Islamic banking rapidly growing, SBP tells Senate body

ISLAMABAD: The representatives of the State Bank of Pakistan informed Senate Standing Committee on Finance here on Thursday that Shariah Compliance, Islamic banking was rapidly growing as about 2,850 bank branches and 22 institution were offering Shariah complaint financing products.

The Senate Standing Committee on Finance here directed the Ministry of Planning Development and Reforms to ensure appropriate release of funds allocated for the construction of small dams and water conservation projects in Public Sector Development Programme (PSDP) for the financial year 2018-19.

The committee met here with Senator Farooq Hamid Naek in the chair and discussed the recommendation on the Finance Supplementary (Second Amendment) Bill, 2019.

Senator Kalsoom Parveen told the meeting that tobacco growers and industry in the country were facing problems as Federal Excise Duty (FED) Rs 300 per kg was imposed on tobacco which had forced the industrialists to shutdown their business.

She said that the tobacco sector was contributing about Rs 4.5 billion in terms of revenue and each unit was also providing livelihood facility to 100 to 150 people and tax burden has forced the sector to close down their business.

Meanwhile, Member Inland Revenue of the Federal Board of Revenue apprised the committee that domestic tobacco production was recorded at 70 million kg annually and out of the total produced  commodity 10 million kg were exported.

He said that two major multi-national companies including Philip Morris Pakistan and Pakistan Tobacco Company were the major byers of  domestic produced. He said that  a large quantity of the output was smuggled to Azad Kashmir for value addation and was a cause of revenue losses.

He said that in order to check the smuggling of tobacco and penetration of non duty paid cigarettes in the domestic markets, Rs 300 per kg duty were imposed on domestic tobacco, adding that domestic produces were only contributing 1 percent in total revenue where as rest of the amount was paid by the multi-national companies.

He informed the committee that FBR was in process of rationalizing the duties and taxes on the tobacco sector and hired the consultants in this regard, where as  other measures were also put in place to check the smuggling of cigarettes.

Senator Dilawar Khan asked the FBR to rationalize the SRO 1149 to protect the local industry and attracting the foreign investment as well as facilitating the tobacco growers across the country.

The committee also unanimously proposed for 10 percent increase in the salaries of government employees due to increasing inflationary impact on an ordinary person, however the officials of the Ministry of Finance opposed the suggestion due to increasing fiscal deficit.

Senator Syesha Raza Farooq, Dilawar Khan, Talha Mehmood, Imam-ud-Din Shouqeen, Mian Muhammd Ateeq Shaikh, Anwar ul Haq Kakar and Sherry Rahman attended the meeting.

The officials of ministries of Finance, Planning Development and Reforms, Commerce and senior officials of other allied departments also attended the meeting.