02 PROFILE - abcpk.org.pkabcpk.org.pk/.../03/ABC-Annual-Report-2011-121.pdf · 54 MEMBERSHIP & ADMIN 55 SECURITY 57 IT ... 1 3 4 5 EXECUTIVE COMMITTEE 2012 1. ... Exxon Chemical Pakistan

02 PROFILE03 MISSIONSTATEMENT04 EXECUTIVECOMMITTEE201205 EXECUTIVECOMMITTEE201306 CHAIRMENOFSUB-COMMITTEES07 PASTPRESIDENTS09 LISTOFMEMBERS10 MEMBERS’CONTRIBUTIONSTOPAKISTAN’SECONOMY11 EXECUTIVECOMMITTEE’SREPORT12 HIGHLIGHTSOFTHEYEAR20 PROGRAMSANDEVENTSPHOTOGALLERY45 REPORTSOFSUB-COMMITTEES46 CSR

47 FINANCE&TAXATION

49 INDUSTRY&TRADE

51 IPR,GOVT.RELATIONS&LEGAL

52 MEDIA,PR&PROGRAMS

54 MEMBERSHIP&ADMIN

55 SECURITY

57 IT

58 NORTHMEMBERS

59 PHARMACEUTICAL&AGRICULTURECHEMICALS

60 USRELATIONS

61 ABCREPRESENTATION ANNEXURES62 ABCSUGGESTIONSFORTHEFEDERALBUDGET2012-13 “A”

85 ABCSUGGESTIONSFORTRADEPOLICY2012-13 “B”

98 FINANCIALSTATEMENTS

105 APPRECIATION

The American Business Council of PakistanF-30,Block7,KDAScheme#5,Kehkashan,Clifton,Karachi,Pakistan.G.P.O.Box1322T:(92-21)35877351-52,35877390F:(92-21)35877391E-mail:[email protected]

Website:www.abcpk.org.pk

C O N T E N T S

2

ANNUALREPORT2011-12

TheAmericanBusinessCouncilofPakistan(ABC)wasformedin1984.ABChascompleted28yearsofservicetoPakistanandplayedamajorroleinbeingabridgetoinvestmentfromtheUnitedStates.

TheABCisoneofthelargestinvestorsgroupinPakistan–currently,wehave61membersandmostofthemareFortune500companies.Theyoperateinvarioussectorsi.e.healthcare,financialservices,informationtechnology,chemicals&fertilizers,energy,FMCG,food&beverage,oil&gasandothers.ABCmembershavecumulativerevenuesofoverUS$3.7billionandaninvestmentofoverUS$662million.Ourmemberscontributeasizableamounttothenationalexchequereveryyearasdirectandindirecttaxes–lastyeartheycontributedRs.66billion.TheABCmembersalsoemployover39,500peopledirectlywhosupport160,000dependentsandindirectlyemploynearlyonemillionpeoplewithagents,distributors,contractors,etc.

TheCouncilismanagedbyanExecutiveCommitteethatiselectedeveryyearbyitsmembersandmeetsmonthlytoreviewvariousaspectsofitsongoinginitiatives.Dependingontheeconomiccycletheinitiativesmayvaryfromyeartoyear.Sub-Committeesareformed,whichmeetregularly,toensurethatadequatefocusisgiventoimportantissuesaffectingmajorityofCouncilmembership.

TheABCisaneffectivechannelfordialoguewiththeGovernmentofPakistan.Regularsuggestionsandinputforimprovementareprovidedtotherelevantbodieslikeministries,regulatoryandtaxauthorities,etc.,throughouttheyear.ThefocusoftheExecutiveCommitteeistoensurethattheABC’ssuggestionsareincorporatedintheannualFederalBudget

andTradePolicy.TheCouncilalsofacilitatesdirectinteractionwiththeFederalandProvincialgovernmentsthroughitsguestspeakers’program,seminarsandeventsallofwhichareaimedatsustaininganongoingdialogue.

TheABCisaffiliatedwiththeFederationofPakistanChambersofCommerce&Industry(FPCCI)andisamemberoftheU.S.ChamberofCommerce(USCC),WashingtonD.C.,andAsia-PacificCouncilofAmericanChambersofCommerce(APCAC).ABCalsohasacloseworkingrelationshipwiththeU.S.-PakistanBusinessCouncil,WashingtonwhichisacomponentoftheUSCC.

KeyABC’sObjectivesare:

• ToraisetheprofileoftheABCsoastoensureitisseen notonlyasaprogressivebodybutalsoresultsinthe greaterparticipationandengagementofmembers.• IncreasetheinclusivityoftheNorth-Basedmembership• PlayanactiveroleandengagewithGovt.bodies,including IPOP,FBR,BoIandrelevantGovt.Ministries.• LobbytheGovt.ontaxationissueseffectingABCmember Companies• Addresstheissuesposedbythepowersectorandengage withtheGovt.totryandfindsolutions• Seekwaysofworkingaroundthelaw&orderandsecurity threatseffectingthesmoothrunningofbusinessin Pakistan• TorecognizethecontributionofABCmemberstowards theircommitmenttocontinuouslyupgradeprocesses, systems,productsandservices,andcreatevaluefor theiremployees,existingandpotentialcustomersandthe localcommunitiestheyoperatein.

PROFILE

3

THEAMERICANBUSINESSCOUNCILOFPAKISTAN

ToProtectandpromotetheinterestsofUSInvestorsinPakistan;toencourageandstimulatenewinvestments;tointroduceandinculcatebestpractices;tostrivetoestablishalevelplayingfieldinthecountryinordertopromotethedevelopmentofcommercebetweentheUSAandPakistan.

MISSION STATEMENT

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ANNUALREPORT2011-12

1

3 4 5

EXECUTIVE COMMITTEE 2012

1. PRESIDENT Mr. Saad Amanullah Khan ChiefExecutiveOfficer GillettePakistanLtd.

2. VICE PRESIDENT Mr. Shabeeh Ikram GeneralManager Johnson&JohnsonPakistan(Pvt.)Ltd

2

6 7 8

10 119

3. Mr. Asif Jooma ManagingDirector AbbottLaboratories(Pakistan)Ltd.

4. Mr. Farrokh K. Captain Chairman&ManagingDirector Captain-PQChemicalIndustries(Pvt.)Ltd.

5. Mr. Tasleemuddin Ahmed Batlay Director Colgate-Palmolive(Pakistan)Ltd.

6. Mr. Osman Asghar Khan ChiefExecutiveOfficer EMCInformationSystems(Pvt.)Ltd.

7. Mr. Akram Wali Mohammad ChiefExecutive Gerry’sInternational(Pvt.)Ltd.[FedEx]

8. Mr. Mohammad Iqbal Shekhani ChiefExecutiveOfficer Johan(Pvt.)Ltd.[Culligan]

9. Mr. Antoine Joignant AreaManagerPakistanandGeneral

ManagerSheratonKarachiHotel, StarwoodHotelsandResorts

10. Mr. Nadeem Arshad Elahi ManagingDirector&CountryHead TRG(Pvt.)Ltd.

11. EXECUTIVE DIRECTOR Ms.RaaheenMani

SUB-COMMITTEE CHAIRMEN

12. Mr. Abdul Majeed ManagingDirector PfizerPakistanLtd.

13. Mr. Navid Qazi CountryGeneralManager CiscoSystemsPakistan(pvt)Ltd.

AUDITORSKPMGTaseerHadi&Company

BANKERSCitibank,N.A.

MEMBERS

12 13

5


1

3 4 5

EXECUTIVE COMMITTEE 2013

2

6 7 8

10 119

MEMBERS

12 13 14

3. Mr. Tauqir Ahmed ChiefExecutive DuPontPakistan Operations(Pvt.)Ltd.

4. Mr. Nadeem Arshad Elahi ManagingDirector&CountryHead TRG(Pvt.)Ltd.

5. Mr. Irshad Ali Kassim Chairman KaramCeramicsLimited

6. Mr. Ahmed Jamal Mir ManagingDirector&CEO PrestigeCommunications(Pvt.)Ltd.

(Grey)

7. Ms. Zehra Naqvi ChiefExecutive ACEInsuranceLimited

8. Mr. Muhammad Navid Qazi CountryGeneralManager CiscoSystemsPakistan(Pvt.)Ltd.

9. Mr. Faisal Hamid Sabzwari CountryManager Procter&GamblePakistan(Pvt.)Ltd.

10. Mr. Mohammad Iqbal Shekhani ChiefExecutiveOfficer Johan(Pvt.)Ltd.[Culligan]

11. EXECUTIVE DIRECTOR Ms.RaaheenMani

SUB-COMMITTEE CHAIRMEN

12. Mr. Saad Amanullah Khan ChiefExecutiveOfficer GillettePakistanLtd.

13. Mr. Tasleemuddin Ahmed Batlay Director Colgate-Palmolive(Pakistan)Ltd.

14. Mr. Akram Wali Mohammad ChiefExecutive Gerry’sInternational(Pvt.)Ltd.[FedEx]

AUDITORSKPMGTaseerHadi&Company

BANKERSCitibank,N.A.

1. PRESIDENT Mr. Farrokh K. Captain Chairman&ManagingDirector

Captain-PQChemical Industries(Pvt.)Ltd.

2. VICE PRESIDENT Mr. Osman Asghar Khan ChiefExecutiveOfficer EMCInformation Systems(Pvt.)Ltd.

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ANNUALREPORT2011-12

CHAIRMEN OF SUB-COMMITTEES

SUB-COMMITTEE CHAIRMAN

CSR Mr. Antoine Joignant AreaManagerPakistanand GeneralManager SheratonKarachiHotel, StarwoodHotelsandResorts

Finance & Taxation Mr. Saad Amanullah Khan ChiefExecutiveOfficer GillettePakistanLtd.

Industry & Trade Mr. Shabeeh Ikram GeneralManager Johnson&JohnsonPakistan(Pvt.)Ltd.

Pharmaceutical & Agricultural Chemicals Mr. Abdul Majeed ManagingDirector PfizerPakistanLtd.

IPR, Govt. Relations & Legal Mr. Akram Wali Mohammad ChiefExecutive Gerry’sInternational(Pvt.)Ltd.

IT Mr. Nadeem Arshad Elahi CountryManager TRG(Pvt.)Ltd.

Media, PR & Programs Mr. Osman Asghar Khan CountryManager EMCInformationSystems(Pvt.)Ltd.

Membership & Admin Mr. Tasleemuddin Ahmed Batlay Director Colgate-Palmolive(Pakistan)Limited

North Members Mr. Navid Qazi CountryGeneralManager CiscoSystemsPakistan(Pvt.)Ltd

Security Mr. Muhammad Iqbal Shekhani ChiefExecutiveOfficer Johan(Pvt.)Ltd.[Culligan]

US Relations Mr. Farrokh K. Captain Chairman&ManagingDirector Captain-PQChemicalIndustries(Pvt.)Ltd.

7


1984-85 MR. HASAN I. KAZMI President ExxonChemicalPakistanLtd.

1985-86 MR. NAWAB ASGHER Chairman&ManagingDirector PfizerLaboratoriesLtd.

1986-87 MR. RUDOLF J. GEBERT VicePresident&CountryManager BankofAmerica,NT&SA

1987-88 MR. RUDOLF J. GEBERT VicePresident&CountryManager BankofAmerica,NT&SA

1988-89 MR. NAWAB ASGHER Chairman&ManagingDirector PfizerLaboratoriesLtd.

1989-90 MR. KAMRAN Y. MIRZA ManagingDirector AbbottLaboratories(Pakistan)Ltd.

1990-91 MR. ROBERT F. McCUSKER GeneralManager InterpakShavingProductsLtd.

1991-92 MR. NISAR A. MEMON CountryGeneralManager IBMWorldTradeCorporation

1992-93 MR. SUBHI W. JARUDI ManagingDirector Cyanamid(Pakistan)Ltd.

1993-94 MR. S. ALI RAZA SeniorVicePresident&CountryManager BankofAmerica,NT&SA

1994-95 MR. AIJAZ K. KHAN Chairman WyethLaboratories(Pakistan)Ltd.

1995-96 MR. SHAUKAT TARIN(Jun – Nov 95) CountryGeneralManager CitibankN.A.

(Dec 95 – Jun 96) MR. FAROOQ HADI ManagingDirector Cyanamid(Pakistan)Ltd.

1996-97 MR. SHAMSHAD ALI ManagingDirector Johnson&JohnsonPakistan(Pvt.)Ltd.

1997-98 MR. S. SAJJAD RAZVI(Jun – Dec 97) CountryGeneralManager CitibankN.A.

(Jan – Jun 98) MR. ASIF IKRAM CountryManager DuPontFarEastInc.

PAST PRESIDENTS

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ANNUALREPORT2011-12

1998-99 MR. FAROOQ HADI(Jun – Dec 98) Chairman,ManagingDirector(CEO) Cyanamid(Pakistan)Ltd.

(Jan – Sep 99) MR. KAMRAN Y. MIRZA Chairman&ManagingDirector AbbottLaboratories(Pakistan)Ltd.

1999-00 MR. PHILIPPE A. BOVAY(Oct 99 – Jun 00) VicePresident&GeneralManager Procter&GamblePakistan(Pvt.)Ltd.

(Jul 00 – Sep 00) MR. IRSHAD ALI KASSIM President&CEO KaramCeramicsLtd.

2000-01 MR. TAWFIQ A. HUSAIN(Oct 00 – Jun 01) SeniorDirector&CountryManager AmericanExpressBankLtd.

(Jul 01 – Sep 01) MR. ANJUM FASIH ManagingDirector Bristol-MyersSquibbPakistan(Pvt.)Ltd.

2001-02 MR. ZUBYR SOOMRO ChiefExecutive&CountryCorporateOfficer Citibank,N.A.

2002-03 MR. ARSHAD NASAR ManagingDirector CaltexOil(Pakistan)Ltd.

2003-04 MR. ANJUM FASIH(Oct 03 – Jun 04) ManagingDirector Bristol-MyersSquibbPakistan(Pvt.)Ltd.

2003-04 MR. HUMAYUN BASHIR(Jul 04 – Sep 05) CountryGeneralManager IBMPakistan

2004-05 MR. NADEEM KARAMAT SeniorDirector&SeniorCountryExecutive AmericanExpressBankLtd.

2005-06 MR. ZUBYR SOOMRO ManagingDirector Citibank,N.A.

2006-07 MR. IQBAL BENGALI ManagingDirector PfizerLaboratoriesLtd.

2007-08 MR. TASLEEMUDDIN AHMED BATLAY Director Colgate-Palmolive(Pakistan)Ltd.

2008-09 MR. ASIF JOOMA ManagingDirector AbbottLaboratories(Pakistan)Ltd.

2009-10 MR. ARIF USMANI ManagingDirector&CitiCountryOfficer Citibank,N.A.

2010-11 MR. HUMAYUN BASHIR CountryGeneralManager IBM

PAST PRESIDENTS

9


LIST OF ABC MEMBERS

1. CORPORATE MEMBERS1. ABBOTTLABORATORIES(PAKISTAN)LTD.2. ACEINSURANCELIMITED3. ACNIELSENPAKISTAN(PVT.)LTD.4. AMERICANLIFEINSURANCECOMPANY (PAKISTAN)LIMITED5. AT&TGLOBALNETWORKSERVICES INTERNATIONALINC.6. BECTONDICKINSONPAKISTAN(PVT.)LTD.7. CAPTAIN-PQCHEMICALINDUSTRIES(PVT.)LTD.8. CHEVRONPAKISTANLTD.9. CISCOSYSTEMSPAKISTAN(PVT.)LTD.10. CITIBANK,N.A.11. COCA-COLABEVERAGESPAKISTANLTD.12. COLGATE-PALMOLIVE(PAKISTAN)LTD.13 CONTINENTALBISCUITSLTD.14. CRESCENTBAHUMANLIMITED15. CRESOX(PVT.)LIMITED16. DUPONTPAKISTANOPERATIONS(PVT.)LTD.17. ELILILLYPAKISTAN(PVT.)LTD.18. ELPASOTECHNOLOGYPAKISTAN(PVT.)LTD.19. EMCINFORMATIONSYSTEMS(PVT.)LTD.20. FMCUNITED(PVT.)LTD.21. GERRY’SINTERNATIONAL(PVT.)LTD.(FedEx)22. GILLETTEPAKISTANLIMITED23. IBM24. INTELPAKISTANCORPORATION25. INTERNATIONALFRANCHISES(PVT.)LTD. (DunkinDonuts)26. JOHAN(PVT.)LTD.(Culligan)27. JOHNSON&JOHNSONPAKISTAN(PVT.)LTD.28. J.P.MORGANPAKISTAN(PVT.)LIMITED29. KARAMCERAMICSLIMITED30. LMKRESOURCESPAKISTAN(PVT.)LTD.31. LEVISTRAUSSPAKISTAN(PVT.)LIMITED32. MCR(Pvt.)Ltd.(PizzaHut)33. MICROSOFTCORPORATIONPAKISTANLIAISON OFFICE34. MONSANTOPAKISTAN(PVT.)LTD.35. MULLER&PHIPPSPAKISTAN(PVT.)LTD.36. NCRCORPORATION37. NEWHAMPSHIREINSURANCECOMPANY

38. OBSPAKISTAN(PVT.)LTD.39. OPTIMUSLTD.(Hertz)40. ORACLECORPORATION41. PEPSI-COLAINTERNATIONAL(PVT.)LTD.42. PFIZERPAKISTANLTD.43. PHILIPMORRIS(PAKISTAN)LTD.44. PRESTIGECOMMUNICATIONS(PVT.)LTD. (GREY)45. PROCTER&GAMBLEPAKISTAN(PVT.)LTD.46. RAFHANMAIZEPRODUCTSCO.LTD.47. RIAZBOTTLERS(PVT.)LTD.(Pepsi-Cola)48. S.C.JOHNSON&SONOFPAKISTAN(PVT.)LTD.49. SHERATONMIDDLEEASTMANAGEMENT CORPORATION50. SINGERPAKISTANLIMITED51. SIZAFOODS(PVT.)LTD.(McDonald’s)52. TERADATAGLOBALCONSULTINGPAKISTAN (PVT.)LTD.53. THECOCA-COLAEXPORTCORPORATION54. TRG(PVT.)LTD.55. 3MPAKISTAN(PVT.)LTD.56. UNISYSPAKISTAN(PVT.)LIMITED57. UNIVERSALLOGISTICSSERVICES(PVT.)LTD. (UPS)58. VISAWORLDWIDESINGAPOREPTELTD.59. VISIONNETWORKTELEVISIONLTD.(CNBC)60. WPPMARKETINGCOMMUNICATIONS(PVT.) LTD.(JWT)

2. ASSOCIATE MEMBERS1. SUNCONSULTING(PVT.)LTD.

MEMBERSHIP BY CATEGORYIndustrialUndertakings 17Trading 06FinancialInstitutions 05Others 33QUOTEDATKARACHISTOCKEXCHANGE 09

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ANNUALREPORT2011-12

TheABCFinancialSurvey2012indicatesthatourmembercompaniesmakeasignificantcontributiontoPakistan’seconomy,asfollows:

Investment and Revenue Update

TheABCmembershavecumulativerevenuesofoverUS$3.7billionwithaninvestmentofoverUS$662million.

Contribution to National Exchequer

TheABCmemberscontributeasizableamounttothenationalexchequereveryyearasdirectandindirecttaxes–lastyearthecontributionwasRs.66billion.

Exports

TheABCmembers’exportedgoodsworthRs.12billionduring2012.

Human Resources

TheABCmembercompaniesemployedover39,500personsdirectlywhosupport160,000dependentsandindirectlyemploywellnearlyonemillionpeoplewiththeiragents,distributors,suppliers,contractors,etc.

MEMBER COMPANIES’ CONTRIBUTION TOPAKISTAN’S ECONOMY

11


OVERVIEW

2012hasbeenanactiveyearforTheAmericanBusinessCouncilofPakistan(ABC).RepresentativesoftheABCExecutiveCommitteemetwiththeheadsofvariousministries,andconcernedfunctionariesoftheGovernment,alongwithseveralhigh-rankingUSdiplomats.DiscussionsincludedtheABC’sSuggestionsfortheFederalBudget,TradePolicyandotherABCissuesandareasofconcernincludingsecurity,energyandadequaterepresentationoftheprivatesectorindecisionmakingprocesses.

AsidefromholdingaseriesofCEORoundtables,guestspeaker/briefingprogramsandnetworkingopportunitiesforitsmembers,thisyeartheABC’smostoutstandingachievementwastheholdingofthe‘AmericanBusinessCouncilEconomicSummit2012’.Markedbytheprominentspeakersandtheattendanceofacross-sectionofstakeholders;thetopicfortheeventwas‘BeyondBorders-Tradetreatiesandtheirimplications’.

ThePresidentandExecutiveDirectoroftheABCalsotooktheinitiativeintravellingtoIslamabadtoensuretheCouncilcontinuestomaintainacloseworkingrelationshipwiththeUSEmbassy.TherelationshipwiththeUSConsulateinKarachiwasalsofrequentandinteractiveastheABCcontinuouslyworkstowardsincreasingUSinvestmentinPakistan,believesinactiveengagementwithUSvisitorsandhopestofacilitatevisitsbymemberstotheirheadquartersintheUSA.

TheABCalsobenefittedfromattainingits‘TaxExempt’statusthisyearthroughPlusConsultants’hardwork.OnthetotalABCgrossreceiptsofRs.10million,theamountofRs.462,515wasnotdeductedatsource.

TheABC’ssuccessdependsontheparticipationandenergyofitsmembers.Asusual,welookforwardtoarenewedcommitmentonthepartofABCmemberstojoininandactivelyparticipate,helpingrecommendstepsforgreatereconomicprosperityforthepeopleandbusinessesofPakistan.

EXECUTIVE COMMITTEE REPORT 2011-12

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ANNUALREPORT2011-12

1. ABC SUGGESTIONS TO THE FEDERAL GOVERNMENT

(a) Suggestions for the Federal Budget 2012-13

TheAmericanBusinessCouncilgreatlyappreciatedtheGovernment’sconsultativeeffortstoinvolveallChambersandbusinessforumsintheBudgetpreparationprocess.TheCouncilsubmitteditsproposalsrelatingtotaxandproceduralissues(Annexure“A”)totheFederalBoardofRevenue,MinistryofFinance,MinistryofCommerceandtheBoardofInvestmentinApril2012.

(b) Suggestions for the Trade Policy 2012-13

TheAmericanBusinessCouncilsuggestionsforTradePolicy(Import/Export)2012-13weresubmittedtotheMinistryofCommerceandtheBoardofInvestmentinApril2012(Annexure“B”).AmeetingoftheAdvisoryCouncilfortheMinistryofCommercewasheldundertheChairmanshipofFederalMinisterforCommerceonJuly31,2012inIslamabad.Mr.NavidQazi,Chairman,ABCNorthMembersSub-CommitteeandCountryGeneralManager,CiscoSystemsPakistan(Pvt.)Ltd.,representedtheABCinthemeetingandpresentedkeysuggestionsfortheTradePolicy.

2. GUEST SPEAKERS’ PROGRAM The ABC Guest Speaker Program with Dr. Shamshad Akhtar and Mr. Shabbar Zaidi -

June 15th 2012 Dr.ShamshadAkhtar,formerGovernorState

Bank;andMr.SyedShabbarZaidi,Partner,A.F.FergusonandCo.,metwithABCmembersandtheirguestsonJune15th,2012andsharedtheirviewsontheimplicationsoftheFederalBudget,overallmicroandmacrotrendsandGovernance.

3. MEETINGS(a) Meeting with Mr. Filippo Adarrii, Head

of ACEVO and EUCLID, at the ABC office - January 9th, 2012

TheABCmeetingwithMr.FilippoAdarriiwasheldonJanuary9thattheABCoffice.Mr.AdarriiistheheadofACEVOandEUCLID,basedintheUK.ACEVOisthe‘AssociationofChiefExecutivesofVoluntaryOrganizations’andaretheleadingvoiceforchiefexecutivesinthethirdsector.ThiswasaninteractivesessionasMr.Adarriiwasinterestedinlearningaboutongoingworkinthedevelopmentsector,NGOandcivilsocietyorganizationsinPakistan,andthepossibilityofchannelingEUfundingtocredibleorganizationsoperatinghere.

• Meeting with ‘Teach for Pakistan’ Fellows at the ABC office -

January 20th, 2012

Themeetingwith‘TeachforPakistan’FellowswasheldattheABCofficeonJanuary20thovertea.TeachForPakistanisanationwidemovementofgraduatesandyoungprofessionalswhowillcommittwoyearstoteachinunder-resourcedschoolsandgoontobecomelifelongleadersworkingfromacrossallfieldstoexpandeducationalopportunity.TeachforPakistanisaninitiativeofTheAmanFoundation,alocal,self-funded,not-for-profittrust,basedandoperatinginPakistan.

• Executive Committee meeting with the US Consul General - January 25th, 2012

TheUSConsulGeneralKarachi,H.E.WilliamMartin,invitedthenewlyelectedmembersoftheABCExecutiveCommitteeonJanuary26,2012attheUSCG’sresidence,Karachi.Mattersofmutualinterestwerediscussedinthemeeting.

• The ABC meeting with the delegation of US journalists, members of the ICFJ, Mishal and US Embassy Staff -

February 3rd, 2012, Karachi

TheABCmeetingwiththedelegationofUSjournalistswasheldonFebruary3rd,inKarachi.ThepurposeofthismeetingwastomeetwithagroupofUSjournalistsvisitingthroughaprogram

HIGHLIGHTS OF THE YEAR

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setupbyMishalPakistan.MishalPakistanhassignedanagreementwiththeInternationalCenterforJournalists(ICFJ)toimplementaprogramknownasthe“U.S.-PakistanProfessionalPartnershipinJournalism.”Thisinitiativewillbuildlong-termpartnershipswithnewsorganizationsandcontentcreators,andatthesametimecreateabetterunderstandingofthevarioustraditionsandculturesinPakistan.ThiswillprovideanimportantopportunitytobuildgreaterunderstandingbetweenAmericansandPakistanisasitgivesmediaprofessionals,whoshapediscussionsandthenewsintheUS,anopportunitytobettereducatetheiraudiencesandeliminatemisperceptions.

• The ABC President and Executive Director’s meeting with Mr. Robert Ewing, US Chief Economic Counselor at the ABC office - February 6th, 2012

Mr.SaadAmanullahKhan,PresidentABCandMs.RaaheenMani,ExecutiveDirectorABCmetwithMr.RobertEwing,USChiefEconomicCounselorattheABCofficeonFebruary6th.Mr.EwingwasaccompaniedbyMr.JunaidMunir,Political/EconomicChiefattheUSConsulateKarachi.ItwasacourtesycallbyMr.Ewingandtopicsofmutualinterestwerediscussedinthemeeting.

• Executive Committee meeting with H.E. Cameron Munter, US Ambassador to Pakistan - February 11th, 2012, Karachi

TheABCExecutiveCommitteemembersmetwiththeUSAmbassadoronFebruary11thinKarachi.AmongstthetopicsdiscussedweretheformationoftheABC’sUSRelationsSub-Committee.ThepurposeoftheSub-CommitteewillbetoestablishanactiveroleforPakistan’scorporatesectorintheformulationofUSeconomicpolicytowardsPakistan.SecurityissueswerealsodiscussedasmembersupdatedtheAmbassadoronthesecurityconcernsofbusinessesinKarachianddiscussedtheimpactofanelectionyearonbusiness.TheABCmembersalsobroughtupopportunitiesforinvestment,includingthe

EnterpriseFundandadditionallysuggestedthattheUSGovt.arrangeanInvestmentConference,invitinginvestorsfromtheUS,whichtheABCcanpartnerin.

• President and Executive Director ABC met with the US Embassy Officials at the US Embassy, Islamabad -

March 5th, 2012

Mr.SaadAmanullahKhan,PresidentABCandMs.RaaheenMani,ExecutiveDirectorABCmetwithUSAmbassadorMunter,AmbassadorRichardE.Hoagland,DeputyChiefofMission,VinayChawla,Deputy,CoordinatorforEconomic&DevelopmentAssistance,JonathanPeccia,DeputyCounselorforEconomicAffairs,Dr.AndrewB.Sisson,MissionDirector,USAID,BrianMcCleary,CommercialCounselor,DavidL.Wolf,SeniorAgriculturalAttaché,UnitedStatesDeptofAgricultureandMollyBrennan,FinancialAttaché,UnitedStatesDeptoftheTreasury.ThesemeetingswerethemostthoroughandextensiveinteractionwiththeUSEmbassytodate.

• President and Executive Director ABC met with Mr. Zafar Mahmood, Secretary Commerce in Islamabad - March 6th, 2012

Mr.SaadAmanullahKhan,PresidentABCandMs.RaaheenMani,ExecutiveDirectorABCmetwithMr.ZafarMahmood,SecretaryCommerceonMarch6thinIslamabad.ThePresidentextendedaninvitationtohimtocomevisittheABCtodiscusstheimplicationsofTradewithIndiaandotherborderingcountries,whichhekindlyaccepted.ThePresidentalsobriefedhimonthemainpointsoftheABCTradePolicyProposals.

• President and Executive Director ABC met with Mr. Asaf Ghafoor, Director General, Directorate General of Trade Organizations in Islamabad -

March 6th, 2012 Mr.SaadAmanullahKhan,PresidentABCand


14

ANNUALREPORT2011-12


Ms.RaaheenMani,ExecutiveDirectorABCmetwithMr.AsafGhafoor,DirectorGeneral,DirectorateGeneralofTradeOrganizationsMarch6thinIslamabad.TheExecutiveDirectorinformedhimofthechangeswearemakingtotheMembershipClauseoftheABC’sArticlesofAssociationandrequestedtheapprovalbeprocessedspeedily.ThePresidentABCextendedaninvitationforhimtomeetwiththeABCwhenhevisitsKarachiinthefuture,whichhekindlyaccepted.

• President and Executive Director ABC met with Mr. Mumtaz Haider Rizvi, Chairman, Federal Board of Revenue (FBR) in Islamabad - March 6th, 2012

Mr.SaadAmanullahKhan,PresidentABCandMs.RaaheenMani,ExecutiveDirectorABCmetwithMr.MumtazHaiderRizvi,Chairman,FederalBoardofRevenue,onMarch6thinIslamabad.TheChairmanFBRsoughttheABC’sadviceinincreasingthetaxnetandideasonhowtocatchtaxevaders.ThePresidentextendedaninvitationforhimtomeetwiththeABCwhenhevisitsKarachiinthefuturetodiscussourFederalBudgetProposal,whichhekindlyaccepted.

• President and Executive Director ABC met with Ms. Rahat Kaunain Hassan, Chairperson, Competition Commission of Pakistan (CCP), in Islamabad -

March 6th 2012

Mr.SaadAmanullahKhan,PresidentABCandMs.RaaheenMani,ExecutiveDirectorABCmetwithMs.RahatKaunainHassan,Chairperson,CompetitionCommissionofPakistanonMarch6thinIslamabad.TheChairpersonCCPrequestedthePresidentABCtogettheABCmembersalignedandonboardwiththeCompetitionCommission’sComplianceCodeandagreedtovisitKarachitodiscussthiswiththeABCmembershipandansweranyqueries/questions.

• President ABC meeting with the Executive Director of Pharma Group and OICCI Secretary General – March 15th, Karachi

Mr.SaadAmanullahKhan,PresidentABCmetwiththeExecutiveDirectorofPharmaGroupandOICCISecretaryGeneralonMarch15thtoalignstrategyonhowtohandlethePharmaEphedrinecrisisusingtheUSMission.ThiswasfollowedbymanyconferencecallsbytheABCPresidentandtheUSCommercialAttachéinIslamabad.

• President and Executive Director ABC attended a consultative meeting of the Chairman IPO-Pakistan in Karachi - March 28th, 2012

Mr.SaadAmanullahKhan,PresidentABCandMs.RaaheenMani,ExecutiveDirectorABCattendedaconsultativemeetingoftheChairmanIPO-PakistaninKarachionMarch28thtodiscussprogressandwayforwardandthepreparationforcelebratingWorldIPday2012.

• The ABC meeting with US Journalists at the ABC Secretariat - April 2nd, 2012

TheABChostedameetingwiththeUSJournalists

onApril2ndattheABCSecretariat.TheUSJournalistsvisitedPakistanaspartoftheEast-WestCenter’sPakistan-USJournalistsExchange,anewdialogueandtravelexchangeprogramforPakistaniandAmericanjournaliststodeepentheirunderstandingofoneanother’scountries.OneofthegoalsoftheirprogramwasfortheseAmericanjournaliststobetterunderstandtheU.S.-PakistaneconomicrelationshipandtoheartheirperspectivesonoverviewofAmericanbusinessactivityinPakistan.

• President ABC meeting with Mr. Rajiv Shah, Global Head of USAID at Karachi - April 12th, 2012

Mr.SaadAmanullahKhan,PresidentABCmet

15



withMr.RajivShah,GlobalHeadofUSAIDonApril12thinKarachi.ThetopicsdiscussedincludedtheroleoftheprivatesectorineconomicgrowthinPakistan,opportunitiesandchallengesforpublic-privatepartnerships,GlobalDevelopmentAlliances,challengestoconductingbusinessinPakistanandparticularlyinKarachiandfinancialsectorandworkforcedevelopmentconstraintsandopportunities

• President ABC attended the MOU signing at the US Embassy Islamabad –

April 13th, 2012

Mr.SaadAmanullahKhan,PresidentABCattendedtheMOUsigningbetweentheAmericanPakistanFoundationandUSAID,hostedbytheUSAmbassadorH.E.CameronMunteronApril13thattheUSEmbassy,Islamabad.

• President ABC meeting with Ambassador Robin Raphael – April 16th, Karachi

Mr.SaadAmanullahKhan,PresidentABCmet

withAmbassadorRobinRaphaelattheUSConsulGeneral’sresidenceinKarachionApril16th.Mattersofmutualinterestwerediscussedinthemeeting.

• Mr. Nasir Waheed, CEO, Universal Logistics Services, participated in the IPR Conference in Islamabad - April 26th, 2012

Mr.NasirWaheed,CEO,UniversalLogisticsServices(Pvt.)Ltd.amemberoftheABC,participatedintheIPRConferenceonApril26thinIslamabadonbehalfofthePresidentABC.

• Mr. Nasir Waheed, CEO, Universal Logistics Services (Pvt.) Ltd. & member Finance & Taxation Sub-Committee attended a meeting of the Ministry of Finance BPC Sub-Committee on Broadening Tax Base in Islamabad -

April 30, 2012

Mr.NasirWaheed,CEO,UniversalLogisticsServices(Pvt.)Ltd.,amemberoftheABC,attendedameetingonApril26thinIslamabadoftheMinistryofFinanceBPCSub-CommitteeonBroadeningTaxBaseinIslamabadonbehalfofthePresidentABC.

• Executive Committee meeting with Mr. Brian McCleary, US Commercial Counselor and Ms. Rebecca Seweryn, Economic Officer at the ABC Secretariat - May 16th, 2012

TheABCExecutiveCommitteemembersmetwithMr.BrianMcCleary,USCommercialCounselorandMs.RebeccaSeweryn,EconomicOfficeronMay16thattheABCSecretariat.ThePresidentABCthankedMr.McClearyforhiseffortsregardingthepharmaissuethattheABChasbeenpursuing.Heemphasizedthatinteractionofthisnaturemustbecontinuedbutresultsmustalsobeseen.HealsosuggestedthattheUSEmbassyneedstoengagewiththecorporatesectorandcivilsociety.Mr.McClearylaudedtheABCforitsaction-orientedapproach.HealsocommittedtolisteningtotheABC’sconcernsandtakingthemfurtherinIslamabadwiththeGovtandUSEmbassy.ThePresidentABCstatedtheABCviewthataBITmustbewin-winforbothpartiesandreiteratedthatweshouldbeengagedinthestake-holderreviewperiod.Mr.McClearysaidhewouldlookintothis.ItwasfurtheragreedtoworktowardsformalizingtheABCrelationshipwiththeUSEmbassy.Ane.g.putforwardwasexpeditionofvisasforABCmembers.Mr.McClearycommittedtolookingintothisaswell.

• Executive Committee meeting with Dr. Andrew B. Sisson, USAID Mission Director to Pakistan at the ABC Secretariat - May 17th, 2012

TheABCExecutiveCommitteemembersmetwithDr.AndrewB.Sisson,USAIDMissionDirectortoPakistanonMay17thattheABCSecretariat.ThediscussionincludedtheABCsuggestionthatUSAIDusetheABCasaconduittoidentifyNGOs

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andtolearnmoreaboutcorporateCSRactivitiesinPakistan.USAIDstatedtheyarelookingforamorehighimpactrelationshipwiththeABC,especiallyinthesectorsofhealthandeconomicgrowth.TheITsectorwasidentifiedasanareathatcanbelookedatastherearegapsintraininglevelsandskills.ItwasalsoagreedthattheABCandUSAIDmeeteveryquarterandcreateamorestructuredrelationshipwiththeABCbecomingpartoftheUSAIDprocess.

• CSR Sub-Committee initiative - presentation to members by The Kidney Centre, at the ABC Secretariat -

May 23rd, 2012 TheABCCSRSub-Committeehaslaunched

aninitiativeforABCmemberstomeetandunderstandtheworkofphilanthropicorganizationsinPakistan.ThefirstorganizationthattheABCinvitedtopresentwasTheKidneyCentre,onMay23rdattheABCoffice.TheKidneyCentreisoneofthelargest,up-to-datemedicalfacilitiesprovidingcomprehensiveandqualityrenalcaretothousandsofpoorpatients.ThispresentationwaswellattendedbyABCmembers.

• CSR Sub-Committee initiative - presentation to members by UNICEF, at the ABC Secretariat - May 30th, 2012

TheABCCSRSub-Committeeinitiative’ssecondsessionoftheserieswaswithUNICEF,whichwasheldonMay30thattheABCSecretariat.InPakistan,UNICEFstarteditsoperationsin1948andisnowtheleadUNagencytoadvocatechildrightsandachieveresultsforchildreninhealth,primaryeducation,protection,water&sanitationandpreventionfromHIVandAIDS.UNICEFworksinpartnershipwiththeGovernmentofPakistananddevelopmentpartnersincludingotherUNagenciesandahostofinternationalandnationalnon-governmentalorganizations(NGOs).

• CSR Sub-Committee initiative - presentation to members by the Make-A-Wish Foundation, at the ABC Secretariat - June 28th, 2012

ThethirdsessionoftheserieswasheldwiththeMake-A-WishFoundationonJune28thattheABCSecretariat.ThemissionoftheMake-A-WishFoundationistograntthewishesofchildrenwithlife-threateningmedicalconditionstoenrichthehumanexperiencewithhope,strengthandjoy.Theyhopetocreateanunforgettableandmeaningfulexperienceinmakingthesewishescometrue.

• Vice President and Executive Director ABC participated in the Competition Commission’s 15th Meeting of Competition Consultative Group at Karachi - June 26th , 2012

OntheinvitationfromtheChairpersonofthe

CompetitionCommissionofPakistan,theVicePresidentandExecutiveDirectorABCattendedthemeetingoftheCompetitionConsultativeGrouponJune26thinKarachi.

• Executive Committee’s farewell lunch meeting for the US Ambassador H.E. Cameron Munter at Karachi -

July 5th, 2012

TheABChostedafarewelllunchfortheUSAmbassadorattheSheratonHotel,KarachionJuly5thatKarachi.TheAmbassadorbriefedmembersthattheUSiskeentohavesolid,sustainableandlongtermrelationswithPakistan,basedonstrong&strategiceconomicandcommercialrelationsandhopedtheABCwouldcontinuetoplayanactiveroleinbuildingthisrelationship.

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• President ABC participated in the IPO-Pakistan’s meeting on amendments to the Legal Framework and Enforcement Mechanism of IP Laws in Pakistan -

July 10th, 2012, Karachi

OntheinvitationoftheIPO-Pakistan,thePresidentABCparticipatedintheirmeetingonamendmentstothe‘LegalFrameworkandEnforcementMechanismofIPLawsinPakistan’onJuly10thinKarachi.

• Executive Committee farewell tea for the US Consul General H.E. William Martin - July 19th, 2012

TheABChostedafarewellteameetingfortheU.S.ConsulGeneralH.E.WilliamMartintorecognizehisspecialinterestandoutstandingsupporttotherole&contributionoftheABCandtofacilitateUSbusiness&investmentopportunitiesinPakistanonJuly19thinKarachi.

• Executive Committee meeting with the US delegation held on August 29th, 2012, Karachi

TheExecutiveCommitteemembersmetwiththeUSdelegationonAugust29thinKarachi,comprisingofMs.MaraBurr,DeputyAssistantU.S.TradeRepresentativeforSouthandCentralAsiaandMr.WilliamJackson,DeputyAssistantU.S.TradeRepresentativefortheGeneralizedSystemofPreferences.ThemembersofthedelegationdiscussedchallengesandopportunitiesinPakistan.

4. THE ABC ECONOMIC SUMMIT 2012 - 13TH SEPTEMBER 2012, AT KARACHI

The2ndABCEconomicSummit2012washeldonSeptember13thinKarachi.Thisyear’stopicwas‘BeyondBorders-Tradetreatiesandtheirimplications’.TheillustriousspeakersthisyearincludedMr.ZubyrSoomro,CEO,HikmahConsulting;Mr.ArvindSaxena,Economic&

CommercialCounselor,HighCommissionofIndia;Mr.OmarAyubKhan,Businessmen/Politician,Ex-MinisterofStateforFinanceandMr.MichaelDodman,USConsulGeneral,Karachi.Theyofferedacompellingcombinationoflocalandinternationalperspectivestoanaudiencecomprisingofseniorbusinessleaders,economicstrategists,governmentdignitaries,andthemedia.

TheABCEconomicSummit2012focusontradeinPakistanwasinlinewithoneoftheABC’skeyobjectivesofhelpingitsmembercompaniesexpandtheirbusinesses,aswellasattractingnewinvestmentintoPakistan.AccordingtotheABC,weneedtoelevatetradetoaprominentroleinthecountry’spolicydialogueandfocusonexports,logistics,governanceandcustoms.

ThespeakersattheSummitaddressedkeyissuesincludingwhichgovernmentpoliciesareneededtodrivedisproportionaltradegrowth,identifyingandeliminatingthekeybarrierswhichhampertrade,theroleoftheprivatesectorinincreasingexportsandhowinternationalpartnerscouldhelpPakistanimproveitstradeperformance.

• The ABC Meeting with Jhpiego (a USAID project) at the ABC Secretariat -

September 14th, 2012

TheABCMeetingwithJhpiego,aUSAIDproject,washeldonSeptember14thattheABCSecretariat.Jhpiegoisaninternationalnon-profithealthorganizationaffiliatedwithJohnsHopkinsUniversity.For35years,Jhpiegohasempoweredfront-linehealthworkersbydesigningandimplementingeffective,low-cost,hands-onsolutionstostrengthenthedeliveryofhealthcareservicesforwomenandtheirfamilies.JhpiegohasbeenworkinginclosecollaborationwiththePakistanigovernmentsince2004toimprovematernalandchildhealthservices,atnational,provincialanddistrictlevels,andwithintheareaofprimaryhealthcare.TheywillsoonbestartingaUSAIDfundedMaternalandChildHealthIntegratedProgram(MCHIP)inPakistan.

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• The US Consul General’s dinner meeting for the ABC Executive Committee members at the USCG’s residence - September 27th, 2012, Karachi

OntheinvitationoftheUSConsulGeneralH.E.MichaelDodman,theABCExecutiveCommitteemembersattendedthedinnermeetingattheUSCG’sresidenceonSeptember27thinKarachi.Mattersofmutualinterestwerediscussedinthemeeting.

• Executive Committee meeting with the Consul General of The Russian Federation H.E. Andrey V. Demidov, at the ABC Secretariat - Oct 15th, 2012

TheConsulGeneralofTheRussianFederationH.E.AndreyV.DemidovvisitedtheABCSecretariatonOctober15th,forameetingwiththeABCExecutiveCommitteetolearnmoreabouttheABC,itsmembers,activitiesandworkings.HewasparticularlyinterestedinencouraginganeconomicrelationshipbetweenRussiaandPakistanandincreasingRussianinvestmentinthecountry.

• CSR Sub-Committee initiative – presentation to members by the Family Educational Services Foundation (FESF) at the ABC Secretariat –

October 16th, 2012

TheABCCSRSub-Committeeinitiative’sfourthsessionoftheserieswaswithFamilyEducationalServicesFoundation(FESF),whichwasheldonOctober16thattheABCSecretariat.ThepresentationbytheFESFwaswellattendedbyABCmembers.TheFESFisanon-profiteducationalfoundation,operatinginPakistansince1984,whichrunsDeafReachSchoolsandTrainingCenters.Theseschoolsandcentersaimtoprovideawell-roundededucationforunderprivileged,non-hearingstudents.Aspartoftheircurriculum,allstudentsareenrolledin

vocationaltrainingsuchascookingandsewingsothattheyarepreparedtobeemployedinaregularworkingenvironment.

• Executive Committee meeting with Mr. James Fluker, US Commercial Counselor at the ABC Secretariat –

October 17th, 2012

TheABCExecutiveCommitteemembersmetwithMr.JamesFluker,CommercialCounseloronOctober17th,attheABCSecretariat.ThediscussionencompassedanumberofissuesrangingfrommanagingcurrentandbringinginnewU.S.investmentinPakistan,inanatmosphererifewithsecurityconcerns;theregulatoryenvironmentinthePharmaceuticalindustryandIPRissues.ThePresidentABCsharedboththeABCSuggestionsfortheFederalBudgetandTradePolicy2012-13withMr.Fluker.

• Executive Committee meeting with Mr. Robert Ewing, US Counselor for Economic Affairs at the ABC Secretariat – October 25th, 2012

TheABCExecutiveCommitteemembersmetwithMr.RobertEwing,CounselorforEconomicAffairs;Mr.EwingwasaccompaniedbyMr.MichaelDodman,USConsulGeneral,Ms.AnuPrattipati,Political/EconomicChiefandMr.JonathanWard,EconomicOfficeronOctober17th,attheABCSecretariat.Mattersofmutualinterestwerediscussedinthemeeting.

• President ABC meeting with the Director Economic Growth and other members of the delegation of the USAID at the ABC Secretariat - November 6th, 2012

Mr.SaadAmanullahKhan,PresidentABCmetwiththeDirectorEconomicGrowthandothermembersofthedelegationoftheUSAIDattheABCofficeonNovember6th.Mattersofmutualinterestwerediscussedinthemeeting.


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• The Executive Committee members visited the MQM Head Office at ‘90’ Karachi on the invitation of

Dr. Muhammad Farooq Sattar – November 12th, 2012

TheABCPresidentandtheExecutiveCommitteemembersvisitedtheMQMHeadOfficeatKarachiontheinvitationofDr.MuhammadFarooqSattar,FederalMinisterforOverseasPakistanis&,DeputyConvenerMQMonNovember12th.Mattersofmutualinterestwerediscussedinthemeeting.

• The ABC Meeting with Ms. Rahat Kaunain Hassan, Chairperson, Competition Commission of Pakistan (CCP) at the ABC office -

November 15th, 2012

TheABCmeetingwithMs.RahatKaunainHassan,Chairperson,CompetitionCommissionofPakistan(CCP)washeldonNovember15thattheABCoffice.TheChairpersonCCPbriefedtheABCmembersontheachievementsoftheCompetitionCommissionPakistan,currentissuesbeingdealtwith,andtheCCPComplianceCode.

• The Executive Committee meeting with Ms. Linda Specht, Deputy Director for the Special Representative for Afghanistan and Pakistan (SRAP)-Pakistan Desk, at the ABC office – November 16th, 2012

TheABCExecutiveCommitteemembersmetwithMs.LindaSpecht,DeputyDirectorfortheSpecialRepresentativeforAfghanistanandPakistan(SRAP)-PakistanDesk,attheABCofficeonNovember16th.Mattersofmutualinterestwerediscussedinthemeeting.

CEO Roundtable Meetings 1st CEO Roundtable meeting - January

26th, 2012, Karachi ThefirstCEORoundtablemeetingoftheyear

washeldonJanuary26th.TheABCmember

companiesCEOssharedtheirviewsbrieflyandtalkedabout:How2011wasforbusiness;Companyplansfor2012andsentimentforinvestmentintheirsector;andthetoptwochallengesfacedbytheirbusinesses.TheCEORoundtablemeetingallowedABCmembercompaniestogetafeelforthecurrentbusinessclimateandhelpedidentifyareasofcommonconcernacrosskeyissuesfacingAmericancompaniesinPakistan.

2nd CEO Roundtable meeting - May 10th, 2012, Karachi

The2ndCEORoundtablemeetingwasheldonMay10th,andthereweretwospecialguestspeakers–DrIshratHussain,formerGovernor,StateBankofPakistan,currentlyDeanandDirectoroftheInstituteofBusinessAdministration,Karachi,andMr.NajmuddinShaikh,theformerPakistanidiplomatwhoservedasForeignSecretaryofPakistanfrom1994to1997.Bothspeakerssharedtheirviewsonregionaltradeandcross-bordertreaties.TheirknowledgeandexperienceprovidedinvaluableinsighttotheABCmembers.

MEETINGS OF THE EXECUTIVE COMMITTEE

TheExecutiveCommitteeconvenedandparticipatedin53meetingsandeventsduringtheperiod.Itconstituted11Sub-Committees,definedtheirTermsofReferenceandgavepolicydirectionsfromtimetotime.

OnbehalfoftheExecutiveCommittee

Saad Amanullah Khan President

PROGRAMS AND EVENTS

PHOTO GALLERY

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PROGRAMS AND EVENTS PHOTO GALLERY

Meeting with Mr. Filippo Adarrii, Head of ACEVO and EUCLID, at the ABCoffice - January 9th, 2012

Mr.FilippoAdarriibriefingABCmembers

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Meeting with ‘Teach for Pakistan’ Fellows at the ABC office -January 20th, 2012

PresidentandMembersoftheExecutiveCommitteewiththeTeachforPakistanFellows

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The ABC 1st CEO Roundtable meeting - January 26th, 2012, Karachi

Mr.SaadAmanullahKhan,PresidentABCandmembersoftheExecutiveCommitteeatthemeeting

Mr.AntoineJoignant,GeneralManager,SheratonKarachiHotel,briefingparticipants

Mr.AshrafJafri,CountryGeneralManager,Unisys,briefingparticipants

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The ABC meeting with the delegation of US journalists, members of the ICFJ, Mishal and US Embassy Staff - February 3rd, 2012, Karachi

ThedelegationofUSJournalistswiththeABCPresidentandmembers

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Executive Committee meeting with H.E. Cameron Munter, US Ambassador to Pakistan - February 11th, 2012, Karachi

H.E.CameronMunter,USAmbassador,withtheABCPresidentandMembersoftheExecutiveCommittee

H.E.WilliamMartin,USConsulGeneral,addressingmembers

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The ABC meeting with US Journalists at the ABC Secretariat -April 2nd, 2012

ThedelegationofUSJournalistswiththePresidentABC,ExComandABCmembers

27



The ABC 2nd CEO Roundtable meeting - May 10th, 2012, Karachi

Mr.NajmuddinShaikhwiththeABCPresident,MembersoftheExecutiveCommitteeandtheABCmembers

Mr.SaadAmanullahKhan,PresidentABC,welcomingDr.IshratHussain

Mr.NajmuddinShaikh,Mr.SaadAmanullahKhan,PresidentABC,andDr.IshratHussain

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Executive Committee meeting with Mr. Brian McCleary, US Commercial Counselor and Ms. Rebecca Seweryn, Economic Officer at the ABCSecretariat - May 16th, 2012

Fromleft:1stMr.MalikAttiq,USCommercialSpecialist,2ndMs.RebeccaSeweryn,USEconomicOfficer,3rdMr.NavidQazi,MemberExecutiveCommittee,4thMr.IqbalShekhani,MemberExecutiveCommittee,5thMr.BrianMcCleary,USCommercialCounselor,6thMr.SaadAmanullahKhan,PresidentABC,7thMr.TasleemuddinA.Batlay,MemberExecutiveCommittee,8thMr.ZubairYaqub,USCommercialSpecialistand9thMr.Shabeeh

Ikram,VicePresidentABC

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Executive Committee meeting with Dr. Andrew B. Sisson, USAID Mission Director to Pakistan at the ABC Secretariat - May 17th, 2012

Fromleft:1stMr.NadeemElahi,MemberExecutiveCommittee,2ndMsSaraPervez,EconomicGrowthSpecialist,USAID,3rdDr.AndrewB.Sisson,USAIDMissionDirector,4thMr.SaadAmanullahKhan,President

ABC,5thMr.ShabeehIkram,VicePresidentABCandinthebackrowMr.EdBirgellsofUSAID

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CSR Sub-Committee initiative - presentation to members by The Kidney Centre, at the ABC Secretariat - May 23rd, 2012

TheKidneyCentrebriefingtotheChairmanCSRSub-CommitteeandtheABCmembers

31



CSR Sub-Committee initiative - presentation to members by UNICEF, at the ABC Secretariat - May 30th, 2012

TheUNICEFofficialbriefingtotheABCmembers

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The ABC Guest Speaker Program with Dr. Shamshad Akhtar andMr. Shabbar Zaidi - June 15th 2012

Dr.ShamshadAkhtarandMr.ShabbarZaidiwiththeABCPresident,MembersoftheExecutiveCommitteeandABCmembers

33



CSR Sub-Committee initiative - presentation to members by the Make-A-Wish Foundation, at the ABC Secretariat - June 28th, 2012

TheABCmemberswiththeMake-A-WishFoundationteam

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Executive Committee’s farewell lunch meeting for the US Ambassador H.E. Cameron Munter at Karachi- July 5th, 2012

Mr.SaadAmanullahKhan,PresidentABC,presentingatokenofappreciationtotheUSAmbassadorH.E.CameronMunterandhiswifeDr.MarilynWyatt

Fromleft:1stTheUSConsulGeneralH.E.WilliamMartin,2ndMr.TasleemuddinA.Batlay,MemberExecutiveCommittee,3rdUSAmbassador,H.E.CameronMunter,4thMr.IqbalShekhani,MemberExecutiveCommittee

and5thMr.SaadAmanullahKhan,PresidentABC

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The ABC farewell tea meeting for the US Consul General H.E. WilliamMartin - July 19th, 2012

TheUSConsulGeneralH.E.WilliamMartinaddressingABCmembers

ABCmemberswiththeUSConsulGeneralH.E.WilliamMartin

Mr.SaadAmanullahKhan,PresidentABC,presentingatokenofappreciationtotheUSConsulGeneral

H.E.WilliamMartin

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The ABC Economic Summit - 13th September 2012, at Karachi

TheABCmembersandguestsattheSummit

TheABCmembersandguests

Mr.SaadAmanullahKhan,PresidentABC,addressingmembersandguests

Mr.ZubyrSoomro,ABCPastPresidentandformerCitibankCCO,addressingthemembersandguests

37



The ABC Economic Summit - 13th September 2012, at Karachi

TheABCmembersandguestsattheSummit

Mr.OmarAyubKhan,Businessmen/Politician,Ex-MinisterofStateforFinance,addressingthemembers

andguests

Mr.ArvindSaxena,Consular,EconomicandCommercialoftheIndianHighCommission,addressing

themembersandguests

H.E.MichaelDodman,USConsulGeneral,addressingthemembersandguests

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CSR Sub-Committee initiative – presentation to members by the FamilyEducational Services Foundation (FESF) at the ABC Secretariat –October 16th, 2012

TheFESFofficialsandABCmembersatthemeeting

39



Executive Committee meeting with Mr. James Fluker, US CommercialCounselor at the ABC Secretariat – October 17th, 2012

Mr.JamesFluker,USCommercialCounselorandtheUSConsulateofficialswiththeABCPresidentandtheExecutiveCommitteemembers

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Executive Committee meeting with Mr. Robert Ewing, US Counselor forEconomic Affairs at the ABC Secretariat – October 25th, 2012

Fromleft:1stMr.FarrokhK.Captain,MemberExecutiveCommittee,2ndH.E.MichaelDodman,USConsulGeneral,3rdMr.SaadAmanullahKhan,PresidentABC,4thMr.RobertEwing,CounselorforEconomicAffairs,5th

Mr.ShabeehIkram,VicePresidentABCand6thMs.AnuPrattipati,USPolitical/EconomicChief

41



The ABC Meeting with Ms. Rahat Kaunain Hassan, Chairperson,Competition Commission of Pakistan (CCP) at the ABC office - November 15th, 2012

ABCmemberswiththeChairperson,CompetitionCommissionandtheCCPOfficials

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Executive Committee meeting with Ms. Linda Specht, Deputy Director for the Special Representative for Afghanistan and Pakistan (SRAP)-Pakistan Desk, at the ABC office – November 16th, 2012

Fromleft:1stMr.FarrokhK.Captain,2ndMs.KaraBabrowski,USEconomicOfficer,3rdMr.SaadAmanullahKhan,PresidentABC,4thMs.LindaSpecht,DeputyDirector(SRAP),5thMr.ShabeehIkram,VicePresidentand

6thMr.FahadZaidi,Economist


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The ABC Meeting with the US Consul General H.E. Michael Dodman –December 3rd, 2012

TheUSConsulGeneralwiththeABCPresident,MembersoftheExecutiveCommitteeandtheABCmembers


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The ABC Breakfast meeting with US Ambassador -December 11, 2012, Karachi

Mr.FarrokhK.Captain,MemberoftheExecutiveCommittee,indiscussionwiththeUSAmbassador

H.E.RichardOlson,USAmbassadortoPakistanwiththePresidentABC,ExCommembersandtheABCmembers

Mr.SaadAmanullahKhan,PresidentABC,presentingamementototheUSAmbassador

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REPORTS OFSUB-COMMITTEES

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ANNUALREPORT2011-12

MEMBERS

Mr. Muhammad Akif TechnologyConsultantEMCInformationSystems(Pvt.)Ltd.

Ms. Claudia ManuelCorporateCommunicationProcter&GamblePakistan(Pvt.)Ltd.

Dr. M. Saeed ShekhaniDirectorExternal&MedicalServicesOBSPakistan(Pvt.)Ltd.

TERMS OF REFERENCE

1. Creatingpartnershipswithsuitablephilanthropic organizationsthatpositivelyimpacttheABCand theperceptionofUScompaniesoperatingin Pakistan,withaclearestablishedmethodof achievingthesegoals.2. Identifyareasofneedforbothlongterm partnershipsandduringemergencyreliefefforts.3. FacilitatemeetingsbetweentheABCmembership anddeservingphilanthropicorganizationsto encouragegreaterinteraction,awarenessand support.4. RegularlycommunicateandhighlightCSR achievementsoftheABCanditsmember companies.5. Reflectthephilosophyofourmembersandtheir commitmenttobeinggoodcorporatecitizens.

THE ACTIVITIES OF THE SUB-COMMITTEE ARE SUMMARIZED BELOW:

• TheABCCSRSub-Committeehaslaunchedan initiativeforABCmemberstomeetand understandtheworkofphilanthropicorganizations

inPakistan.ThefirstorganizationthattheABC invitedtopresentwasTheKidneyCentre,onMay 23rdattheABCoffice.

• TheABCCSRSub-Committeeinitiative’ssecond sessionoftheserieswaswithUNICEF,whichwas heldonMay30thattheABCSecretariat.

• Thethirdsessionoftheserieswasheldwiththe Make-A-WishFoundationonJune28thattheABC Secretariat.

• TheABCCSRSub-Committeeinitiative’sfourth sessionoftheserieswaswithFamilyEducational ServicesFoundation(FESF),whichwasheldon October16thattheABCSecretariat.

CHAIRMANMr. Antoine JoignantAreaManagerPakistanandGeneralManagerSheratonKarachiHotel,StarwoodHotelsandResorts

REPORT OF THE CSR SUB-COMMITTEE

ThankyoutoalltheSub-CommitteemembersandtheABCSecretariatfortheirsupport&contribution

47


MEMBERS

Mr. S. Anis Ahmed DirectorFinance AbbottLaboratories(Pakistan)Ltd. Mr. Iqbal Shekhani ChiefExecutive Johan(Pvt.)Ltd.[Culligan]

Mr. Kamal Ahmed FinanceDirector ACEInsuranceLtd. Mr. Imran Farooqui FinancialAnalysis&CorporateF&A Procter&Gamble Mr. Kashif Imtiaz Khan TeamLeader-AdvisoryFinancialAnalyst IBM Mr. Syed Zeeshan MobinGroupDirectorFinanceOBSPakistan

Mr. S.M. WajeehuddinDirectorFinancePfizerPakistanLtd.

Mr. Sohail GogalManager,FinanceCresox(Pvt.)Ltd.

TERMS OF REFERENCE

1. StudymajorGovernmentpolicydirectiveson variousmattersrelatingtoFinanceandTaxation concerningmembersoftheABCandtheAmerican businesscommunityatlarge.2. Identifyanddeveloppositionsonmajorissues relatingtoFinanceandTaxation.3. DevelopABCproposalsfortheFederalBudget4. Ensurealevelplayingfieldformembercompanies bylobbyingfortheremovalofdiscriminatoryrules andregulations5. OverseeABCFinance

THE ACTIVITIES OF THE FINANCE & TAXATION SUB-COMMITTEE ARE SUMMARIZED BELOW:

FINANCE & TAXATION SUB-COMMITTEE MEETING WITH MR. SHABBAR ZAIDI

Mr.SaadAmanullahKhan,PresidentABCandChairman,FinanceSub-CommitteeinvitedtoMr.SyedShabbarZaidi,Partner,A.F.FergusonandCo.,attheABCSecretariatonMarch13th2012todiscussandcompellingthebudgetproposalsforABCandcountry’sprivatesectorgrowth.

ABC SUGGESTIONS FOR FEDERAL BUDGET 2012-13

TheABChavesubmittedtotheFederalGovernment8taxationrelatedproposalsimpactingUScompaniesoperatinginPakistanandontheproceduralfront,therewere5proposalstohelpstreamlineprocesses&improvetaxationcollectionsystems(Annexure–A).

TheABCvisionremainstohavearobust,understandableandtransparenttaxationenvironmentwhichincludes:

TAXATION PROPOSAL INDEX

1. CORPORATE TAXES

1A) ExpansionoftheTaxNet1B)HighCorporateIncomeTax1C) RationalizeMinimumTurnoverTaxforall Companies1D) SimplifyAdvanceTaxesforManufacturer

CHAIRMANMr. Saad Amanullah KhanChiefExecutiveOfficerGillettePakistanLimited

REPORT OF FINANCE & TAXATION SUB-COMMITTEE

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2. EXPANSION OF GENERAL SALES TAX (GST)

2Ai)Suspensionwithoutnotification2Aii)BlacklistedSuppliers2B)WithholdingofSalesTax

3. EXCISE DUTY ELIMINATION

3A) EliminateExcisebutifneeded,introduce ConsumptionTax

4. PERSONAL INCOME TAX

4A) TaxReliefforlowerSalariedClass4B) Introductionofa“TaxPayerCard”4C) EliminationofCaponexemptionofIntereston HouseLoans4D)TaxonEmployers’ContributiontoRecognized ProvidentFund4E)WithholdingtaxBankingTransactions4F) SmallPaymentsforPrizeandWinnings4G) IntroducingRebatesforSalariedIndividualsand ExpandingTaxBracketsi) TaxCreditonEducationExpensesii) TaxRebateonMedicalExpensesiii) IncreasedrangeofTaxSlabs(Salaries)

5. FINAL TAX REGIME (FTR)

6. PRIOR YEARS BAD DEBTS DISALLOWED BY TAX AUTHORITIES

7. ELIMINATE SALES TAX

7A)LocalSupplyofPlantandMachinery7B) PharmaceuticalSectori) PharmaceuticalInputsii) ImportofIn-VitroDiagnosticEquipmentiii) ImportofAmberGlassBottlesType-III

8. CREATING VIBRANCY IN THE IT SECTOR

8A)IncentivizeITExportofServices8B)PreferentialTaxRegimeforITSector

PROCEDURAL PROPOSAL INDEX

1. GENERAL SALES TAX RELATED

1A) Section8BoftheSalesTaxAct1990shouldbe abolished/amended1B) Section48oftheSalesTaxAct,19901C) SalesTaxWithholdingAgents&WithholdingRules 20071D) EliminateAnomalyinChildcareCategory

2. AMENDMENT OF ASSESSMENT – SECTION 122

3. APPEAL PROCESS – SECTION 124/127/129/131/132

4. STREAMLINING IDEAS FOR COLLECTION OF TAXES

4A) StreamlineCollectionofGeneralSalesTax4B)StreamliningCollectionofWithholdingTaxes4C) ElectronicFilingofReturn4D)PaymentstoNonResidentPersonsunderSection 152oftheITO,20014E) Unwarrantednoticesreceivedu/s176oftheITO 20014F) AveragerateofTaxonseverancepayment4G) TaxChallanVerification

5. CORPORATE TAX RELATED

5A)AdvanceTax(Section147)5B)LongOutstandingRefund

ThankyoutoalltheSub-CommitteemembersandtheABCSecretariatfortheirsupport&contribution.

49


MEMBERS

Mr. Bilal Lakhani AssociateManager Procter&GamblePakistan(Pvt.)Ltd.Mr. Kamran Mazhar P&CManagerACEInsuranceLtd. Mr. Tilal Safder Sr.DirectorMarketingPfizerPakistanLtd. Mr. Rizwan SajjadVicePresident,FinancialInstitutions J.P.MorganPakistanLtd.

TERMS OF REFERENCE

1. StudymajorGovernmentpoliciesrelatingtoTrade, Industry(incl.Import&Export),andEnvironment impactingmembersoftheABCandtheAmerican businesscommunityatlarge.2. Identifyanddeveloppositionsonmajorissues relatingtoGovernmentprocedures,policiesand enactmentsaffectingTrade,Industry,etc.3. DevelopABCsuggestionsforImportandExport PoliciesandtheoverallTradePolicy4. Ensurealevelplayingfieldformembercompanies intrade&industrybylobbyingfortheremovalof discriminatoryrulesandregulations

ABC SUGGESTIONS FOR THE TRADE POLICY 2012-13

TheSub-CommitteediscussedandaddressedissuesandsuggestionsreceivedfrommembersandbasedonthesefinalizedsuggestionsfortheTradePolicy2012-13(Annexure–B)andforwardedthemtotheFederalGovernmentonJune12th,2012.

These Proposals Consisted The Following:

A. Improving Investment Climate

A1. ImprovementInInfrastructure

A2. ImprovementInEnvironment

B. Encouraging Exports And Lowering Cost Of Local Industries

B1. HighUtilityCostOfLocalIndustries

B2. TransparencyInUseOfFundsOfExport DevelopmentFund(Edf)

B3. ExportDutyDrawback-RatesAndDelayed Realization

B4. AnomaliesInCustoms&RegulatoryDuties

B5. EnhancedExportCompetitivenessFor PharmaceuticalProductsToAfghanistan

C. Import Policy – General

C1. PowerGeneration-Duties&TaxesOnCo- GenerationEquipment

C2. CustomDutiesOnSparePartsAndMachinery NotManufactured/ProducedLocally

C3. ProcurementSystemToBringTransparency AndEfficiencyInGovernmentPurchases

D. Industry Specific – Pharmaceutical

D1. ShelfLifeRestrictions:PharmaceuticalRaw MaterialsAndFinishedProducts

D2. LowerHealthCareCosts–MedicalTesting/

CHAIRMANMr. Shabeeh IkramGeneralManagerJohnson&JohnsonPakistan(Pvt.)Ltd.

REPORT OF THE INDUSTRY AND TRADESUB-COMMITTEE

50

ANNUALREPORT2011-12

Diagnostic/LabReagentsD3. SimplificationOfApprovalProcessFor ImportOfRawMaterialsForThe PharmaceuticalIndustry

D4. DressingAndAppliancesIdentifiableFor OstomyUse

D5. NeedForReductionOfCustomDuties/Sales TaxOnTheImportOfRawMaterialsForDaily Consumption

D6. NeedForAutomaticQuotaRe-AllotmentOf PsychotropicDrugs

D7. WithdrawalOfTaxesAndLeviesOn PharmaceuticalIndustry

D8. PriceFixation

E. Trade Agreements

E1. AfghanTransitTrade

E2. TradeWithIndia

E3. Bit

E4. TradingBlocs

E5. StrategyTradePolicyFramework

MEETING OF THE ADVISORY COUNCIL FOR THE MINISTRY OF COMMERCE

AmeetingoftheAdvisoryCouncilfortheMinistryofCommercewasheldundertheChairmanshipofFederalMinisterforCommerceonJuly31st,2012inIslamabad.Mr.NavidQazi,Chairman,ABCNorthMembersSub-CommitteeandCountryGeneralManager,CiscoSystemsPakistan(Pvt.)Ltd.,representedtheABCinthemeetingandpresentedkeysuggestionsfortheTradePolicy.


51


MEMBERS

Mr. Mirza Anjum Fahim DirectorMarketing&SalesOBSPakistan(Pvt.)Ltd.

Mr. Bilal LakhaniAssociateManagerER Procter&GamblePakistan(Pvt.)Ltd.

Mr. Shaharyar NashatGeneralCounselPfizerPakistanLtd.

Mr. Raza Mustafa SaeediHeadofSalesJohnson&JohnsonPakistan(Pvt.)Ltd.

Mr. Yousuf VadiwalaNationalFinanceManagerUniversalLogisticsServices(Pvt.)Ltd.[UPS]

TERMS OF REFERENCE

1. IdentifykeyIPRissuesimpactingABCmembersand workonprogramsandactionsintendedtoinfluence legislationrelatingtoIPRinbothPakistanandtheUS.

2. Ensurealevelplayingfieldformembercompanies relatingtoIPR.

3. CreatealiaisonwithGovt.officesandestablisha platformfortheABCanditsmembers.

4. Adviseonmattershavinglegalimplicationsorrelating totheABC.


• Mr.SaadAmanullahKhan,PresidentABCandMs.RaaheenMani,ExecutiveDirectorABCattendedaconsultativemeetingoftheChairmanIPO-PakistaninKarachionMarch28thtodiscussprogressandwayforwardandthepreparationforcelebratingWorldIPday2012.

• TheABCmemberscompanieswereactivelyparticipatedandassistedtheIPOintheirWorldIPDayConferenceheldonApril26th2012.

• Mr.NasirWaheed,CEO,UniversalLogisticsServices(Pvt.)Ltd.amemberoftheABC,participatedintheIPRConferenceonApril26thinIslamabadonbehalfofthePresidentABC.

• OntheinvitationoftheIPO-Pakistan,thePresidentABCparticipatedintheirmeetingonamendmentstothe‘LegalFrameworkandEnforcementMechanismofIPLawsinPakistan’onJuly10thinKarachi.

CHAIRMANMr. Akram Wali MohammadChiefExecutiveGerry’sInternational(Pvt.)Ltd.

REPORT OF THE IPR, GOVT. RELATIONS & LEGALSUB-COMMITTEE


52

ANNUALREPORT2011-12

MEMBERS

Dr. Jehanzeb Akram BusinessDirector OBSPakistan(Pvt.)Ltd. Mr. Ahmer AshrafSeniorManager,PublicAffairs&Policy PfizerPakistanLtd.

Mr. Omeir Dawoodji CountryExternalRelationsManager GillettePakistanLtd.

Mr. Rashid YusufNationalSalesManagerUniversalLogisticsServices(Pvt.)Ltd.

TERMS OF REFERENCE

1. PositivelyprojecttheABCtoallstakeholdersthrough eventsandspecialactivities.2. EnsurehighlightingvariousABCactivitiesthrough differentmediaandprovidesupporttotheABCin producingaquarterlynewsletter.3. CreateawarenessofABCkeyissues4. EnhancePRandpromotionviamediacoverage, througharrangingpressbriefingsandsimilaractivities aspartofapressplan.5. Proposeaplantoinvitehighprofileguestspeakersto addresstheABCmembersoncurrentissuesor subjectsofgeneralbusinessinterest.6. ProposeaplanfortheABCEconomicSummitand recommendhighprofilespeakersandinviteesforthe event.


• GUEST SPEAKERS PROGRAM

TheGuestSpeakerprogramwasdevelopedfortheyearthatincludedthefollowingeventwhichwaswellattendedandhighlyappreciatedandprovidedsignificantvalueadditionforthemembers:

• Dr.ShamshadAkhtar,formerGovernorStateBank; andMr.SyedShabbarZaidi,Partner,A.F.Ferguson andCo.,metwithABCmembersandtheirguests onJune15th,2012andsharedtheirviewsonthe implicationsoftheFederalBudget,overallmicroand macrotrendsandGovernance. • CEO ROUNDTABLES

ThefirstCEORoundtablemeetingoftheyearwasheldonJanuary26th.TheABCmembercompaniesCEOssharedtheirviewsbrieflyandtalkedabout:How2011wasforbusiness;Companyplansfor2012andsentimentforinvestmentintheirsector;andthetoptwochallengesfacedbytheirbusinesses.TheCEORoundtablemeetingallowedABCmembercompaniestogetafeelforthecurrentbusinessclimateandhelpedidentifyareasofcommonconcernacrosskeyissuesfacingAmericancompaniesinPakistan.

The2ndCEORoundtablemeetingwasheldonMay10th,andthereweretwospecialguestspeakers–DrIshratHussain,formerGovernor,StateBankofPakistan,currentlyDeanandDirectoroftheInstituteofBusinessAdministration,Karachi,andMr.NajmuddinShaikh,theformerPakistanidiplomatwhoservedasForeignSecretaryofPakistanfrom1994to1997.Bothspeakerssharedtheirviewsonregionaltradeandcross-bordertreaties.TheirknowledgeandexperienceprovidedinvaluableinsighttotheABCmembers.

• THE AMERICAN BUSINESS COUNCIL ECONOMIC SUMMIT 2012

The2ndABCEconomicSummit2012washeldonSeptember13thinKarachi.Thisyear’stopicwas‘BeyondBorders-Tradetreatiesandtheirimplications’.TheillustriousspeakersthisyearincludedMr.ZubyrSoomro,CEO,HikmahConsulting;Mr.ArvindSaxena,Economic&CommercialCounselor,HighCommissionofIndia;Mr.

CHAIRMANMr. Osman Asghar KhanCountryManagerEMCInformationSystems(Pvt.)Ltd.

REPORT OF THE MEDIA, PR & PROGRAMSSUB-COMMITTEE

53


OmarAyubKhan,Businessmen/Politician,Ex-MinisterofStateforFinanceandMr.MichaelDodman,USConsulGeneral,Karachi.Theyofferedacompellingcombinationoflocalandinternationalperspectivestoanaudiencecomprisingofseniorbusinessleaders,economicstrategists,governmentdignitaries,andthemedia.

TheABCEconomicSummit2012focusontradeinPakistanwasinlinewithoneoftheABC’skeyobjectivesofhelpingitsmembercompaniesexpandtheirbusinesses,aswellasattractingnewinvestmentintoPakistan.AccordingtotheABC,weneedtoelevatetrade

toaprominentroleinthecountry’spolicydialogueandfocusonexports,logistics,governanceandcustoms.

ThespeakersattheSummitaddressedkeyissuesincludingwhichgovernmentpoliciesareneededtodrivedisproportionaltradegrowth,identifyingandeliminatingthekeybarrierswhichhampertrade,theroleoftheprivatesectorinincreasingexportsandhowinternationalpartnerscouldhelpPakistanimproveitstradeperformance.


54

ANNUALREPORT2011-12

MEMBERS

Ms. Zehra NaqviChiefExecutiveACEInsuranceLtd.

Mr. Ali Akbar ZaidyFinanceManagerJohnson&JohnsonPakistan(Pvt.)Ltd.

TERMS OF REFERENCE:

1. Tooverseeandreviewthemembershipcriteriafor theABC2. Pursueamembershipdrivetoseeknewmembers fortheABC3. ToprovidesupporttotheABCstaffanddefine theirreportinglines,benefitsandincrements


• Duringtheyearacomprehensiveexercisewas undertakentoencouragenewmemberstojoin theCouncil.• TheSub-Committeeprovidedinputsintothe changesrequiredintheMembershipsectionof theABC’sArticlesofAssociation.• TheExecutiveDirectorsharedthesesuggestions withthelawyers,Orr.Dignam,andrequested themtorewordtheArticlesaccordingly.• ThefindingsandinputoftheSub-Committeeled toavoteattheAGMinsupportofchangestothe ABCArticlesofAssociation.• TheExecutiveDirectorlookedintotherentlease

oftheABCofficeanddocumentedalltheABChas investedtodate,alongwithcurrentinfrastructure issues.• TheExecutiveDirectorhadasecurityreview oftheABCofficeconductedwiththekindhelpof Mr.NorbertAlmeida,HeadofSecurityatP&G. ThereviewlookedintoaspectssuchasCCTV, locks,fireextinguishers,etc.• Ms.ZehraNaqvi(ACEInsurance)wasnominated andelectedCo-ChairpersonoftheSub- Committee.

CHAIRMAN

Mr. Tasleemuddin Ahmed BatlayDirectorColgate-Palmolive(Pakistan)Limited

REPORT OF THE MEMBERSHIP & ADMIN SUB-COMMITTEE


55


MEMBERS

Mr. Norbert AlmeidaGlobalSecurityManagerProcter&GamblePakistan(Pvt.)Ltd

Mr. Ghulam AbbassSecurityConsultantIBM

Mr. Amjad Ali Shah BukhariDirectorHumanResourcesOBSPakistan(Pvt.)Ltd

Col (R) Laique Muhammad Khan DirectorSecuritySheratonKarachiHotel

Mr. Jamil A. MughalGeneralManager,Marketing&DevelopmentSizaFoods(Pvt.)Ltd.[McDonald’s]

Mr. Rehan QureshiChannelManagerEMCInformationSystems(Pvt.)Ltd.

Brigadier Farrukh SaeedDirectorSecuritySheratonKarachiHotel

Mr. Filraz A. SiddiquiCorporateSecurityManagerPfizerPakistanLtd.

Capt. (R) Muhammad TariqSeniorManagerSecurityandAdministrationAbbottLaboratories(Pakistan)Ltd.

TERMS OF REFERENCE

1. TocreateaforumviawhichABCcompaniesare abletoaccesseffectiveinformationandcontact theappropriateresourceswhentheneedarises.2. Tomaintainadatabaseofactualincidents experiencedbyABCmembercompaniesthat canbetakenupinmeetingswiththegovernment orrelevantpeople.3. ToidentifyandmaintaincontactswithintheGovt., Rangers,Police,CPLCandArmy,tobesharedwith allmembers.4. Toshareinformationonsecuritythreats,advisory notesandbestpracticesregardingsafety measuresamongsttheSub-Committeeandlarger membershipasrequiredviaSMS5. Toremindallmemberstoregularlyupdatetheir securityplansandstrategies.


• ItwasagreedtocontinuetheABCSecuritySMS service.TheABCsentoutaremindertoall membersregardingtheservice.Otheravenuesfor sendingtheinformation(viaaGooglegroupor bbm)werealsoexplored.• TheSub-Committeeestablishedrelationshipswith theRangersandPolice,alongwiththeCPLC.• TheSub-Committeeagreedtohelpsetup meetingsforABCmemberswiththeDGRangers, PoliceChief,HomeSecretaryandIB,afterhaving collectedupdateddataonmembercompanies’ securityissuesandconcerns.• TheABCagreedtoinvitetheSecuritystaffofall membercompaniesforanetworkingevent.• ABCmemberswereinformedtheycanrefer securityissuestotheSub-Committeeforadvice.• TheSub-CommitteeagreedthattheABC’ssecurity issuesmustbecontinuouslyreiteratedatthetop level.• Mr.NorbertAlmeidakindlyagreedtoconduct areviewoftheABCSecretariat’ssecurityand makesuggestionstobereviewedbytheExCom.

THE CHALLENGES FACED BY ABC MEMBER COMPANIES WERE IDENTIFIED AS FOLLOWS:

• Terrorism• Streetcrime

REPORT OF THE SECURITY SUB-COMMITTEE

CHAIRMANMr. Muhammad Iqbal ShekhaniChiefExecutiveOfficerJohan(Pvt.)Ltd.[Culligan]

56

ANNUALREPORT2011-12

• Extortion• Vandalism• Kidnapping• Mobattacks• Armedrobberies• Anti-Americansentiments

SUPPORT TO MEMBERS:

• Members’specificissueswereactivelydealtwith throughcoordinationwiththePoliceandCPLCfor earlyresolution.• Law&orderincidentswithinthebusiness communitywereregularlysharedwithmembers alongwithproposedprecautionarymeasures.

COORDINATION WITH US EMBASSY / CONSULATE:

• TheSub-Committeehadcloseinteractionwith U.S.EmbassyandtheConsulate.TheUS ConsulateinKarachiandEmbassyinIslamabad issuesperiodicwarnings/advisoryinformation toUScitizensandAmericancompaniesin Pakistan.Thesewardenmessages,whichinclude precautionarymeasures,wereimmediately forwardedbyemailtoABCmembers.


57


MEMBERS

Mr. Mahmood Ahmed A&HManager ACEInsuranceLtd.

Mr. Muhammad Ilyas NetworkLeaderIBM

Mr. Naveed Siraj CountryManagerIntel Pakistan Corporation

Mr. Akkasha SultanCountryHead,SAGEWestApplicationsOracle Corporation

TERMS OF REFERENCE

1. PromoteITinthecountry.2. CreateadocumentontheITindustryinPakistan incollaborationwithPASHA.3. ProvideaforumforABCMembersto communicatetheirviewsontheGovernment’sIT Strategy&Policy4. OrganizeprogramsorcommunicationsforABC MembersonITdevelopmentsandtheirimpacton business5. Co-ordinatewithGovernmentagencies,especially theMinistryforInformation&Technology.6. HelptheGovernmenttoattractforeigninvestment inIT.7. PromoteABCmembershiptorelevantIT companies.8. ProvideITsupporttotheABCSecretariat.

9. ProvideassistancetotheABCbyhelpingcreate andmaintaintheirsurveysonline.


• TheSub-Committeeagreedtocollaboratewith PASHAforinformationonITindustryfactsand figures.

• TheSub-Committeeagreedtolookintoissues affectingtheITindustryincludinggreychannels, flightofcapital,customsissuesetc.andtheimpact oftheexistingimport(andexport)policiesonour companies.

• ItwasagreedtoconductasurveyofABCmember companiestoestablishhowmuchtheyspendon ITandhowmanypeopletheyemployeeintheirIT departments.

• ItwasagreedtoshareanyITrelatedIPRissues withtheIPRSub-Committee.

• TheSub-Committeesharedbestpracticesofhow ITisutilizedintheircompanies.

• TheChairmankindlyagreedtohaveTRGconduct anITassessmentoftheABCoffice.Basedon theseimprovementsweresuggestedtotheExCom anddulyimplemented.

• Mr.NavidSiraj,CountryManager,Intel,was nominatedandelectedCo-ChairmanoftheSub- Committee.

REPORT OF THE IT SUB-COMMITTEE

CHAIRMANMr. Nadeem Arshad ElahiCountryManagerTRG(Pvt.)Ltd


58

ANNUALREPORT2011-12

MEMBERS

Mr. Ali Tariq EMCInformationSystems(Pvt.)Ltd.

Mr. Jawad A. Khan IBM

TERMS OF REFERENCE

1. TofacilitatethepresenceofABCintheNorth region2. TohavecloseinteractionwiththeABCmembers locatedinNorth3. TohavecloseliaisonwiththeGovernment functionariesforresolutionofallABCissues.


• TheChairmanoftheNorthMembersSub- Committeejoinedinandaddedvaluableinput duringtheABCtriptoIslamabadonMarch5th 2012,wheretheymetwithUSAmbassador Munter,AmbassadorRichardE.Hoagland,Deputy ChiefofMission,VinayChawla,Deputy,

CoordinatorforEconomic&Development Assistance,JonathanPeccia,DeputyCounselor forEconomicAffairs,Dr.AndrewB.Sisson, MissionDirector,USAID,BrianMcCleary, CommercialCounselor,DavidL.Wolf,Senior AgriculturalAttaché,UnitedStatesDeptof AgricultureandMollyBrennan,FinancialAttaché, UnitedStatesDeptoftheTreasury.

REPORT OF THE NORTH MEMBERS SUB-COMMITTEE

CHAIRMANMr. Navid QaziCountryGeneralManagerCiscoSystemsPakistan(Pvt.)Ltd.


59


MEMBERS

Dr. Ali Afzal ManagingDirectorOBSPakistan(Pvt.)Ltd. Mr. Muhammad Shahid Farooqui DirectorSales&DistributionPfizerPakistanLtd.

Dr. Salman Lodi Medical&RegulatoryAffairsManagerJohnson&JohnsonPakistan(Pvt.)Ltd

Mr. Ayub Siddiqui CountryManager,AbbottNutritionAbbottLaboratories(Pakistan)Ltd

TERMS OF REFERENCE

1. Co-ordinatewithmembersinallmattersrelating tothePharmaceutical&AgriculturalChemicals industrytoidentify&developpositionsonmajor issuespertainingtothissector.2. Ensurealevelplayingfieldformembercompanies inthissectorbylobbyingfortheremovalof discriminatoryrulesandregulations


• TheABCcontinuouslylobbiedthegovernment regardingPharmaissuesfacedbytheindustry.

• TheABCsoughtthehelpoftheUSEmbassyand wasgivenampleandactivesupport.

• TheSub-CommitteekepttheIPRSub-Committee abreastofissuesaffectingthePharmaceutical Industry

REPORT OF THE PHARMACEUTICAL & AGRICULTURAL CHEMICALS SUB-COMMITTEE

CHAIRMANMr. Abdul MajeedManagingDirectorPfizerPakistanLtd.


60

ANNUALREPORT2011-12

MEMBERS

Mr. Saad Amanullah Khan ChiefExecutiveOfficerGillettePakistanLtd. Mr. Asif Jooma ManagingDirectorAbbottLaboratories(Pakistan)Ltd.

Mr. Nadeem Elahi ManagingDirectorTRG(Pvt.)Ltd.

Mr. Osman Asghar Khan CountryManagerEMCInformationSystems(Pvt.)Ltd

TERMS OF REFERENCE

1. ABCtoplayakeyroleindefiningandinfluencing USpolicy,practicesandprocedurestowards Pakistan.2. Maintainanactiverelationshipwithkey stakeholdersrepresentingtheUSinPakistan.3. DefinethekeymessagesoftheABC,tobeshared andalignedwiththeUSateveryopportunity.


• TheSub-CommitteemetwithH.E.Cameron Munter,USAmbassadortoPakistanonFebruary 11th2012inKarachi,alongwithothermembers oftheExecutiveCommittee.

• TheSub-Committeestrategizedonestablishing anactiveroleforPakistancorporatesectorinthe formulationofUSeconomicpolicytowards Pakistan.

REPORT OF THE US RELATIONSSUB-COMMITTEE

CHAIRMANMr. Farrokh K. CaptainChairman&ManagingDirectorCaptain-PQChemicalIndustries(Pvt.)Ltd


61


ABC REPRESENTATION

ABC was represented on the following Councils/Committees:

1. ADVISORY COUNCIL OF THE MINISTRY OF FINANCE PresidentABC

2. ADVISORY COUNCIL OF THE MINISTRY OF COMMERCE PresidentABC

3. PROVINCIAL COMMITTEE ON INVESTMENT (SINDH) PresidentABC

4. FEDERATION OF PAKISTAN CHAMBERS OF COMMERCE & INDUSTRY (FPCCI)

a) EXECUTIVE COMMITTEE Mr. Farrokh K. Captain Chairman&ManagingDirector

Captain-PQChemicalIndustries(Pvt.)Ltd.

b) GENERAL BODY Corporate Class Mr. Irshad Ali Kassim Chairman KaramCeramicsLtd.

Associate Class Mr. Mohammad Iqbal Shekhani ChiefExecutiveOfficer Johan(Pvt.)Ltd.[Culligan]

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ANNUALREPORT2011-12


63



EXECUTIVE SUMMARY Attachedaretheproposalsfortheupcoming

FederalBudget2012/2013whichcompriseof8taxationrelatedproposalsand5proceduralimprovement/modificationproposals.AlltheseproposalswillpositivelyimpacttheabilityforUScompaniestooperateefficientlyinPakistan.Theproceduralsuggestionsaredesignedtohelpstreamlineandimprovetaxcollectionandappealprocesses.

TheABCvisionremainstohavearobust,understandableandtransparenttaxationenvironmentwhichincludes:

• EVERY EARNING MEMBER OF SOCIETY SHOULD BE PAYING TAXES:

• Wehaveoneofthelowest“TaxtoGDP”ratiosin

theworld,atlessthan9%.• Majorsectorsoftheeconomyarenot

appropriatelytaxed,suchasagriculture,realestate&thestockmarket.

• Industry,whichmakesup20%oftheGDP,isdisproportionatelytaxed.

• Currentlylessthan2%ofthepopulationpayspersonaltaxes.

• HAVE A SIMPLE TAXATION STRUCTURE:

• Taxesshouldbeeasytolevyandeasytofilefor

taxpayers.• Thefocusshouldbeononly3sources oftaxation,i.e. 1. GeneralSaleTax(GST); 2. CustomsDuty; 3. CorporateandPersonalIncomeTax.

• SHOULD BE COMPETITIVE VIS-À-VIS OTHER COUNTRIES:• MakePakistanattractiveforforeigninvestment

bymakingitstaxationcompetitive.• Thisinturnwillhelpreversetheunfortunate

braindraintakingplace.

Saad Amanullah Khan PresidentABCandChairman Finance&TaxationSub-committee

cc:ABCExecutiveCommittee

ANNEXURE - A

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ANNUALREPORT2011-12

TAXATION PROPOSAL INDEX1. CORPORATE TAXES 1A) ExpansionoftheTaxNet 1B) HighCorporateIncomeTax 1C) RationalizeMinimumTurnoverTaxforall

Companies 1D) SimplifyAdvanceTaxesforManufacturer 1E) HighRateofAdvanceIncomeTaxatImport

Stage

2. EXPANSION OF GENERAL SALES TAX (GST) 2Ai) Suspensionwithoutnotification 2Aii)BlacklistedSuppliers 2B) WithholdingofSalesTax

3. EXCISE DUTY ELIMINATION 3A) EliminateExcisebutifneeded,introduce

ConsumptionTax

4. PERSONAL INCOME TAX 4A) TaxReliefforlowerSalariedClass 4B) Introductionofa“TaxPayerCard” 4C) EliminationofCaponexemptionof

InterestonHouseLoans 4D) TaxonEmployers’Contributionto

RecognizedProvidentFund 4E) WithholdingtaxBankingTransactions 4F) SmallPaymentsforPrizeandWinnings 4G) IntroducingRebatesforSalariedIndividuals andExpandingTaxBrackets i) TaxCreditonEducationExpenses ii) TaxRebateonMedicalExpenses iii) IncreasedrangeofTaxSlabs(Salaries)

5. FINAL TAX REGIME (FTR)

6. PRIOR YEARS BAD DEBTS DISALLOWED BY TAX AUTHORITIES

7. ELIMINATE SALES TAX 7A) LocalSupplyofPlantandMachinery 7B) PharmaceuticalSector i) PharmaceuticalInputs

ii) ImportofIn-VitroDiagnosticEquipment iii) ImportofAmberGlassBottlesType-III

8. CREATING VIBRANCY IN THE IT SECTOR 8A) IncentivizeITExportofServices 8B) PreferentialTaxRegimeforITSector

PROCEDURAL PROPOSAL INDEX

1. GENRAL SALES TAX RELATED 1A) Section8BoftheSalesTaxAct1990should beabolished/amended 1B) Section48oftheSalesTaxAct,1990 1C) SalesTaxWithholdingAgents& WithholdingRules2007 1D) EliminateAnomalyinChildcareCategory




4A) StreamlineCollectionofGeneralSalesTax 4B) StreamliningCollectionofWithholding Taxes 4C) ElectronicFilingofReturn 4D) PaymentstoNonResidentPersonsunder Section152oftheITO,2001 4E) Unwarrantednoticesreceivedu/s176of theITO2001 4F) AveragerateofTaxonseverance payment 4G) TaxChallanVerification

5. CORPORATE TAX RELATED 5A) AdvanceTax(Section147) 5B) LongOutstandingRefund

ABC SUGGESTIONS FORFEDERAL BUDGET 2012-13

65


1. HIGH CORPORATE TAXES1 A) Expansion of the Tax Net

IssueFutureprosperityofournationdependsontheabilityofthegovernmenttoexpandthetaxnet.Inordertoadequatelyinvestininfrastructureimprovementandenergyreliability,thegovernmentmustincreasetheTax/GDPratiobeyondthe~8%whereithasstagnatedoverthelastmanyyears.Governmentmustclearlyidentifysectorsoftheeconomywhicharenotfairlytaxedandtaxtheminlinewithothersectors,elsethemanufacturingsectorwhichisdisproportionallytaxed(accountsfor20%ofGDPbuttakes66%oftaxburden)willceasetoremainattractiveandsurvive.

There are two key pools of tax payers that need to be tapped, namely:

a) Sectorsthatarenottaxedproportionallylike Agriculture,RetailandWholesale,RealEstateand StockMarket.b) Haveastrongandeffectivedrivetoidentifytax evaders.

ProposalAllsectorsincludingAgricultureandRetail&Wholesaleneedtobebroughtunderthetaxnetandproportionallytaxed.

a) Allindividualsandcommercialbusinessesshould betaxedirrespectiveoftheirexemptionstatus.b) Taxevadersneedtoidentifiedandtaxed.Some ideasonidentifyingevadersare: a. Better coordination between SECP and FBR: Thiswillresultindetectingcompanies whicharealthoughregisteredwithSECPbut arenotregisteredwithFRBandthusarenot underthetaxnet.

b. International Travel, Utility and Communication Bills:Individualsand companiesmakingpaymentsfortheirutility bills(electricity,gas,water), communicationbills(cellphones,PTCL)and forinternationallytravel(businessorpleasure) needtobecheckedwhethertheyareinthe taxnet.Ifspendingisaboveacertainlevel thentheseentitiesmadetopaytaxes. c. Foreign Remittances Taxed:Foreigntransfers notrelatedtoroyalty,dividendsorbusiness servicesneedtobetrackedandtaxed. UnderSubsection4ofsection111ofthe IncomeTaxOrdinance2001,foreign remittancesthroughbankingchannelsarenot questionedortaxed.Modifiedthissub-section totheextentthataminimumtaxcanbe levied. d. Bank Account Information:Itshould bemademandatoryforBanksandFinancial InstitutionstosharewithFBRallbanks deposits,loansandinvestmentsmadesothat FBRmayprobethesourceofsuchamounts deposited/invested. e. Investments in Mutual Funds Pension Funds: SourceofinvestmentinMutualFunds/Pension FundsfortaxCreditshouldbedocumented. f. Dealers of Precious Metals:Itshouldbemade mandatoryforalldealersofpreciousmetal (goldetc.)tofileormaintainrecordsincluding name,NTN/CNIC,completemailingaddress etcofallbuyersofsuchmetalandsubmitsuch detailstoFBRonquarterlybasis.

TAXATION PROPOSALS FORFEDERAL BUDGET 2012-13

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ANNUALREPORT2011-12

BenefitMorefundsavailabletothegovernmentwillenhancetheirabilityimproveinfrastructure,attractinvestmentandcreateaconduciveenvironmentforbusinessestofunctionandprosper.Thebusinessesinturnwouldcreatejobsandgivebacktothegovernmentthemuchneededtaxrevenue.TogetherthisprocesswillresultinmuchneededincrementalGDPgrowthandimprovementinstandardoflivingoftaxpayers.

1B) High Corporate Income Tax

IssueWithglobalshifttowardsindirecttaxes,averagecorporatetaxratesarecomingdown,e.g.among116countriestaxratehasfallenfromahighof32.7%in1999to25.5%in2009.

Source: KPMG 2009 Corporate Tax survey

Inlinewiththecontinuousdownwardtrendinworlddirecttaxes,averagecorporatetaxratesamongAsiaPacificcountrieshasalsofallenfrom31.8%in1999to27.5%in2009(0.94%below2008)whilePakistanCorporateTaxRateremainsat35%(effectiveis42%includingWPPFandWWF),whichisfaraboveintheregion.

Lookingahead,ifwewanttoremaincompetitiveinattractingforeigninvestment,wewillhavetobecompetitiveoncorporatetaxesamongourregionandneighbors.Thisisallthemoreimportantandurgentwiththecurrentglobalreductionineconomicactivity.Alsothelimitedsupplyofcapitalinvestmentwillgotothosecountrieswhichhavemostattractiveoverallpackageofwhichcorporatetaxrateisakeyfactor.

ProposalInordertoremaininternationallycompetitive,Pakistanneedstoreduceitscorporatetaxratetoamaximumof30%inlinewithregionalstandards.

BenefitLowercorporatetaxwillpromoteinvestmentinPakistan,makeprivatesectormorevibrantandwillenablePakistantobeinternationallycompetitive.

Country Corporate Pakistan

Higherby TaxRate

Pakistan 35.0%- -India 33.6% 1.4%Indonesia 25.0% 10.0%HongKong 16.5% 18.5%Singapore 17.0% 18.0%

35 33 12 31 3130 29 28 27 27 26 26

GlobalAverageCorporateTaxRate

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Perc

enta

ge

5

0

30

25

20

15

10

32 31 31 32

30 30

29 29 2928

27

ASPAC Average Corporate Tax Rate

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Perc

enta

ge

25

26

27

28

29

30

31

32

67


1C. Rationalize Minimum Turnover Tax for all Companies

IssueTheBoardhasvideitsSRO1086(1)/2010datedNovember30th,2010givenrelaxationinminimumtaxtodistributorsofpharmaceuticalproducts,fertilizers,consumergoodsincludingfastmovingconsumergoodswhereaftertheminimumtaxhasbeenreducedby80%fromthe1.0%to0.2%.

IncasesofOilmarketingcompanies,Oilrefineries,SuiSouthernGasCompanyLimitedandSuiNorthernGasPipelinesLimitedtherateofminimumtaxshallbereducedto0.5%incasestheirannualturnoverexceedsRupees1.0billion.

Westronglyfeelthattheminimumtaxisunfairtocompaniesthatareinastart-upphaseandhavemadeinitialcapitalinvestments/marketinginvestmentsandaremakingresultantlossesintheirfirstyearsoftrialproductionortrialoperations.

ProposalItisrecommendedthattocreatealevelplayingfieldtothenewentrantsinthemarkettheminimumtaxshouldbereducedto0.2%inthefirst3TaxYearsofthecompany.ForexistingcompanieswhohavemadeinvestmentsexceedingUS$0.5Million,thesameshouldbeapplicablefortheyearofinvestmenttoencourageinvestmentinexistingfacilities.

Benefit1. CompanieswillingtoenterPakistan,aswellas

thosealreadyfunctioninginthecountry,whichareplanningoninvestingincapitalormarketing,willbeencouragedtomakefurtherinvestments.

2. Arationalizedlevyofminimumtaxandwillnotactasashowstopperforcompaniesindifficultfinancialsituations.

1D. Simplify Advance Tax for Manufacturers

Issue1. Section147oftheOrdinancerequirescompanies

topayadvancetaxonthequarter’sturnoverinthesameproportionasthetaxassessedforthelatesttaxyearbearstothetotalturnoverforthatyear.

Further,ifanytaxpayerfailstopayadvancetaxorthetaxsopaidislessthan90%ofthetaxchargeablefortherelevanttaxyear,heshallbeliabletopayadditionaltax@KIBORplusthreepercentperquarterontheamountoftaxsochargeableortheamountbywhichthetaxpaidbyhimfallsshortofthe90%,asthecasemaybe.

Thisrequirementisveryharsh,asitrequirescompaniestomakehugeamountsofadvancetaxatanearlystagethuscausingcashflowissues.Ifrefundsareexpectedatfinalizationofassessmentorderstage,thetaxofficemayresorttomakingarbitrarydisallowancesnegatingtherefundsituation.

2. Presentlythemanufacturersarerequiredtopayadvancetaxesinmultipleformse.g.withholdingtaxesu/s153(deductedbycustomers),taxatimportstageu/s148paidtoCustomsauthoritiesandquarterlyadvancetaxesu/s147paidonthebasisofestimatedtaxliabilityforthecurrentfiscalyear.Pertinenttonotethatallthewithholdingtaxespaidduringthequarterareadjustableagainstthequarterlytaxliability.

Proposal1. Itisrecommendedthatpreferablythelawbe

changedtotheone,whichwasinforcebeforethe2006FinanceActamendmentwherebyacompanywasrequiredtopayadvancetaxequaltoonefourthofthetaxliabilityfinalizedforthelatesttaxyearoratleastthebenchmarkof90%shouldbereducedto75%.

2. Manufacturersshouldbegivenexemptionfromwithholdingtaxesu/s153andu/s148.Theyshouldonlyberequiredtopayadvancetaxu/s147.Thiswaythemanufacturerswillpaythesameamount

TAXATION PROPOSALS FOR FEDERAL BUDGET 2012-13

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ofadvancetaxbutthroughamuchsimplerway.Reducecomplexityatbothends,i.e.payerandgovernment.

BenefitHelpsimplifyandstreamlinetaxprocessforgoodcorporatecitizensandwilleasecashpositionofthecompany

Further,itwilleliminatetheimpositionofadditionaltaxduetoestimationvariance.AsduetouncertaintyofeconomicandpoliticalconditionofPakistanitisverydifficulttoestimatethetaxableincomewith90%accuracyespeciallyinacaseveryacompany’sbusinessincomeisveryvolatilelikeincomefrominvestmentinlistedsecurities.

1E. High Rate of Advance Income Tax at Import Stage

IssueWithholdingtaxatimportstagehasbeenincreasedfrom4%to5%ofvalueofgoodsinclusiveofcustomdutyandsalestaxfromJuly2010.Thishasbadlyaffectedindustriesimportingrawmaterialformanufacturingpurposes.Hugeworkingcapitalisstuckintaxpaidatimportstage.

ProposalRateofwithholdingtaxatimportstageshouldbereducedto2%to3%.Exemptionshouldbeallowedtothoseindustrieswhichareimportingrawmaterialfortheirownmanufacturingpurposes.

BenefitThiswillimprovecashflowandmakecompaniesmoreefficien

2. EXPANSTION OF GENERAL SALES TAX (GST)

IssueInmanydevelopingcountries,suchasPakistan,India,Mexico,etc.,GSTisakeyrevenuesourceashighunemploymentandlowpercapitaincomerenderotherincomesourcesinadequate.Insteadofintroducingorusingothertaxsourcesthuscreatingmorebureaucracyandcomplexityofcollection,itis

idealtoexpandGSTtoapplyacrossallsectorsoftheeconomy.Unlikeothercollectionsources,GSToffersasteadystreamofincomeandiscollectedevenlyovertheentirefiscalyear.

AneffectiveindirecttaxsystemneedstoevolveifPakistanhastokeepupwiththepaceofcommercialandtechnologicalchange.InsteadofincreasingtheSalesTaxrateasdonelastyear,thetaxnetneedtobebroadened.SalesTaxRateapplicableinPakistanisalreadyathighersideasgivenbelowinthetable:

ProposalToexpandthetaxnet,attractingentitiesregisterforGSTiscritical.SomeideasforcreatingincentivesanddispellingfearforpotentialentitiestoentertheGSTnetare:

Expansion and Communication:1. TheGSTrateshouldbereducedtobecomparable

levelsvs.otherAsianmarketswhichwillencourageregistration.AgeneraleconomicmodelisthatifGSTexceeds10%,peoplestartengaginginwidespreadtaxevadingactivity.

2. TheGSTprocessshouldbesimplifiedtoenablemediumandsmallsizedtrader’stounderstandthe‘concept;easily.Thedocumentationrequirementsshouldbereducedtoavoidunnecessarywork.

3. Specialteamusing3rdpartyqualifiedcompaniesshouldbebroughton-boardandwhowillworkwithbusinessestohelpthemunderstandandfileforGST.ThisisinlinewithFBRworktowardsenhancingcooperationandhelpinginexpandingtheGSTnet.

4. TheGovernmentshouldrunmediaandawarenessprogramstopublicizetheseincentivesandtoexplaintheeasyuserfriendlyfilingandcollectionsystem.

Country GSTRates Pakistan HigherbyPakistan 16.0% -India 12.5% 3.5%Indonesia 10.0% 6.0%HongKong 0.0% 16.0%Singapore 7.0% 9.0%


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Incentives to Attract Registration:1. Nosalestaxauditsbecarriedoutfornewly

registeredsmalltradersduringthefirst5yearsofanentity’sregistration.Onlyexceptionwillbeiftheentityclaimsanyrefunds,inthatcaseforverifications.

2. Smalltraders,havinglimitedturnover,maybeallowedtofileasalestaxreturnonceevery6months.Thiswillmakethecomplianceeasyforsmalltraders.

3. Thesamenewlyregisteredsmalltradersbeofferedlowerincometaxratesforfirstthreeyearsincasetheyoptforsalestaxregistration.

Benefita. Thiswilldiscourageevasionandencourage

participationwithawin-winsituationforregisteredentities.

b. ExpansionoftaxnetistheonlyviablesolutiontoaprosperousPakistan.

c. Newlyregisteredentitieswillpaysometaxascomparedtotheir‘ZEROCONTRIBUTION’today.

2Ai) Suspension without notification

IssueAtpresent,anytaxpayermaybesuspendedonmeresuspicionoftaxfraud,etc.Thisresultsinimmediateblockageofrefundsaccruingtocorrespondingbuyers.

ProposalTocurtailtheabuseofsuchprovision,itisproposedthatbeforedeclaringanypersonasblacklisted/suspended,thechargeforissuingfakeinvoiceorcommittingtaxfraudshouldalsobeestablishedintheOrder-in-Original.

Further,inputtaxcreditonaccountofpurchasesbyagenuinebuyer(fromasubsequentlydeclaredblacklistedperson)shouldbeallowabletotheextentofpurchaseuntildateofsuspension.

BenefitToavoiddelaysinclaiminggenuinelyavailabletaxcredit

2Aii) Blacklisted Suppliers

IssueSaletaxdepartmentisissuingnoticesunderrule12(5)oftheSalesTaxRules,2006contendingtheadjustmentofinputtaxpaidbytheregisteredpersonsontheinvoicesissuedbythesupplierswhichwereblacklistedsubsequenttothesupplydate.SuchnoticesarebeingissuedwithoutconsideringthefactthattheCompanyhassufferedandpaidinputtaxonbonafidetransactionsandthereisnocollusivearrangementwith(unrelated)suppliersofgoods,whichisevidentfromthefactthatthecorrespondingsupplierhasbeenblacklistedsubsequenttothetransactionwiththebuyer.ThisblacklistingalsoresultsindisallowanceofinputtaxbyFBRportal,ifthisvendorisblacklistedatthetimeofthereturnsubmission.

ProposalFBRneedstoissueguidanceonthisissuetocollectingunitssothattaxpayersarenotunnecessarybothered.Thisisespeciallyimportantasmostofthevendorsinthesecasesareonactivetaxpayerslistwhenpurchasesweremadefromthem.

BenefitCollectingtaxesisastateresponsibilityandhenceitshouldnotbethetaxpayerswhoshouldbemaderesponsibleforanactiondonebyanothertaxpayer.

2B) Withholding of Sales Tax

IssueThroughSRO704(I)/2009datedJuly30,2009,taxpayersregisteredwithLTUarerequiredtowithholdsalestaxat1%frompaymentsmadetonon-LTUregisteredpersons.Itisanextraburdenasthetaxpayersarerequiredtowithholdanddepositthesalestax,issuecertificatetothetaxpayers,andmaintainrecord.Thisrequiresadditionalresourcesandcostofdoingbusinessincreasesunnecessarily.

ProposalWithholdingofsalestaxat1%bedoneawaywith.


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BenefitEliminationofcomplicationsandeaseofoperationforthetaxpayerstogetherwithreducedoperationalcosts.

3. EXCISE DUTY ELIMINATION3A. Eliminate Excise but if needed,

introduce Consumption Tax

IssueExciseDutyisanadditionaltaxburdeningconsumers.Keysourceofgovernmentrevenuesshouldbejustthree,i.e.GeneralSalesTax,CustomDutyandCorporate/PersonalIncomeTax.

ProposalEliminateExciseDutyfromallitemsandifitisimportantforthegovernmenttocurtailordiscourageconsumptionofanycategory,aconsumptiontaxbelevied.However,thisconsumptiontaxshouldbereviewedanddecidedbyindustryandnotleviedacrossboardlikeCentralExciseDuty.

BenefitByreducingtaxburdenfromindustryandconsumers,bothaffordabilityaswellasconsumptionwillincreasethusimpactingGST/VATpositivelyandoffsettinghurtfromCEDelimination.

4. PERSONAL INCOME TAX4A. Tax Relief for lower Salaried Class

IssueGovernment’seffortinrevisingthesalaryslabstructure&taxingthesalaryongrossamountalongwiththereductionofratestomaximumof20%isappreciated.Howeverthelowersalariedclassindividualshavestilltopaytaxeswhichareahugeburdenfortheseindividualsconsideringtherateofinflationandconsequentlyrisingpricesofconsumableitemsspeciallyfoodwhichconstitutesamajorportionofthespendingbudgetoflowincomeindividuals/families.ExemptionisavailableonlyuptoRs.300,000only.

Tonotethatpayrolltaxisnottheonlyincometaxbeingpaidbysalariedclass.Theyalsopayincometaxinformofwithholdingtaxesonutilities,phonebillsetc.Sincetheyarenotrequiredtofileincometaxreturn,mostofthemdonotclaimrefundsofthesewithholdingtaxes.Ontheotherhand,thecontributionoflowersalaryclassofpeopleingovernmentexchequerisimmaterialandthisestimatedtobelessthan0.05%oftotalnationaltaxrevenue.

ProposalItisrecommendedthatsalariedclassindividualsshouldbegivenexemptionuptoRs.500,000andamountearnedabovethislimitshouldbeconsideredastaxable.

BenefitRelieftothelowersalariedclassmaybegivenspeciallyinthecurrenttougheconomictimes.

4B. Introduction of a “Tax Payer Card”

IssueIndividualTaxpayersinPakistanarenotincentivizedhencemanystayoutofthetaxnet.GeneralimpressionisthatgettingintotheTaxNetentailscomplexitiesandadditionaltaxburden.

ProposalIntroducea“TaxPayerCard’toallindividualtaxpayerswithclearbenefits(somesuggestions’below):

1. Quickprocessingofapplicationand50%discountongovernmentfeeslikepassportfee,

NICfee,drivinglicensefee;waiverfrompoliceenquiryetc.

2. Waiveronloanprocessingfeeandanyotherone-timechargestakenbybanksfor

Loan/financeprocessing.

3. ReducedmarkupratesforthesetaxpayersonloantakenfromNationalizedBanks.


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4. WaiverfromCVTwhichisbeingpaidbyindividualsonpurchaseofvariousitemssuchasProperty,Vehicles,InternationalAirticketsetc.

5. Preferenceanddiscountonmotorvehicleregistrationfeeandannualvehicletax

6. Waiverofreferencesforopeningofnewbankaccounts,andobtainingcreditcardsetc.

7. Preference/priorityinobtainingnewconnectionsforutilitieslikeelectricity,telephone,gasandwater.

Minimumcriteriaforpeoplewhogetthe“TaxPayersCard’shouldbethosetaxpayerswhohavefiledandcompletedtaxreturnsforlast3fiscalyears.Apropermechanismmaybeestablishedtomonitorthesetaxpayersonanannualbasistofacilitatetheprocess.

BenefitThiscardanditsbenefitswillmotivethetaxpayertopaypropertaxandgetvaluedreturnsthereonandwillalsoinducetaxevaderstopaytheirdueshareoftaxes.

4C. Elimination of Cap on exemption of Interest on House Loans

IssueIntodayhighinflationarytimes,housebuildinghasbecomeahugeburdenoncitizensofPakistan.Basedoncurrentlaw,taxrebateoninterestpaidonHousingFinanceloanisavailabletotaxpayersubjecttothelowerof:i) Actualamountpaid,orii) Rs.750,000/-,oriii) Amountnotexceeding40%oftaxableincome

Withthehighcostofbuildingmaterialsandincreasedfinancingthisisnotmuchofanincentiveanymore.

ProposalNocapshouldbeplacedontaxrebateoninterestpaidonHousingFinanceloantoanexistingtaxpayer

BenefitEncouragetaxpayerastheperceivedbenefittoexistingtaxpayerissignificant.Itwillsignificantlyhelploweringtheburdenofbuildingahousefortaxpayers.

4D. Tax on Employers’ Contribution to Recognized Provident Fund

IssueThroughtheFinanceAct2008anamendmentwasmadeintheIncomeTaxOrdinance2001wherebyanyamountinexcessof1/10thofsalaryorRs.100,000whicheverisloweristobeincludedinthetaxableincomeofthesalariedperson.

Taxationonsalaryincomeisleviedbysection12onreceiptbasisonly,whereascontributiontoprovidentfundiscreditedtothefundaccountandreceivedbytheemployeeoncessationofemployment.Further,employercontributioncanalsobewithheldbytheemployerifemployeeischargedwithmisconduct.Therefore,itisonlyatthetimeofretirementorresignationthatreceiptofprovidentfundcontributioncanbeassessedwithcertainty.

ProposalDuetoaboveanomaliesandcomplexities,taxonProvidentfundcontributionisunwarrantedandshouldbewithdrawn.

BenefitThiswillresultinreducingthealreadyheavytaxburdenonsalariedclass.FurtherPFcontributionbeingaretirementbenefit,shouldnotbebroughtintotaxnet.

4E. Withholding tax on Banking Transactions

IssueTherearealargenumberofsalariedindividualspayingtaxesontheirsalaries,andagainpayingwithholdingtaxontheirbankingtransactions.Bankingtransactions;includingdemanddrafts,payorders,telegraphictransfers,andtransactionsexceedingthethresholdofRs.25,000inasingledaychargeabletowithholdingtaxattherateof0.2%

ProposalAllmodalitiesremainingthesame,i.e.rateofwithholdingtaxremainsat0.2%,adjustableagainstthefinal/annualtaxliability,etc,butthresholdbeincreasedfrom25,000to50,000


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BenefitReducecomplexity.

4F. Small Payments for Prize and Winnings

IssueCompanies,especiallyFMCGofferingprizesforpromotionofsalesarerequiredtodeducttaxandfurnishthename,addressandNTNoftherecipient.Wheretheprizesofferedareofanominalvaluesuchascigaretteslighters,wallclocks,toys,etc,itispracticallyimpossibletodeducttaxandfurnishthedetailsrequired.

ProposalTomakethesystemworkable,prizesofferedbycompaniesvaluedatlessthanRs.10,000shouldnotbesubjectedtodeductionoftax

BenefitReductioninadministrativeworkforthetaxpayer.

4G. Introducing Rebates for Salaried Individuals

4Gi) Tax Credit on Education Expenses

IssueOvertheyearseducationhasbecomeveryexpensiveandisoneofthemajorexpensesforindividualsandtaxpayersbeprovidedtaxreliefonamountspentonchildreneducation.

ProposalWerecommendthattaxcreditshouldbeallowedforamountspentonchildren/dependanteducationtoallsalariedtaxpayers.

BenefitReducethetaxburdenonthesalariedclass,andwillalsohelptobringanyundocumentedparteducationsectorintotaxnet.

4Gii) Tax Rebate on Medical Expenses

IssueUndertheIncomeTaxOrdinance1979,taxrebatewasavailableinrespectmedicalexpensesincurredbyindividualtaxpayerandhisdependants.ThisfacilitywaswithdrawnafterthepromulgationofIncomeTaxOrdinance2001.

ProposalTaxcreditonsubmissionofevidencesofexpensesincurredonmedicalbeallowedtoindividuals.

BenefitSuchpracticewillprovideincentivesfortheusersoftheseservicestoobtainevidenceofpaymentwhichwillencouragedocumentationandassistinbringinguntaxedservicesectorintotaxnet.

4 G iii) Increased Range of Tax Slabs (Salaries)

IssueWithever-risinginflation,thecostoflivinghassignificantlyincreased,makingitdifficultforcommonpeopletomeetbothendsmeet.Theconstantdouble-digitinflationposesgreatneedtorevisethetaxslabsforindividualincome.Reducingincometaxratecansurelyprovideimmediaterelieftothecommonman.

Likewiseprovidingtaxcreditagainstpersonaltaxationonsubmissionofevidencesofexpensesincurredon:1 medical2 educationofchildren,canhelpproviderelief,inadditiontoencouragementofdocumentationandassistanceinbringinguntaxedservicesectorsintotaxnet.

ProposalThebasicexemptionlimitshouldbeenhancedtoRs.500,000.Likewisethereisanurgentneedtoredefinetheoveralltaxslabs(salaried/non-salariedindividuals)asfollows:


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Themarginalreliefsshouldbeaccordinglyadjusted.Also,taxcreditforpersonalexpenditureonmedicalandeducationofchildrenshouldbeintroducedwiththeconditionofsubmissionofevidenceofpaymentwithfullparticularsofpayee.

BenefitProvidingrelieftoexistingtaxpayersagainsttheever-risinginflation.Restrictingtaxevasion.Theintroductionoftaxcreditwillprovideincentivefortheuserofsuchservicesinobtainingevidencesforpayments.Thatinturnwillinducetherecipienttobewithinthedocumentedsector.

5. FINAL TAX REGIMEIssuePresentlycorporatetaxunderFTRiscollectedon

companyrevenues–thisisillogicalandnotfair.Todayallimportbusinessespaytaxeswhethertheymakeprofitornot.Duetothis,newmanufacturingbusinessescannotutilizetheirearlieryeartaxlosseswhentheyimportproducttotestthemarket,orduringtheinterimperiodofsettingupmanufacturingfacility.

MajormultinationalcompanieswhowanttoenterPakistanarereluctantastheycannotutilizetheirearlieryeartaxlosseswhentheyimportproducttotestthemarket,orduringtheinterimperiodofsettingupamanufacturingfacility.

Aneffectivetaxsystemcanonlyworkwherethereareidenticaltaxproceduresandprocessesforthesamekindornatureofbusinessactivities.Furthermore,thereisnodiscriminationinincidencebyonesectorovertheother.FTRdisturbsboththeseaspects.


WherethetaxableincomeexceedsRs.500,000butdoesnotexceedRs.600,000 0.75%WherethetaxableincomeexceedsRs.600,000butdoesnotexceedRs.700,000 1.5%WherethetaxableincomeexceedsRs.700,000butdoesnotexceedRs.800,000 2.5%WherethetaxableincomeexceedsRs.800,000butdoesnotexceedRs.900,000 3.5%WherethetaxableincomeexceedsRs.900,000butdoesnotexceedRs.1000,000 4.5%WherethetaxableincomeexceedsRs.1000,000butdoesnotexceedRs.1200,000 6%WherethetaxableincomeexceedsRs.1200,000butdoesnotexceedRs.1400,000 7%WherethetaxableincomeexceedsRs.1500,000butdoesnotexceedRs.1700,000 8%WherethetaxableincomeexceedsRs.1800,000butdoesnotexceedRs.2000,000 9%WherethetaxableincomeexceedsRs.2000,000butdoesnotexceedRs.2500,000 10%WherethetaxableincomeexceedsRs.2500,000butdoesnotexceedRs.3000,000 11%WherethetaxableincomeexceedsRs.3000,000butdoesnotexceedRs.3500,000 12%WherethetaxableincomeexceedsRs.3500,000butdoesnotexceedRs.4000,000 13%WherethetaxableincomeexceedsRs.4000,000butdoesnotexceedRs.4500,000 14%WherethetaxableincomeexceedsRs.4500,000butdoesnotexceedRs.5000,000 15%WherethetaxableincomeexceedsRs.5000,000butdoesnotexceedRs.6000,000 16%WherethetaxableincomeexceedsRs.6000,000butdoesnotexceedRs.7500,000 17%WherethetaxableincomeexceedsRs.7500,000butdoesnotexceedRs.10,000,000 18%WherethetaxableincomeexceedsRs.10,000,000butdoesnotexceedRs.15,000,000 19%WherethetaxableincomeexceedsRs.15,000,000 20%

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ProposalItisproposedthatFinalTaxRegime(FTR)shouldbeeliminated.Thiscanbedoneinphaseswiththeobjectivefullydocumenttheexistingeconomy,aswellastoencourageforeigncompaniestoenterintoPakistan’sMarket.

a) InitiallyFBRshouldallowadjustmentoffirst threeyearsoftaxlossesagainsttheirFulland finaltaxliabilityasassessedunderFTR. b) Graduallyincentivizecompaniestomovetoa NormalTaxRegime(NTR).Onesuggestionis tomakeNTRratesmoreattractiveversesFTR andmodifythelawaccordingly. c) Manufacturerscumimportersassessedunder NTR,meetingcertainpresetcriteria,should begivenoptiontomergetheirmanufacturing andtradingprofitsforthepurposeoftheir finaltaxcalculations.Presetcriteriawill limitpossibleabuse&onlythosecompanies shouldbeallowedtooptwhomeetminimum criteriaoninvestmentinfixedassets,or companyturnover. d) InadditioncompaniesfallingunderFTRand makinglossesshouldnotbesubjecttoWWF levy.

BenefitsEncourageforeigncompaniestotestmarketnewproductonimportbasisandthenset-upmanufacturingoncemarketpotentialconfirmed.Inaddition,simplicityoftaxregimewillmaketaxationmuchmoretransparentandinlinewithglobalstandardsforinvestors.

6. PRIOR YEARS BAD DEBTS DISALLOWED BY TAX AUTHORITIES IssueOneofthebiggesthurdlesthatiscurrentlybeingfacedbythebankingindustryisthedisallowanceofbaddebtswrittenoffinearlieryearsuptocalendaryearendedDecember31,2007(taxyear2008).HugeamountshavebeendisallowedtobanksonanarbitrarybasisundertheprovisionsofSection29

&Section29AoftheIncomeTaxOrdinance,2001.TheFBRthroughitsletterdatedDecember23,2009(addressedtotheICAP)hadagreedtoinserttransitionalprovisionsintheformofRule8AwhichstatesthatbaddebtsdisalloweduptoDecember31,2007(i.e.taxyear2008)whichareneitherclaimednorallowedasataxdeductioninanytaxyearwouldbeallowedtobedeductedintheyearinwhichtheyarewrittenoff.Subsequently,Rule8AwasinsertedintheSeventhSchedulethroughFinanceAct2010andwasmadepartoflaw.However,thewordingsusedinRule8Are“neitherclaimednorallowed”isambiguousandneedsfurtherclarification.Thereferenceto“neitherclaimednorallowed”woulddeprivelargeamountsofbaddebtsthathavebeenclaimedinthepast,butweredisallowedbythetaxauthorities.Also,Rule8AcreatesanambiguityonsuchdisallowedbaddebtsthatwereeitherdirectlywrittenofforwerewrittenoffintheyearsuptoDecember31,2007(taxyear2008)forthereasonthatitpermitsadeductionintheyearadebtiswrittenoff.

ProposalAshighlightedabove,furtherclarityisrequiredforthewordingsusedinRule8Are“neitherclaimednorallowed”.Itcannotbetheintentionoflawtodisallowsuchamountswhichwereclaimedbythetaxpayerinthepast,butweredisallowedbythetaxauthorities.Wefurtherrecommendthatinordertosavethebanksfromhardshipofwritingofdeferredtaxasset,reclaimofprioryearbaddebtsdirectlywrittenoffaswellasprovisionsshouldalsobeallowedthroughRule8Awithoutanydistinction.

BenefitSignificantlyimpactviabilityandeffectivenessofbankstooperateinPakistanandalsohelpreducetheireffectivetaxrate.

7. ELIMINATE SALES TAX7A Local Supply of Plant and Machinery

IssueLocallymanufacturedplantandmachineryissubjecttosalestax,thatunreasonablyincreasescostof


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products.Likewise,supplyofimportedplantandmachineryisalsoincludedinsalestaxambit.

Forgeneralindustrytheinputtaxonplantandmachineriescanbeadjustedagainstoutputtax,whichdoesnotcreateanyburdenonthoseindustries.Forpharmaceuticalandotherexemptindustries,theinputtaxonplantandmachineryandcapitalgoodsbecomespartofcost,therebycompressingmargins,placingthoseindustriesinanunjustcondition.

ProposalPharmaceuticalproductsshouldberemovedfromthelistofexemptitemsandzero-ratedforsalestaxpurposes.Alternatively,exemptionofsalestaxonplantandmachineryshouldbeprovidedtopharmaceuticalandotherexemptindustries.

BenefitReducethecostofdoingbusinessforpharmaceuticalindustryandotherexemptsectorstoensurebusinessviabilityandcontrolinflation.

7B Pharmaceutical Sector

PakistanhasavibrantandforwardlookingPharmaceuticalindustrycontributingaround1%ofGDP.ItalsopromotesknowledgebasedeconomyandisasourceofbringinglatesttechnologyintothecountrythroughalargenumberofleadingMNC’sthatoperatehere.Yet,itremainsoneofthemoststrictlyregulatedbusinessesinPakistan,subjecttostringentcontrolsontheentireoperatingcyclerangingfrompurchaseofrawmaterialtomanufacturing,fromregistrationofproductstotheirmarketingandpricing.Forefficientoperationofbusinessessubjecttosomanycontrols,itisessentialthattheregulatoryprovisionsbejustandequitableandtheregulatorymachineryshouldworkefficientlywithoutanydisruption.

However,pharmaceuticalindustrycontinuestofaceahostofproblemswhichresultinincreasedcostofbusinessultimatelyrenderingtheoperationsunviable.ThatisthereasonforcingquiteafewMNC’sin

pharmaceuticalsectortoexitPakistanlately.Someoftheissues,whichcanbemanagedwithequitableandpracticalgovernmentpolicies,are:

• Frozensellingpricessinceoveradecade,baring fewadjustmentsofhardshipscases.Duringthe sameperiodthecostofinput(goodsandservices) haveincreasemanifoldduerampantinflationand significantdevaluationoflocalcurrency.

• GSTpaidbypharmaceuticalsectoronitsinputs cannotbeclaimedonoutputduetopricecontrol, significantlyanddiscriminatinglyincreasingthe costs

• Latelythereisvirtuallyacompletestalemate attheMOH,themainregulatorybodycontrolling pharmaceuticalbusiness,duetodevolutionof certainfunctiontotheprovinces.Thisishurting theindustryalot.Basictaskslikeregistration ofnewproducts/variantsandtheirpricingetc. hassloweddownconsiderablywhichhasstarted toimpactthecontinuingofoperationsand upsettingtheinvestment/expansionplans.

7Bi) Pharmaceutical Inputs

IssueSalesTaxbeingpaidonpackagingmaterials,utilitiesandothersuppliesusedinmanufacturingpharmaceuticalproductsisaddingtotheproductcost.SincethefinalproductisexemptfromSalesTax,thetaxpaidcanneitherbepassedontotheconsumernorcanbeclaimedasinputtax.Thisisalsoagainstthephilosophyofsalestaxwhichissupposedtobebornebytheconsumer.

ProposalPharmaceuticalproducts,theirrawmaterialsandpackagingmaterialsshouldberemovedfromthelistofexemptitemsandbezero-ratedforSalesTaxpurposes.

BenefitReducethecostofdoingbusinessforpharmaceuticalandhencereducemedicineinflation.


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7Bii) Import of In-Vitro Diagnostic Equipment

IssueBeforethepromulgationoftheSalesTax(Amendment)Ordinance,2011dated15March2011,importandsupplyofplant,machineryandequipmentincludingpartsthereonenjoyedzero-ratedstatus.Subsequentlyallsortsofplant,machineryandothercapitalgoodsbecameliabletosalestax.Althoughdifferentconcessionswerelaterprovidedonimportofplantandmachinerywithcertainrestrictions,theimportofin-vitrodiagnosticequipment(capitalgoods)remainedunderthetaxnet.ThereagentusedforDiagnosticbusinessismostlyexemptfromsalestax,whichrendersnoopportunitytoclaiminputtaxoncapitalgoodsforthesamebusiness.

ProposalThesalestaxzerorating/exemptionshouldbeallowedforimportofdiagnosticequipment.

BenefitTheexistinglawloadsinputtaxburdenonin-vitrodiagnosticequipmentandisultimatelybornebyconsumers,despitebeingkeymedicaldevicesandplaysavitalroleinpatientmedication.ThesameequipmentsarealsousedforscreeningofHIV,Hepatitis&Kidneydiseases.ItwillalsohelptoimprovequalityoflifeofPakistancommonpopulation.

7Biii) Import of Amber Glass Bottles Type-III

IssuePracticallythereisonlyonemanufacturerofsuchproductsinPakistan.Withincreaseddemandofglassbottles,vendorisunabletomeettheindustryrequirementandallpharmaceuticalcompaniesarefacingshortageofglassbottlesandincreaseinprices.Duetoimpositionofsalestax,currentlyimportisnotviable.

ProposalElimination/reductioninsalestaxonimportsthereof.

BenefitExemptionofsalestaxwillensurecontinuityofpharmaceuticalbusiness,asrelyingononesupplierwithmajorenergyissuesinthecountryisamajorcontinuityriskfortheindustry.

8. CREATING VIBRANCY IN THE IT SECTOR

8A) Incentivize IT Export of Services

IssueHavingthe6thlargestpopulationintheworldaswellasoneofthelargestmiddleclasses,weshouldbeabletobecomeadisproportionalexporterofservicesinInformationTechnology(IT)whichincludeback-officeoutsourcing,software/applicationdesign,offshoreaccountingservices,medicaltranscriptionservicesetc.TodayIndiahasITexportsinexcessof$60billionversusalittleover$1billioninPakistan.Thisareadesperatelyneedsinvestmentbythegovernmentinimprovinginfrastructure,taxincentives,andeasyaccessibilitytolow-costhigh-qualityconnectivity.

Proposal1. Provideanattractivetaxenvironmentwhichdraws

investor’sattentionfromaroundtheworld.GreatexamplesexistinPhilippineswhichistheworld’sleaderinITservices.TherebyregisteringwiththeBoardofInvestmentsorPEZA(PhilippineEconomicZoneAuthority)foreigncompaniescangetgreatincentiveswhichinclude4to8yeartaxholidays,exemptionfromtaxes&dutiesonimportedspareparts,exemptionfromwharfageduesandexporttax,duty,impost&fees,taxcredits,etc.

2. Weneedanattractiveinfrastructureandlegalenvironmenttoattractinvestment.TheseshouldincludeprovidingstrongincentivessuchasITvillageswithlow-costhigh-qualityconnectivityandlegislaturetoencouragerisktaking.

BenefitsTaxingabusinessthatbarelyexistsdoesnotaddmuchtothegovernmentexchequer.Bygivingattractiveincentivestheindustrywillgrowdisproportionalandoncenearingmaturitytaxcanbelevied.1. In2011totalPakistanexportswerebarely$30

billion,practicallyhalfofIndianITexportonly.A


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hugeopportunityexiststodrivetheexportsectorinserviceswhichcurrentlyisindesperateneedofgovernmentsupportandassistance.

2. Willprovidehugeemploymentopportunity.In2010aloneIndianITindustrycreatedjobsforover150,000people.

8B) Preferential Tax Regime for IT Sector

IssueTheITindustryinPakistanisinthenascentstages.Itenjoyedofficialpatronagetill2006uptowhichpointitwasexemptedfromGST.LiftingofthisexemptionhasadverselyaffectedthePCmarket.

Anindustrythatwasprojectedwitha5-year2007-2012CAGRof20%asperIDChas,sincetheliftingofGSTexemption,experiencedlowsingledigitgrowth.TheWorldBankattributesITassinglemostimportantcontributortoGDPgrowthandGovernmentofPakistanneedstonurtureitjustasitdidpriorto2006.

LiftingofGSTexemptionhasresultedin:

• PCpenetrationratiooflessthan5%;lowestin SouthAsia.• Hand-carried/smuggledgoodsinundatingthe market.• Diminishedaffordabilityresultinginanepidemic ofITscrapbeingimportedinviolationof internationaltreatieslikethe1992UNBasel Convention.• PressureoncustomersITspending;compromise onscale&qualityofinfrastructureupgrade;lower productivity.

ProposalItisrecommendedthat:

1. GSTiswaivedonITimportsfornext5-yearssothatITindustryisabletoanchor,getfirmfoot-holdandblossom.

2. BanningimportofITscrap,usedPC’s&Serversintothecountry.

BenefitSuggestedproposalswillspurindustrialgrowth,increasePC&broad-bandpenetration,benefit

customers(especiallyEducation)andcountrycanretainitscompetitiveedgeasanattractivedestinationforforeigninvestmentduetoskilledIT-savvyworkforce.

PROCEDURAL PROPOSALS1. GENERAL SALES TAX RELATED

1A) Section 8B of the Sales Tax Act 1990 should be abolished / amended

IssueSection8BoftheSalesTaxAct,1990restrictstheadjustmentofinputsalestaxtotheextentof90%oftheoutputduringataxperiodwhilefilingsalestaxcumfederalexcisereturn.Section8Balsorestrictsthesalestaxinputadjustmentpaidonfixedassetsintwelveequalmonthlyinstallments.However,certaincategoriesofregisteredpersonsareexcludedfromthepurviewofSection8BoftheActbyvirtueofSRO647(I)/2007AsaresultofcomplianceofSection8BoftheAct,theregisteredpersonhastoisobligedtomaintainexcessiverecords..Further,theregisteredpersonhasalsotofacecashflowproblems.Sincethisschemeisnotapplicableforallcategoriesofregisteredpersons,thereforethebusinesscommunityisconceivingthisschemebasedondiscrimination.

ProposalSinceSection8BisdistortionofVATlaws,thereforeitissuggestedthatthissectionshouldbeabolishedtoallowfullinputsalestaxadjustmentinthesamemonth.

Benefit1. Restorecashflowflexibilitytothetaxpayers.2. Avoidunduehustletogettherefundclaim approvedfromthedepartment.3. Reducecomplexityofrecordkeepingbybothtax payerandgovernment.


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1B. Section 48 of the Sales Tax Act, 1990

IssueSection48givesoverwhelmingpowerstotaxofficialsbutfailstoincludeclausesthatrestraintheauthoritiesfromcommittingexcesses.Forpendingmatters,eveninvolvingminorliability,unduepressureisimposedontaxpayersbyexercisingSection48.

ProposalAllcasesshouldbedecidedasperthestrictinterpretationoflaw.Section48shouldnotbeexercisedunlessthecaseunderlitigationhasundergonetwoappellateproceedings.Inthisregard,thehonorableHighCourtinarecentjudgmenthasheldthattherecoveryactionagainsttheregisteredpersoncannotbetakenunlessthecasehasbeenheardbyaforumoutsidethejurisdictionofFederalBoardofRevenue.Basedonthisposition,itissuggestedthatSection48oftheActmaybeamendedinamannerthatrecoveryproceedingsareinitiatedbythedepartmentafterissuanceof2ndappellateorder.

Wemaywishtoreferto“Law of the People’s Republic of China on Tax Administration (Promulgated on NPC Chairman Order [2001] No. 60 on April 28, 2001)”asbestpracticeguideline.Althoughthemeasuresforcollection(e.g.writtennotificationfollowedbydetention,

sealofforsaleofgoodstorecovertaxoverdues)aresimilartoourlawtocertainextentbutArticle43advisescautiononpartoftaxauthoritiesandsetsoutpenaltyforirresponsibleactionbytaxofficials.

Chapter III Tax Collection: Article 43Intheeventthatthetaxauthoritiesabusethepoweroftakingmeasuresforpreservingtaxrevenueorcompulsorymeasuresforlawenforcementortakemeasuresforpreservingtaxrevenueorcompulsorymeasuresforlawenforcementinappropriately,thushurtingthelegitimaterightsofthetaxpayer,withholdingagentortaxpaymentguarantor,thetaxauthoritiesshallberesponsibleforcompensationinaccordancewiththelaw.

Benefit1. ReducethewideningofgapbetweenGovernment

andtaxpayers,thereby,enhanceconfidence.2. Avoidlossofrevenuetothetaxpayerand

Governmentexchequer.3. Enhanceimageofthecountryinlocalandforeign

investor’scircles.

1C) Sales Tax Withholding Agents & Withholding Rules 2007

IssueInadditiontowithholdingofincometax,withholdingof1percentofsalestaxfromaregisteredpersonotherthanregisteredwithLTUisanextraburdenonwithholdingagents.Withholdingagentsarerequiredtodeposittheamountintothegovernmenttreasuryandalsotoissuewithholdingtaxcertificatestosupplierfromtimetotimeandalsotomaintaintrackrecordofallthetransactions,whichisaverytimeconsumingandlengthyexercise.

ProposalSalestaxwithholdingonNon-LTUregisteredsuppliersthoughregisteredwithRTUisadiscriminatoryregimeofwithholdingprovisionforSaleTaxonnon-LTUpersons,shouldberemoved.

BenefitThiswillhelptoreducedtheburdenoftaxpayers.

1D) Eliminate Anomaly in Childcare Category

IssueDiapersinPakistanareprimarilyclassifiedundertwodifferentPCTcodes:1. Chapter48:Diapersofinfantsandbabies-PCT Code4818.40202. Chapter56:DiapersofWadding–PCTCode 5601.1040

TheDiapersclassifiedunderbothChapter48and56havethesamefunction(i.e.hygieneandbabycare)andarecateringtoasimilarmarketsegment.However,theclassificationintodifferentchaptersof


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thePCTbookallowsforvaryingtaxstructureonthetwoproductswithregardsto

GeneralSalesTax.Diapersinchapter48areliabletopay16%GSTv/sconcessionaryGSTaslowas0%fordiapersclassifiedinChapter56.Forperspective,diapersclassifiedunderChapter56canavailconcessionaryGSTgrantedbythegovernmenttotextileproductsviaSRO509followedbySRO283.

Inadditiontothedisruptionofthelevelplayingfieldviaavaryingtaxstructureforsimilarproducts,theissueisfurthermagnifiedduetomisclassificationbydiapermanufacturerswhowronglyclassifythemselvesinChapter56versus48totakeadvantageoftheconcessionarytaxrates.ThismeasurenotonlydisruptsthelevelplayingfieldbutalsodeprivesthegovernmentofrevenuesfromGSTcollection.

ProposalFirstandforemost,itisrecommendedthattherelevantgovernmentauthoritiesimmediatelyinvestigate&takeactionagainstcompaniesmarketingdiapersthatarewronglyclassifiedasaDiaperofWaddinginChapter56toavailconcessionaryGST.ThiscouldresultinincrementalSalesTaxrevenuesofnearlyPKR100millionperyearforthegovernmentgoingforward.

Inadditiontothis,itisrecommendthatPakistanadoptsthesingle,newWorldCustomsOrganization(WCO)HScodeclassificationforallsanitaryproductunderChapter96subheading96.19.00titled“Sanitarytowels(pads)andtampons,napkinsandnapkinlinersforbabiesandsimilararticles,ofanymaterial”.TherationalforthecreationofthisHScodewastoclassifysanitaryproductsbyfunctionalityandtoeliminateanomaliesliketheoneinPakistan.AsingleHScodewilleliminatetheopportunityforthemis-classificationofdiapersbydiapercompaniesbecauseonlyoneHScodeclassificationwillexistforalldiapers,basedonthefunctionalityoftheproduct.

PakistanshouldadoptthisnewclassificationasprescribedbytheWCOwithoutcreatinganysub-classifications–thiswillresultinarestoringthelevel

playingfieldandeliminatetheopportunitytomis-classifyproductstotakeunduetaxadvantage.

BenefitImmediateactionagainstdiapermanufacturerswronglyclassifyingthemselvesunderChapter56willresultinimmediaterevenuegainsforthegovernmentviaenhancedGSTcollection.ThiscouldresultinincrementalSalesTaxrevenuesofnearlyPKR100millionperyearforthegovernment.Overafiveyearperiod,thiscouldresultinadditionalrevenuesofPKR500millionforthegovernment.

Moreover,seamlessadoptionofthesingle,newWorldCustomsOrganization(WCO)HScodeclassificationforallsanitaryproductswillsimplifytheclassificationstructureinthediapercategoryandwouldprovidealevelplayingfieldforalldiaperproductmanufacturersandimportersinthecountry.LevelplayingfieldwillenhanceinvestorconfidenceinPakistanandprovideanenablingenvironmentforcompaniestomakelongterminvestmentsinthiscategoryinPakistan.


IssueUndersection122oftheIncomeTaxOrdinance,2001,areturnofincomeoncefiledisdeemedtobethefinalassessmentorder.However,theCommissionerisauthorizedtoreviseanassessmentorderwithinaperiodoffiveyears.TheperiodoffiveyearsallowedtotheCommissionerisextremelylongandimpractical,andineffectcouldcausealotofproblemsfortheassesses.

ProposalWerecommendthatthetimeperiodallowedtotheCommissionertoamendanassessmentorderbereducedfromaperiodoffiveyearstotwoyear.Wefurtherrecommendthatatimeframeof60daysshouldbefixedfortheCommissionertocompletethisauditfromthedateitisstarted.


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TAXATION PROPOSALS FOR FEDERAL BUDGET 2012-13BenefitTheproposedamendmentwillensurethattaxinspectionsarenotkeptpendingandcommissionersissueNOC’sinareasonabletimeperiodwherebyeasingrecordkeepingandprocessingburdenoncompanies.


IssueTheentireappealprocessislongwindedandtedious,havingthefollowingdrawbacks:1. UnderITO-2001,thereisaprovisioninlaw(132-

2A)whichrequirestheIncomeTaxAppellateTribunal(ITAT)todisposeallappealswithinsixmonthsoffiling.However,practicallythisprovisionisneverinvokedandTribunalstakelongtimeindecidingcases.

2. WhereCIT(A)orITATprovideddirectrelieftotheassessed,theCommissionerundersection124(4)isrequiredtoissuetheappealeffectorderwithintwomonths.Inpractice,thisisrarelydoneasitwouldleadtorefundsbeingassessed,whichwoulddisruptthetaxofficer’s

revenuetargets.

3. Aspersubsection2ofsection127noappealshallbemadebyataxpayeragainsttheassessmentorderunlessthetaxpayerhaspaidtheamountoftaxforwhichtaxpayeriscontesting.ThisregulationwasintroducedinFinanceAct,2004,whichsubstitutedtheconditionofpartialpaymentat25%ofthedueamount.Currentregulationsofarhasbeenusedasatooltomeetthetaxcollectiontargetsasmostassessmentsarebeingdecided,againstthetaxpayers,inthemonthofJunei-elastmonthoffiscalyear.Sincetheentireappealprocessitselfislongwindedandtediousandnormallytakesyearstoculminatetillthentaxpayer’sfundsareblocked.

ProposalWerecommendthattheentireappealprocessfromthetimetheassesseefilesitsreturntothetimewhenanassessmentisdeemedtobecomplete,shouldnot

exceedtwoyears.Thefollowingstepsshouldbetakentoensuretheabove.

1. Atimeframeshouldbeintroduced,wherebyITATisrequiredtogiveitsdecisionwithin3monthsoffilingofanappeal,asiscurrentlythecasewithCIT(appeals)anditshouldbestrictlyfollowed.IncasenonoticeofhearingisissuedbytheITAT,thereliefsoughtbytheappellantintheappealshallbedeemedtohavebeengranted

2. Werecommendthatthetwomonthsperiodstipulatedinlawshouldbestrictlyadheredto.Intheeventthetimeframeoftwomonthsisbreached,itshouldbestatedinlawthattheassessesmayassumethatreliefisdeemedtohavebeengiven,i.e.theappealeffectorderstandsissuedinfavoroftheassesses,andwherepaymenthasbeenmadearefundstandsdetermined.

3. Itisproposedthatinsteadofdepositingfullamountoftax,partialpaymentat25%oftheadditionalamountoftaxassessedshouldbeleviedsothatassessmentsarecarriedoutonmeritbasisrathertomeetthecollectiontargets.

BenefitItwillsavesignificantresourcesofcorporatetaxpayeraswellasre-buildconfidenceininvestingandgrowingtheirbusinessinPakistan.


4A. Streamline Collection of General Sales Tax

IssueMultinationalandmanylocalpublicbanksprovideelectronicpaymentfacilitiestotheirclientsfortheirpaymentprocesses.Thesebanksreceiveelectronicinstructionsfromclientsandtransferthemoney.PresentlytheNationalBankofPakistan(NBP)isprovidingthesefacilitiestocollecttaxonlytocustomerswhohavebankaccountsinonlinebranchesofNBP.Companies,whohaveavailedelectronicbankingfacilitiesthroughbanksotherthanNBP,are

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notinapositiontopaytaxesviatheirnormalpaymentsystemsandtheyhavetomaintainamanualpaymentsystemonlyforoneortwomonthlytaxpayments.

ProposalFBRshouldconvinceNBPtoprovideelectronicbankingfacilitiestotaxpayersfortaxpaymentswithoutrequiringtomaintainbankaccountswithNBP.

Oralternatively,commercialbanksbeallowedtocollecttaxfromtheircustomers(i.e.taxpayers)attheircountersasagentsofNBP.TheproceedscouldbetransferredtoNBPonamechanismsimilartonostro&vostroaccountsbetweenbanks.ThiswayNBPwillreceivethefundsonalmostrealtimebasisandonthefrontenditshouldresolveproblemsfacedbytaxpayers.

BenefitItwillsimplifytheprocesswithoutrequiringNBPtoinvestine-bankingandtoavailbenefitfromsynergiesofothersbankswhohavee-bankingfacilities.Thisproposalwillexpeditethetaxcollectionprocessandmakelifeeasierforcompanies.

4B. Streamline Collection of Withholding Taxes

IssueInMay2009,theFederalBoardofRevenueissuednewtougherguidelines,wherebyitwasstipulatedthattaxsodeductedbyapayermustbedepositedintotheGovernmentTreasurywithin7daysfromtheendofeachweekendingoneverySunday.This,effectivelymeansthataweeklydepositisnowrequiredtobemadebythepayerinsteadofthefortnightlypaymentunderthepreviousrule.

ProposalItisrecommendedthatpayersshouldbeallowedtodepositallwithholdingtaxdeductedduringthemonthonthe7thofthefollowingmonth.

BenefitThiswillresultintimesavingforthecompanies.WithholdingtaxeswillbedepositedintotheGovernmentTreasuryonamonthlybasiswithoutanylossofrevenuetotheGovernment.

4C. Electronic Filing of Return

IssueThroughtheFinanceAct2008,FBRmadechangesintheI.T.Ordinance2001toenabletaxpayerstofiletheTaxReturnelectronically.ThisisbeingfollowedbyCorporateTaxPayers.

IthasbeenobservedthatTaxAuthoritiesissuenoticesforfilingofreturnofIncomeattheirlocalofficeinhardformalso,alongwithallannexure.

Thisiscreatinghardshiptothetaxpayersasinsomecaseshardcopyofreturndulyauthenticatedbyauthorizedpersonarenotretainedorincertaincasesacknowledgementreceiptissuedafterfilingthereturnelectronicallyarenotretained.

ProposalTheFBRshouldissueclearinstructiontoalltaxofficesnottoinsistfilingofhardcopyofreturnafterithasdulyfiledelectronically.

BenefitThiswillbeagreatconveniencefortaxpayersaswellaspromotionofITcultureinthePakistan.

4D. Payments to Non Resident Persons under Section 152 of the Income Tax Ordinance,2001

IssueCurrently,lawrequirespayerstoseekwrittenpermissionfromthetaxauthoritiesatthetimeofmakingtechnologyandtrainingrelatedpaymentstoanon-residentpersonoutsidePakistanwithoutanydeductionoftax.Inrecenttimes,ithasglaringlybeenhighlightedthatthetaxauthoritiesareextremelyreluctanttoissuenilwithholdingtaxcertificatesthatwouldfacilitatesuchpaymentstonon-residentswithoutanytaxdeduction.Lawstipulatesthatafteranapplicationismadebythetaxpayerforanilwithholdingtaxcertificate,thetaxauthoritiesmustrespondtoitwithin30daysofreceivingtheapplication.Inreality,monthsgobywithoutanyresponsebeingreceivedandthisresultindelayedpaymentstoserviceproviderssituatedoutsidePakistan.

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ProposalItisrecommendedthatthetaxauthoritiesexamineeachapplicationreceivedforanilwithholdingtaxcertificate,andgiveitsdecisionbasedonthemeritsofthecasewithinthetimeframeof30daysasstipulatedinlaw.Incase,noresponseisreceivedfromthetaxauthoritieswithin30days,itwillbedeemedasacceptedbytaxauthoritiesfornilwithholdingtax.Thereisabsolutelynojustificationinnotrespondingwithinthe30daytimeframeallowedasthiscausesunnecessaryhardshiptotaxpayerswhohavetomeettheexpectationofnon-residentserviceproviderstomakethispaymentwithinareasonabletimeframe.

BenefitServiceprovidersoutsidePakistanmaystoptheexistingcontractormaynotbekeentorenewthesameaspaymentsarenotreceivedonatimelybasiswhichinturnwouldharmtheeconomyofthecountry.

4E. Unwarranted notices received u/s 176 of the Income Tax Ordinance 2001

IssueNumerousnoticeshavebeenissuedbyFBRthroughRegionalTaxOffices(RTOs),LargeTaxpayersUnits(LTUs),andothertaxationofficeforverificationofincometaxpaymentsbycompanieswhichsuppliedgoodsinprecedingyears.FBRisnowaskingthewithholdingtaxcollectingcompanies,ortosaythecompanieswhichhavedeductedthewithholdingtax,onreceivingsupplyofgoodsandservicesfromthecompanywhichhasrenderedservicesandsuppliedgoods.Thedetailsofthetaxdeductedbythemagainstthesupplyhavealreadybeenprovidedbythecompanieswhichhaverenderedservicesandsuppliedgoodstotheincometaxdepartment.Thistaxdeductedhasbeenclaimedbythesuppliersbyprovidingchallansoftaxdeductionandpaymentprooffromtherecipientcompaniestothetaxauthoritiesforclaimingrefunds.

Bothcompaniesintheirannualstatementshavealreadysuppliedthisinformationwhichisnowavailablewiththetaxauthorities.Henceitisfrustratingandsurprisingthatincometaxauthoritiesareaskingforre-confirmationoftheconfirmed

positionswiththembecausetheserefundsareclaimedtobeoflastandprecedingfinancialyear.

Thecompanieswhichhavebeenissuednoticeshavebeenfurtherwarnedthatincasetheydonotprovidetheevidencewherebythetaxsocollectedfromthetaxpayerhasbeendepositedinthegovernmenttreasury,taxpayerwillnotclaimcreditofsaidtax.

Thishascreatedtremendousworkloadpressureonthecompaniestoreconcileandprovidethesameinformationwhichwasalreadyprovidedbefore.

ProposalItisrecommendedthatverificationoftaxchallansbemadethroughtheFBRelectronicsystemasthetaxpayersarefilingthetaxdeductionstatementsonmonthlybasiswhichalsocontainstheinformationoftheTaxPaymentReceiptNumbers.Suchnoticesshouldbeonlyissuedincaseswherethetaxpayerhasnotalreadysubmittedtheinformation.

BenefitThiswillhelpreduceunnecessaryworkloadonthecompaniestoprovidethesameinformationtwiceandletthemfocusonvalueaddedwork.

4F. Average Rate of Tax on Severance Payments

IssueSeverancepaymentstoemployeesaretaxableinthehandsofindividualatlastthreeyearsaveragetaxrate,asprovidedundersection12(6)oftheordinance.Howeversection149requiresemployerstowithholdtaxfromsuchpaymentsatthecurrentratesoftax.Thisgivesrisetolargerefundsforindividualemployeesinmostcaseshavetobeunnecessarilypursuedandtakealongtimeandlotsofeffortstorealize.

ProposalSection149beamendedtoprovidewithholdingoftaxonseverancepaymentsataveragerateoflastthreeyears,asprovidedinsection12(6)oftheordinance.Further,section149beamendedtoauthorizeemployertoadjustrefundsduetotheemployeeasperreturnfiled.

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TAXATION PROPOSALS FOR FEDERAL BUDGET 2012-13BenefitsJustandequitablewithholdingtaxregime,eliminatingunnecessaryhardshipsforsalariedindividuals.Similarly,adjustmentofrefundswouldalsohelptheemployeestogetthebenefitofinstantly,insteadofgoingthroughthecumbersomeprocess.

4G) Tax Challan Verification

IssueVidesection176,taxauthoritiesareempoweredtocallforanyinformation/documentsfromassesseesasandwhenrequired.Thisalsoincludesverificationoftaxdeductedatsource,taxdeductionchallanandtaxcertificatesissuedtodifferentvendors

Despiteimplementationofelectronic/automaticfilingofmonthlyandannualstatementsoftaxdeductionandmaintenanceofdatabaseatPRAL,noticesundersection176arestillissuedtothetaxpayersforverificationofdataalreadyavailableatthePRAL.Thisresultsinduplicationandunnecessaryhassleforthetaxpayers.

ProposalItisrecommendedthatFBRshouldusethedatacollectedandcompiledatPRALforverificationoftaxpaymentsbytaxpayers.

BenefitMinimizedpaperworkandlowernumberofnoticesissuedislikelytofacilitatetaxpayers.

5. CORPORATE TAX RELATED5A) Advance Tax (Section 147)

IssueSection147oftheOrdinancerequirescompaniestopayadvancetaxonthequarter’sturnoverinthesameproportionasthetaxassessedforthelatesttaxyearbearstothetotalturnoverforthatyear.Incasetaxpayerfailstopayadvancetaxorthetaxsopaidislessthan90%ofthetaxchargeablefortherelevanttaxyear,additionaltax@KIBORplus3%perannumisleviedontheamountoftaxsochargeableortheamountbywhichthetaxpaidbythecompanyfalls

shortofthe90%asthecasemaybe.

FurtherthroughtheFinanceAct2010achangehasbeenintroducedinthepaymentdatesofadvancetaxi.e.25thdayofeachquarter;whichbeforetheamendmentswas15thoffollowingmonthofeachquarter.

Thisrequirementisveryharsh,asitrequirescompaniestomakehugeamountsofadvancetaxpaymentsatanearlystagethuscausingcashflowissues.Ifrefundsareexpectedatfinalizationofassessmentorderstage,thetaxofficemayresorttomakingarbitrarydisallowancesnegatingtherefundsituation.

ProposalDuetouncertaintyofeconomicandpoliticalconditioninPakistanitisverydifficulttoestimatethetaxableincomeinthesevolatiletimes.Itisrecommendedthat

• Itisrecommendedthatpreferablythelawbe changedtotheone,whichwasinforcebeforethe 2006FinanceActamendmentwherebyacompany wasrequiredtopayadvancetaxequaltoone fourthofthetaxliabilityfinalizedforthelatesttax year;OR

• Thebenchmarkof90%shouldbereducedtoat least75%andtheadvancetaxpaymentdates shouldbebroughtbacktopreviouspositioni.e., 15th.offollowingmonthofeachquartertoallow adequatetimeforestimation.

Benefit Helpsimplifyandstreamlinetaxprocessforgoodcorporatecitizensandwilleasecashpositionofthecompany.

Further,itwilleliminatetheimpositionofadditionaltaxduetoestimationvariance.DuetouncertaintyofeconomicandpoliticalconditioninPakistanitisverydifficulttoestimatethetaxableincomewith90%accuracy.

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TAXATION PROPOSALS FOR FEDERAL BUDGET 2012-135B) Long Outstanding Refund

IssueIncometaxrefundsforthetaxyearsfrom2001to2003arisenduetodeductionoftaxu/s50(4)oftherepealedordinance1979onaccountofsuppliesofgoodswhichweresubjecttodoubletaxationattheimportstageandwithholdingtaxatthesalestagehavebeenaseriousproblemforthetaxpayers.

However,FBRauthoritiesrealizedthispracticalproblemofdoubletaxationandissuedaspecificSROwherebyitwasdirectedtoconcernedauthoritiestorefundtheamountcollected/deductedonaccountofsaleofgoods.

Somepartialrefundshavebeenreleasedafterfulfillingthespecifiedcriteria.However,thebalancerefundsarestillpendingwithFBR.

ProposalTheselongoutstandingrefundsshouldbedisbursedattheearliest.

BenefitThiswillhelpbuildinvestorconfidenceandprovidemuchneededcashforinvestinginbusinessactivities.

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ABC SUGGESTIONS FOR TRADE POLICY 2012-13

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ANNEXURE - B

INDEXA. Improving Investment ClimateA1. ImprovementInInfrastructureA2. ImprovementInEnvironment

B. Encouraging Exports And Lowering Cost Of Local IndustriesB1. HighUtilityCostOfLocalIndustriesB2. TransparencyInUseOfFundsOfExport DevelopmentFund(Edf)B3. ExportDutyDrawback-RatesAndDelayed RealizationB4. AnomaliesInCustoms&RegulatoryDutiesB5. EnhancedExportCompetitivenessFor PharmaceuticalProductsToAfghanistan

C. Import Policy – GeneralC1. PowerGeneration-Duties&TaxesOnCo- GenerationEquipmentC2. CustomDutiesOnSparePartsAndMachinery NotManufactured/ProducedLocallyC3. ProcurementSystemToBringTransparency AndEfficiencyInGovernmentPurchases

D. Industry Specific – PharmaceuticalD1. ShelfLifeRestrictions:PharmaceuticalRaw MaterialsAndFinishedProductsD2. LowerHealthCareCosts–MedicalTesting/ Diagnostic/LabReagentsD3. SimplificationOfApprovalProcessFor ImportOfRawMaterialsForThe PharmaceuticalIndustryD4. DressingAndAppliancesIdentifiableFor OstomyUse

D5. NeedForReductionOfCustomDuties/Sales TaxOnTheImportOfRawMaterialsForDaily ConsumptionD6. NeedForAutomaticQuotaRe-AllotmentOf PsychotropicDrugsD7. WithdrawalOfTaxesAndLeviesOn PharmaceuticalIndustryD8. PriceFixation

E. Trade AgreementsE1. AfghanTransitTradeE2. TradeWithIndiaE3. BitE4. TradingBlocsE5. StrategyTradePolicyFramework


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A. IMPROVING INVESTMENT CLIMATE

A1. IMPROVEMENT IN INFRASTRUCTURE

IssuePakistan’sstrongeconomicgrowthduringthelast6yearsandtheprojectedgrowthrateisforecastataround3%.However,duetolackofproperinfrastructureespeciallyroads,nationalhighways,railwaysandlogistics,includingportsandwarehousing,industryandtradeareseverelyimpacted.Severeshortageofpowerandgasisyettobemitigated.Notonlyisthecostofdoingbusinessnegativelyimpacted,thecountryisalsofindingitdifficulttobegloballycompetitive.

ProposalWerecommendthatthegovernmentshouldgivehighprioritytothedevelopmentofproperinfrastructureandimmediatelyformahighlevelCommitteefrompublic-privatesectorsdirectlyreportingtothePrimeMinister.RepresentativesandChairmenofChambersofallmajorcitiesshouldbegiven50%participation.Fromthegovernment,ChairmenofrelevantmajorpublicsectororganizationsshouldparticipatealongwithSecretariesofrelevantMinistries.ThisCommitteeshouldmeetwiththePrimeMinisteronaquarterlybasistoprioritizemajorinfrastructuredevelopmentprojectsandreviewtheirprogress.

BenefitThisproposalwillgreatlyspeed-upthedevelopmentworkforallkeyinfrastructureprojects,synchronizethecriticaldevelopmentamongtheprovincesandfacilitateindustryandtradebyreducedcostofbusinessaswellassignificantlyenhanceglobalcompetitivenesswhichisessentialinmaintainingthehighgrowthratesprojectedduringnext5-10years.

A2.IMPROVEMENT IN THE ENVIRONMENT

IssueInindustrialestates,seriousenvironmentproblemsarebeinghighlightedbutverylittleisbeingdonetocontrolthem.Theissuesincludecollectionanddisposalofhazardouswastes,treatmentofindustrialsewageandinadequatecapacityofGovernmentrunincineratingplants.ToavoidfurtherdegradationoftheenvironmenttheGovernmentmustimprovefacilitiestosafelyhandletheindustrialwastes.Also,theGovernmentmustactivelyencourage/facilitatetheindustriestomaketheappropriateinvestmentsformeetingenvironmentalstandards.Proposal1. Toencourageallindustriestoprotectthe

environmentbymeetingNEQSstandardswerecommendthatallplants,machineryandequipmentsthatareimportedwiththerecommendationofthePakistanEnvironmentalProtectionAgencyareexemptfromallCustomDutiesandSalesTax.

2. Developamechanism&regulatoryframeworkforpromotionofcarbonoffsetandcarbontrading.Inthelarger,compliancemarket,companies,governments,orotherentitiesbuycarbonoffsetsinordertocomplywithcapsonthetotalamountofcarbondioxidetheyareallowedtoemit.

Offsetsaretypicallyachievedthroughfinancialsupportofprojectsthatreducetheemissionofgreenhousegasesintheshort-orlong-term.Themostcommonprojecttypeisrenewableenergy,suchaswindfarms,biomassenergy,orhydroelectricdams.Othersincludeenergyefficiencyprojects,thedestructionofindustrialpollutantsoragriculturalbyproducts,destructionoflandfillmethane,andforestryprojects.Someofthemostpopularcarbonoffsetprojectsfromacorporateperspectiveareenergyefficiencyandwindturbineprojects.


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Benefit• Industrieswouldreadilymakeinvestmentsinto

Plant,MachineryandEquipmentsthatprotecttheenvironment.

• Helpsinminimizingrisks• Industriesmakebetterproductsandservices• Inthelongrunresultsincostsavings–energy,raw

materialetc• HelpsinattractingandretainingemployeesB. ENCOURAGING EXPORTS AND LOWERING COST OF LOCAL INDUSTRIES

B1. HIGH UTILITY COST OF LOCAL INDUSTRIES

IssueLocalindustryutilitiescostsarehighlyinflatedwhichleadstoPakistanicompaniesbeingunabletocompeteinmanufacturingcostsversuscompaniesinothercountries.Chargesofelectricityandgashavesubstantiallyincreasedthecostofdoingbusinessinthiscountry.Thecombinationofgenerationcost,transmission&distributioninefficiencieshaveexcessivepowertariffforindustriesbothlocalandexportoriented.

ProposalWhileweencouragetheGovernmenttomeetinternationalcommitments,weproposeatariffreductionthrough:OrganizationalProductivity;TheftlossminimizationandRecoveryofdues

BenefitsLowerinputcosttolocalindustrieswouldhelp:• Improveexportperformancethroughenhanced competitiveness• Allowthecountrytorealizeitsexportpotentialby leveragingitsinnateskillsinbothtraditionaland non-traditionalexports.

B2. TRANSPARENCY IN USE OF FUNDS OF EXPORT DEVELOPMENT FUND (EDF)

IssueTheexportdevelopmentsurcharge(EDS)isleviedonallexportsattherateof0.25percentofthefobvalueofgoods.AsperlawentirereceiptsofEDSaretransferredtoExportDevelopmentFund(EDF)inthefollowingyear.Thegovernmentistousethesefundsforimplementationofmeasurestofacilitateandenhanceexportsfromthecountry.

Thefinanceministryhadwithheldtheamountscollectedfromexportproceedssince2005-06,whichhavebeendivertedtoothersectorstomeetbudgetdeficit.Asperofficialstatistics,theEDScollectedRs18.82billionsince2005-06.OfthisonlyRs7.89billionhadsofarbeenreleasedtocommerceministryleavingRs10.9billionstuckupwithfinanceministry.For2009-10and2010-11thegovernmentcommittedRs2.5billionforimplementationofthetradepolicyinitiative.Ironicallynofundwasreleasedin2009-10andonlyRs1billionwasreleasedin2010-11

ProposalTheEDSproceedsshouldbedirectlycreditedtoStateBankofPakistanforonwarddisbursementtoministryofcommenceinsteadofbeenroutedthroughministryoffinance.Themoneycollectedfromexportersbeutilizedforenhancingofexports

BenefitWiththeinitiativesofthetradepolicybeenimplemented,theexportsearningswillincreaseformeetingtherisingrequirementsofforeignexchangeandminimizingtheneedtoseekloanstobuildupforeignexchangereserves


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B3. EXPORT DUTY DRAWBACK RATES AND DELAYED REALIZATION

IssueItiscustomaryfortheGovernmenttoissueDutyDrawbackratesthroughSROforexportsafterconsultationwiththeconcernedindustry.Contrarytothis,onSeptember11,2007SRO931(I)/2007andsupersededbySRO212datedMar5,2009wasissuedwithoutconsultingthePharmaceuticalIndustrywhichfurthersignificantlyreducedtheratesthatwereapplicablethroughSRO787(I)/2005datedAugust06,2005.Thecomparisonofthedutydrawbackratesisasfollows:

Thereductionintheratesisjustifiediftheimportdutyofinputmaterials(rawandpackaging)hadbeenreduced.Therehasbeennosuchchangeintheimportdutytariffonmaterialinputsforexportproducts.

Furthermore,theExportersfileRebateClaimsontimetoCustomsHousebuttheprocessofverifyingclaimsandissuanceofchecksisunnecessarilydelayed.

ProposalItisproposedthattheratesasperSRO787(I)/2005datedAugust6,2005shouldberestoredandifanychangesaretobemadethenthisnotdonearbitrarilybutmustbeafterconsultationwiththerespectiveindustries.

Also,theremustbeclearandtransparentsystemoffinalizingExportDutyDrawbackClaimsandthe

issuanceofchecks.TheCustomsmustestablishagreedtimelines,monitorandadheretothem

Benefits

• Increaseexportsthathelptomeetcompanyand nationaltargets.• Exportsarecompetitiveinthemarketplace.• RealizationofontimeExportRebateswillreduce themoneytieduptherebyreducingthecostof exportproducts.

PharmaceuticalProducts SRO787 SRO931supersededbySRO212

TabletsandCapsules 3.14% 1.32%Liquidsorpowderorsyrupsorsuspensionordropsorgranulesinbottles

1.90% 1.15%

Creamsorointmentsorgels 2.32% 1.20%Injections 2.39% 1.29%Intravenoussolutions 1.23% 1.05%

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ABC SUGGESTIONS FOR TRADE POLICY 2012-13B4. ANOMALIES IN CUSTOMS & REGULATORY DUTIES

IssueIntheFY2008/09fiscalbudget,certainpolicymeasuresweresuddenlyintroduced,includinganad-hocincreaseinCustomdutiesonarangeofproducts,thatraisedthecostofdoingbusinessaswellasinflationarypressuresinPakistan.

ThishighlightsanongoingproblemforbusinessesinPakistan,whodon’thavevisibilityonCustomDutyratesintheshort,mediumorlongtermandcanoftenbesurprisedbybudgetarymeasurestakenonayearlybasis.

Furthermore,theexorbitantlyhighratesofcustomdutieshavedisruptedthelevelplayingfieldbetweenlocallyproducedandimportedgoods.Thishasprovidedunnecessaryprotectiontothelocalindustry,whichmayleadtooperationalinefficienciesaswellasopeningthefloodgatesforsmuggling.SmugglingandunderinvoicingmayprosperwhereCustomDutiesarehigh,evenanhonestbusinessessuffer.

Proposal1. Itisproposedthatthecustomdutyratesshouldbe

restoredbacktotheFY2007/08levels.2. Thereshouldbenoacrosstheboardincreasein

CustomsDutiesforanycategoryofproducts.3. Wesupportthegovernment’sinitiativetofurther

rationalizeandbringdowndutyrates.Inaddition,thegovernmentshouldshareaglidepathforCustomsDutyrationalizationovera3-5yeartimeframetofacilitatebusinessdecisionmaking.

4. TheCustomsauthoritiesshoulddeveloprobustsystemstoenforceIPRlawstoprotectbusinessesagainstsmugglingandcounterfeitproducts.ForexampletherighttoimportregisteredbrandsiswiththeBrandownercompaniesonly.

BenefitSuchapositivemovebytheGoPwouldbeawin-winfortheconsumers,GoPandindustryofPakistan.Itwill:

• Reduceroomforparallelimportersand counterfeiterstooperateandonlylegitimate

playerswillflourishincreasinginthetotal revenuecollection• Enablelocalindustrytobecomeefficientandcost effectivewithouttheneedfordutyprotection• Reducetheinflationarypressureandreducethe burdenonlowersocioeconomicclasses.

B5. ENHANCED EXPORT COMPETITIVENESS FOR PHARMACEUTICAL PRODUCTS TO AFGHANISTAN

IssueTheexportmarketforpharmaceuticalproductstoAfghanistanisexpandingrapidly.Currently,allexportstoAfghanistanwhichareinvoicedinPakistanicurrency(Rs)areexcludedfromexportrebateasperExportPolicyOrderSRO767(I)/2009datedSep04,2009underpara7.

ProposalItisproposedthatPharmaceuticalproductswhenexportedtoAfghanistanandinvoicedinPakRupeesbealsoallowedExportRebatethatisinlinewithotherconvertiblecurrencies.ThereisminimalchanceoftheseproductsflowingbackintoPakistanastheindustryishighlycontrolledbytheMinistryofhealth.

Benefits• Increaseexportsthathelptomeetcompanyand

nationaltargets• Competitivelypricedexportsinthemarketplace

C. IMPORT POLICY - GENERALC1. POWER GENERATION - DUTIES & TAXES ON CO-GENERATION EQUIPMENT

IssueDespitemuchpublicizedclaimsregardingimpendingimprovementinpowergenerationanddistributionbypreviousandpresentregimes,thepowersituationinthecountryisfarfromimproved.Theelectricutilitycompaniesareill-equippedtomaintainexistingpowerplantsandhandletherisingpowerdemandinthecountry.

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Awayoutofthisproblemistopromoteonsiteself-generation,bysettingupCo-generationbasedpowerplantsinindustry.Thissolutionnotonlyrepresentsbetterutilizationofcountry’sdiminishingfuelreservesbutalsoprovideshighersystemefficienciesthanconventionalgeneratorbasedpowerplants(75%vs30%).

Undertheexistingrulesco-generationequipment(H.S.Code8502.3900)importedpresentlyhasadutycomponentof5%.

ProposalAlltypesofco-generationequipmentshouldbemadedutyfree.

BenefitsThiswillencourageindustrytosetuptheirowngenerationunitstherebyreducetheloadonpublicutilitycompanies.

C2. CUSTOM DUTIES ON SPARE PARTS AND MACHINERY NOT MANUFACTURED / PRODUCED LOCALLY

IssueAtpresentimportdutiesareapplicableat5%onmachineryandequipment‘notlocallyavailable’andimportedintothecountryforsettingupindustry.Evenat5%,thisimportdutyisunnecessarilyburdeningcompanieslookingtomakelargescaleinvestmentinthecountry.Globally,variouscountriesareofferingattractiveincentivestoindustriestoencourageFDI.Someexamplesare:

i) SouthAfricahas0%importdutyslabonplant machineryandequipment.ii) Nigeriaisofferingaschemetoinvestorsforduties andVATexemptionsoncapitalequipment.iii) InMoroccogovernmentisofferingtailormade solutionstoseriousinvestorsinthecountryand theinvestorscanalsonegotiateinvestmentdeals withthegovernment.

ProposalItisrequestedthatanewdutyslabofzeropercentbecreatedforallindustryrawmaterials,machineryandequipmentnotmanufacturedlocallyorforwhichlocalequivalentsarenotavailable.

BenefitThispolicymeasurewillbeapositivestepinattractingmuchneededForeignDirectInvestmentintothecountry,especiallyinthemanufacturingsector.ItwillreducethecostofproductionandmakePakistaniproducedgoodscompetitiveindomesticandexportmarkets.Moreover,thiswillnothurtthelocalindustryasdutyrateswillonlybereducedonmachineryandequipmentnotproducedlocally.Theproposedchangeoffersabetterinvestmentclimateinthecountrywhichwouldultimatelyleadtoincreasedinvestmentincountry’sinfrastructureandhumanresource.

C3. PROCUREMENT SYSTEM TO BRING TRANSPARENCY AND EFFICIENCY IN GOVERNMENT PURCHASES

IssueProcurementinGovernmentdepartmentsiscarriedoutthroughamanualtenderingprocess.Thecompleteprocessrequiredalongchainofinternalauthorizationsandscrutiny(attimesinvolvingseveraldepartments),severalvisitsbysupplierstodepartments,andthegenerationofreamsofpaper-basedstatementsandevaluations.Themanualtendersystemissufferingfromthefollowingdeficiencies:

Discrimination and delay in issue of tender schedules to suppliers:Govtdepartmentscontroltheissuanceoftenderdocumentstothebidders,afterverifyingtheirapplications.Thereexistsanelementofsubjectivityanddiscriminationinthisprocess,inadditiontodelaysinthepreparationoftenderschedules.

Cartel formation to suppress competition:Throughdubiousmeans,theparticipatingbiddersgatherthelistofprospectivebiddersforaprocurementrequest.Theyusethisinformationtolobbyforformationofsyndicatesorcartelsandbidathigherquotations.


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Tampering of tender files:Forthepurposesofevaluation,thebiddocumentsaretransportedacrosstheadministrativehierarchy,whichintroducestheriskoftamperingorlossalongtheway.Thetransportationofbiddocuments,manuallyandthroughsurfacemail,isalsoatimeconsumingactivity.

Delays in finalization of tenders:Redtape,lackoftransparency,andmanualmovementoffilesacrosstheadministrativehierarchyisresultingininordinatedelaysinthefinalizationoftenders.Thesedelaysarecontributingtocostandtimeoverrunsfortheprojects.

Human interface at every stage:Themanualsystemexposesthedepartmentalpersonneltothebiddersateverystageoftheprocess.Suchrepeatedcontactbetweenbiddersanddepartmentalstaffcouldleadtosubjectivity,favoritismandotherundesirablepractices.

Lack of Transparency:Procurementisconsideredasensitivefunction,withallrelatedinformationtightlycontrolledandcloselyguardedbygovernmentdepartments.Thislackoftransparencyleadstomisinformationandalackoftrustinthesystembythebidders,mediaandthecitizens.

ProposalTheaboveissuecanbetakencareofbyimplementationofe-ProcurementbestpracticesthatshouldbeadoptedbytheGovernmentofPakistan.Thesebestpracticeswillbeimplementedwiththehelpofanautomatede-procurementsystem.Benefitsofsuchaprocurementsystemarehighlightedinthefollowingsection.TheElectronicGovernmentDirectorateofMinistryofIThasalreadyconductedanexercisethoughanindependentconsultingfirmandhascomeupwithsuchaprocurementframework.Allthatisneedednowistoimplementthissystem.

BenefitsThesevereshortcomingsinthemanualtendersystemhaveanadverseeffectonthereputationofGovernmentdepartments.Delaysinthefinalization

ofsuppliersformaterialsandservicesforgovernmentprojectshadcripplingimpactsonthecompletionofprojectsanddeliveryofservicestothecitizens.

Automationoftheprocurementtransactionsreduceshumanerror,enhancestheintegrityofthedata,bringsintransparencytotheGovernmentprocurementsandfacilitatesstandardizationofprocesses.

Theentiree-Procurementprocessshouldbedesignedtoavoidhumaninterfacei.e.,supplierandbuyerinteractionduringprebiddingandpostbiddingstages.

Theautomatedprocessesandworkflowswillimproveinternalefficiencywithinthedepartments;shortentendercycletimes,eliminatesubjectivityintheevaluationoftenderswithsystembasedautobidevaluations,andreducecorruption.

Reduction in tender cycle time:Todaythedepartmentstake90-135daysforfinalizationofhighvaluetenders.Thetendercycletimecangraduallycomedowntoanaverageof42daysoveraperiodofoneyearandfurtherreducedto35daysattheendofthesecondyear.

Reduction in opportunities for corrupt practices:Theentiree-Procurementprocesscanbedesignedtoeliminatethehumaninterfacei.e.,supplieranddepartmentinteractionduringprebidandpostbidprocessescanbeminimized.Theautomatictenderevaluationfunctionalitywillreducesubjectivityintenderevaluationandhelptocurbopportunitiesforcorruptpracticestoasignificantextentandincreasetheaccountabilityofprocurementofficials.Intermsoftransparency,asupplierparticipatinginatenderknowsthelistofotherparticipatingsuppliers,thedocumentsfurnishedbyhiscompetitors,pricequotationsandtheevaluationresult,assoonasastageiscompletedbythedepartmentsinthesystem.

Cost Savings:OnewaytoestimatecostsavingsistocomparethepercentagediscountofTenderedContractValueovertheEstimatedContractvalueforservicecontractsawardedbeforeandaftertheimplementationofthee-Procurementsystem.


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TendersprocessedinanothercountryofSouthAsiathroughthee-Procurementplatforminthepilotphaseduring2003-04,thefirstyearoftheinitiative,yieldedareductionof16%inthequotationsincomparisontothepreviousyearswhentheprocurementwasmanual.

More CompetitionTheprojectencouragesbidderstoparticipateingovernmenttenders.Supplierparticipationwillincreasefromanaverageof3pertenderinconventionalmodeto4.5ine-Procurementmode.Thecartelsareeliminatedandevensmallandmediumsupplierswillbeabletobid.

D. INDUSTRY SPECIFIC - PHARMACEUTICALD1. SHELF LIFE RESTRICTIONS: Pharmaceutical Raw Materials and Finished Products

IssueSRO766(I)/2009datedSep04,2009allowsimportofPharmaceuticalRawMaterialsandFinishedGoods,ontheconditionthatthesematerials/goodshaveatleast75%RemainingShelflife,atthetimeoffilingtheImportGeneralManifest(IGM).This75%shelfliferestrictionisverydifficulttofollow,sincesometimesthemanufacturersdonothavethematerials/goodsavailablewith75%ShelfLife,andhavetowaitforfreshbatches,formanymonths.Thisdelaysproduction,shortageofessentialpharmaceuticalproductsinthemarket.

ProposalThepharmaceuticalshelfliferestrictionshouldbechangedtomorethan50%asisthecaseinEdibleProducts.

BenefitsThiswillfacilitatethetimelyavailabilityoflife-savingpharmaceuticalpreparationstosufferingpatientsaswellasthesmoothoperationsofpharmaceuticalplantswithuninterruptedsuppliesofrawmaterials.

Note:Thepharmaceuticalrawmaterialisconsideredcorrectlyusedevenifusedattheveryendofitsusefullife.

D2. LOWER HEALTH CARE COSTS – MEDICAL TESTING / DIAGNOSTIC / LAB REAGENTS

IssueThereisaCustomsDuty@20%andSalesTax@16%onCompositeDiagnosticRe-agents(H.S.CodeNo.3822.0000)beingusedinthelaboratoryformedicaltests.ItmaypleasebenotedthatpriortoFinancialbill1997-98,CustomsDutywas15%andSalesTax12.5%onthesame.

ProposalTheGovernmentwouldstrivetohelpthecommonpeopleintheareaofmedicalcoverage.Tofurtherthisobjective,itissuggestedtoremovesalestaxhowevercustomdutyshallbereducedfrom20%to10%.ThiswouldbeexactlyinlinewiththecurrenttariffapplicableonimportofpharmaceuticalpreparationsofChapter30.

Also,itistobenotedthatloweringofdutywillnotaffectlocalindustryastheseCompositeDiagnosticRe-agentsarenotproducedinPakistan.

BenefitsThiswouldhelpinprovidingmedicalfacilitiestothecommonpeopleatcheaperrates

D3. SIMPLIFICATION OF APPROVAL PROCESS FOR IMPORT OF RAW MATERIALS FOR THE PHARMACEUTICAL INDUSTRY

IssueSomerawmaterialshavebeenplacedunderAppendixBofImportPolicyOrderSRO766(I)/2009datedSep04,2009.Inordertoimportthese,thePharmaceuticalIndustryfirsthastogettherequiredquantityassessedbytheMinistryofHealthandthenobtainaNoObjectionCertificatefromtheMinistryofNarcoticControl.

Similarly,MinistryofScienceandTechnology,GovernmentofPakistan,hasenforcedthatsugaralongwiththeother19articlesshallalsobereferredtotheauthorityforConformityAssessmentReport


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(CAR)whichmaytakeadditional2weeksormoreforclearance/utilization.

ProposalAsthepharmaceuticalindustryisahighlyregulatedindustryalladditionalapprovalsshouldbeissuedthroughasingleauthority,i.e.MinistryofHealth,whichwillbeonewindowandasimpleroperation.

BenefitsSimplifyprocessingofrawmaterialimportsformanufacturersandemploymentoflessadministrativeresourcesbytheGovernmentofPakistan.

D4. DRESSING AND APPLIANCES IDENTIFIABLE FOR OSTOMY USE

IssueFollowingAppliancesandDressingsforOstomyusehaveaCustomDutyandSalesTax:HSNo:3006.91CustomsDuty20percent&SalesTax16percentHSNo:3005.109CustomsDuty25percent&SalesTaxFree

ProposalFortheaboveHSNoCustomsDutyandSalesTaxshouldbeasperinthecaseofPharmaceuticalpreparationsunderChapter30.ThatisCustomDutyissuggestedtobereducedto10%andwithnoSalesTax.

BenefitsThiswouldhelpinprovidingmedicalfacilitytothecommonpeopleatcheaperrates.Also,itistobenotedthatloweringofdutywillnotaffectlocalindustry,astheseproductsarenotproducedinPakistan.

D5. NEED FOR REDUCTION OF CUSTOM DUTIES/SALES TAX ON THE IMPORT OF RAW MATERIALS FOR DAILY CONSUMPTION

IssueRawmaterialcostshavebeensteadilyincreasingintheinternationalmarketandthepricingofmostconsumergoodshavebornethebruntofthisincrease.

Additionally,inthelastfewyears,theindustryhasadvancedsignificantlywiththeusageofnew,highqualityrawmaterialstoprovidebetterproductbenefits.

Unfortunately,theburdenisplacedontheconsumer,especiallyintermsofbasicgoodssuchassoap,detergents,toothpasteanddiapers.

ProposalItissuggestedthatthegovernmentshouldreducecustomdutiesontheimportofallrawmaterialsusedforallconsumergoodssothatthemassiveimpactcausedbytheriseininternationalpricesofrawmaterials,isnotseverelyfeltbyattheconsumers’end.Weproposecustomdutiesbebroughtdownonrawmaterialsinthenextbudgetandcascadedannually.

BenefitThisreliefwillensurethattheendpricetotheconsumerinPakistanisnothitbyanunaffordablelevelofinflation,whilesimultaneously,manufacturingcompanieswillbeencouragedtocontinueimprovingthequalityandeffectivenessoftheirproductsbybeingabletousethebestrawmaterialsavailableglobally.

D6. NEED FOR AUTOMATIC QUOTA REALLOTMENT OF PSYCHOTROPIC DRUGS

IssueCurrentlyallcompaniesmanufacturingpsychotropicdrugs,aresubjecttoanannualre-approvalprocessforthesedrugs

ProposalItissuggestedthatcompaniespreviouslyallottedaquotashouldautomaticallygetarenewalforthatamounteveryyear.Forquotaenhancementsonly,shouldtheneedfordetaileddocumentationarise.Companieswhosetrackrecordwithrespecttoinformationrelatedtoconsumptionandtheirreconciliationarealwaysaccurate;thosecompaniesshouldbeallowedtoapplyforthenextyearquotaafterconsumptionof75%ofthecurrentyearquota.ThiswillgivesufficienttimebothforDRAandthecompanyfromwhere


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weareimportingtheNarcoticMaterialstocompletetheentirenecessaryrequirementrelatedtoregulatorypermissionbeforetheshipmentofthematerials.CurrentpracticeofentertainingtherequestfromthecompanyafterendofthecalendaryearorbeginningoftheNewYear,boundtotake2-3monthsprovidedifwegetthepermitonfirstofJanuary.Bythetimeallthenecessaryrequirementbothlocallyandalsobythecompanyfromwherewearesourcingthematerials,wewillnothavethematerialsbeforeMarch/April.ThereforethismakeslotofsensethatDRAshouldstartworkingontheissuanceofpermitonthebasisof75%consumptionofcurrentyearquota.Thiswillsavelotoftimeandtherewillbenodelayinavailabilityofthepsychotropicdrugsandwillbecontinuouslysupply.

BenefitsAlotoftime,energyandliveswillbesavedifcompaniescansaveontheprocedureforre-allotmenteachyear.

D7. WITHDRAWL OF TAXES AND LEVIES ON PHARMACEUTICAL INDUSTRYIssueAlotoftaxesandlevieshavebeenappliedonthepharmaceuticalindustrywhichmakeitdifficultforthemtocontinueproductionespeciallyoflife-savingdrugs.

ProposalAlltaxesandleviesshouldbewithdrawnonthepharmaceuticalindustry–particularlythelife-savingdrugs.

BenefitsThiswillmakeproductsaffordableandavailableforallpatientsonanas-and-whenneedbasis.

D8. PRICE FIXATION

IssuePricefixationinthepharmaceuticalindustryatthemomentisnotin-linewithcompetition,hurtinglocalindustry.

ProposalIn-linewithIndianpolicies,thepricefixationofproductsshouldbeleftoncompetitionexceptforlifesavingdrugs.

BenefitsEaseofproductionandbusinesscontinuityforpharmaceuticalindustry.

E. TRADE AGREEMENTS

E1. AFGHAN TRANSIT TRADE

IssueUnderAfghan-PakTradeandTransitAgreement(APTTA)allowedshippingtruckstotransitgoodswithinbothnations.Totackletheissueofunauthorizedtrade,bothcountrieshadagreedtoinstalltrackingdevicesontransportunitsandcustomsinformationsharing(ITdataandothers)shouldbedone.Inaddition,itwasalsoagreedthatfinancialguaranteesequaltotheamountofimportleviesofPakistanwillhavetobedepositedbyauthorizedbrokersorcustomsclearingagents,whichwillbereleasedafterthegoodsexitPakistan.Contrarytothis,AfghanTransitTrade(ATT)iscausingunlimiteddamagetothePakistaneconomyasgoodswhichareimportedtobeusedinAfghanistanonlyarefreelyavailableinthePakistanmarketwithoutanycustomsorimportduty.Verylittleisbeingdonetocontrolthisdespitewrittenagreementonpapers.

Proposal1. CustomsproceduresandCross-boarderrules shouldbepublishedfortransparency.2. ContainerscomingbackfromAfghanistanshould becheckedbycustoms.3. Thereshouldbeanegativelistofitemswhichare notutilizedinAfghanistan;yetareimportedand maketheirwayintoPakistan.4. Streamliningofbordercrossingprocedureson financialguaranteebybanksandanti-corruption measures.5. EstablishformalBankingchannelforeffective clearanceandsettlementsystemtodocument tradeflows.


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Benefits• Itwillhelpreducecross-bordersmuggling, increasegovernmentrevenuesfromlegitimate trade.• Thegovernmentwillreceivesubstantialtaxesas thedomesticproductionwouldincrease.• Thishelpsinreducingunemployment.

E2. TRADE WITH INDIA

IssueTheGovernmentofPakistanhasissuedmanyconflictingsignalsontradeliberalizationwithIndia.Thiscreatesanuncertainenvironmentforbusinesses,whichdon’thavefullvisibilityontradeprospectswithIndia.ProposalItisrequestedthatthegovernmentundertaketransparentdecisionmakingwithrespecttotradeliberalization,viasharingthenegative&positivelistsoftradewithIndiaaswellasthespecifictimelinesfortradeliberalization.

BenefitsIfthegovernmentensurestransparencyindecisionmaking,itwillengagebusinessstakeholdersintheprocessmorecompletelyandenablethemtocreatewinningsolutionssituationforallstakeholdersvis-à-vistradewithIndia.

E3. BIT

IssueDespitethefactthatPakistanisaUSallysince2001ithasfailedtoattractsizeableinvestmentfromtheUS.ItcouldnotevengaineasyaccesstotheUSmarkets.Incontrast,thecountrysufferedbillionsofdollarsintermsof“lost”investmentopportunitiesandsocialunrest.Bilateralinvestmenttreatiesessentiallygiveconfidenceandsafetytotheinvestorsthattheirpropertyandinvestmentwillnotbeexpropriated/nationalized.However,theBITismarredbyalackofknowledgeandtransparencyamongststakeholders,namelythebusinesscommunitywhowillbedirectlyaffectedbythisTreaty.Ashroudofsecrecyonlycreatesmoreapprehensionsinarelationshiprifewithmistrust.TheBITis,inessence,goodandmustnot

bediscriminatoryagainstanypartybutawin/winforboth.

ProposalBoththeUSandPakistanGovt.mustensurethatthereviewperiodoftheBITissufficientandadheredto.Theymustengagewiththebusinesscommunityandputstockintheirfeedbackandinputstoreflectedinthefinalagreement.

BenefitsABITwillopenthedoorforaFTA/PTAbetweenPakistanandtheUS.Itpromisestoenhancetradevolume,generatemoreemploymentandspurbusinessactivities.EngagementwiththebusinesscommunityandwidespreadknowledgeofthebenefitsofBITwillleadtoanimprovementintheUS/Pakrelationship.

E4. TRADING BLOCS

IssueTheworldismovingtowardscompleteeconomicintegrationwithitspresetdefinedtradingcountries/bloc.Pakistanissandwichedbetweentwolargertradingcommunitiesi.e.MiddleEastandSouthEastAsia.SomemultinationalsviewPakistanaspartofAsiaandsomeviewitasbeingclosertoMiddleEast.AlthoughPakistanisamemberofSAARC,buthaslittleimpactonitstradingactivitiesthansomeothercountries/tradeblocks.ToremaincompetitiveinthelongrunPakistanmustclearlydefineitstradingpartnersandthatitisformallypartofthelargeropportunity.

ProposalPakistanshouldfirstdefineitstradingblocksanddefinethePTAasafirststeptoincreasetradeactivities,followedbyFTA’swherethecountriescanagreetotradewithminimumtariffsuchasASEANwithdutieslessthan5%.

CurrentlyPakistanhasPTA’swithChinaandMalaysia,whichshouldbeextendedtoASEANtogainaccesstomorethan400Mpeople.

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BenefitsExpansionofcooperationinmultifacetedfields,includinggrantofgreateraccesstoPakistaniproductstothedefinedmarkets/blocs.

Anincreaseinforeigndirectinvestmentresultsandcreationoflargermarkets,resultingineconomiesofscaleforlocallyproducedgoods.

MultinationalcompaniescanviewPakistanasbeingpartofalargercommunityandcanplanitsinvestmentsnotonlytocatertodomesticneedsbuttoalargeraudiencewithexportopportunitiesmainlyforPharmaandFMCG/Foodsectors.

E5. STRATEGY TRADE POLICY FRAMEWORK

IssueThegovernmentatthebeginningoftheyearsetstargetsforsectorstoachievehighexportsandalso

allocatesfundsforinfrastructuredevelopmenttohelpandsupplementtheexportgrowth.OnesuchinitiativewastheStrategicTradePolicyFramework2009-12.Itisnotknowntillthenexttradepolicyastowhathashappenedtothetargetsandobjectivesofthepreviousyear.

ProposalThegovernmentshouldpublishtheachievementsagainstthetargetsandobjectivessetfortheyear.Thiswillenhancethebusinessmanunderstandingoftheperformanceofthegovernmentandmayalsogetadviceintheareaswhereitisdeficittoimproveperformancetomeetthesetgoals.

BenefitsTheperformanceofthegovernmentinimplementingthetradepolicyinitiativeswillbeunderstoodbythebusinesscommunityandwilldevelopmoreenhancedtrustinthedevelopingaprivatepublicpartnershiptodeveloptheexportsofthecountry.

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APPRECIATIONThe Executive Committee highly appreciates and thanks the following members for actively supporting the ABC by inserting their advertisements in this Annual Report:

1. ACEINSURANCELIMITED2. CAPTAIN-PQCHEMICALINDUSTRIES(PVT.)LTD.3. CISCOSYSTEMSPAKISTAN(PVT.)LTD.4. CITIBANK,N.A.5. DUPONTPAKISTANOPERATIONS(PVT.)LTD.6. EMCINFORMATIONSYSTEMS(PVT.)LTD.7. JOHAN(PVT.)LTD.(Culligan)8. JOHNSON&JOHNSONPAKISTAN(PVT.)LTD.9. KARAMCERAMICSLIMITED10. MONSANTOPAKISTAN(PVT.)LTD.11. NEWHAMPSHIREINSURANCECOMPANY12. OBSPAKISTAN(PVT.)LTD.13. PRESTIGECOMMUNICATIONS(PVT.)LTD.(Grey)14. PROCTER&GAMBLEPAKISTAN(PVT.)LTD.

Proudly serving various National & International Industries

Documents

02 PROFILE - abcpk.org.pkabcpk.org.pk/.../03/ABC-Annual-Report-2011-121.pdf · 54 MEMBERSHIP & ADMIN 55 SECURITY 57 IT ... 1 3 4 5 EXECUTIVE COMMITTEE 2012 1. ... Exxon Chemical Pakistan