Open Society Announces $1.7 Million to Support Middle East and North Africa Debt Swap for Sustainable Development

Amman, March 15, 2023 (GLOBE NEWSWIRE) — The Open Society Foundations today announced that they are giving $1.7 million to a United Nations initiative in the Middle East and North Africa region (MENA) that seeks to catalyze increased public spending on achieving the UN’s Sustainable Development Goals by negotiating reduced national debt service payments. Importantly, the initiative provides a channel for MENA civil society organizations to have a voice about where such kinds of innovative financing is needed most.

The two-and-a-half-year project partnership, which will last from April 2023 through September 2025, will support work by the UN Economic and Social Commission for Western Asia (ESCWA) with interested member states and civil society to identify investment projects that prioritize the most urgent needs of MENA societies. ESCWA will support member states in reaching agreements with their creditors to redirect scheduled debt service payments into sustainable local investments.

An emphasis on robust project monitoring and evaluation provides an incentive to creditors who are ready to deliver on their own commitments to climate and sustainable development goals financing in MENA. The initiative is further strengthened by the role of ESCWA’s Advisory Committee, made up of experts with experience implementing debt swaps and providing economic policy advice on inclusive growth in other parts of the world.

Heavily indebted MENA countries have pressing financing needs to address climate adaptation and sustainable development goals, while struggling to recover from fallouts of the COVID-19 pandemic and repercussions of the war in Ukraine, including growing food insecurity. As middle-income countries, they are both excluded from debt relief frameworks and find it difficult to access the financing they need.

The combined public debt burden of Arab countries was $1.5 trillion, equivalent to about 54 percent of the region’s GDP in 2021. In addition, the Arab region continues to suffer disproportionately from climate change and 90 percent of the population resides in water-scarce countries. Conflicts in the region have devastated institutions and infrastructure and some 66 million persons in Arab countries affected by conflict are dependent on humanitarian aid.

“The ESCWA initiative is a win-win strategy for all stakeholders involved,” said Issandr Amrani, executive director for Open Society–Middle East and North Africa. “As a multilateral institution with a commitment to human rights and civil society engagements, ESCWA provides a new opportunity for civil society to engage with governments on borrowing, spending, and development priorities. Open Society is committed to backing innovative projects that can help deliver economic justice.”

Yamide Dagnet, Open Society’s director for Climate Justice, added: “Climate disruption poses exponential risks to MENA’s economic and political challenges. Open Society’s pro-climate and fiscal-forward support can pave the way for catalytic investment in a just and inclusive climate transformation. From spurring dynamic and higher quality, green new employment opportunities that spark optimism among youth, women, and other marginalized communities, to addressing adaptation issues such as water scarcity that risks amplifying conflict. The fiscal space and just opportunities this pledge creates expands how we must put climate justice into action.”

Open Society’s president announced the launch of the grant during a high-level plenary session of the Arab Forum on Sustainable Development in Beirut, Lebanon, on March 15, 2023.

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Open Society Foundations 
212-548-0378
media@opensocietyfoundations.org

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Karandaaz Launches Report on The State of Business Taxation in Pakistan – Challenges for SMEs –

Islamabad, March 15, 2023 (PPI-OT): Karandaaz Pakistan arranged a webinar on 15th March, 2023 to launch its latest study on The State of Business Taxation in Pakistan – Challenges for SMEs. The report provides detailed analysis on the hurdles Pakistani SMEs face when attempting to become tax-compliant, the rules that govern taxation in the country and recommends ways responsible authorities can streamline taxation policy while establishing efficient processes for collection to establish a more optimal tax regime.

SMEs are regularly touted as the backbone of the country’s economy, contributing more than 70% of employment and approximately 25% of the country’s exports. At the same time, however, Pakistani SMEs tend to remain largely outside the formal economy.

Estimates for Pakistan’s undocumented or shadow economy range from 35% to 56% of the country’s official gross domestic product (GDP). Another even stronger indicator is provided by data from the Federal Board of Revenue (FBR), Pakistan’s supra tax collection and enforcement authority.

Though a recent census of business establishments has not been conducted, proxy data suggests that there could be close to 5.2 million SMEs in Pakistan. Yet, according to the FBR’s 2018 filing data, only about 64,000 associations of persons (AOPs) filed returns. This indicates that only a handful of SMEs are registered with the national tax collection agency.

The SMEs interviewed for this study cited the burden of tax compliance as a bigger hurdle than the actual tax paid or the high tax rates associated with it.

Without the adequate resources and skillset for timely compliance with tax obligations, SMEs end up having to pay penalties. In many developing economies, compliance costs are a major deterrent to tax filing and deciding to become ‘formal.’

Evidence collected during the study suggests that, first and foremost, the tax authorities must move beyond revenue-centricity towards the goal of building a cohesive, collaborative, and simplified tax regime that eliminates all the ‘noise’ in the system.

To do so, the report contains numerous recommendations, including harmonization of policy across jurisdictions; strengthen handholding and facilitation of SMEs via heavy investment in systems that can be integrated across the government machinery so that data can ‘talk’; adopt automation and smart regulation that is accessible to SMEs; and institute painless tax administration that reduces tax compliance burdens.

CEO Karandaaz, Waqas ul Hasan addressed Pakistan’s shadow economy and said, “One of the key challenges facing the taxation system in Pakistan is its inherent complexity, which leads to high compliance costs and burden for taxpayers. An effective tax system should aim to minimize distortions, facilitate ease of collection, avoid discrimination, and garner acceptability.

However, experts suggest that Pakistan’s current tax policy does not adhere to these fundamental principles. According to the 2020 Doing Business Report, Pakistan ranks 161st out of 190 economies for the “paying tax” indicator, which underscores the difficulty and complexity of complying with tax regulations in the country.”

In her opening remarks, Dr. Shamshad Akhtar, Chairperson Karandaaz, said that “As the KRN study underscores tax regime and its implementation pose a real challenge for the SMEs. Underreporting of SMEs is quite pervasive both because the entities do not have records and capacity to report, nor do they wish to because of fear of FBR tax harassment. It would be safe to say what we don’t count we don’t really know:

Moreover, SMEs constraints and dynamics render it difficult to design effective policies and support system… SME policy framework in Pakistan is fragmented and entities with conflicting mandates and overriding powers impose their priorities.

Taxation structure has for years been regressive given its heavy dependence on high indirect taxes and on tradable sectors. At the same time tax exemption of agriculture, real estate and properties and low progressivity in direct taxes erodes revenue base.”

In his keynote address Federal Minister Mr. Ahsan Iqbal said: “Unlike other nations in the region, Pakistan has yet to adopt an export-led growth strategy, making it crucial to bolster the private sector’s export capabilities to improve the country’s economic situation. Small and medium-sized enterprises (SMEs), the backbone of Pakistan’s economy, contribute significantly to value chains, generate job opportunities, and spur innovation and competition.

Therefore, policymakers must prioritize developing and supporting the SME sector through effective policymaking. For instance, tax reform efforts must prioritize directing capital inflows towards productive businesses with export potential instead of unproductive sectors functioning as tax havens in the country.

This approach can reduce inefficiencies and widen the tax base, leading to increased revenue collection, facilitating socio-economic development in Pakistan.”

In his closing remarks Dr Najeeb Memon, Chief Commissioner Inland Revenue Karachi, FBR stated that “We must make choices on how to structure the taxation system. However, these choices cannot solely be based on the revenue authorities’ objectives. We must also consider the compliance costs on the tax-paying entities.

Non-compliance is not only a result of the tax regime’s complexity, but also the unfair and inefficient system design that actually incentivizes non-compliance. Businesses and individuals are given room to falsely categorize their income, resulting in tax evasion in weakly regulated sectors like real estate and exempt sectors like agriculture.

These inequities must be removed from the system. Additionally, larger minimum tax thresholds and lower marginal tax rates for certain sectors have further constricted the tax base, incentivizing tax evasion at the margins.

This approach unfairly burdens compliant sectors while failing to enforce tax laws in others. Rather than squeezing the compliant sectors, we need to reform the design of the taxation system in a manner that addresses the core reasons for non-compliance.”

The webinar also included two panel discussions. The first panel comprised of SME representatives and relevant stakeholders to talk about the type of challenges faced in compliance with frequently changing taxation policies.

Panelists included Ms. Maryam Sarim, CEO and Founder of Instaenergy; Syed Nabeel Hashmi, Chairman SNH Group of Companies; Mr. Asfandyar Farrukh, MD Urban Brands and Founder Chain Store Association of Pakistan; and Mr. Ehsan Malik, CEO Pakistan Business Council (PBC).

The second panel included representatives of several tax authorities as well as experts on taxation, including Mr. Zain-ul-Abidin Sahi, Chairman Punjab Revenue Authority (PRA); Mr. Tariq Naseem, Head of Islamic Finance Department and Registrar Modaraba, SECP; Mr. Muhammad Raza, Partner A. F. Ferguson and Co.; Dr. Hamid Sarwar, REMIT Project, FCDO; Mr. Akbar A. Tejani, CEO and Co-Founder Befiler (Pvt.) Ltd. and Ms. Darakhshan Vohra, Lawyer and CEO of Soan Valley Tech.

Karandaaz is a Section 42 Company, supported by the UK’s Foreign, Commonwealth and Development Office (FCDO) and the Bill and Melinda Gates Foundation (BMGF).

The Company focuses on improving access to finance for unserved and underserved individuals and micro, small and medium enterprises (MSMEs), by providing financing and by leveraging technology platforms. The survey findings are available on the Karandaaz website at: https://karandaaz.com.pk/karandaaz_publication/

For more information, contact:
Karandaaz Pakistan
1E, Ali Plaza, Nazimuddin Road,
D Chowk, Islamabad, Pakistan
Tel: +92-51-8449761
Email: info@karandaaz.com.pk
Website: www.karandaaz.com.pk

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Russia, Pakistan cooperation to develop rapidly despite sanctions: CG

Karachi, March 15, 2023 (PPI-OT): Consul General of the Russian Federation Andrey V. Fedorov has said that despite sanctions on Russia by the western countries, the cooperation between Russia and Pakistan will develop rapidly as there were a lot of unexplored business opportunities in Russia Pakistan bilateral economic cooperation which should definitely be developed.

Speaking at a meeting during his visit to the Karachi Chamber of Commerce and Industry (KCCI), he hoped that that the current high level of bilateral ties between the two friendly countries will be sustained and the true bilateral potential will also be realized. President KCCI Mohammed Tariq Yusuf, Vice President Harris Agar, Chairman of Diplomatic Missions and Embassies Liaison Subcommittee Zia ul Arfeen and KCCI Managing Committee Members were present on the occasion.

Highlighting numerous areas of cooperation between Russia and Pakistan, he said that although bilateral trade was mainly concentrated on commodities but there was a huge potential in other sectors as well particularly the energy sector. “Furthermore, Pakistan produces leather goods and sports equipment of very high quality and has huge potential in information technology sector in addition to being a major player in the pharmaceutical production and also surgical equipment which are the best in the world.”

Expressing Russia keenness to develop trade and economic cooperation with Pakistan, he said that 2023 was the year which marks 75 years of diplomatic relations between Russia and Pakistan and during all these years, there were ups and downs but recently the bilateral ties have strengthened. “In 2022, significant boost of 38.6 percent was witnessed in Russia’s exports to Pakistan as compared to 2021.”

Referring to recent talks between the foreign ministers of the two countries, he said that during these talks, the foreign ministers expressed willingness to enhance cooperation in a wide range of spheres including energy sector, fight against terrorists, trade and economic partnership, humanitarian, cultural and educational cooperation.

Keeping in view series of government-to-government interactions at the highest level, he was fairly optimistic about enhanced bilateral cooperation. “When friends meet at the negotiation table, lot of agreements can be reached.

The only thing needed is wishes and wills from both sides which have been witnessed during meetings between Prime Ministers, Foreign Ministers and Defence Ministers of the two countries.”

Earlier, President KCCI Mohammed Tariq Yusuf, while warmly welcoming the Russian CG, stated that Pakistan and Russia have experienced many ups and downs in their bilateral relations, but mutual bilateral cooperation has strengthened economic relations, marked by enhanced govt.

level talks between the two countries. “Despite friendly relations, the volume of trade is much below its potential as during the seven months of current fiscal year, Pakistan’s exports to Russia dropped by 45 percent to around $45 million compared to $82.34 million last year, which is a serious concern.”

He noted that Pakistan was close to a final agreement with Russia for the import of discounted crude oil and petroleum products. The 40-50 percent discounted energy deal if settled, could reshape Pak-Russia trade and bilateral relationship to a greater extent, allowing both countries to structure their ties more effectively. This agreement was very critical for Pakistan’s economic growth, which could resolve part of energy needs and create breathing space.

He stressed that Russian investors should enhance trade and investment cooperation in numerous sectors including the energy sector, construction and industrial machinery, mines, metallurgy, railways engineering, pharmaceutical products, fertilizers and chemicals etc.

“The visa regimes should be relaxed and made accessible for travelling for improving trade, economic
integration and people to people contact between the two countries. Russian investors must also explore business opportunities in CPEC through investments and joint ventures in 10 special economic zones offering huge incentives for foreign and domestic investors”, he added.

For more information, contact:
Director Press/Electronic Media and Public Relations
Karachi Chamber of Commerce and Industry (KCCI)
Aiwan-e-Tijarat Road, Off Shahrah-e-Liaquat,
Karachi-74000
Phone: +92-21-99218001-09
Fax: +92-21-99218040
Email: info@kcci.com.pk, secretary@kcci.com.pk
Website: www.kcci.com.pk

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The Ambassador of the Republic of Kosovo held a meeting with Mr. Amin Ullah Baig Vice President of FPCCI Pakistan promoting trade relations with Kosovo could enhance its exports to the International Markets: Envoy

Karachi, March 15, 2023 (PPI-OT): H.E Agon Vernezi, Non-Resident Ambassador of the Republic of Kosovo to Pakistan visited FPCCI Capital Office, Islamabad held a meeting with Mr. Amin Ullah Baig Vice President of FPCCI and Incharge along with Zahid Anjum Honorary Consul republic of Kosovo and Mr. Gent Gjikolli, Frist Secretary Embassy of Kosovo. During the meeting, the matters of enhancing cooperation in diverse fields, including tourism, trade, investment, technology, and exchange of business delegations were discussed.

The Ambassador of the Republic of Kosovo appreciated Pakistan’s support in their struggle for independence. He said that Kosovo wants to strengthen its trade and economic relations with Pakistan as both countries have good potential to trade in many areas. Pakistani investors may use Kosove as a hub to promote their exports to European markets.

Agon Vernezi, said that Kosovo was interested in developing sector-specific relations with Pakistan to make some tangible progress and later those ties could be diversified to cover more areas of cooperation.

He was of the view that regular interaction between the private sectors of the two sides with follow-up meetings should be the way forward to further strengthen bilateral trade and economic ties between Kosovo and Pakistan.

Speaking on the occasion, Amin Ullah Baig Vice President FPCCI and Incharge Capital Office, said that Pakistan could export many products to Kosovo including textile goods, pharmaceuticals, surgical instruments, IT products and services, sports goods, leather products, fruits and vegetables.

He said that Kosovo is an unexplored market for the Pakistani business community and emphasised that both countries should facilitate the exchange of trade delegations and organise B2B meetings.

Amin Ullah Baig, emphasized evolving institutional mechanisms to promote economic and commercial cooperation as well as to enhance awareness about trade and investment opportunities available in the two countries.

He further said that the business community could play an important role in forging stronger relations between the two countries. The need for exploring the possibility of the establishment of a Pakistan-Kosovo Business Council in the respective Federation Chambers was also agreed upon during the meeting.

Mr. Rana Muhammad Siddique EC Member FPCCI, Mr. Arif Malik President Skardu Chamber, Mr. Syed Mansoor Nadeem, Islamabad Chamber, and Farukh Alvi Mining Association were also present on this occasion.

For more information, contact:
Head Office,
Federation of Pakistan Chambers of Commerce and Industry (FPCCI)
Federation House, Main Clifton, Karachi, Pakistan
Tel: +92-21-35873691-94
Fax: +92-21-35874332
Email: info@fpcci.org.pk
Website: http://fpcci.org.pk/

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PACRA Maintains Broker Management Rating of Aba Ali Habib Securities (Private) Limited

Lahore, March 15, 2023 (PPI-OT): Aba Ali Habib Securities (Pvt.) Limited (“AAH”) is one of the oldest brokerage houses, established in 1970. AAH is primarily engaged in the provision of equity brokerage services while diversity exist in the form of commodity brokerage, MTS, MFS and IPO distribution.

The rating signifies a strong internal control environment supported by outsourced internal audit, dedicated compliance department and the presence of audit and risk management committees. However, the extent of policies may be enhanced further with the addition of more detailed guidelines.

The availability of online trading, mobile-app, complaint system and research department results in a sound client servicing. AAH has a lean organizational structure with all the required departments in place, the management is experienced; however, depth needs to be built. The assigned rating takes into account a sound business acumen of the sponsor family.

The governance framework may be enhanced further with the induction of certified independent directors. AAH actively manages its investment book whereby the funds are strategically moved between equity and fixed income avenues based on market expectations. The ongoing volatility of equity market may impact the commission revenue going forward.

Financial assessment indicates a decline of commission on equity brokerage by ~35% during 1HFY23 as compared to 1HFY22. AAH earned revenue from equity brokerage of ~PKR 34mln in the 1HFY23 (1HFY22: ~PKR 52mln) whereas for FY22 it stood at ~PKR 51mln (FY21: ~PKR 101mln).

However, the mark-up earned on MTS/MFS has provided support. The Company has a strong equity base of ~PKR 1,024mln at End-Dec’22 (Jun’22: ~PKR 968mln) which provides a cushion against unexpected shocks.

The rating takes comfort from a low leveraged capital structure. In the near future, once clarity emerges on the economic and political front, the management has plans to enhance the institutional clientele and to venture into the IPO advisory and underwriting business.

The management also intends to improve the technological structure for swift on-boarding of retail clientele. Moreover, geographical diversification is also under consideration to improve client outreach.

Going forward, improvement in core income, sustainability of market shares and profitability and materialization of planned business strategies remains critical. Meanwhile, upholding strong internal controls, sound governance structure, retention of key management personnel and diligent monitoring of risks is important.

For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com

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PACRA Revises the Rating of Pakistan Services Limited – Sukuk – Mar-18

Lahore, March 15, 2023 (PPI-OT): Ever since the pandemic of Covid-19, the hotel sector has been under pressure. The relief provided by the regulator furnished much-needed respite to the players. While occupancy level became a challenge, the cost of doing business witnessed a constant rise. In full cognizance of the situation, the company was pursuing a sale plan of its fixed assets, primarily properties.

Post Covid-19, the operational cash flows improved, though these were considered insufficient by the management to make repayments. The management was hopeful to complete the sale transaction of the company’s properties to remain afloat. They were able to sell a few but some big large assets could not be disposed of as targeted.

Over the last couple of months and especially after the rise in political instability, unprecedented increase in interest rates and hyperinflation, the management started to face material uncertainty around the company’s operations, as disclosed in the recent published financial statements. This led to the revision and adjustment of ratings.

The management has represented that they have express intention to settle the debt, while aligning the financial obligations with the operational realities. A detailed plan is under discussion with lenders, wherein the company is settling the debt over the future course of time.

A sizeable portion of the debt would be linked with the sale of some of the prime properties that the company owns, while the rest would be aligned to the emerging pattern of cash flows. The management seems to be confident and committed about it. The success of these initiatives is crucial to the future ratings of the company; and hence sukuk. Sustainability of operations and materialization of optimal cash flows are important.

For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com

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PACRA Revises Entity Ratings of Pakistan Services Limited – Negative Outlook – RW

Lahore, March 15, 2023 (PPI-OT): Ever since the pandemic of Covid-19, the hotel sector has been under pressure. The relief provided by the regulator furnished much-needed respite to the players. While occupancy level became a challenge, the cost of doing business witnessed a constant rise.

The aforementioned financial relief helped the company in avoiding immediate collapse, though issues and challenges persisted. In full cognizance of the situation, the company was pursuing a sale plan of its fixed assets, primarily properties. Post Covid-19, the operational cash flows improved, though these were considered insufficient by the management to make repayments.

The management was hopeful to complete the sale transaction of the company’s properties to remain afloat. They were able to sell a few but some big large assets could not be disposed of as targeted. Over the last couple of months and especially after the rise in political instability, unprecedented increase in interest rates and hyperinflation, the management started to face material uncertainty around the company’s operations, as disclosed in the recent published financial statements.

This led to the revision and adjustment of ratings. The management has represented that they have express intention to settle the debt, while aligning the financial obligations with the operational realities.

A detailed plan is under discussion with lenders, wherein the company is settling the debt over the future course of time. A sizeable portion of the debt would be linked with the sale of some of the prime properties that the company owns, while the rest would be aligned to the emerging pattern of cash flows.

The management seems to be confident and committed about it. The success of these initiatives is crucial to the future ratings of the company. Sustainability of operations and materialization of optimal cash flows are important.

Pakistan Services Limited (“PSL” or “The Company”) is known for its flagship hotel chain in Pakistan: “Pearl Continental (PC)”. Hospitality and tourism industry of Pakistan is segmented by inbound and outbound tourism, and there are various types of hotels starting from economy and low-budget categories to premium and luxury hotels.

Pakistan has emerged as one of the most favourite outbound tourist destinations, due to its rich culture and landscape diversity, a real attraction to foreign tourists. Inbound tourism is also promoted by the rising attractions of northern areas, which is supported by improved infrastructure and facilities.

For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com

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