Annual Report

Annual report

CONSTRUCTORS ASSOCIATION OF PAKISTAN

INCORPORATED UNDER THE COMPANIES ORDINANCE 1984 VIDE LICENCE NO.: 23 GRANTED BY MINISTRY OF COMMERCE

2016 - 2017

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 1 - - 1 -

Quaid-e-Azam Muhammad Ali Jinnah Father of the Nation

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 2 - - 2 -

Mamnoon Hussain President Islamic Republic of Pakistan

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 3 - - 3 -

Shahid Khaqan Abbasi Prime Minister Islamic Republic of Pakistan

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 4 - - 4 -

Introduction

The Constructors Association of Pakistan (CAP) represents leading construction and infrastructure contracting companies. The sole aim behind the formation of Constructors Association of Pakistan (CAP) was to establish a body looking after the interests of the Constructors/contractors in the Country.

Established by the leading contractor's/construction companies of Pakistan in the year 1998 and granted a licence under Section-3 of the Trade Organization Ordinance 1961, by the Ministry of Commerce, Government of Pakistan, (DGTO). It is duly represented on the General body of Federation of Pakistan Chambers of Commerce & Industry (FPCCI).

CAP membership is open to all construction companies working in Pakistan as per conditions laid down in the CAP Memorandum and Articles of Association and subject to the approval of the Executive committee.

On the initiative of CAP, Construction has been declared as an industry, entitling all fiscal incentives/special treatment and other benefits, as envisaged in the investment policy, as amended from time to time vide notification No. F (10) IF-11/98, dated 07.04.1999 and F. No. 10 (10) IF-11/98 dated 04.06.1999 issued by the Government of Pakistan, Finance Division (Investment Wing).

It is a proven history that Construction Industry being the mother Industry plays a pivotal role in economic development of any nation. Most of the developed countries gave special importance to this sector in their early development period and have become world leaders. Although the Construction and Housing sector was declared as Industry, but unfortunately not being treated at par with other Industries. It is an important employment and economic activity generating Industry and offering job opportunities to millions of skilled and un-skilled labour force. In fact it is the second largest sector, after agriculture, in creating employment.

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 5 - - 5 -

Office Bearers of CAP for the Year 2016-17

ENGR. SIKANDAR HAYAT KHATTAK MR. AFZAL-UR-RAHMAN Chairman CAP/ Senior Vice Chairman CAP/ Managing Director, Chief Executive, M/s. Shah Zaman (Pvt.) Ltd, Peshawar M/s Indusmens Corporation, Karachi

MR. IMRAN ABBAS AWAN MR. FAROOQ AZAM Vice Chairman, CAP (Punjab)/ Vice Chairman, CAP (Sindh)/ Director, Chief Executive, M/s. Abbas Construction Company, M/s. Crescent Construction Company, Lahore Karachi

ENGR. SHAHID RAFIQ Vice Chairman CAP (Islamabad)/ Director, M/s. Habib Rafiq (Pvt.) Ltd, Islamabad

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 6 - - 6 -

Executive Committee Members for the year 2016-17

ENGR. ZAFARULLAH KHAN ENGR. ABDUL KARIM KHADIM EC Member, CAP/Chief Executive, EC Member, CAP/Managing Director, M/s. Zee Khan Associates (Pvt.) Ltd, M/s. Sachal Engineering Works (Pvt.) Ltd, Lahore Islamabad

ENGR. AKBER SHEIKH MR. AYUB SABIR IZHAR EC Member, CAP/Managing Director, EC Member, CAP/Chairman, M/s. Guarantee Engineers (Pvt.) Ltd, M/s. Izhar Construction (Pvt.) Ltd, Lahore Lahore

MR. ARIF RAZA KAZMI ENGR. SYED IQBAL YUNAS EC Member, CAP/Director, EC Member, CAP/Chief Executive, M/s. AMCORP Engineering & Construction M/s. Technicon Enterprises (Pvt.) Ltd, (Pvt.) Ltd, Karachi Peshawar

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 7 - - 7 -

MUHAMMAD GULZAR SHAH CH. MUHAMMAD SIDDIQUE, EC Member, CAP/Chief Executive, EC Member, CAP/Chief Executive, M/s. GSP Associates, Quetta M/s.Sinaco Engineers (Pvt.) Ltd, Lahore

MR. ZAHID-UL-HASSAN QURESHI MUHAMMAD ADNAN WAHEED EC Member, CAP/Managing Partner EC Member/Project Coordinator, M/s. Progressive Construction Company M/s. Sardar Mohammad Ashraf D. Baloch Lahore (Pvt.) Ltd, Islamabad

SABIR HUSSAIN JAVID MAQSOOD AHMED (Late) EC Member/Chief Executive, EC Member/Chief Executive, M/s. Iftikhar & Company, Lahore M/s. Fareed Co. (Pvt.) Ltd, Lahore

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 8 - - 8 -

MUNIR AHMED ABBASI KHAWAJA SHOAIB MOHI-UD-DIN EC Member/Sole Proprietor, EC Member, CAP/Managing Director, M/s. Munir Ahmed Abbasi, Islamabad M/s. Khawaja Builders, Rawalpindi

MR. SAIF ULLAH ZIA MUHAMMAD TARIQ EC Member, CAP/Chief Executive, EC Member, CAP/ Director, M/s. Zoom Engineers, Islamabad M/s. Ravi Construction Company, Lahore

ENGR. MUHAMMAD NAJEEB HAROON MUHAMMAD AYUB SHEIKH EC Member/Chief Executive, EC Member, CAP/Co Chairman, M/s Principal Builders, Karachi M/s. MishalSania (Pvt.) Ltd, Lahore

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 9 - - 9 -

ENGR. NAJAM UL HAQ NAJMI (Late) ENGR. IKRAM UL HAQ SIDDIQUI EC Member, CAP/Chief Executive, EC Member, CAP/Chairman, M/s. Abaseen Construction Company M/s. Muslim Constructors (Pvt.) Ltd, (Pvt.) Ltd, Karachi Karachi

RAZA ALI ABIDI MR. NAEEMUDDIN A. SIDDIQUI EC Member, CAP/Managing Director, Ex-Officio EC Member, CAP/ M/s. Friends Construction Syndicate Chief Executive Officer, (Pvt.) Ltd, Karachi M/s. Ziauddin Ahmed & Co. (Pvt.) Ltd. Karachi

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 10 - 10 - -

List of Past Years Chairmen (1998 – 2017)

Sr. Length of No Name of Chairman Designation For the Term Tenure Late Muhammad Chairman 11-Apr- t 30-Sep- 5 Months, 19 1 Yousaf Sheikh APCA 1998 o 1998 Days Chairman 1-Oct- t 30-Sep- 2 M. R. Sheikh APCA 1998 o 1999 12 Months Late Sheikh Nazir Chairman 1-Oct- t 30-Sep- 3 Ahmed APCA 1999 o 2000 12 Months Chairman 1-Oct- t 30-Sep- 4 Engr. Kamal Nasir Khan APCA 2000 o 2001 12 Months Chairman 1-Oct- t 30-Sep- 5 Engr. Akber Sheikh APCA 2001 o 2003 24 Months Engr. Sikandar Hayat Chairman 1-Oct- t 30-Sep- 6 Khattak APCA 2003 o 2005 24 Months Engr. Ahmed Ghazal Chairman 1-Oct- t 31-Dec- 7 Usmani APCA 2005 o 2007 27 Months Chairman 1-Jan- t 30-Nov- 8 Engr. Shahid Rafiq APCA 2008 o 2008 11 Months Muhammad Ayub Chairman 1-Dec- t 30-Sep- 9 Sheikh APCA 2008 o 2009 10 Months Engr. Muhammad Chairman 1-Oct- t 30-Sep- 10 Hamayun Khan APCA 2009 o 2010 12 Months Engr. Sikandar Hayat Chairman 1-Oct- t 30-Sep- 11 Khattak APCA 2010 o 2011 12 Months Engr. Ahmed Ghazal Chairman 1-Oct- t 30-Sep- 12 Usmani CAP 2011 o 2012 12 Months Chairman 1-Oct- t 30-Sep- 13 Engr. Akber Sheikh CAP 2012 o 2013 12 Months Chairman 1-Oct- t 30-Sep- 14 Afzal ur Rahman CAP 2013 o 2014 12 Months Chairman 1-Oct- t 30-Sep- 15 Engr. Arshad Dad CAP 2014 o 2015 12 Months Naeemuddin Ahmed Chairman 1-Oct- t 30-Sep- 16 Siddiqui CAP 2015 o 2016 12 Months Engr. Sikandar Hayat Chairman 1-Oct- t 30-Sep- 17 Khattak CAP 2016 o 2017 12 Months

Engr. Akber Sheikh 2 Terms 36 Months Engr. Ahmed Ghazal Usmani 2 Terms 39 Months Engr. Sikandar Hayat Khattak 4 Terms 48 Months

Shortest Late Muhammad Yousaf Sheikh 5 Months, 19 Days Longest Engr. Sikandar Hayat Khattak 48 Months

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 11 - 11 - -

Number of Executive Committee Meetings 2011-12 to 2016-17

No. of Sr. EC Name of Chairman Year No Meetin gs Engr. Ahmad Ghazal 1stOctober 2011 To 30thSeptember 2012 04 1 Usmani 2 Engr. Akber Sheikh 1stOctober 2012 To 30thSeptember 2013 04 3 Mr. Afzal Ur Rehman 1stOctober 2013 To 30thSeptember 2014 04 4 Engr. Arshad Dad 1stOctober 2014 To 30thSeptember 2015 05 Mr. Naeemudin A. 1stOctober 2015 To 30thSeptember 2016 09 5 Siddiqui (86 to 94) Engr. Sikandar Hayat 1stOctober 2016 To 30thSeptember 2017 07 6 khattak (95 to 101)

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 12 - 12 - -

Activities During the Year 2016 - 2017

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 13 - 13 - -

No. 1. National Highways Authority (NHA)

CPEC Project

Constructors Association of Pakistan (CAP), Executive Committee Members had a series of Meetings with the Chairman, National Highway Authority (NHA) and Minister for Planning, Development and Reforms (PD&R) to allocate share in development and infrastructure Projects to the local constructors especially from the CPEC projects.

Al Hamd o Lillah CAP was successful to get the one contract from CPEC western corridor, exclusively designated for the local constructors.

The Association has requested the chairman NHA and the Minister for PD&R to accept Insurance cover in these contracts as per PEC Standard Bidding Documents for following contract guarantees:

i. Bid Security ii. Performance Guarantee and iii. Mobilization Guarantee

Move to Increase Insurance Limits

Several CAP members have informed that presently, limits of the Insurance companies are relatively low and local insurance companies will not be able to provide required bonding because of size of the CPEC projects and would lose the business.CAP has informed all the local insurance companies to take their share of business by increasing the bonding limits and exposure of risk at the earliest.

Operation Maintenance and Managements Contracts

On the suggestion from CAP the Chairman NHA encouraged the CAP to give proposals to participate in the pilot project being floated by NHA for the Operation, Maintenance and Management contracts of the Motor Ways and Highways in the country.

Measures Proposed for the Capacity Building of the Local Construction Industry

1. Qualification Criteria

Collective experience of all partners for last fifteen years may be considered. Nos. of experience with quantity based of quantum of work

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 14 - 14 - - 2. Contract Conditions

Contract as per PEC Bidding Documents which was approved by ECNEC harmonized with PEPRA rules. Particularly as per Bidding Documents.

a) Bid Bond from AA rated Insurance Companies. b) Performance Guarantee from AA rated Insurance Company. c) Mobilization Advance 15% from AA rated Insurance Company. d) NHA should open L/C for import of equipment up-to 20% of Contract Value.

3. 30% of Local participation as per PEC guide line should be followed:

4. For GOP funded projects only local companies should be allowed to participate.

5. Capacity of Local construction sectors are withheld in shape of Bond and cash. Following steps are suggested.

a) 20% of Performance Guarantees laying with NHA may be replaced with Insurance Guarantees. 80% Bond may be released. b) Payments may be released as per Contract Conditions it should not be tied up with audit paras. c) PEC registered and CAP certified Contractors may be allowed duty and Sales Tax Free Import of Machinery, Plant and Equipment.

No. 2. Pakistan Engineering Council (PEC)

Series of Meetings were held with the Chairman Pakistan Engineering Council (PEC) on the issues of the constructors and construction Industry on the implementation of the PEC bidding documents and renewal of PEC license/registration.

CAP Help Desk Established at PEC Offices

The PEC finally agreed and grant approval for establishing the CAP help desk in April 2016 at PEC Head Quarter, Islamabad and all Branch offices to facilitate/help the constructors regarding their Registration matters with PEC.

The CAP subsequently appointed the required staff at PEC offices at Islamabad, Karachi, Lahore and Peshawar to facilitate the constructors in renewal of their PEC licenses.

Construction Industry Regulation Committee (CIRC)

This Committee was constituted in the PEC to periodically have meetings to resolve the problems of the Construction Industry. During 2016-17 following objectives have been achieved:

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 15 - 15 - - The Issue of Supervisory Engineers and Renewal of Constructors Licenses.

Effective from January 1, 2017, the PEC has introduced the appointment of supervisory engineers in different categories of construction companies as follows:

Sr. No. Category Minimum Req. of Sup. Engrs. 1 C-A 6 2 C-B 4 3 C-1 3 4 C-2 2 5 C-3 1 6 C-4 1 7 C-5 1 8 C-6 1

Since these appointments were not in favour of constructors, therefore, a series of meeting were held under the umbrella of CIRC. The Chairman CAP Engr. Sikandar Hayat Khattak and CAP Members representing at CIRC objected such appointments and had meetings with Chairman PEC and Secretary Science and Technology to resolve the issue.

Finally, in the 18th Meeting of CIRC, held on April7, 2017, it was decided/approved to recommend to PEC that “undertaking may be obtained from the contractors for renewal of their licenses. Undertaking will state that the contractors will employee engineers possessing Supervisory license as per approved requirements of each category after the approval of employment of engineer as per apprentice engineer by the Government in that case, the constructor will pay Rs. 5,000/- per Month to the engineer while balance amount will be paid by the Government”

The recommendations of CIRC were submitted to the Governing body of PEC in its 28th Meeting held on May 25, 2017. The Governing body did not agree with the recommendations of CIRC and decided to appoint the supervisory engineers as follows:

Category No. of Sup. Engineers

C – A 3 C – B 2 C – 1 1

The Chairman CAP appreciated the decision of PEC Governing Body to exempt C-2 to C-6 from the appointment of supervisory Engineers.

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 16 - 16 - -

No. 3. Ministry of Commerce (MOC)

Construction Machinery - Age Relaxation

Meeting was held in the Ministry of Commerce under the chairmanship of Secretary Commerce, to discuss the age Restriction & Original Equipment Manufacturer (OEM) condition On Import of Vehicle Mounted Construction Machinery by Construction Companies in Term of Para 9(ii) 5 Of Import Policy Order and Reduction of Horse Power of Prime Movers from 380 To 340.

It was informed to meeting that total duties and taxes on construction plant /equipment range from 31% to 46%, which adds to the already high priced items specially vehicle mounted machinery and excavators, bulldozers etc. Under the above circumstances, the Pakistani Construction Industry (specially the SME’s) is unable to mechanize their operation and increase capacity and maintain quality. This also hinders the adoption of new technology and innovations, thus limiting the local companies to deliver only limited and small projects and for most of the large projects the country becomes dependent on foreign contractors who charge much higher rates.

CAP EC Members humbly requested that in the interest of the Country and for the Capacity Building of the local Construction Industry, a window for Duty and Taxes Free Construction Machinery Import without any age restrictions may please be allowed for Five years.

Secondly, due to recent enormous development activities, initiated by the Government, like CPEC, Motorways Highways, Power Plants and other development projects construction Industry – the implementing sector of all development projects has to play a decisive role in turning the dreams/plans into reality. But unfortunately the Ministry of Commerce has imposed age restriction of five years on import of Vehicle Mounted construction machinery which has increased cost of doing business and resultantly directly affecting the economic activities.

Since the heavy vehicles manufacturing companies abroad like Hino, Nissan etc. are manufacturing only chassis not their bodies. The bodies are manufactured by other companies. Therefore, there is no original manufactured equipment (OEM) construction specialized mounted vehicles. Therefore, it is proposed to waive off the condition of OEM from Para 9(ii) 5 of the Import Policy Order (IPO) 2016.

Import of specialized vehicle mounted construction machinery is regulated by Para No. 9(ii) 5 of Import Policy Order 2016, which is reproduced below: -

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 17 - 17 - - ❖ “Construction companies are allowed to import specialized vehicle mounted machinery and transport equipment such as Mobile Transit Mixer, Concrete Pumps, Dumpers off highway, Cement Bulkers and Prime Movers of 380 Hp or above etc. including those mentioned in appendix-I. Import of said specialized machinery or transport equipment as mentioned above shall however, be subject to prior pre-shipment inspection in the exporting country from any of the internationally recognized pre-shipment inspection companies listed at appendix- H to the effect that the said machinery or transport vehicle or (a) Euro.II compliant (b) manufactured as such by Original Equipment Manufacturer (OEM) and (C) not older than five years”.

Under the above regulations, the import of 5 years old construction Machinery/dump trucks are not viable due to the following reasons:

a) Since construction machinery (vehicle mounted machinery), and prime movers of above 320 HP is not locally manufactured therefore, waving off age restriction and allowing 340 or above HP prime movers has no threat to the local industry.

b) Construction machinery is mostly manufactured and imported from Japan, Europe and Hong Kong. All 5 years old vehicles are compliant with Euro-VI emission standards or above. Hence 5 years old vehicles mounted machinery (2011) is not available in Euro-II emission compliance standards.

c) In Pakistan even Euro II emission compliant diesel is not available, then how Euro-VI emission compliant vehicles mounted machinery will be operated on Pakistani diesel.

d) Five years old construction machinery is very expensive and it would escalate cost of doing business and directly affect the cost of developmental project in Pakistan.

e) It is further pointed out that, 2011 model (five years old) construction machinery will be difficult to operate by our drivers and difficult to be repaired in case of break down due to computerized operating system in these Machinery.

f) Since we are importing Euro-II compliant construction machinery and in Pakistan the local assemblers are assembling Euro-I and Euro-II vehicles, therefore import of Euro II vehicles /machinery is not injurious to environment.

In views of the situation mentioned above it is requested to kindly recommend/ review the Current Trade Policy to waive off following:

❖ The condition of 5 years old age restriction ❖ The condition of Original Equipment Manufacturer (OEM) and allow prime movers of 340 Hp or above. ❖ Duties and Taxes on the import of Construction Machinery (recommend to Finance)

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 18 - 18 - - Meeting with Federal Minister for Commerce

In continuation of the meeting with Federal Secretary, Ministry of Commerce, a meeting was arranged with the Federal Minister for Commerce to discuss the following issues:

1. Brief on the issues discussed with Secretary Commerce 2. Post shipment facility for the import of Machinery 3. Import of Euro II Compliant or equivalent construction machinery

The Executive Committee Members of Cap explained to the Federal Minister for Commerce about the various issues developed due to the conditions incorporated in the import policy order 2016 and difficulty being faced by the importers.

The Minister was requested to allow Post Shipment of the imported machinery because of the following reasons:

i. In pre-Shipment-Mostly in case of Japan, Inspection parameters are not compatible with Pakistani requirements ii. Long waiting time and lengthy procedure iii. Constructors are not aware of the procedure of pre-inspection

The Federal Minister was very kind to accommodate the request of CAP delegation to consider post shipment facility for the imported Construction Machinery and import of Euro II Compliant or equivalent Construction Machinery. He advised the CAP Embers to submit the revised/amended part of the Import policy order (IPO). Accordingly following amended IPO was provided to the Ministry of Commerce.

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 19 - 19 - -

PROPOSED AMMENDMENTS IN SUB SECTION 5&6 OF SECTION 9 CLAUSE 2 OF IMPORT POLICY ORDER

Existing Clause Should Be Inserted

(5) Construction companies, mining, oil, Construction companies, mining, oil, gas and gas and petroleum sector companies petroleum sector companies commercial are also allowed to import specialized sector are also allowed to import specialized vehicle-mounted machinery and vehicle-mounted machinery and transport transport equipment such as mobile equipment such as mobile transit mixer, transit mixture, concrete pumps, crane concrete pumps, crane lorries, concrete lorries, concrete placing truck, dumpers placing trucks, dumpers designed for off designed for off highway use, cement highway use pay load capacity above 5 Ton bulkers and prime movers 380 HP and in CBU Condition, cement bulkers and above, etc. including those specified in prime movers 340 HP and above. Including Appendix-I. Import of said specialized those specified in Appendix-I. Import of said machinery or transport equipment as specialized machinery or transport mentioned above shall however be equipment as mentioned above shall subject to prior pre-shipment inspection however be subject to pre-shipment in the exporting country from any of inspection in the exporting country or post the internationally recognized pre- shipment inspection in Pakistan from any of shipment inspection companies listed at the internationally recognized inspection Appendix-H to the effect that the said companies listed at Appendix-H to the machinery or transport vehicle are (a) effect that the said machinery or transport Euro-II compliant (b) manufactured as vehicles are (a) Euro-II compliant or such by Original Equipment equivalent / higher standard (b) the Manufacturer (OEM); and (c) not older inspection companies certify that said than five years; and machinery is in good condition and remaining life is for further minimum period of Five years. (6) Commercial importers may also be Should be deleted, as in clause (5), we allowed to import plant, machinery proposed to insert the commercial sector, so and equipment, excluding specialized after inserting in clause 5 there is no need of vehicle-mounted machinery or this clause. transport equipment, on behalf of construction companies duly registered with Pakistan Engineering Council, mining, gas and petroleum sector companies. The imports will however, be subject to conditions mentioned clause (1).

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 20 - 20 - -

LIST OF CONSTRUCTION MACHINERY BEING IMPORTED

Sr. H.S. Name of Equipment / Machinery No Code 1 Trailer / Tractor 4013.9010 2 Film Faced Plywood For Form Work 4412.3200 3 Forming Material Scaffolding, Shuttering, Propping, Sections, Roofing Frame, Shutters, Balustrades, Pillars & Columns 7308 4 Diesel Generators 8402.1130 5 Diesel Generators - Parts 8405.9000 6 Grouting Pump / Mixer 8413 7 Concrete Stationary Pump 8413.4000 8 Air Compressor 8415.9099 9 Pre-Stressing Jacks 8425.4200 10 Trailer / Tractor 8428.9010 11 Wheel Loader, Shovels, Excavators, Shovel Loaders, Bulldozers & Road Rollers 8429 12 Dozers (Bulldozers) / Pipe Layer Dozers 8429.1900 13 Motor Grader (Various Blade Sized) 8429.2000 14 Ptr Roller / Vibratory Road Rollers 8429.4000 15 Front End Loaders 8429.5100 16 Road Milling Machine 8459.3910 17 Concrete Bathing Plant / Asphalt Plant 8474.3120 18 Batching Plants / Crusher Plant 8474.3190 19 Asphalt Paver 8479.1000 20 Dumper Trucks 8704.1090 21 Truck Mounted Mobile Crane 8705.1000 22 Concrete Transit Mixer Truck 8705.4000 23 Truck Mounted Concrete Pump / Concrete Mobile Pump / Bitumen Spraying Lory / Sweeper Truck 8705.9000

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 21 - 21 - -

No. 4. Federal Budget Proposals: 2017-18

Budget Proposals: Custom Duties

Proposal: Reduction in Import Duties on Construction Equipment/ Machinery

The total duties and taxes range from 31% to 46%, which adds to the already high priced items specially vehicle mounted machinery and excavators, bulldozers etc. It is also pertinent to mention here that Pakistani construction companies cannot afford even second hand equipment and machinery which is being auctioned in UAE.

Under the above circumstances, the Pakistani Construction Industry (specially the SME’s) is unable to mechanize their operation and increase capacity and maintain quality. This also hinders the adoption of new technology and innovations, thus limiting the local companies to deliver large projects for which the country becomes dependent on foreign contractors who charge much higher rates.

Policy measures should be adopted to enable the local construction companies to import construction equipment and machinery at affordable prices thus enhancing their capacity and eventually saving government expenditure through import substitution of foreign contractors:

It was proposed that Import duty on Major construction machinery and equipment may please be reduced to 2% (as allowed to the Agriculture Sector).

To avoid misuse of this facility, the exemption may only be allowed to constructors who:

i. Hold a valid Contractors License from Pakistan Engineering Council. ii. Provides a certificate from Constructors Association of Pakistan confirming the genuine project specific requirements of the constructor keeping in view the works awarded to the company.

Also vehicle mounted machinery should be Non-transferable for a period of 10 years.

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 22 - 22 - - Present Schedule of Custom Tariff of Major Equipment: 2016-2017

Name Of Advance Advance Total Sr. Import Additional Equipment / H.S. Code Sales Income Aggregate No. Duty Sales Tax Machinery Tax Tax Duties

Concrete Bathing 1 8474.3120 05% 17% 03% 06% 31% Plant

Concrete Stationary 2 8413.4000 05% 17% 03% 06% 31% Pump

Truck Mounted 3 8705.9000 20% 17% 03% 06% 46% Concrete Pump

Concrete Transit 4 8705.4000 20% 17% 03% 06% 46% Mixer Truck

Wheel Loader, Shovels, Excavators, 5 Shovel Loaders, 8429 05% 17% 03% 06% 31% Bulldozers & Road Rollers

Forming Material Scaffolding, Shuttering, 6 Propping, Sections, 7308 20% 17% 03% 06% 46% Roofing Frame, Shutters, Balustrades, Pillars & Columns Film Faced 7 Plywood 4412.3200 20% 17% 03% 06% 46% For Form Work

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 23 - 23 - - Proposal Relating to Inland Revenue

1. Sales Tax:

It was proposed that: -

1. Exemption from Advance Sales Tax (17%) and Additional Sales Tax (3%) be granted on import of construction equipment, machinery and formwork systems including plywood for formwork. A representative list is attached.

This exemption may only be granted for an initial period of 3 years to enable the capacity enhancement of local construction industry.

To avoid misuse of this facility, the exemption may only be allowed to constructors who:

i. Hold a valid Contractors License from Pakistan Engineering Council.

ii. Provides a certificate from Constructors Association of Pakistan confirming the genuine project specific requirements of the constructor keeping in view the works awarded to the company.

Also vehicle mounted machinery should be Non-transferable for a period of 10 years.

Sale Tax Issues in Punjab:

A meeting of CAP Technical Committee for Punjab Revenue Authority (PRA) was held on Monday the 27th June, 2016 at the Conference Room of ABAD, Lahore under the convenorship Mr. Amir Subhan Khan, Convener, CAP Technical Committee for PRA, to discuss the significant amendments made in budget which will affect the contractors.

It was decided that: -

i. The association should file writ petition in the court of law. ii. The association should also approach Punjab Revenue Authority (PRA) for fixed sales tax regime for contractors.

2. Income Tax

Construction companies fall under the Presumptive Tax Regime where the deduction of income tax at source is the final discharge of tax liability. Any other income tax deduction cannot be adjusted in the Tax Return and normally results in a refund, the payment of which is a cumbersome process giving rise to corrupt practices.

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 24 - 24 - -

It was proposed that:

a) The Advance Income Tax on Import of construction equipment and machinery be reduced to zero. This facility be allowed only to constructor s fulfilling the criteria laid down in the Sales Tax Proposal, above.

b) Collection of Advance Income Tax from utility bills, all banking transactions, vehicle purchases and registration should be zero rated for Construction Companies having valid PEC Construction License.

Present Schedule of Sales Tax On Major Equipment: 2016-17

Sr. Name Of Equipment / Advance Additional H.S. Code No Machinery Sales Tax Sales Tax

1 Concrete Bathing Plant 8474.3120 17% 03%

2 Concrete Stationary Pump 8413.4000 17% 03%

Truck Mounted Concrete 3 8705.9000 17% 03% Pump

4 Concrete Transit Mixer Truck 8705.4000 17% 03%

Wheel Loader, Shovels, 5 Excavators, Shovel Loaders, 8429 17% 03% Bulldozers & Road Rollers

Forming Material Scaffolding, Shuttering, 6 Propping, Sections, Roofing 7308 17% 03% Frame, Shutters, Balustrades, Pillars & Columns

Film Faced Plywood For Form 7 4412.3200 17% 03% Work

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 25 - 25 - -

No. 5. Strengthening of CAP

1. Established CAP help desk at PEC offices at Islamabad, Karachi, Lahore and Peshawar to facilitate constructors. 2. Resolved the issue of appointment of Supervisory Engineers. 3. NHA allocated CPEC Package II to Local Constructors. CAP Expect Rs. 20 Million each from the winning partners to strengthen the working of Association 4. Liaison with Ministry of Commerce for import of construction machinery. 5. Cooperation with Ministry of Planning, Development and Reform for establishment of Construction & Infrastructure Development Board. 6. Cooperation with Ministry of Planning, Development and Reform for revival of Pakistan Institute of Cost and Contracts (PICC)

Cooperation with National Vocational and Technical Training Commission

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 26 - 26 - - No. 6. Analysis of Balance Sheet from Year 2011 to 2017

Engr. Engr. Name of Engr. S.H Naeemuddin Afzal ur Engr. A.G Engr. S.H Arshad Akber Khattak A. Siddiqui Rehman Usmani Khattak Chairman Dad Sheikh

2017 2016 2015 2014 2013 2012 2011 ASSETS Non-current assets

Property, Plant and equipment 3,123,873 3,262,596 3,225,156 3,394,047 3,517,099 3,817,857 4,025,772

Long term

Advances 46,000

3,123,873 3,262,596 3,225,156 3,394,047 3,517,099 3,817,857 4,071,772

Current assets

Advance,Prepayme nts and deposits 712,500 76,500 32,250 151,000 68,391 70,823 39,500 Short term Investment - - 1,700,000 1,683,317 - - -

Other receivable - - 137,302 - -

Accrued interest - - 28,947 20,789 - - -

Tax refundable - - - 9,899 - - - Cash and bank balances 5,231,279 5,877,848 2,339,224 696,210 1,508,250 2,141,490 2,200,937

5,943,779 5,954,348 4,100,421 2,561,215 1,713,943 2,212,313 2,240,437

Total Assets 9,067,652 9,216,944 7,325,577 5,955,262 5,231,042 6,030,170 6,312,209

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 27 - 27 - - Engr. Engr. Name of Engr. S.H Naeemuddin Afzal ur Engr. A.G Engr. S.H Arshad Akber Khattak A. Siddiqui Rehman Usmani Khattak Chairman Dad Sheikh

2017 2016 2015 2014 2013 2012 2011

Fund And Liabilities Accumulated Fund

3,869,814 Unrestricted fund 5,240,136 3,097,213 3,137,077 2,051,584 2,487,911 2,641,832

4,751,509 Restricted fund 3,473,317 3,851,509 2,116,509 2,116,509 2,188,673 2,236,974

8,621,323 8,713,453 6,948,722 5,253,586 4,168,093 4,676,584 4,878,806 Non-Current liabilities

Deffered grants 83,121 92,357 102,619 114,021 126,690 140,767 156,408

Current Liabilities

521,874 Other payables 411,134 274,236 587,655 823,424 1,099,985 1,164,161 Short term borrowing ------Income tax payable - - - 112,834 112,834 112,834

521,874 411,134 274,236 587,655 936,259 1,212,819 1,276,995

Contingencies and commitments ------Total fund and liabilities 9,226,318 9,216,944 7,325,577 5,955,262 5,231,042 6,030,170 6,312,209

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 28 - 28 - - CAP BUDGETARY POSITION 2015-16 & 2016-17

Period Accounts Description 2015-16 2016-17 Rs. Rs. Opening Balance 2,336,637 5,859,466

Receipts during the year 6,203,000 5,139,752

Expenses during the year 2,680,171 5,795,305

Closing Balance 5,859,466 5,203,913

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 29 - 29 - - CAP STAFF SALARY & EXPENSES 2016-17

Lahore Office Islamabad Office CAP Month Total Total G.Total Salary Exps Salary Exps H.D

Jul-16 133,796 51,502 185,298 99,000 19,708 118,708 0 304,006

Aug-16 133,796 21,741 155,537 99,000 18,883 117,883 0 273,420

Sep-16 133,796 23,519 157,315 99,000 21,549 120,549 0 277,864

Oct-16 133,796 31,850 165,646 99,000 21,604 120,604 0 286,250

Nov-16 133,796 26,288 160,084 99,000 26,245 125,245 30,633 315,962

Dec-16 102,418 27,019 129,437 99,000 20,444 119,444 76,378 325,259

Jan-17 102,418 26,714 129,132 99,000 15,250 114,250 87,733 331,115

Feb-17 127,418 36,105 163,523 87,000 26,570 113,570 98,378 375,471

Mar-17 105,856 35,930 141,786 99,000 15,698 114,698 98,378 354,862

Apr-17 105,856 31,156 137,012 99,000 20,939 119,939 98,378 355,329

May-17 105,856 43,813 149,669 99,000 23,745 122,745 98,378 370,792

Jun-17 105,856 33,725 139,581 99,000 26,074 125,074 98,378 363,033

Total 1,424,658 389,362 1,814,020 1,176,000 256,709 1,432,709 686,634 3,933,363

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 30 - 30 - -

Pictorial

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 31 - 31 - - CAP Pictorial (01.10.2016 to 30.09.2017)

Chairman CAP, Mr. Naeemuddin A. Siddiqui, addressing 19th AGM of CAP

Engr. Sikandar Hayat khattak addressing 19th AGM of CAP

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 32 - 32 - -

19th AGM of CAP Participants

Participants

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 33 - 33 - -

19th AGM of CAP

19th AGM of CAP Participants

Participants

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 34 - 34 - -

19th AGM of CAP

Participants

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 35 - 35 - -

Engr. Sikandar Hayat Khattak presenting shield to Mr. Naeemuddin A. Siddiqui at 19th AGM of CAP

Mr. Naeemuddin A. Siddiqui presenting shield to Mr. Sardar M. Ishaq Khan at 19th AGM of CAP

Mr. Naeemuddin A. Siddiqui presenting shield to Mr.Umair Zahid Qurreshi at 19th AGM

19th AGM of CAP

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 36 - 36 - -

Group photo at Pakistan Green Build Expo.

Mr. Naeemuddin A. Siddiqui receiving shield at Pakistan Green Build Expo.

CAP Meeting

Attending B2B, meeting with Italian Delegation at Islamabad.

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 37 - 37 - -

95thEC meeting of CAP at CAP Office, Lahore

96th EC meeting of CAP at Islamabad Hotel, Islamabad

Inauguration of LCCI Mediation Centre. Honorable Chief Justice Lahore High Court Mr. Syed Justice Mansoor Ali Shah also present on this occasion.

Engr. Sikandar Hayat Khattak, Chairman, CAP at inauguration meeting of LCCI Mediation Centre.

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 38 - 38 - -

Engr. Sikandar Hayat Khattak Chairman CAP and LCCI President Abdul Basit signing a MoU for setting up of a mediation desk for the CAP members in the LCCI. Chief Justice Lahore High Court Mr. Justice Syed Mansoor Ali Shah also present on the occasion.

Group Photo on the occasion of inauguration of LCCI Mediation Centre with Honorable Chief Justice Lahore High Court Mr. Syed Justice Mansoor Ali Shah

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 39 - 39 - -

Engr. Shahid Rafiq, Vice Chairman, CAP delegation led by Engr. Sikandar CAP (Islamabad) presenting shield to Hayat Khattak, Chairman, CAP met of Mr. Ji Bingyuan, Chairman Chinese Chinese delegation under the leadership delegation. Engr. Sikandar Hayat of Mr. Ji Bingyuan at Islamabad Khattak and Khawaja Shoaib Mohiuddin also present on the occasion

CAP delegation led by Engr. Sikandar Hayat Khattak, Chairman, CAP met Mr. Fazal Abbas Maken, Federal Secretary, Ministry of Science & Technology

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 40 - 40 - -

98thEC meeting of CAP at CAP Office, Lahore

Engr. Sikandar Hayat Khattak, Chairman, CAP meeting Chinese delegates

Engr. Sikandar Hayat Khattak, Chairman, CAP met Chinese delegates

CAP delegation met with Member Operation, Punjab Revenue Authority (PRA)

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 41 - 41 - -

Chronology of Event of CAP (01.10.2016 to 30.09.2017) Date Events

28.09.2016 CAP issued press release regarding announcement of CAP election. The news was published by The News, The Nation, Business Recorder, Daily Khabrain and, Engineering Post

95th Meeting of Executive Committee of CAP held on 8th 08.10.2016 October, 2016 at CAP Office, Lahore, under the chairmanship of Engr. Sikandar Hayat Khattak, Chairman CAP.

A delegation of CAP led by Engr. Sikandar Hayat Khattak, 10.10.2016 Chairman CAP, met Mr. Sunil Mitra, Deputy Country Director, Pakistan Resident Mission, Asian Development Bank, Islamabad on 10th October 2016. It was decided that in future, ADB will inform CAP office of all their tender invitations / floated for the relevant work of the Constructors Association.

Pakistan Green Build Council is holding Pakistan Green Build 27 - 29.Oct. 16 2016 at Expo Center on 27th to 29th October, 2016. Mr. Naeemuddin A. Siddiqui, attended the subject Job Fair/Skill Show 2016. Large numbers of CAP members attended the Job Fair/Skill Show 2016.

96th Meeting of Executive Committee of CAP held on 29th 29.11.2016 November, 2016 at Islamabad Hotel, Islamabad, under the chairmanship of Engr. Sikandar Hayat Khattak, Chairman CAP.

20.01.2017 97th Meeting of Executive Committee of CAP held on 20th January, 2017 at CAP Office, Lahore, under the chairmanship of Engr. Sikandar Hayat Khattak, Chairman CAP,

Constructors Association of Pakistan (CAP) and the Lahore Chamber of Commerce & Industry (LCCI) signed a 28.01.2017 Memorandum of Understanding (MoU) by virtue of which the Association has declared LCCI as permanent venue for settlement of commercial, corporate and other disputes of its members and other groups through Arbitration and Mediation.

CAP Chairman Engr. Sikandar Hayat Khattak and LCCI President Abdul Basit inked the document on behalf of their organizations. Chief Justice Lahore High Court Mr. Justice Syed Mansoor Ali Shah was also present on this occasion.

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 42 - 42 - - 31.01.2017 CAP issued press release regarding MoU signing ceremony of CAP and LCCI.

08.02.2017 The News and Business Recorder published interview of Engr. Sikandar Hayat Khattak, Chairman CAP, regarding CPEC projects.

13.02.2017 Daily Pakistan published interview of Engr. Sikandar Hayat Khattak, Chairman CAP, regarding problems of constructors.

07.03.2017 CAP issued press release regarding establishment of CAP help desk at PEC offices at Islamabad, Lahore, Karachi and Peshawar to assist constructors.

11.03.2017 98th Meeting of Executive Committee of CAP held on 11th March, 2017 at CAP Office, Lahore, under the chairmanship of Engr. Sikandar Hayat Khattak, Chairman CAP.

27.03.2017 A delegation of CAP headed by Engr. Sikandar Hayat Khattak, Chairman CAP raised the issue of the constructors in renewal of licenses in a meeting with the Federal Secretary Science & Technology Mr. Fazal Abbas Maken. CAP delegation members were Mr.Naeemuddin A. Siddiqui, Engr. Syed Iqbal Younus, and Khawaja Shoaib Mohiuddin.

30.03.2017 CAP issued press release regarding meeting with the Federal Secretary Science & Technology Fazal Abbas Maken raised the issue of the constructors in renewal of licenses.

14.04.2017 CAP issued press release regarding CIRC recommended a way out for the Problem renewal of PEC Licenses after a lapse of 4 Months.

08.05.2017 99th Meeting of Executive Committee of CAP held on 8th May, 2017 at Islamabad Hotel, Islamabad, under the chairmanship of Engr. Sikandar Hayat Khattak, Chairman CAP

29.05.2017 CAP issued press release regarding exemption given in the PEC Governing Body meeting to categories from C-2 to C-6 from hiring the services of supervisory engineers.

03.07.2017 100th Meeting of Executive Committee of CAP held on 3rd July, 2017 at Islamabad Hotel, Islamabad, under the chairmanship of Engr. Sikandar Hayat Khattak, Chairman CAP.

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 43 - 43 - -

07.07.2017 CAP delegation met with Member Operation, Punjab Revenue Authority (PRA) on Friday the 7th July, 2017 at PRA HQ, Lahore to discuss problem of constructors regarding taxation. CAP delegation led by Mr. Imran Abbas Awan, Vice Chairman, CAP (Punjab) comprising of Engr. Akber Sheikh, Engr. M. S. Asad Mukhtar, Mr. Marghoob Shakir Izhar, Ch. Muhammad Siddique, Mr. Danish Siddique,

07.07.2017 CAP issued press release regarding dishonoring the cheques of constructors by Punjab Finance Department

19.08.2017 101st Meeting of Executive Committee of CAP held on 19th August, 2017 at CAP Office, Lahore, under the chairmanship of Engr. Sikandar Hayat Khattak, Chairman CAP.

Participants Glimpse of Activities of Media Cell During 2016-17

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 44 - 44 - -

19th AGM of CAP Participants

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 45 - 45 - - Participants

Participants

Ediqui

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 46 - 46 - - at 19th AGM of CAP

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 47 - 47 - -

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 48 - 48 - -

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 49 - 49 - -

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 50 - 50 - -

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 51 - 51 - -

Contact Addresses - CAP

❖ Constructors Association of Pakistan (CAP) – Lahore Office

Postal Address 2nd Floor, Classic Complex, 35-M, Model Town Extension, Lahore-54700, Pakistan

Contact Numbers (Tel) +92 42 35178421 (Fax) +92 42 35178422 Email: [email protected] & [email protected] Web: www.cappak.org

❖ Constructors Association of Pakistan (CAP) – Islamabad Office

Postal Address Office No. 204, 2nd Floor, Multy Arcade, Plot No. 1, Sector E-11/1, Islamabad, Pakistan

Contact Numbers (Tel) +92 51 8778234 (Fax) +92 51 8779234 Email: [email protected] Web: www.cappak.org

Auditor:

Tallat Mahboob & Co Chartered Accountant Faisalabad

CONSTRUCTORS ASSOCIATION OF PAKISTAN “Annual Report for The Year 2016 – 2017” - 52 - 52 - -