(Note throughout this document Rs. 160 may be taken as approximately equal to USD 1)
The Corona scourge has hit the country badly. What is worse is that currently an end to the malady is not even remotely visible. The Government of Pakistan and the local administration are at pains to grapple with this unprecedented situation for what right now appears to be an indefinite time.
The following is a synopsis of the general and business friendly measures announced; details of these are separately attached:
- Government's core effort is the institution of a National Action Plan to combat the spread of the contagion i.e. principally to severely clamp down on morbidity and mortality rates. Currently the government figures on those diagnosed and those deceased are not alarming when compared to some of the other countries that are fellow sufferers. But the threat of a massive outbreak here remains palpable. Read details....
- The business and financial friendly incentives will entail an expenditure of Rs. 1.2TN as announced by the Prime Minister 3 days ago. Principal in these are:
- Extending massive support to the medical fraternity including tax breaks, easing of import restrictions on essential items and the setting up of relevant testing laboratories etc.
- Labourers' relief package... Rs 200 BN for the benefit of those on low paying jobs.
- Support to the exports and other industries... Rs 100 BN. Early refunds and interest deferments included.
- Small and Medium Sized Industries and Farmers ... Rs 100BN. Includes ease in interest payments and the provision of concessional loans.
- Interest rate cut of 150 basis points in addition to the 75 basis points cut given earlier in the week. Policy rate now at 11% p.a.
- Reduction in the prices of regular petroleum products incl. diesel and motor gasoline by Rs. 15 per liter.
- Essential medical products.... Rs 50 BN to combat shortages.
- Boost to the Construction industry. Details to be unveiled shortly.
- Various other poor people friendly measures.
Relief given by the regulatory agencies:
Federal Bureau of Revenue
- Extension of filing dates.
- Relief from import duties and taxes on selected medical equipment deemed necessary.
Securities and Exchange Commission of Pakistan
- Relaxation of various filing dates and relief from penalties.
- Deferment in the performance of non-essential responsibilities.
State Bank of Pakistan
- Encouraging the lenders to accept requests for deferment of loan repayments and of interest
- Relaxation from the strict application in the stratification of delinquent loans, under Covid 19 conditions.
- Gradual (over 4 quarters), if need be, implementation by the lenders of the mark-to-market requirement of equity stock badly hit by the exceptional conditions and held in the 'Available for Sale' category.
National Action Plan (NAP) for COVID-19 - Pakistan
Briefly, a national action plan was introduced by the Government of Pakistan to deal with the preparation against, containment and mitigation of the Covid19 outbreak. Its aim is the introduction of an effective response to minimize morbidity and mortality rates.
It is the intent of the government that with the implementation of this plan we will not only control the menace but also be well rehearsed to handle similar calamities in the future too.
It would be beyond the remit of this objective of ours to delve more deeply into the various measures being taken to combat this scourge but it would suffice to say that they are comprehensive but will entail a serious but understandable burden on the country's limited resources.
It will not be an overstatement to declare that the impact of the plan will affect every citizen of Pakistan in one form or another.
We shall discuss the financial and business measures in this plan as these are the ones that will likely have an impact on your enterprises. But first the financial measures that are specific to the medical industry and to those clients associated, as first and foremost Coronavirus is a medical emergency.
- Treasury is allocating a fund that will be used for medical infrastructure.
- The provision of Tax rebates/exemptions on the machinery to be imported by the pharmaceutical companies that is essential for the production of commodities/medicines/equipment to control the pandemic.
- The allowing of concessional import of ventilators, testing kits, Personal Protective Equipment (PPE)s etc. Enabling a one window facility to allow for smooth purchasing and the curbing of hoarding.
- The promotion and the establishment of new testing laboratories, both private and public.
Government announces multi-billion relief packages
To mitigate the economic impact of the Coronavirus outbreak, the Prime Minister of Pakistan announced concessions and tax refunds for exporters and businessmen including a Rs. 12,000 billion relief package aimed at providing financial support to the different sectors of economy affected. Details of the package, beginning March 24, 2020 are:
- Labourers'relief: PKR 200 billion
This package is for the protection of jobs. GoP is currently in a dialogue with the provincial governments on how best to effect disbursements to protect jobs.
- Export: PKR 100 billion
GoP will accelerate tax refunds of Rs100bn— so that these may also be spent by the exporters on the welfare of their labour. Interest payments due from the exporters have also been deferred. The cash flow squeeze resulting from a partial to complete halt in their business operations could otherwise spell bankruptcy quickly for many, resulting in massive joblessness.
- Small and medium industries: PKR 200 billion
GoP announced that PKR 100 billion would be available for these industries and for their interest payments which may be deferred as well. They will be able to make use of concessional loans at low interest rates, as well. Farmers will also be able to enjoy lower input costs.
- Cut in interest rate
The Monetary Policy Committee (MPC) of the SBP agreed at its emergency meeting on March 24, 2020, to cut the policy rate by a further 150 basis points to 11 percent. This brings the cumulative easing over the past one week to 225 basis points. The MPC was of the view that this cumulative easing would cushion the growth slowdown.
- Petrol and diesel
Petrol, diesel, kerosene and light diesel--- prices reduced by Rs 15 per liter
- Medical workers, equipment: PKR 50 billion
A sum of Rs 50bn has been set aside for the purchase of equipment and the necessary facilitation of medical workers who are at the forefront of the fight against the virus. The National Disaster Management Authority (NDMA) would get Rs. 25 billion of this allocation for the procurement of the required kits.
- Construction industry
The government believes that the construction industry will lead the revival of the economy once this scourge is eliminated. To facilitate this measure the government is developing a separate plan of relief. This remedial plan will be announced in a few days time.
There are other measures also being taken for the benefit of the poorest in our society including cheap accommodations, relief on utility bills and monthly sustenance payments etc.
- FBR, considering the lockdown in many parts of the country, extended the date of payment and submission of sales tax and federal excise returns for the tax periods of January 2020 and February 2020 up to April 15, 2020. These were due on February 18, 2020 and March 18, 2020 respectively.
- FBR has allowed exemption from duty and taxes on import of medical and testing equipment specific to the outbreak of Coronavirus. The FBR issued three different SROs of income tax, sales tax and customs duties to allow the full import of medical and testing equipments. FBR allowed the exemption initially for three months which would be further extended on the recommendations of the health ministry. The exemption from duty and taxes has been allowed on the following 61 items:
- Life technologies 7500 Real Time PCR with RNaseP instrument verification kit and complete guides documentation and software.
- Biosafety Cabinets Class II Types A2, EN 12469, Europe NSF/ANSI 49, USA JIS K3800 Japan.
- Auto Clave 50 Liter Capacity.
- Multi Channel Pipette 5-10 ml.
- Single Channel pipette set of four .2, 10, 200, 1000ml.
- Multi Channel pipette 20-200 ml.
- Vacuum fold.
- Mini spin.
- PCR Chambers.
- PCR Kits (95 tests) for suspects diagnosis (Altona).
- QIAMP Viral RNA Mini Kit (250) reaction.
- VTM (Viral Transport Medium)
- Dr Oligo Synthesizer
- Refregirator/freezer-20 CModel MPR-414 Panasonic
- Vortex Machine 0-3000 RPM 220V, Velp Italy
- Refrigerated Centrifuge Machine Temperature Rang 20 to +40 Model Z 326 K, Hermle IEC 1010
- UPS 6 KVA APC smart-UPS RVA 6000VA 230V
- Tyvek Suits
- Biohazard Bags (18 liters)
- PAPR (Powdered Air Purifying respirators)
- Multimode ventilator with air compressor
- Vital sign monitor with 21BPand ETco2 two temp.
- ICU motorized patient bed with side cabinet and over bed table
- Syringe infusion pump
- Infusion pump
- Electric suction machine
- X-Ray mobile machine
- Simple nebulizer
- Ultrasound machine
- Noninvasive BIPAP
- ECG Machine
- Pulse Oximeters
- Ripple mattress
- Blood gas analyzer
- AMBU bag
- Nitrile gloves
- Latex gloves
- Face shields
- Gum boots
- Mackintosh bed sheets
- Surgical masks
- Air ways
- Disposable nebulizer mask kit
- ECG electrodes
- ETT Tube (Endotracheal Tube) all sized
- Humidifier disposable, flexible type
- IV Cannula all sizes
- IV Chambers
- Oxygen Recovery Kit
- Padded Sheets
- Stomach Tube
- Stylet for endotracheal tube
- Suction tube control valve
- Tracheostomy tube 7, 7.5, 8
- Ventilator circuit
- Ventury masks
- Disposable shoes cover (water proof)
- FBR has condoned the expiry of the time limit allowed to taxpayers to submit their stock position for the period July – October 2019 i.e. Annexure-H, up to April 15, 2020 in order to still claim sales tax refunds. This facility is being granted under the new and easy "only verification and issuance system"
SECP has relaxed regulatory deadlines under the Companies Act in the aftermath of the COVID-19 pandemic. The Commission using the powers conferred under section 510 of the Companies Act, 2017 approved the following relaxations:
- All companies that are facing difficulties in the timely holding of their annual general meetings (AGMs) for the year ended on December 31, 2019, are allowed a general extension for a period of 30 days as provided in Section 132 of the Act. The companies can now hold their AGM for the year ended on December 31, 2019 on or before May 29, 2020.
- The companies, whose election of directors is due before or in the aforesaid AGM, may file impediment reports with the concerned registrar under section 158(2) of the Act citing the reasons for delay in holding the election of directors to be able to obtain a favourable dispensation.
Any statutory return, which is required to be filed on or after 24th March, 2020 may be filed with the concerned registrar within a delay of 30 days of the occurrence of an impeding event, without any additional filing fee. No penal action shall be taken for the late filing.
Further, all assignments that are not urgent in nature i.e. trainings and employee engagement activities etc., can be deferred for the time being. All hearings by the Adjudication division would be done through Skype /VC only.
- Banks/DFIs, upon a written request of a borrower received before 30th June 2020, will defer repayment of principal loan (other than non performing loan as on December 31, 2019) by one year provided that the borrower continues to service the mark-up amount as per the agreed terms & conditions. The banks/DFIs will convey their decision to the borrower within 7 working days after the receipt of a written request, with reasons to be provided in case of a refusal of the request.
- The financing facilities of those borrowers (other than borrowers of non performing loans as on December 31, 2019), who are unable to service the mark-up amount or need a deferment time that exceeds one year, may be rescheduled/restructured on request.
- Banks/DFIs shall not classify as doubtful, the financing facilities of borrowers who have requested deferment or rescheduling/restructuring, unless the payment obligations are overdue by 180 days or more. After 180 days these will be classified as doubtful as per prevailing instructions.
- The current regulatory instructions w.r.t. treatment of accrued mark up income on regular financing facilities that have been rescheduled/restructured more than once, will not be applicable on new cases of rescheduling.
- Banks/DFIs may, if they so desire, recognize the likely impairment loss resulting from the mark to market valuation of listed equity securities held as available for sale, in a phased quarterly manner during the calendar year. Early recognition of full impairment is nonetheless encouraged.