The State Bank of Pakistan has said that among the four provinces of the country, Punjab has the lowest residential property transaction cost.

In a report on the implementation of National Housing Policy - 2001, the central bank said the Punjab government saw an increase in revenues after reducing registration fee and stamp duty in 2003-04.

The central bank therefore observed “it is important for the provincial governments to understand positive implications of rate reduction for revenue collection.”

According to the report, the cumulative impact of registration fee and stamp duty, which comes to nine per cent, is the highest in Balochistan. In Punjab, it is 3.50 per cent, in NWFP eight per cent and in Sindh 5pc plus Rs2,500.

The report called for one per cent aggregate rate of stamp duty and registration fee on conveyance deeds and zero per cent stamp duty and registration fee on mortgage deeds.

The central bank observed the “provincial governments, despite being signatories to NHP ñ 2001, have so far not adopted its covenants relating to rationalisation of stamp duties and registration fee in lieu of conveyance and mortgage deeds in letter and spirit.”

Keeping in view the positive implications of rate reduction for home ownership, revenue collection and documentation, the central bank said in the report that the provincial governments should adopt the housing policy in letter and spirit by reducing transaction costs of residential property.
 

Administrator, Defence Housing Authority (DHA) Brig Maqsood Hussain has said that his authority’s biggest and most ambitious project, the DHA Phase 9, which is situated off the Super Highway could be given to international companies for development.

“We are looking at the possibility and have been approached by some private international groups with renowned reputations. The proposal has to be put before our board and that is why I cannot give any names at this stage,” said Brig Hussain while talking to The News.

The DHA chief said Phase 9 would be the largest project undertaken by the DHA in Karachi because of which a separate set-up would be established so that it could function effectively. He was not clear as to who would head the set-up and whether it would be placed under the present DHA or run parallel to it.

Brig Maqsood Hussain said that such an arrangement whereby two DHAs would function in one city “would be the first such arrangement in any city in Pakistan.” He said that at present possession of the land had not been taken but survey of land which has been purchased has been completed.

“We have received bids for its development from consortia of local and foreign developers. Right now we are evaluating them. Besides, we may invite internationally known builders and developers for development of that land. We may give them a piece of land to construct their projects there. It would add to the value of those lands,” he added.

He said that efforts were being made to employ private concerns for purposes of town planning and development. Talking about Phase 8, the upcoming sector of DHA, Brig Maqsood said that it will be fully operational within five years. “We are going to give permission for construction gradually as civic works are completed,” he said, adding “and we aim to have all things in place within five years.”

The DHA chief said that Phase 8 comprised several construction belts which would be gradually opened for construction. He said that the decision to open construction in some belts in 2003 was not right as at the time most of the civic works had not been done.

The Phase 8 has six sectors (construction belts) which would be gradually opened. “Already a contract has been signed with NLC for construction of roads and soon some agreement will be reached on other works,” he said.

Brig Maqsood said that one of the major issues in Phase 8 was the supply of power and in this connection DHA and KESC were in talks. “In this phase, power lines will all be underground,” he informed.

About the ongoing revamping process in DHA, Phase One would be completed by the end of October this year. He said that refurbishing of roads in Phase One would fully start next week and the work on it had already been initiated at a few places.

Brig Maqsood said that the former contractor who was responsible for revamping Phase One was not working up to expectations and that was why he was removed and the new one was awarded the contract.

One of the reasons for delays, he added, was that “we did not have the data about the lines of Pakistan Telecommunication Company Limited (PTCL) and Karachi Electric Supply Corporation (KESC) which really disturb us during the revamping procedure. Sui Southern Gas Company was the only company which had the required data.”

Brig Maqsood Hussain said that DHA with the process of revamping of the phase was also compiling necessary data now. He said that all the roads within DHA would be revamped phase-wise for the better flow of the traffic.

He said that the next phase that the DHA would work on revamping is Phase 4 but the problem there is that the water table in some areas of that phase is very high. He said work in phase 4 should start in January 2007.
 

The Defence Housing Authority Lahore has received a huge number of applications for residential plots in Phase VII, prompting it to extend the date for submitting forms till June 15.

Ballot of Phase VII will be held on June 30. Real estate dealers say since the Rs5,000 to be submitted with application is non-refundable, the DHA will earn a big amount of money even before balloting.

The DHA Lahore has said town planning for Phase VII has started and development work will begin soon after balloting. Real estate dealers say the DHA Lahore has allowed civilians to apply for the plots so that more people could participate, giving the DHA an opportunity to earn money in the head of application fees. Had they restricted the scheme to army officers, they would have received only a limited number of applications.

In Karachi, the House Building Finance Corporation (HBFC) has announced two more auctions of property for recovery of the amount outstanding against the defaulters who failed to clear dues despite issuance of notice of demand. It would auction 43 plots each on July 10 and 11.

In Islamabad, groundbreaking ceremony for the development of Phase I extension of DHA Islamabad took place last week. There will be approximately 2,300 plots of one kanal each in Phase I extension.

The Revenue, Excise and Taxation Department of the City District Government Karachi is running a campaign, encouraging people to pay property taxes. It has announced the last date for paying property tax is June 15 and warned non-payment may result in confiscation of property, auction of moveable and immovable property and other punitive measures.

A Dubai government fund announced on Tuesday the purchase of a landmark building in the heart of New York city for $1.2 billion as the Gulf Arab state blazed ahead with its Big Apple investment binge.

The 32-storey building on 280 Park Avenue in midtown Manhattan, one of the world’s most expensive property locations, was bought by Istithmar from Boston Properties, a publicly listed real estate investment trust. “We are delighted to work with Istithmar on this transaction and we look forward to a long relationship with them,” Boston Properties chairman Mortimer Zuckerman said in a statement issued by Istithmar.

“Park Avenue is the hub of global operations. Two-Eighty Park Avenue is a particularly attractive corporate location,” said David Jackson Istithmar chief investment officer. “Within the real estate sector, Istithmar targets projects that are positioned to experience long-term, substantial capital appreciation.” The 1.2 million square feet building, which has a ziggurat type structure reminiscent of ancient Assyrian and Babylonian temples in Iraq, was built in the early 1960s to house the offices of Bankers Trust Co.

This is the third New York property deal to be announced by Istithmar since November and a source close to the fund, who spoke to AFP on condition of anonymity, said several similar deals have been finalised or were in the process of completion.

The source also said the fund is under the direct supervision and control of the office of Dubai’s ruler Sheikh Mohammed bin Rashid al-Maktoum, who is also vice president and prime minister of the oil-rich United Arab Emirates (UAE), a federation of seven emirates including Dubai.

The fund had announced last week that it paid $300 million for a prime Beaux Arts-style building in Manhattan’s famed Times Square dating from the 1920s that was once the site of the Knickerbocker Hotel.

Real estate barons in the country have viewed that although the imposition of two per cent Capital Value Tax (CVT) on immovable urban property measuring 500 square yards or one kanal will not yield more than Rs2.5 billion during fiscal 2006-07, the economic managers in the country were justified in their own right to bring an untapped sector into the tax net.

They acknowledged the fact that the budgetary move would widen the stagnant tax base a bit more, but also felt at the same time that it would have been better on part of the policy-makers to have left this sphere untapped for another year, so that better gains could have been harvested when bullish sentiments had started to reign again.

These property pundits maintained that nearly 80-90 per cent of the total $20 billion Foreign Remittances influx from expatriate Pakistanis during the last five years has greeted the real estate business, something which spoke volumes of the fact that this sector has always had an ever-flourishing promise.

They, however, urged the government to frame revolutionary housing policies on the pattern of Dubai which has succeeded in attracting $165 billion during the last five years from all over the world into its real estate sphere to resultantly benefit a dozen of its allied sectors like banking and finance.

Talking to The News here on Tuesday, the Chief Executive of Lake City Holdings and a noted member of All Pakistan Textile Mills Association (APTMA) Mian Gohar Ejaz asserted, “Though Dubai is far ahead of us in terms of investment climate, the potential in Pakistan’s real sector is also unmatched. Nearly every affluent expatriate Pakistani has invested in this sphere since 2001. I surely agree that the trend to send money back home in large chunks did gain momentum after the 9/11 episode, but very few people had then predicted that the flow of these foreign remittances would be directed towards the property business.”

He said, “Economic gurus, after 9/11, were instead heard prophesying that cement, textiles and the leather sector would absorb the major share of this money sent back home by overseas Pakistanis nervous about their position in the West after the globe-rocking tragedy.

There is no doubt that all the three afore-mentioned spheres have witnessed a lot of foreign investment during this period under preview, but the housing sector tops the list beyond any iota of doubt.”

Ejaz admitted that the confidence of the overseas Pakistanis was badly shaken during the preceding 18 months or so, due to the emergence of a few faulty housing schemes which consequently flopped, but claimed the lost confidence was now converging back at a quick pace.

He elaborated, “During these last two or three months, country’s leading construction giants Habib Rafiq have signed an MoU with the Lake City Holdings and just a day ago, Eden Developers have inked a Rs12 billion pact with us to build their ready homes at our site.

Now, this is a major economic development and could not have taken place had the confidence in housing sector not been restored to the desired levels. If you allocate 6,000 kanals of land for development and opt to construct on 1,760 kanals only at the cost of your profit, the way we have done, you are bound to attract money and slumps are bound to be temporary.”

Another leading textile and housing magnate Mian Javed Iqbal maintained, “If you also look at the projects of the Defence Housing Authority, especially their Phase VI, and if you analyze the success of the Fazaiya Colony of Pakistan Air Force and that of the projects undertaken by Bahria Town, you will see that their accomplishments would not have been possible without the confidence of the overseas Pakistanis. Same is the case with the Lake City Holdings and a few other leading housing schemes, all of which are being run by eminent magnates possessing massive credibilities dating back to decades.”

He observed that a few huge reasons for the massive success of real estate business in Pakistan included the credibility and financial strength of the reputed business groups involved in building new housing projects, the expensive-cum-novel construction concepts they have imported and the lack of investment avenues in the country.

Both Ejaz and Iqbal hoped that the waiver of sales tax on imported construction machinery will boost the housing sector further, though doubted it would have any immediate effects on the prices of land or ready houses.

Analysts see the budget 2006-07 in line with the estimations and expectations but most of them question the way it was presented, which kept several queries unanswered.

They believe the budget 2006-07 may bring relief to some extent for the masses but tight monitoring and institutionalisation of the trading mainly of the household commodities are termed as keys to achieving the desired results.

The research analysts voiced laurels in unison over capital value tax on property business. However, they came up with mixed reaction on 0.01 per cent increase in capital value tax on shares trading in stock market.

“The budget is mainly in line with the market expectations,” Faisal Shaji, Head of Research at Capital One Equities. “Tax on property deals is positive and it would regulate the overall business of the sector.”

He said increase in capital value tax (CVT) on shares trading was expected but it was not likely to affect the market negatively. “I don’t think the market should overreact on the enhanced tax, as it has capability to absorb such levy,” he added.

He said the tax on property would discourage speculation and push the investors back to the capital market. Muhammad Sohail, Director Research at Jahangir Siddiqui Capital Markets termed the budget 2006-07 expansionary with popular measures.

“The budget increased pension and salaries of the government employees,” he said. “These are the popular measures but can be termed positive.” He said overall the budget almost all the expectations and estimations. He observed CVT on real estate would increase the government’s revenue as the sector remained out of tax net for a long.

“But you can term increase in CVT on shares trading both positive and negative,” he added. “It could increase revenue and bring back real investors in. However, it would keep the market range-bound in the near term.”

Tanveer Abid, Head of Sales at Live Securities seriously criticised the increase in CVT on share trading and said it could cause a stock market crash in the short term. “It would raise the transaction cost and shake the investors’ confidence, as the market relies mostly on day traders,’ he said. “It would hurt bulk of the trading volume and the index may lose 700 to 800 points in a reaction.”

SHARM EL-SHEIKH, Egypt: A new real estate law will delay a widely anticipated real estate downturn in Dubai by attracting more investment into property, especially from foreign institutions, a top government developer said. The Gulf emirate of Dubai, home to man-made islands shaped like palm fronds and a ski slope in the desert, started the regional property boom in 2002 by opening its real estate market to foreign investment.

Property prices have since quadrupled in some segments, drawing billions of dollars into new developments. Analysts expect the market will peak in the next year and the central bank warned last year of a correction starting around March. But Farhan Faraidooni, chief executive of Sama Dubai, said a new law announced in March to remove uncertainty surrounding foreign ownership of property had forced him to revise his view of the real estate cycle.

Sama Dubai is the property development and investment arm of Dubai Holding, the government-owned firm that invests the emirate’s wealth. “We were anticipating that the market would correct itself in a year...a year and a half. A lot supply will reach the market (then),” Faraidooni told Reuters in an interview. “(The law) has been introduced at the right time. It has given a boost and prevented the market from having a shorter cycle,” he said on the sidelines of the World Economic Forum that concludes in Egypt on Monday.

Faraidooni, whose company has around $40 billion worth of projects in the pipeline, said it was too early set a new date for the cycle’s end, but said the new momentum would add at least another year to the boom.

Although foreigners have been buying property in Dubai, one of the seven emirates in the oil-exporting United Arab Emirates, for several years, the legal basis of their holdings has been ambiguous at best.

Optimisim: Most buyers have been retail investors, either Gulf Arabs looking to invest growing wealth from an oil boom or Westerners drawn to Dubai’s relatively affordable lifestyle. Dubai says its new law will offer expatriates limited freehold ownership and formal 99-year leases. Similar laws are in the works across the UAE.

Faraidooni said greater certainty would allow foreign institutional investors to move in. “Now we have another type of buyer, which is the institutional buyer, that we did not have one year back,” he said.

Few analysts share Faraidooni’s optimism when it come to luxury real estate into which developers have ploughed much of their money, turning great swathes of Dubai into a construction site and flooding the market with new properties. But the property market was still growing early this year. Standard Chartered Bank’s Dubai real estate index showed property prices rising 3.7 per cent in January and 1.9 per cent in February.

And many analysts believe the law could inject some momentum into Dubai’s property market. Some foreign banks have started offering mortgages since the law was announced and realtors have reported growing interest from European property funds. International Realtor CB Richard Ellis said in March it was in talks with European funds about investing in Dubai where it estimates that prime commercial real estate would yield on average 1.5-2 per cent more than in London’s Canary Wharf. But bankers and real estate firms have also urged the government to quickly finalise details of the law so potential investors can read the fine print.

Faraidooni dismissed those concerns. “I am selling free hold title,” he said of Sama Dubai’s flagship “The Lagoons” development that will cost almost $18 billion. “The Lagoons” consists of seven man-made islands and is one of the giant construction projects springing up around the world’s biggest oil exporting region, where more than a $1 trillion has been committed to developments in the next decade.

The government should impose a ban on resale of a plot within two years of buying, if it wants to check the rising real estate prices, said Arif Malik, President of Clifton and Defence Real Estate Association in an interview with The News on Monday.

This restriction would leave only the genuine buyers in the market, he said and added that levying taxes on real estate transactions is not the solution, as mostly the value of plot is underreported. “It will not have any impact on the prices,” he said.

If the government wants to boost its revenue from the real estate sector, it should bring those people into income tax net who are earning through buying and selling of property, he added. But it is not easy for the government, because mostly black money is utilised by the investors in this business and they would not declare actual worth of property, said Malik who runs Indus Estate.

He said the government should bind all authorities like DHA, KDA and MDA to seek national tax number for a property transaction, which would help the Central Board of Revenue tax the real estate investors. He said currently there is a bubble in the real estate market created by investors including jewellers and stockbrokers.

He said tax on property transactions would create more difficulties for the middle and poor class. It is already very difficult for people belonging to lower class to buy a house, he said. He said countless dishonest people had entered the real estate business and they were fleecing the poor by selling them plots, which they didn’t own. “They are the black sheep of our business,” he said. He suggested the real estate agents should be registered with the government, which would help arrest the culprits.

He said there were only 700 real estate dealers in Karachi who paid taxes while only in Defence around 1,500 dealers were working. The government should bring them into tax net, he said.

He said the DHA had decided to register property brokers and seek their particulars after it received many complaints of fraud, but the dishonest refused to be registered and filed a case. The Sindh High Court declared the decision of DHA null and void, so there is currently no authority to register estate brokers.

About cantonment boards he said the staff there was corrupt and asked for money for giving vacancy relief. He complained that estate agents were not given respect. Even banks refuse to issue credit cards to agents, even if someone has a lot of wealth, he added.

Sindh Adviser for Finance, M A Jalil has directed Town Nazims to start a survey of property in their respective areas because according to him most of the owners of commercial properties are paying tax according to industrial schedule, which was less than commercial rates.

Presiding over a meeting of town nazims of Karachi here on Monday, he said the owners of industrial plots were paying property tax as per schedule of housing properties. “This survey will provide new financial resources for the towns,” he added.

He suggested imposition of tanker fee on water hydrants, adding the posters, pasted by mobile phone companies on the walls, should attract local fee. He was of the view “at present, owners of commercial properties located at Hawkes Bay, Machi Goth, SITE, Pakistan Steel and Bin Qasim are not paying local taxes.”

Meanwhile, the Sindh government has decided to transfer the privatisation process of Lakhra Coal Power Plant to the Privatisation Commission. It had also been decided the Pakistan Agricultural Storage and Supplies Corporation (PASSCO) would be approached to take over possession of wheat silos, otherwise these would be put up for auction.

Prices of plots in Gwadar are likely to recover and shoot up as soon as the port is handed over to any operator, said Amir Samsam of S & S Estate in an interview with The News on Monday.

He said prices of plots in Gwadar had nose-dived following the stock market crash in March last year. The prices have not recovered since then and are still 50 to 60 percent bellow the last year level, he said.

He said a residential plot worth Rs6 million at the beginning of last year was fetching only Rs3 million. Similar was the case with industrial plots, he added.

When asked why the prices had fallen in Gwadar, he said there was an artificial boom there like other parts of the country. "When the bubble bursts it affects prices everywhere. Besides, continuous rains had also caused a flood in the area adding to the negative trend."

The real estate dealer said infrastructure development in Gwadar should be paced up to lure investments in residential, commercial and industrial projects. He said the area still lacked water and electricity. A desalination plant was being set up and much is expected to improve, he said.

He criticized the Gwadar Development Authority for failing to spend the allocated funds for different works in the city. Samsam said big groups from Gulf and Middle East were investing in various industrial as well as construction projects in Gwadar.

Once proper infrastructure is developed resorts would be built there. A hotel of a major group is ready to be inaugurated, which indicates the potential of the city, he said. He said more people would come to Gwadar once its airport was upgraded and the city was connected to more cities of the country.

He said the government should allow duty free import of construction equipment for projects in Gwadar to help attract investments. He said Gwadar could be a city like Dubai. It has an ideal location and trade of Central Asian states would take place through this port in the future.

Governor State Bank of Pakistan (SBP) Dr Shamshad Akhtar has asked the managers of the central bank to explore the possibility of outsourcing cash handling and prize bond business to the commercial banks.

Besides, she also directed them to evaluate the possibility of sale of unutilised land owned by the central bank in different cities of the country.

Presiding over the first meeting of the SBP’s chief managers, sources said, the governor expressed the desire that a task force should examine the feasibility of transferring cash handling and prize bond functions to the commercial banks.

The National Savings Organisation, a subsidiary of the Ministry of Finance, issues the prize bonds while the State Bank handles sale and purchase of bonds and pays prize money through its offices of chief managers. The SBP gets a fixed percentage of service charges.

Cash handling (printing and delivery of currency notes) is jointly decided by the Ministry of Finance and the central bank.

The central bank has been implementing a clean note policy for the last three years to ensure the supply and maintenance of currency as per requirements of the commercial banks.

These two functions are being handled by the Banking Services Corporation (BSC), a subsidiary of the central bank.

The sources said the governor has further ordered BSC to sell pieces of land belonging to BSC.

She said that a consolidated view of unutilised land available at different locations be made by estimating the total area, by aggregating market value, present legal status of title and legal implications involved in selling such land.

Sources said governor also proposed redundancies both in the head office and all field offices of the BSC.

Governor ordered that chief managers should perform their duties as effective managers and provide better services to stakeholders by improving the staff efficiency.

She said that the delinquents may be dealt with under regulations and efficient employees be suitably rewarded.

Managing Director Liaquat Durrani informed the governor that soon he will be proposing a reward and recognition policy for the BSC staff as has been approved by the board for the state bank employees.

Governor said she would enter into performance contracts with chief managers and their performance will be judged on quarterly and half yearly basis according to their respective performance results.

The future of Agriculture Export Processing Zone (AEPZ) planned to up grade the fruit and vegetable exports from Pakistan hangs in limbo as Sindh Agriculture Department is striving hard to evacuate the designated three acre piece of land from alleged encroachers.

The AEPZ was planned near the new Fruit and Vegetable Market (Subzi Mandi) on Supper Highway. However, litigation over land possession between provincial agriculture department and residents or alleged encroachers has hampered building process of core chain based agriculture export process in Karachi.

The agriculture department has spelled out a strategy including hiring of a reputed private counsel in order to pursue the case in civil courts for early resolution of the matter.

The AEPZ was initiated in 2001 and should have been completed by 2003. However due to legal issues the government has extended establishment period to 2008-09. Whereas the revised cost of the project has been estimated around Rs370.846 million. This year government has allocated around Rs19 million in its Annual Development Program (ADP) for AEPZ.

Additional Agriculture Secretary (Technical) Sindh Dr.Noor-ul- Haque said that 50 percent construction work on the project has been completed, while the building process of the other arteries or sub station of AEPZ including Ghottki, Nosheroferoze, Nawabshah, Badin, Khairpur, Mirpurkhas and Hyderabad was almost complete.

The construction of sheds and auction and exhibition halls at Karachi AEPZ was in final stage. Besides that offices for exporters have also been constructed, he told. The project would provide employment to 20000 people he said.

The objective of establishing the AEPZ was to control post harvesting losses of perishable agriculture products including fruits, vegetables and flowers by provide proper marketing and processing arrangements to exporters and growers for exports their commodities besides eliminating the role of middle men.

The City District Government (CDGK) had provided around 50-acre land to provincial agriculture department instead of proposed 100-acre against payment of Rs100 million. Later on CDGK handed over possession of around 47 acre land to provincial agriculture department, whereas remaining 3 acre land was grabbed by encroachers, which provides major access to project and links it with main Supper Highway. The land encroachers filed a suit in court and court adjudicated stay in favour of alleged encroachers on humanitarian grounds. The court’s decision has hampered construction process of AEPZ.

According to AEPZ plan government has to provide infrastructure facilities including roads, electricity, gas, water besides of grading, waxing, packaging and processing of fruits and vegetables at AEPZ.

In addition establishment of cold storages in the main fruit growing areas is another important feature of this program, currently all fresh produce for export is transported at ambient temperature by trucks. These vehicles vary in load capacity for small open backed trucks to large double axle trucks. All vehicles tend to be overloaded; with the result that average speeds are very low. The horticulture produces being carried by the trucks in bulk to wholesale market is damaged prior to reaching packing areas for exports.

To control these losses use of refrigerated trucks is planned. Moreover, the country’s international airports are totally devoid of facilities for handling fresh produce for the export. “The produce is often loaded into metal containers that have stood in the sun all day and quite often are put back in the open after loading”, a leading fruit exporter said. None of the airports offer cold storage facilities at cargo area or within a reasonable travelling distance.

Only limited covered areas are available and during peak seasons produce is left in the open before shipment.

According to exporters the main transportation problem was the timely availability of space.

PIA dominates the supply of air cargo space, while other airlines avoid carrying fresh produce because perishable products are logistically more difficult to handle. In order to reduce this loss-factor provision of cold storage facility at Jinnah terminal was also under consideration.

The farmers and exporters would be given separate places, 30 percent space would be allotted to farmer/growers. The allotment committee has been constituted and summary for allotment has been sent to Chief Minister Sindh for final approval.

The Chairman of Association of Builders and Developers (ABAD), Hafeezur Rehman Butt has said that any attempt to fix the price of 50kg bag of cement at Rs300 will be unjustified because prior to the recent unjustifiable hike cement was available for Rs220 to Rs230 per 50kg bag. In a statement issued here on Thursday, he said the government must stay firm in its decision until such time the cement prices come back to the previous levels. He criticised the statement made by the Minister for Industries and Production, Jahangir Khan Tareen, in which he had said that government would consider resuming export of cement if prices come down to Rs300 per bag. He further said that strict actions were needed to stop the smuggling of cement in order to consolidate the supply of cement in the local market. In the guise of export of 13 per cent of total production, massive 52 per cent is being smuggled out, he pointed out.

The Central Board of Revenue (CBR) has decided to obtain the Computerised National Identity Card Numbers (CNICs) of real estate purchasers for compilation of a national database.

The CBR on Wednesday issued instructions to all Regional Commissioners of Income Tax (RCITs) to ensure collecting CNICs of the persons engaged in buying and selling of property during the tax year.

According to the directive, information regarding investment, inclusive of NIC/CNIC of the purchasers, is to be obtained for a consolidated database at CBR level.

Official sources told Business Recorder that CNICs of the persons engaged in real estate investment are a prerequisite for maintaining authentic database. The income tax database, called 'National Tax Number (NTN) Master Index', only recognises CNICs as identifier numbers allocated to the taxpayers.

The CBR will use CNICs for allocation of NTN to taxpayers on the basis of information available with the 'Master Index'.

They said that the CBR directive to obtain CNICs of property purchasers has many complications. It is an uphill task for an income tax officer to obtain the CNICs from provincial registrars, who maintain manual record. The computerisation of property transactions is necessary for obtaining data on property. The provincial governments have issued instructions to registrars of land revenue departments to cooperate with the income tax department. But manual maintenance of record in Urdu language creates serious problems in obtaining the requisite record, officials added.

Federal Textiles Minister Mushtaq Ali Cheema has announced that government would provide free premises to the foreign investors at proposed garment cities to start their business in ladies garments.

This he said while talking to newsmen after speaking at the inauguration ceremony of IGATEX Pakistan 2006, the 5th International Garment, Textile & Leather Machinery and Accessories Exhibition at Karachi Expo Centre on Tuesday.

The minister said that premises would be given to the foreign investors for the period of five years, in the proposed garment cities to be established in Karachi, Lahore and Faisalabad.

He said this would include land, infrastructure and other required facilities. Government has taken this initiative to attract foreign investors, he added.

The minister pointed out textile policy would be announced with in next one or two months as the work for preparation the policy was in progress. "Government have hired a foreign consultant for preparation of the textile policy and it would announced soon after it finalization", Cheema said.

Responding a question Cheema said that government is paying Rs50 per mound extra to growers for supplying uncontaminated cotton while Rs 30 per mound was being given to ginners extra in this regard. This step was taken to get pure and good quality cotton.

Earlier, while speaking at the inaugural ceremony of the exhibition the minister said that textile was the backbone of the country's economy. Pakistan is the fourth largest cotton producing country in the world.

He said that the country has not still entered in the ladies garments sector and there is huge potential to invest in this sector. Government has planned to provide more incentives to foreign investors to invest in ladies garments in the proposed garments cities.

Asim Siddiqui, Chairman and Managing Director of Pegasus Consultancy, the organizer of the event, said on this occasion that over 400 companies from 30 countries are participating in this exhibition.

He said this exhibition has drawn visitors from all over the region, like India, Bangladesh, Sri Lanka, Mideast and even from Europe and African countries. Igatex has really turned out to be a true marketplace for textile machinery, he added.

Haroon Farooqui, President of Karachi Chamber of Commerce and Industry also spoke on this occasion.

Later the Textile Minister formally inaugurated the exhibitions and visited different halls.

The United Arab Emirates was dumbfounded by the political storm in the US over a move by one of its companies to manage six American ports and is now watching for the reaction to another planned takeover, the Gulf country’s economy minister said on Tuesday.

“I think we were dismayed by the reaction, of being denied in the Dubai Ports World case,” said Lubna al-Qasimi.

“While we are all here to encourage more open markets in trade, this should not be a practice,” she told reporters on the sidelines of a meeting of the 149-nation World Trade Organisation. The government-owned company DP World had won the rights to operate six main US ports through a multi-billion-dollar deal in which it acquired British P and O.

But it announced in March its plans to sell the US part of its P and O acquisition following massive US Congress opposition which voiced security concerns over a deal involving an Arab state, recalling that two of the plane-hijackers on September 11, 2001 were UAE nationals.

Al-Qasimi said that port security controls had long been a paramount concern for the UAE, which is has a reputation as a trading hub.

US President George W Bush had backed the ports deal, and the company’s climbdown spared him a clash with lawmakers who have increasingly been challenging his free trade agenda and raised the spectre of a Republican rebellion ahead of mid-term elections in November. “In my opinion, this was a pure good business deal that got politicised.

It was a perfect deal but the wrong timing, in an environment of political challenges in the States,” said al-Qasimi. “From the aspect of the political relationship, I don’t think there was any damage,” she said. Another deal involving the United States has the potential to provoke a spat.

Dubai International Capital has acquired Doncaster Group Ltd., a British aerospace company that owns nine US plants for tanks and military aircraft, and the purchase is still under review.

“This particular company has two percent of defence parts and it’s considered non-classified and it’s not something that has great implication on defence or security,” said al-Qasimi. “So we’ll have to see what the impact and reaction will be in the States on that one.”

Business Software Alliance (BSA) on Tuesday joined the international community celebrating the World Intellectual Property Day 2006 in order to educate people how intellectual property rights protection promotes innovation, creativity and socio-economic growth.

“The World Intellectual Property Day provides an opportunity to encourage the creative intellectuals everywhere,” Co-Chairman BSA, Middle East, Al Redha said in his message.

He said that all the technological developments have taken place owing to the creative people, who turn their ideas into reality. He said copyright law protects intellectual property.

Al Redha said the corporate sectors and sellers should respect the copyright law and purchase legal software.

He pointed out the losses to the software industry due to theft around the world are continuously burgeoning and about $13 billion losses were recorded in 2002 for business software products which increased to $32 billion in 2004.

Prime minister says Pakistan to lay pipeline to provide secure oil supplies for western China

Pakistan is interested in developing Gwadar not only as a transshipment port, but also as an energy port by establishing refineries, building storage capacity, and laying pipeline ensuring secure and reliable supplies to Western China.

This was stated by Prime Minister Shaukat Aziz while inaugurating the three-day Pakistan China Energy Forum here on Tuesday.

The prime minister said that the Framework Agreement on Energy Cooperation signed during President Pervez Musharraf’s last visit to Beijing reflects the determination of both governments to promote comprehensive cooperation in the field of energy including nuclear power as well as realise the concept of building an Energy Corridor between Pakistan and China.

He said that Forum should develop a comprehensive agenda as well as mechanism to institutionalise energy cooperation between the two countries. More specifically, it must focus on devising a framework to enhance oil and gas exploration activity and capacity building; build energy corridor to China; increase oil refinery, storage capacity and laying oil pipelines ensuring secure supplies; initiate studies for this corridor and transportation network to China; enhance cooperation in nuclear power generation; exploit vast coal resources of Pakistan for meeting energy needs; and promote cooperation between private sectors of the two countries for realising joint ventures in the relevant fields.

Aziz said that that Asia is among the fastest growing regions in the world. It will require increasing and reliable energy supplies to fuel their rapid pace of economic expansion.

In, Pakistan, prime minister said, “we have been making strenuous efforts over the past six years to reform reinvigorate and reposition ourselves across the entire spectrum of economic growth and governance in order to meet the challenges and development and progress in the twenty first century as well as to exploit opportunities unleashed by the globalisation.

He said: “our economic philosophy is based on deregulation, liberalisation and privatisation accompanied by deep and wide ranging structural reforms has set Pakistan on high growth path. To sustain this accelerated growth within a band of 6 to 8 per cent over long-term and to remain competitive in the rapidly globalising world.

Mentioning the government’ strategic direction for development of energy sector to ensure sustainable supply of energy at competitive prices to all sectors of the economy he said that government is increasing emphasis on nuclear energy resources generating 8,800 MW in the next 25 years.

Prime minister said that GoP is also working on enhancing exploitation of hydropower to make industry more competitive by reducing cost of input. The government is also placing more stress on developing and encouragement use of Renewable Resources (solar, wind and biomass) in remote areas.

He said government is also focusing on developing coal reserves for power generation and exploring regional linkages (Tajikistan). He said Pakistan is considering three options to import gas through, Iran-Pakistan-India pipeline; Turkmenistan-Afghanistan-Pakistan pipeline and Oman-Pakistan Pipeline.

The Income Tax Bar Association, Karachi (ITBAK) has proposed to the Central Board of Revenue (CBR) that submission of National Tax Number (NTN) be made mandatory in all the documents, executed in any form at any stage, in six business transactions including, transfer of properties; transfer of shares, transfer of vehicles; for bank documents; for credit, debit and ATM cards; and for travel documents.

Advocate Arshad Siraj Memon, while presenting budget proposals on behalf of the bar here on Friday, said new provision be introduced for tax credit for investments made in National Savings Schemes to give incentives on savings, which will create investment and employment.

He said the lawmaker appears to be to allow the non-resident persons having a permanent establishment in Pakistan to avail final tax basis assessment as provided under Section-6 of the income tax ordinance, read with Section-8.

According to the rules of interpretation, the rule cannot override the main statute, the concession given to the non-residents in the said rules is not legally proper. This is despite the fact of usage of words “subject to the ordinance appearing in the beginning of Section-6 of the income tax ordinance.

In salary taxation he proposed that ceiling of conveyance allowance be increased from Rs3,600 to Rs15,000 because this allowance has remained static since ages.

He said deduction in computing income chargeable under the head ‘income from property’ be allowed to taxpayer or owner of the building if such commission on rent is paid through recognised normal banking channel to the estate agent.

This amendment will not only give benefit to the owner but also be instrumental in bringing such class of persons, engaged in the estate agency business, into tax net, which will facilitate the broadening of tax base.

He said accounting treatment of stock in trade be brought in line with international accounting standards and Section-35 of the ordinance be amended.

He proposed set off or carry forward of loss be allowed for reduced period of five years instead of six years.

He said regarding “fair market value” of immoveable properties, parameters for valuation may be prescribed by CBR in the income tax rules 2002.

He said the right of representation before Regional Commissioner be introduced to redress the grievances of taxpayers.

Finally he proposed that period for disposal of application by Alternate Dispute Resolution (ADR) committee to be extended from present 30 to 60 days and under the ADR the “appropriate time limit” of six months for decision by the CBR also be fixed.

Majid Khandwala, partner of Ford Rhodes Sidat Hyder and Company, while presenting pre-budget suggestion with special reference to the Sales Tax, said that the rate of sales tax be reduced from 15 per cent to 10 per cent and rate should not be enhanced for a period of five years.

To avoid mismatching of figures in sales tax returns and books of accounts, sales tax at the time of payment of advance should be removed from the definition of time of supply.

At the same time he suggested that definition of input tax should be modified to include sales tax paid on services chargeable under provincial sales tax ordinance.

According to him, presently if a supply is made before obtaining sales tax registration, there is an exposure to very serious offence by way of tax fraud.

He said the proposal is that the definition of tax fraud should be suitably amended to allow commencement of business once the application for sales tax registration has been submitted.

Under Section-73 of the sales tax ordinance he proposed that if the payment is not made within the prescribed time by the buyer, the input tax, already claimed, should be offered back.

If payment is made after the prescribed time then it may be re-claimed by the buyer at the time of actual payment.

In case of bad debts the seller should not be penalised.

He complained that sales tax officers are not issuing adjustment notes on time for adjustment in the next tax period and the only remedy is that the carry forward facility should be reinstated across the board.

He said confusion with regard applicability of special procedures for retailers, supermarkets and general stores be removed.

He proposed that special procedures for the collection of sales tax for telecommunication services also be prescribed.

In disputed sales tax appeal cases, like income tax an automatic stay may be granted until the decision in appeal.

Sama Dubai, the international real estate investment and development arm of Dubai Holding, announced on Saturday the launch of its spectacular new waterfront project ‘The Lagoons’, on the Dubai Creek. The 70 million square feet ‘The Lagoons’ is expected to catalyse Dubai’s position as an international destination offering a perfect retreat for residents looking for the highest possible quality of life within a true metropolitan environment.

The project considers environmental living as a core principle that is manifested throughout the development to ensure harmonious existence with the surrounding ecosystems. ‘The Lagoons’ is one of the first projects in Dubai to undertake a comprehensive Integrated Environmental Impact Assessment (EIA) following international standards across all phases of the project. It will offer freehold property with 100 per cent ownership to all nationalities.

Half of the project will be sold to third party investors as land plots for development. The remaining 50 per cent of the area will be developed, marketed and operated by Sama Dubai. The project will be spread over an area of 70 million sq ft.

‘The Lagoons’ will have seven beautifully landscaped islands, comprising of residential units, shopping centres, office buildings, and marinas. These detached islands will be interlinked with bridges. The project will also incorporate a unique work environment with its own Central Business District (CBD), where multi-nationals and regional corporations can establish their headquarters.

Strategically located in the heart of Dubai, ‘The Lagoons’ will be a masterful combination of proximity to the necessities of city life while offering a haven of seclusion and natural splendour.