Federal Board of Revenue withdraws 10% withholding tax on mutual funds; include other updates – Shajar Research
By: Shajar Capital Pakistan (Private) Limited
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Economy
Finance Minister Mr. Ishaq Dar has expressed Pakistan’s desire for strong economic ties with the United States (US), during a Pakistan-US investment conference held in Dubai on Jun 25’13. According to sources a strategy has been formulated to resolve all economic challenges and subsidies would now target particular segments of the population and a strong social protection system would be introduced to tackle the issue of poverty. The scope for investment in Pakistan’s energy sector was emphasized upon and Pakistan’s independent judiciary and vibrant media were highlighted. (ET)
The US Agency for International Development (USAID) announced the Pakistan Private Investment Initiative (PPII) with the Abraaj Group and JS Private Equity Management in Dubai. According to a press release issued by the US Embassy, the Pakistan Private Investment Initiative will launch two new private equity funds focused solely on Pakistan’s dynamic and fast growing small- and medium-sized businesses. USAID will provide a seed investment to capitalize the funds and Abraaj Group and JS Private Equity Management have committed to match or exceed these seed funds with investments of their own, as well as private funds raised from other limited investors. According to sources, the agency is seeding individual funds with $24mn each and the Abraaj Group and JSPE will match the commitment. (BR)
The Federal Board of Revenue has withdrawn 10% withholding tax on mutual funds acting as margin financiers. On Jun’12, the Finance Bill 2013 proposed the withholding tax on margin financiers for stock exchange transactions but through an amendment in the finance bill, the Federal Board of Revenue reversed its earlier decision by withdrawing levy on margin financiers to prevent double taxation on savings through mutual funds. The Securities and Exchange Commission of Pakistan (SECP) had written a letter to the secretary of finance to amend the finance bill by withdrawing all measures, which the commission believed would halt corporatization in the country. (Dawn)
Chemicals
Fertilizer off-take depicted a surge of 25.2% during 5MCY13 to 2.77mn tons compared to 2.21mn tons recorded in the same period last year. According to the latest fertilizer data, urea sales were up by 24.5% to 2.14mn tons during 5MCY13 against 1.72mn tons recorded last year. On the other hand, DAP off-take remained strong, with the industry registering a surge in growth by 67%YoY. During 5MCY13, DAP sales were recorded at 273k tons compared to 164k tons in the same period last year. (FD)
Power
With a view to ease the power crisis, the federal government has decided to clear the dues of private power producers by paying off roughly PkR300bn on Jun 28’13, While payments to Gencos (public sector credit) will be made by Aug’13, the dues of IPPs till May 31st of the current year will be cleared through this initiative which will add 1700-2000MW to the national grid. (TN)
Fatima Group has reportedly made all the arrangements to set up one 118.8MW co-generation power plant in Muzaffargarh at an estimated cost of US$234.72mn. The project is to be built adjacent to a sugar mill owned by the group in District Muzaffargarh and will utilize bagasse produced by the sugar mill along with other biomass and imported coal. The project is being developed through a public limited company, Fatima Energy Limited. The company expects to close the finances for the project by Sep’ 13 and commercial operations are scheduled to close in Mar’16, allowing a construction period of 30 months. The project cost will be funded on the basis of a debt equity ratio of 75:25 implying a total debt requirement of US$176.04mn; and a total equity requirement of US$58.68mn, based on a project cost of US$234.72mn. (TN)
Telecommunication
Telenor Group, the largest landline and mobile phone network of Norway, is ready to invest more in Pakistan, if it sees favorable behavior of the industry and the present government. Telenor is already providing Easypaisa, Speedy Internet, Micro-Insurance and other valuable services to its customers in Norway, India, Thailand, Bangladesh and Pakistan through its landline and mobile phone network. According to the company officials, the 3G and 4G are important for a country like Pakistan as it will boost the Internet penetration in big cities as well as rural areas of the country. (DT)
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