Five industries launch countrywide protests as budget strikes down zero-rated tax

Exporters and workers of five Pakistani industries seen protesting in Karachi to denounce the withdrawal of a zero-rated sales tax facility in the budget for the fiscal year to June 2020, June 15, 2019 (AN Photo)
Updated 15 June 2019
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Five industries launch countrywide protests as budget strikes down zero-rated tax

  • Pakistan government has abolished zero-rated sales tax for textile, leather, carpets, surgical and sports goods sectors
  • Economists fear growth expected at 2.4 percent will fuel unemployment, poverty and social unrest

KARACHI: Five Pakistani industries launched protests in seven major cities on Saturday to denounce the withdrawal of a zero-rated sales tax facility in the budget for the fiscal year to June 2020, decrying the move as a “disaster” for the countries export-oriented sectors.
Seeking final approval for an International Monetary Fund bailout, the government’s new budget envisions widespread belt-tightening, a sharp hike in tax revenues and abolished the facility of zero-rated sales tax for the textile, leather, carpets, surgical and sports goods sectors.
A standard rate of 17 percent sales tax will now be imposed on these sectors to generate an expected Rs75-80 billion in additional revenue.
Muhammad Jawed Bilwani, Chief Coordinator of the Value Added Textile Export Sector, said peaceful protests were being held by the industry in Karachi, Lahore, Faisalabad, Sialkot, Multan, Kasur and Gujranwala against the new measure announced in the budget.
The new tax regime, he said, would be “a deadly blow” for exporters' liquidity, create hardships for exporters and threatened to eliminate small and medium sized enterprises.
“Exports will decline to approximately 30 percent in the next fiscal year,” Bilwani said.
The textile sector directly or indirectly provides 42 percent of total employment in urban centers, Zubair Motiwala, a former president of the Karachi Chamber of Commerce and Industry and chairman of the Council of All Pakistan Textile Associations, told Arab News.
Pakistan’s textile exports were $13.38 billion in fiscal year 2017-18 and $11.35 billion in the 10 months of fiscal year 2018-19: “This sector contributes almost 65-70 percent to the overall exports of the country. Does it make sense to disturb this sector?” Motiwala asked.
The surgical goods sector too is worried. State bank data shows Pakistan’s surgical exports stood at $477.2 million in fiscal year 2017-18 while $325.4 million worth of goods were exported during the 10 months of the current fiscal year.
“It was not a well-thought out decision,” Khalil ur Rehman, chairman of the Surgical Instrument Manufacturers Association of Pakistan, said referring to the government’s decision to withdraw the zero-rated facility. “We were not taken on board by authorities.”
Rehman said the government’s move would jeopardize the future of up to 250,000 people associated directly or indirectly with the industry, adding that the sector would now be forced to raise prices and become less competitive in the international market, leading to reduced operations and layoffs.
“The sector can survive for the next 2 to 3 years but after that, if the situation persists, 50 percent of the business would cease to exist,” Rehman said.
Representatives of the carpet manufacturing sector, whose representatives say 99 percent production is exported, also said the industry was struggling to survive. Pakistan exported $84.2 million worth of carpets and rugs in fiscal year 2017-18 and $65.8 million in the 10 months of fiscal year 2018-19.
The decision to withdraw the zero-rated tax facility will “totally collapse exports,” M Naeem Sajid, chairman of the Pakistan Carpet Manufacturers & Exporters Association, told Arab News.
He said Pakistan was facing tough competition in the carpets’ business from Afghanistan, India, and China: “We operate on 10-15 percent profit margin; with a 17 percent sales tax, doing business will not be viable,” Sajid said, adding that this would affect the livelihoods of around 800,000 people.
Syed Shujat Ali, chairman of the Pakistan Leather Garments Manufacturers & Exporters Association, said the sector employed 1.2-1.5 million people who would suffer as the cost of doing business went up by up to 15 percent because of new taxes, which would force the industry to cut down on its workforce and operations.
Leather exports stood at $365.4 million in fiscal year 2017-18 and $241.5 million in the 10 months of the current fiscal year, official data shows.
“The input cost hike will render us uncompetitive in the international market and we may lose our share to our competitors,” Ali said.
Pakistan’s sporting goods sector, which exported goods worth $551.4 million in fiscal year 2017-18 and $425.7 million during the 10 months of the current fiscal year, will also feel the burn of the government’s new measures.
“The government’s decision to abolish the zero-rated tax facility has sent a wave of uncertainty among the people of [the city of] Sialkot where every second person is involved in the sports goods manufacturing,” said Chaudhry Muhammad Arshad, the chairman of the Pakistan Sports Goods Manufacturers & Exporters.
The government had been forecasting growth of 4% for the next financial year, but after Revenue Minister Hammad Azhar delivered his budget speech to parliament on Tuesday evening, the government released a budget document showing it trimmed its growth estimate for the coming year to 2.4%. Inflation, which hit 9% in May, is seen at 11-13% during fiscal year 2019-2020.
“This (2.4 percent growth rate) means unemployment would increase to a large extent because economic growth has already declined by more than half,” senior economist Yousuf Nazar said.
Dr. Ashfaque Hassan Khan, a member of Pakistan’s Economic Advisory Council, added: “Every year 1.5 million new people enter the job market. The 2.4% growth is also equal to population growth rate which means the new entrants are not finding jobs. So the pool of unemployed will keep on rising and this may lead to social unrest in the country and increase poverty.”


Pakistan finmin to discuss global finance challenges at international conference in Spain this week

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Pakistan finmin to discuss global finance challenges at international conference in Spain this week

  • Fourth International Conference on Financing for Development will be held in Seville, Spain, from July 1-3
  • Muhammad Aurangzeb to meet global policymakers, speak on debt transformation and financial cooperation

KARACHI: Pakistan’s Finance Minister Muhammad Aurangzeb will discuss global finance challenges and meet policymakers from other countries at the Fourth International Conference on Financing for Development (FFD4) being held in Spain this week, the finance ministry said on Monday. 

The conference, which is being held from July 1 to 3 in Seville, will bring together leaders, policymakers and international development experts to explore innovative and sustainable financing strategies to accelerate progress toward Sustainable Development Goals (SDGs), particularly for developing and emerging economies, the finance ministry said. 

Aurangzeb is scheduled to take part in several key conferences and high-level side events, where he will present Pakistan’s take on the prevalent global finance issues and greater cooperation among nations. 

“The Finance Minister’s participation at FFD4 underscores Pakistan’s commitment to promoting innovative financing solutions, strengthening international cooperation, and enhancing the country’s voice in global development discourse,” the finance ministry said. 

Sharing details of the finance minister’s engagements at the conference, the ministry said he will co-chair the multi-stakeholder roundtable on ‘Leveraging Private Business and Finance’ on July 1 and deliver a keynote address at the International Business Forum Policy Dialogue on ‘Accelerating EMDEs Investment: The Role of Credit Ratings.’

The minister is also scheduled to address the General Debate of the conference and participate in the roundtable discussion on ‘Revitalizing International Development Cooperation,’ the ministry said. 

It added that as part of a UNICEF-hosted side event, Aurangzeb will speak on ‘Driving Capital Towards Children and Young People: A Dialogue on Innovative and Sustainable Financing for Children.’

It said the finance minister will also attend and speak as the chief guest at a special session titled ‘Swapping Out Debt for Development: The DCS Financing Approach,’ where he will highlight Pakistan’s perspectives on debt transformation and the potential of deposit protection mechanisms to support development finance.

He will also participate as a panelist at the International Business Forum’s side event on ‘Scaling Up SME Finance,’ focusing on enhanced financial inclusion for small and medium-sized enterprises, the ministry added. 

“In addition to his conference engagements, the Finance Minister will hold bilateral meetings with key international figures, including Mr. John W.H. Denton AO, Secretary-General of the International Chamber of Commerce, and H.E. Mr. Steven Collet, Vice Minister for Development of the Kingdom of the Netherlands,” the finance ministry said. 

Pakistan has been navigating a tricky path to recovery from a prolonged macroeconomic crisis that has weakened its foreign exchange reserves, drained its resources and triggered a balance of payments crisis. 

The government says it is committed to the reforms course, which includes privatizing state-owned enterprises incurring losses, widening the tax base and improving its energy sector. 


Pakistan says two ‘dangerous’ fugitives wanted in several cases arrested in Spain

Updated 30 June 2025
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Pakistan says two ‘dangerous’ fugitives wanted in several cases arrested in Spain

  • Nawazish Ali Hanjra is wanted in 23 cases on charges ranging from “terrorism” to murder and kidnapping for ransom
  • Pakistan says has demanded the arrest and extradition of 38 fugitives from Spain via Interpol’s Red Notices for years

ISLAMABAD: Spanish authorities have arrested two “dangerous” fugitives wanted in several cases such as murder, “terrorism” and kidnapping for ransom, Pakistan’s state-run media reported recently, with Islamabad hoping other absconders in the European country would also be apprehended and extradited soon. 

As per details shared by the state-run Associated Press of Pakistan (APP), Nawazish Ali Hanjra is wanted in 23 cases including “terrorism,” murder and kidnapping for ransom while Haroon Iqbal, the other suspect, is wanted in a separate case. These two were arrested in Spain on Interpol’s Red Notices, APP said.

Pakistan’s Minister of State for Interior Tallal Chaudry, during his recent visit to Spain, met Spanish Interior Minister Fernando Grande-Marlaska to demand the arrest and extradition of the two suspects, APP said. The Spanish interior minister acted swiftly and issued directives to authorities in this regard.

“This is a major step forward in our commitment to justice,” Chaudry was quoted as saying by APP on Sunday. “I am grateful to the Spanish authorities for understanding the gravity of the situation and taking swift action. We hope to see the remaining fugitives arrested and extradited soon.”

APP said Islamabad has demanded the arrest and extradition of 38 fugitives from Spain via Interpol’s Red Notices for years. It said these individuals managed to evade justice for years, exploiting legal loopholes and the lack of coordination between international enforcement agencies.

The state-run media said legal proceedings are underway to facilitate Hanjra’s and Iqbal’s extradition to Pakistan, where they will face trial under the country’s anti-terror and criminal laws.

“The development is being hailed as a milestone in international law enforcement cooperation and a sign that Pakistan is intensifying efforts to bring back criminals who have found refuge abroad,” APP said. 


At least 45 killed, 68 injured since June 26 as monsoon rains batter Pakistan 

Updated 56 min 9 sec ago
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At least 45 killed, 68 injured since June 26 as monsoon rains batter Pakistan 

  • Khyber Pakhtunkhwa reports highest casualties, 21, followed by Punjab with 13, Sindh with seven and Balochistan with four deaths
  • Pakistan has forecast widespread rain with wind and thundershowers across various regions of the country from June 29 to July 5

ISLAMABAD: At least 45 people have been killed and 68 injured across Pakistan in rain-related incidents since June 26, the National Disaster Management Authority (NDMA) said in its latest report as heavy monsoon rains continued to batter the country. 

Heavy rains have lashed Pakistan’s Khyber Pakhtunkhwa (KP), Punjab and Sindh provinces since June 26, raising water levels in rivers to alarming levels and triggering floods in various cities across the country. 

The latest casualties took place as the NDMA issued multiple impact-based weather alerts on Sunday, forecasting widespread rain with wind and thundershowers, accompanied by isolated heavy falls across various regions of Pakistan from June 29 to July 5. 

“NDMA urges all provincial and district administrations to remain on high alert, activate contingency plans, and ensure timely dissemination of warnings in local languages,” the authority said on Sunday. “Citizens, especially those in high-risk areas, are advised to stay updated through official adviseries, avoid unnecessary travel near glacial streams, riverbanks, and flooded roads, and keep emergency kits ready.”

As per the latest NDMA situation report, 45 people have been killed and 68 injured from June 26-29 in Pakistan’s KP, Punjab, Sindh and Balochistan provinces. The casualties include 23 children, 12 men and 10 women. 

KP reported the highest number of casualties from rain-related incidents, 21, followed by Punjab with 13, Sindh with seven and Balochistan with four deaths. Punjab reported the highest number of injuries at 39 followed by Sindh with 16 while KP reported 11 and Balochistan two. 

The report said flash floods claimed the highest number of casualties, followed by electrocution, drowning, lightning and other factors. Flash flooding in KP’s Swat River last week claimed the lives of 12 tourists while Rescue 1122 emergency service said it was searching for one missing boy on Sunday. 

 

 

Pakistan, home to over 240 million people, is considered one of the world’s most vulnerable countries to the effects of climate change and faces extreme weather events with increasing frequency.

These extreme and irregular weather patterns include droughts, heatwaves and torrential rains which experts have attributed to climate change. Unusually heavy rains and the melting of glaciers in June 2022 triggered cataclysmic floods that killed over 1,700 people across Pakistan, washed away swathes of crops and damaged critical infrastructure. Pakistan estimated the damages to be worth over $33 billion. 


Pakistani mangoes draw crowds at China-Eurasia Expo as exporters set 125,000-ton target

Updated 30 June 2025
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Pakistani mangoes draw crowds at China-Eurasia Expo as exporters set 125,000-ton target

  • Pakistan is home to over 100 mango varieties like Sindhri, Chaunsa and Anwar Ratol
  • The fruit’s popularity at Chinese exhibition highlights Pakistan’s potential for growth

ISLAMABAD: Pakistan has set a pavilion at the China-Eurasia Expo in Urumqi where mango varieties native to the South Asian country have been drawing crowds, the Pakistani embassy said on Sunday, as mango exporters eye 125,000 tons exports this season.

The 2025 China-Eurasia Commodity and Trade Expo, running from June 26 till June 30 in Xinjiang’s Urumqi, has brought together more than 2,800 enterprises and delegates from 50 countries and regions to deepen cooperation across Eurasia, according to the organizers.

Pakistan’s ​Ambassador to China Khalil Hashmi, along with Zhu Lifan, vice chairman of the Xinjiang government, inaugurated the Pakistan Pavilion, displaying a rich array of products, including fruit, jewelry, leather garments, luxury bags and contemporary clothing.

“The pavilion’s showcase of premium Pakistani mangoes drew hundreds of visitors, making it one of the most popular exhibits,” the embassy said in a statement on Sunday. “The fruit’s popularity highlighted Pakistan’s agricultural excellence and potential for growth.”

Pakistan is home to over 100 varieties of mangoes, including Sindhri, Chaunsa and Anwar Ratol.

Pakistan’s ​Ambassador to China, Khalil Hashmi (second right), along with Vice Chairman of the Xinjiang Government, Zhu Lifan (second left), inaugurates the Pakistan Pavilion at China-Eurasia Expo in Urumqi, China, on June 29, 2025. (Pakistan Embassy in China)

The South Asian country aims to export 125,000 tons of mangoes this season, a 25,000-ton increase over last year’s export volume, according to the Pakistan Fruit and Vegetable Exporters Association (PFVA). If achieved, the target could generate an estimated $100 million in foreign exchange earnings.

​At the inauguration, Ambassador Hashmi briefed Vice Chairman Zhu about Pakistan’s enhanced focus on increasing trade and investment relations with China, including Xinjiang.

“He [Ambassador Hashmi] gave the Vice Chairman a tour of the Pavilion, elaborating the high-quality of Pakistani products. The Chinese VIP also praised the taste of Pakistani mangoes,” the Pakistani embassy said.

Pakistan’s ​Ambassador to China, Khalil Hashmi (left), interacts with Zhu Lifan, vice chairman of the Xinjiang government (right), at the Pakistan Pavilion, China-Eurasia Expo in Urumqi, China, on June 29, 2025. (Pakistan Embassy in China)

China is a longtime friend and strategic partner of Islamabad, with Beijing making significant investments in infrastructure and energy projects in Pakistan.

The total bilateral trade in goods between China and Pakistan reached $23.1 billion in 2024, an increase of 11.1 percent from the previous year, according to China Customs and the Pakistani embassy. China’s exports to Pakistan surged 17 percent year-on-year to $20.2 billion, while imports fell by 18.2 percent to $2.8 billion.

Islamabad, which is on path to economic recovery under a $7 billion International Monetary Fund (IMF) program, is currently making efforts to expand trade with China, Central Asian and Gulf nations to boost the $350 billion South Asian economy.


Pakistan okays 50 percent increase in fixed gas charges for domestic consumers

Updated 29 June 2025
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Pakistan okays 50 percent increase in fixed gas charges for domestic consumers

  • Gas prices increased for general industries, power stations and independent power producers to shift partial burden
  • The move aligns with structural benchmarks agreed with the IMF, including rationalization of captive power tariffs

ISLAMABAD: The Pakistani government has revised gas prices for the fiscal year 2025-26 and okayed a 50 percent increase in fixed charges for domestic consumers, effective from July 1, the Oil and Gas Regulatory Authority (OGRA) announced on Sunday.

The development comes days after the federal cabinet’s Economic Coordination Committee (ECC) approved the hike in fixed gas charges for domestic users and to shift the partial burden to bulk consumers, like the power sector and industry.

“Protected category to pay a fixed charge of Rs600 and meter rent of Rs40,” an OGRA notification said on Sunday. “Non-protected category to pay a fixed charge of Rs1,500, up to 1.5hm³ (cubic hectometers), while Rs3,000 for exceeding consumption of 1.5hm³ and meter rent of Rs40.”

While the government has increased the fixed charges, the sale prices of gas for both protected and non-protected consumers remain unchanged, according to the notification.

The government also kept prices for tandoors commercial units, compressed natural gas and ice factories unchanged, but increased the rates for general industries, power stations and independent power producers.

The move aligns with structural benchmarks agreed with the International Monetary Fund (IMF), including rationalization of captive power tariffs and a shift from subsidies to direct, targeted support for low-income consumers.