Tuesday, June 16, 2009

Federal budget 2009 & textile sector




Federal budget 2009 & textile sector
Introduction

Pakistan is the 4th largest cotton producer and 3rd largest cotton consumer. The textile and clothing industry has been the main driver of the export based industry for the last 50 years in terms of foreign currency earnings and jobs creation.

Textile Industry has made an investment of about 7.5 billion US$ during the last ten years (1999-2009). China, India and Bangladesh are posing tough challenge by virtue of their competitiveness.
What comprise its cost & revenue?
Cost is determined by
Raw material
Labour
Factory overhead ( mainly energy)
All other cost
Revenue is determined by whatever sale is made.
It has two markets to sale.
Local sale
Export sale
IMPORTANT QUESTIONS ARE
How textile industry will grow ( 2008 2.6 2009 -.7)
How to enhance its exports
How to increase foreign exchange reserves
How to create employment opportunities in the country
How to lower cost of doing business in pakistan to cater foreign investment
Demands from textile industry
Immediate financial relief
Special treatment on energy ( gas & electricity)
Market access
Federal budget 2009

A) "The government is managing the affairs of our country within a strategic policy framework expressed in its Nine Point Agenda of economic and socialrecovery. I take this opportunity to highlight these nine pillars:

I. Macroeconomic Stability and Real Sector Growth.

II. Protecting the Poor and the Vulnerable.

III. Increasing Productivity and Value Addition in Agriculture.

IV. Making Industry Internationally Competitive.

V. Capital and Finance for Development.

VI. Removing Infrastructure Bottlenecks through Public Private Partnerships.

VII. Integrated Energy Development Programme.

VIII. Human Capital Development for the 21st Century.

IX. Governance for a Just and Fair System."
"SOURCE BUDGET SPEECH FOR FISCAL YEAR 2009-10 "
B) Some of the textile circles feared that the federal budget would prove last nail in manufacturing sector's coffin, as the budget lacks a booster for growth of manufacturing sector, guaranteeing job creation over the last four decades.
C) The State Minister for Finance & Revenue Hina Rabbani Khar did not explained in her budget speech as to how the government was going to revive the industrial sector, particularly textile industry, which contributes 67 per cent to the country’s total exports
D) With a view to moving industry towards consolidation and value addition an Export Investment Support Fund, worth Rs. 40 billion has been proposed for FY 2009-10. The government will contribute Rs 10 billion towards this fund; another Rs 10 billion would be contributed by the Export Development Fund; balance Rs 20 billion would be contributed by governmental agencies through mopping up of surpluses in commercial banks.
"SOURCE BUDGET SPEECH FOR FISCAL YEAR 2009-10 "
The announcement of Rs 40 billion as industrial support fund does not clarify that what is being earmarked for which sector.????
E) 'The government proposes to declare fiscal 2009/10 as the year of industrial recovery.'
But it spreads disappointment simultaneously by missing the measures to bring the textile industry out of woe.















Monday, June 15, 2009

Friday, June 12, 2009

Economic Survey of Pakistan 2009

Economic Survey of Pakistan 2009

To know & download
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Monday, June 8, 2009

IAS-2 Inventories ( Measurement of cost)




IAS-2 Inventories (Accounting treatment)

Inventories shall be measured at the lower of cost and net realisable value.

Net realisable value is the:

estimated selling price in the ordinary course of business
less
the estimated costs of completion and
the estimated costs necessary to make the sale.

The cost of inventories shall comprise all :

costs of purchase,

costs of conversion and

other costs incurred in bringing the inventories to their present location and condition.

Inventory cost should not include:

abnormal waste

storage costs

administrative overheads unrelated to production

selling costs

foreign exchange differences arising directly on the recent acquisition of inventories invoiced in a foreign currency

interest cost when inventories are purchased with deferred settlement terms.



Illustration 1



ABC ltd record shows the following data regarding abc material.


Invoice value of $ 1,000 ( Net of Trade discount $ 2)

Freight $5

Storage cost $ 1

Compute the cost of material to be recognised as per IAS -2

Solution:


Cost of material:

costs of purchase $ 1,000 + Freight $5 = $ 1,005
Storage cost is not included as per IAS-2
costs of purchase (including taxes, transport, and handling) net of trade discounts received.

Standard cost & retail method

The standard cost and retail methods may be used for the measurement of cost, provided that the results approximate actual cost.

Specific costs.

For inventory items that are not interchangeable, specific costs are attributed to the specific individual items of inventory.

For items that are interchangeable:

IAS 2 allows the FIFO or weighted average cost formulas.

(Fifo & weighted average illustration as per above.)

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Wednesday, May 20, 2009

Japan's economy takes sharp downturn as GDP falls 4%

Japan's economy takes sharp downturn as GDP falls 4%

Japan's GDP contracted at an alarming rate in the first quarter, dropping 4% compared with the previous quarter and 15.2% compared with the same period last year. The decline, the fourth consecutive quarter of such, was the biggest since 1955, when Japan started keeping GDP records
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Tuesday, May 19, 2009

North Korea sees record expansion in trade

North Korea sees record expansion in trade

The value of North Korean foreign trade, excluding deals with South Korea, set a record last year, Yonhap News reported. Exports increased 23% to $1.13 billion, while imports expanded 32.7% to $2.69 billion

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To know more

Canada's banks stay strong, profitable through recession

Canada's banks stay strong, profitable through recession

When market conditions in Canada were at their worst during the first quarter, the country's major banks were making a profit. None of the banks has needed a government bailout. Mortgage interest is not tax deductible, eliminating an incentive to borrow, and when loan to value is more than 80%, the mortgage must be insured by an agency of the Canadian government
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Saturday, May 16, 2009

Spanish prime minister moves to keep jobs, cut taxes

Spanish prime minister moves to keep jobs, cut taxes

Facing Spain's most dramatic setback in 40 years, Prime Minister Jose Luis Rodriguez Zapatero took aggressive action to breathe life into the economy. He plans to cut taxes for small businesses that keep their employees and pay $2,700 bonuses to people who buy cars made in Spain. He also plans to eliminate airport fees for airlines that carry at least the same number of passengers as last year.The government had already announced stimulus measures valued at about €71 billion, including an €11 billion public works program.
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China's foreign direct investment drops 7 months straight

China's foreign direct investment drops 7 months straight

In April, foreign direct investment in China fell 22.5%, the seventh consecutive monthly decline. "This is a reflection of multinational companies around the world tightening their belts," said David Cohen, an economist with Singapore's Action Economics. "The weakness is being offset by the fiscal-stimulus measures of the Chinese government.

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To know more

Friday, May 15, 2009

Japan's 10 automakers expect 2009 losses to cross $10B

Japan's 10 automakers expect 2009 losses to cross $10B

Hit hard by plummeting auto sales worldwide and the strength of the yen, Japan's 10 automakers predicted that their combined losses for fiscal 2008 -- $3.35 billion -- will more than triple to $10.48 billion this fiscal year. "We've begun to see the bottom, but there's no sign of recovery," Mitsubishi Motors President Osamu Masuko said.

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To know more