdown, said the PM. Before August, the smuggling of Iranian oil was considered legal by many, he added.
The prime minister said the unemployment in Balochistan has been used as an excuse to promote and protect smuggling. The government positions are deliberately kept vacant to use unemployment as an argument for the continuation of smuggling in Balochistan, said the PM.
In 2020, the then government had also launched a crackdown against smuggling of POL products from Iran, estimated at US$ 2 billion per annum at the time.
Supply routes of illegal POL products through Baluchistan to the rest of the country were choked three years ago. As a result, 1,674 illegal POL retail outlets were sealed, 1,155 FIRs were lodged against the owners of these illegal outlets and 781 applications for freezing of assets were moved in light of relevant provisions of Customs Act, 1969.
A 2018 study by the customs department revealed that in the case of only 11 commodities, the national exchequer sustained a revenue loss of about $3.5 billion in terms of duties and taxes.
Meeting with IMF
The PM also spoke about his meeting with the Managing Director of the IMF on the sidelines of the United Nations General Assembly session.
The PM briefed Kristalina Georgieva about the efforts that Pakistan was making to curb the smuggling of foreign currency. The PM said that he apprised the MD that Pakistan did not use its thin foreign exchange reserves to bring down the value of the dollar against the rupee.
The IMF is primarily an economic tool and I do not see any political angle to it, said Kakar while responding to a question whether the global lender would give a new loan to Pakistan if elections are delayed beyond January.
“The probability is that they would engage with Pakistan as they have been engaging with both the elected and non-elected governments across the world”, said Kakar.
Pakistan’s current IMF programme is expiring on April 12th next year and the country’s economic conditions warrant another long-term IMF deal, which many see can only happen after the next general elections.
After meeting with the PM, the IMF MD emphasised taxing the rich people.
It was not the managing director of the IMF that raised the question of taxing the rich, rather, I briefed her that Pakistan would tax its rich people, said the PM.
“I want to tax the lawyers, doctors, media persons, media owners and retailers”, said the PM. He stated that everyone has to pay due taxes.
“Pakistan wants to reform the tax system out of conviction, not under pressure by the IMF”, said Kakar while sharing details of his meetings with the Managing Director of the IMF, Kristalina Georgieva.
To a question about expanding the role of the military-dominated Special Investment Facilitation Council to areas that are not defined in the governing law, the PM said that the Board of Investment amended Act gives the federal government a mandate to bring any new area into the fold of the Council through a gazette notification.
The Express Tribune reported last week that the SIFC role has been expanded to areas, which are domestic in nature and involve as small issues as providing gas to housing societies or setting priority in allocation of gas to various economic sectors.
To another question, the PM said no new notification has yet been issued to bring new areas in the SIFC fold.
The law says that the SIFC shall facilitate investment and privatisation in areas, including, but not limited to, defence, agriculture, infrastructure development, strategic initiatives, logistics, minerals, information technology, telecommunication and energy and shall take all necessary measures in order to establish, facilitate, encourage and promote opportunities for investment, as well as, inter alia, business in and for Pakistan.
Another section of the law says that the federal government may notify any other area, sector, industry or projects as Relevant Field through a notification in the official Gazette to be processed under this Chapter.
While speaking about privatisation, the PM said that the government would outline its policy by December this year to stem losses caused by the power distribution companies. He said that various proposals were under consideration, which includes signing concession agreements with the private sector and handing over these companies to the provinces.
The PM also responded to questions about action against the PTI workers and Pakistan’s policy about illegal Afghan immigrants.
Pakistan is expelling only those foreigners who have illegally entered the country and do not have any legal basis to stay back, said Kakar while defending the government’s policy of repatriation of illegal immigrants. “No country in the world can stop us from taking action against aliens”, said Kakar.
To a question about providing a level playing field to all political parties, the PM said that PTI is a political and legal entity and its supporters enjoy all the rights, which the constitution ensures to any political party. There would not be any intervention by any institution in the elections, said the premier.
‘Neutrality and transparency’
Separately speaking during an interview, the premier said that while pursuing the guiding principles of transparency, neutrality and fair play, his government would ensure that no political party had any fear or favour while undergoing the electoral process.
The prime minister, in an interview with a private television channel, rubbished the notions of his government favouring the PML-N and said usually the political parties attracted their voters through such impressions.
Read more Crackdown launched against oil smuggling
Regarding the date for elections, he said through legislation, the previous parliament had given the mandate to the Election Commission of Pakistan (ECP). However, as far as the government’s role was concerned, they were ready to provide funding and security for the elections, he added.
Ruling out any threat to the PTI chief’s life in jail, the prime minister said the caretaker government would ensure the provision of facilities to him as per his entitlement.
To a question, the prime minister said there was no formal requirement for the caretaker government’s consultation with the President for the electoral process. However, the government would surely respond whenever they got any queries from the president as they maintained a respectful relationship.
The prime minister said he had need-based interaction with the president – in a reasonable environment – on three to four occasions.
Asked about the PTI’s apprehension of being barred from electioneering, he said there was no law, executive order, or administrative order keeping PTI off from the process. Referring to the arrest of the people involved in the riots of May 9, he said calling the legal action bar from the electoral process was unfair.
To a query, he said the government had not received any complaint against any enforced disappearances in Punjab.
However, he said it was the state’s inherent right to apprehend the people accused of any law violation. Commenting on JUI-F chief Maulana Fazlur Rehman’s suggestion of delaying polls citing snowfall season in some parts of the country, he said the government would not hold elections based on the input from the Met Office rather it was up to the ECP to decide the date. He said the country was faced with security and economic challenges and besides holding the polls, the government would prioritise the protection of people’s lives and properties.
IHC halts Rs35b tax on banks
The Islamabad High Court (IHC) on Wednesday suspended the government’s decision to impose a windfall income tax on commercial banks for the recovery of Rs35 billion, after lawyers questioned the powers of the interim setup and the constitutionality of the move.
The court’s decision came a day before the last date for the payment of an estimated Rs35 billion tax by those commercial banks that had manipulated the value of foreign currency to make extra profits.
The Federal Board of Revenue (FBR) was betting on the Rs35 billion in revenues to achieve its monthly target of nearly Rs711 billion. It is now left with the goal of collecting over Rs100 billion more today (Thursday) to meet the monthly target, although it may achieve the five-month tax collection target of Rs3.45 trillion.
design: Ibrahim Yahya
design: Ibrahim Yahya
“The submissions (by petitioners) demonstrate not only a prima facie case but also that the ingredients of balance of convenience and irreparable loss operate in favour of the petitioner. Resultantly, the operation of the impugned statutory regulatory order shall remain suspended till the next date of hearing,” reads the short order of the court.
Eight days ago, the FBR, through SRO 1588, had imposed a 40% windfall income tax on income from foreign exchange of banking companies for the preceding two years ended on December 31, 2021, and 2022.
Advocate Supreme Court, Salman Akram Raja, pleaded before the court on behalf of his banking clients.
While the government had anticipated banks to challenge the levy, the financial institutions were finding it difficult to hire lawyers to plead their case.
The government had issued the SRO under section 99D, which the Parliament had inserted into the law in June this year. While the FBR imposed taxes on the banks to get an additional Rs35 billion out of an estimated Rs90 billion windfall income, it conveniently ignored a windfall profit of approximately Rs1.5 trillion made by exporters. The Ministry of Finance has estimated that the exporters made a windfall gain of Rs1.5 trillion due to steep currency devaluation these past few years.
The banks’ lawyers argued that section 99D (through which the federal government could determine a tax rate between 0% and 40%) was tantamount to excessive delegation of power by Parliament and in breach of Article 77 of the Constitution.
The legal team also questioned the power of the caretaker government in imposing the tax, arguing that the function of the caretaker government was only to “attend to day-to-day affairs and (it) cannot extend its authority to a fresh taxation measure.”
The legal team also argued that the SRO was also defective in that the determination of the preconditions under section 99D, namely, the economic factors that led to the windfall income as well as the quantum of the windfall income, are conspicuous by their absence in the impugned SRO.
The team further argued that by reading the SRO, there was only an underlying (but invalidated) assumption that external economic factors have actually operated and led to a windfall income but without these being spelt out in the notification, which would be expected given the letter and spirit of section 99D.
The petitioners also claimed that the charge of additional tax conflicted with entry number 47 in the Legislative List for imposing an additional tax which was not warranted.
The law requires that the notification of the windfall tax has to be placed before the National Assembly within three months –a clause that the banks have now invoked as there is no assembly in Pakistan and the next elections are scheduled for February 8th.
The lawyer argued before the court that the government assumes that the next assembly will validate its action but it is quite possible that the National Assembly does not agree to bless the notification.
If the next assembly rejects the additional tax, banks would be at a disadvantageous position, according to the petitioners.
The court did not accept the arguments of the FBR legal counsel who submitted that the legislation has to remain operative until it is declared ultra vires. The court accepted the banks’ argument that the interim relief is sought in respect of the SRO, which is an executive act and not legislation and, therefore, prima facie not covered by the judgments on the point referred to by the counsel for the FBR.
Published in The Express Tribune, November 30th, 2023.
Growers sound alarm on fertiliser crisis
Growers in Sindh have appealed to the federal and provincial governments, as well as Chief of Army Staff (COAS) General Asim Munir, to take notice and prompt action to curb hoarding, smuggling, counterfeiting, and the black market of Urea and diammonium phosphate (DAP) fertilisers in Sindh immediately; otherwise, food insecurity could ensue.
“After demanding action from the federal and provincial governments on multiple occasions, I had to write a letter [available with The Express Tribune] to the COAS to address the ineptitude of all three fertiliser companies: Fauji Fertiliser Company Limited, Engro Fertilisers Limited, and Fatima Fertiliser Company Limited. Additionally, three Sindh government departments, including Sindh Agriculture Extension, Anti-Corruption Establishment (ACE), and Revenue, are being implicated in hoarding, smuggling, counterfeiting, and the black market of fertilisers due to nepotism, favouritism, and corruption. This is agonising farmers and driving up input costs of agricultural produce,” said Ali Palh, Advocate and President of the Small Growers’ Organisation Sindh Agriculture Research Council (SARC), speaking to The Express Tribune.
He highlighted that the government’s substantial subsidies to fertiliser companies have been in vain, as poor growers are not benefiting from them, leading to an acute shortage of fertilisers in the market. “We have laws, including the Sindh Fertiliser (Control) Act 1994 and Sindh Fertiliser (Control) Rules 1999; however, they are not being implemented to benefit peasants at all,” he emphasised.
Frustrated with the caretaker government, Jawaid Junejo, Chairman of the Farmer Organisations Council Sindh, expressed concern that large farmers are being compelled to purchase fertiliser sacks at almost double rates, while small growers are unable to obtain them, even at higher rates in the market. “We are running a social media trend; those who provide fertilisers at government rates to farmers will garner votes from the people in the upcoming general elections. This is the wheat sowing season, and we are being deprived of fertilisers,” he lamented.
Sindh Chamber of Agriculture (SCA), Senior Vice President, Nabi Bux Sathio highlighted that instead of a controlled Urea price at Rs3,680 per 50kg bag, it is being sold for Rs5,000-5,500 per 50kg in the market. He pointed out that a 50kg sack of DAP, which was sold at Rs9,000 until October 30, is now being sold at Rs15,000 per 50kg bag due to wheat sowing and other Rabi season crops.
“A total of 6.5 million tonnes of Urea are being produced in the country, meeting a local demand of 6.2 million tonnes. We should have a surplus, but no action is being taken. Growers need Urea and DAP fertilisers for better yield, rapid growth of standing crops. I urged the Sindh Chief Minister during a meeting today (Wednesday) in Hyderabad to make the fertiliser portal, set up by the federal government under the Ministry of Industries and Production, public. This way, every farmer can obtain updated information about actual bags of fertilisers sent to authorised dealers in every district. I also proposed forming an agriculture advisory committee to monitor agriculture issues and fix problems through monthly meetings,” he concluded.
Published in The Express Tribune, November 30th, 2023.
Saudi Arabia wins bid for 2030 world fair
The Saudi Arabian capital of Riyadh won the right to host the Expo 2030 world fair, vote results showed on Tuesday, in another diplomatic victory for a Gulf country after last year’s soccer World Cup in Qatar.
South Korea’s port city of Busan and Rome in Italy were also in the running to host the five-yearly event that attracts millions of visitors and billions of dollars in investment.
Riyadh won 119 votes, Busan 29 and Rome 17, results from 182 members of the Paris-based Bureau International des Expositions (BIE) showed. Saudi Arabia needed two-thirds of the votes to win from the first round.
The Italian contestants were scathing in their disappointment.
“This huge result for Saudi was unexpected in those proportions,” Giampiero Massolo, head of the Italian Expo bid, told reporters. “It is no longer about the merits, but about transactions. Yesterday it was a soccer championship, tomorrow it will be the Olympics,” he added.
However, South Korean President Yoon Suk Yeol congratulated Saudi Arabia for winning the bid, calling the Gulf state “a key partner,” and adding that his nation would share the resources and experience gained to help Riyadh hold a successful event.
Riyadh had enlisted soccer star Cristiano Ronaldo, who plays for the Al-Nassr Saudi club, to convince members in a video projected before the vote. Riyadh aims to host the event between October 2030 and March 2031.
The win is the icing on the cake for de-facto ruler Crown Prince Mohammed bin Salman’s ambitious Vision 2030 programme, which aims to wean the country off its oil dependency.
Published in The Express Tribune, November 30th, 2023.
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