ISLAMABAD: Turkish companies engaged in different projects have raised concerns over the delay in repatriation of profits, payments and taxation issues with Pakistani authorities, which will be taken up with Prime Minister Shehbaz Sharif during his two-day visit.
PM Shehbaz during his previous visit to Istanbul had publicly apologized to Turkish companies for their treatment during the previous government, however he has been unable to resolve all their issues so far.
The following companies are likely to hold one-on-one meeting with the Prime Minister to apprise him about their issues: (i) M/s Al-Bayrak; (ii) M/s Zorlu Energy; (iii) M/s Med Marine; (iv) M/s Arceilk; (v) M/s Coca Cola; (vi) M/s Hayat Kimiya; (vii) M/s Nora Electrical Devices Inc; and (viii) Pak Investment Co Inc.
Turkiye Embassy in Islamabad has shared concerns of following companies with the government of Pakistan.
M/s Med Marine: The company is facing issues on opening of Letter of Credit (L/C). The company was awarded a contract by Port Qasim Authority on March 14, 2022 regarding PQA buoy tender, however, Ministry of Finance has not opened the L/C yet although seven months have passed. M/s Med Marine, its Pakistani partner, Dynamic Engineering and Automation (DEA) and PQA are suffering due to this delay. In addition, this delay is jeopardizing maritime safety because of urgent need for a change to a new buoyage system at the port.
On November 4, 2022, M/s Med Marine informed PQA that it would not be able to maintain the offered price if the L/C is not opened immediately.
M/s Dawlance-Arcelik: The company has received quota for imports of their raw materials/components based on 38 per cent of their prior year import volumes. However, due to curtailment of import quota, the company has sustained a loss of Rs 900 million and now is unable to sustain operations and is being forced towards significant retrenchment of employees and eventually partial shutdown of its production facilities.
M/s Dawlance has requested that as a large sized progressive manufacturer and a foreign investor, it should be allowed quota free imports.
The Group includes two manufacturing companies – Dawlance (Private) Limited and United Refrigeration Industries Limited whose tax refunds up to tax year 2021 amounting to Rs 943,752,352 and Rs 993,387,760 respectively are pending.
They have requested that refunds be paid to them at the earliest so as to alleviate their financing burden. M/s Hayat Kimiya: The company which is engaged in manufacturing, import and sale of personal care products including diapers, hygiene pads and tissues, commenced commercial production on March 23, 2019. The company has invested up to $ 100 million and a further investment of $ 250 million is in the pipeline.
PM to interact with Turkish businesspeople: FO
The company is facing the following issues: (i) release of bank guarantees (Pakistan Customs); (ii) FIDMIC property tax (excise and taxation Punjab); (iii) withdrawal of exemption of minimum tax on SEZs; (iv) difficulties in import payments on time; (v) ban on import of tissues; and (vi) gas disconnection at Hayat Kimiya Plant by SNGPL.
M/s Limak: As Limak-ZKB JV, they were awarded CPEC Hakla-D.I. Khan Motorway Project package-4 and package-5. And have an estimated Rs 4.2 billion remaining work. Due to financial issues, GoP allocated less funds to NHA in first quarter of current financial year, due to which NHA made partial payments to JV. The company maintains that it is difficult to continue projects under these circumstances, and are requesting GoP to earmark sufficient funds for the projects.
The company is also facing issues in remitting profit. The company claims that it was to transfer Rs 100,000,000 (second installment) profits after payment of tax to Turkiye head office for the year ended December 31, 2017. They have been continuously seeking approval from the bank since June 27, 2022, ie, since approval of the SBP on designation application in terms of Para 15 Chapter 14 of Foreign Exchange Manual.
However, although the company has provided all required documentation as prescribed in para 15(a) of chapter 14 of FEM but till-date transfer of Rs 100 million after tax has not yet been allowed. Further, due to delay in profit remittance, the company is also facing losses in Rupee dollar parity (June 2022, the rate was Rs 207/US$ which is now Rs 223/US$).
Turkish Airlines: Turkish Airlines has been waiting for three remittance approvals from the authorities i.e. May 2022, June 2022 and July 2022 as necessary approvals are required to transfer Rs 5.9 billion ( Rs 1.8 billion for May, Rs 2.1 billion for June and Rs 2.1 billion for July) to its headquarters. Turkish Airlines has also stated that fluctuation in Rupee/ Dollar parity is adversely affecting it and at the same time the airline is unable to use the amount in the accounts which is approximately $ 26 million.
M/s Anatolia Travel: This is a Turkish visa drop-box, registered in Pakistan under the Companies Act, 2017. The company received $ 40,000 as share capital in April-May 2019 which is not yet registered with the SBP. The money was received in Silk Bank, which is not cooperating with the company in the registration of the amount as share capital. M/s Anatolia Travel has requested that the government should request Silk Bank and SBP for registration of the share capital so that they are able to send dividend to Turkiye.
M/s Dolsar: which has provided engineering services through an engineering contract for the Saaf Pani Project has requested payment of invoiced amount of projects completed in previous years.
M/s Albayrak-OzPak: was awarded Solid Waste Management Contract for seven years to expire in 2019. Its contract was extended till December 31, 2020 subject to regular payments. However, its premises were raided and service vehicles and equipment were seized by Police in December 2020 but neither their belongings nor vehicles were returned. The company is also waiting its due payment of $ 20 million. The company wants to settle the issue through dialogue amicably.
M/s Havelsan: is also facing difficulties in repatriation of the amount earned in local currency within the scope of the project. The company has also issues related to taxation.
M/s Zorlu Energy: The wind energy company of 100 MW is facing issues related to delays in payment and is waiting for final approvals.
The project was given tariff by NEPRA on August 12, 2022, however, it is still waiting for gazette notification from Power Division for approval to start the project. The company intends to participate in 200 MW solar project in Bahawalpur as continuation of its existing project.
Copyright Business Recorder, 2022