Pakistan Daily Economy Update - 1 January

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1. Jan 01 , 2021 KCCI - eBulletin Fixed tax regime for construction industry: PM extends relief period till Dec 31 PM Imran Khan has announced extension in tax amnesty scheme for the construction sector till Jun’21, and fixed tax regime to 31st Dec’21, while terming the decision as a “New Year’s gift” for the construction industry. IMF has agreed to the extension in view of the 2nd wave of coronavirus. The projects completion date of 30th Sep’23 has also been extended by a year more, and; exemption for disclosing the source of investment for buyers has been extended till 31st Mar’23. BR. Investors show PKR 186Bn in bank accounts Till now projects worth PKR 186Bn have been registered with FBR under the construction package, whereas, projects worth another PKR 116Bn are in the pipeline. BR. ‘Mini budget likely ahead of talks with IMF’ Govt. is contemplating increase of PKR 3.30 per unit in the electricity tariff by mid-Jan’21, a taxation of up to PKR 200Bn rupees and a possible increase in discount rate ahead of talks with IMF. It hopes that these measures will help restore the $ 6Bn dollars IMF program which have been stalled since Feb’20. The News. July-December: PKR 15Bn shortfall in collection FBR has provisionally collected PKR 2,195Bn net revenue during 1HFY21 against the target of PKR 2,210Bn, reflecting shortfall of PKR 15Bn. The monthly collection stood at PKR 503Bn in Dec’20 against the target of PKR 541Bn, reflecting a shortfall of PKR 38Bn. The FBR has paid refunds of PKR 102Bn during Dec’20. A total of over 30,000 corporate returns have been filed till 31st Dec’20 evening and the number would cross 50,000, the FBR officials said. BR. SRB receives PKR 11.75Bn record revenue in Dec Sindh Revenue Board (SRB) has made a record revenue collection of PKR 11.75Bn during Dec’20 against PKR 9.394Bn during Dec’19, reflecting an extraordinary growth of 25%. The SRB is focused to achieve the assigned revenue target of PKR 135Bn for FY21, despite all the adverse factors such as low economic growth and the resurgence of Covid-19. BR. Fuel prices go up PM Imran Khan has approved increase of PKR 2.31 and PKR 1.80 in the prices of petrol and diesel, contrary to OGRA’s recommendation of PKR 10.68 and PKR 8.37 respectively. Similarly, the OGRA had proposed increase of kerosene oil price by PKR 10.92 and light diesel by PKR 14.87 which the PM reduced to PKR 3.36 and PKR 3.95 respectively. BR. Pak-Afghan trade talks go nowhere Pakistan and Afghanistan are said to have failed to evolve a consensus on a number of conditions of transit trade agreement, due to which minutes of three-day technical meetings could not be signed. The main disagreement, between Pakistan and Afghanistan, was on the wording of one clause of the proposed APTTA: Afghanistan was insisting that it should be minuted in writing that the new APTTA will be signed under the law and framework of World Trade Organization (WTO) which construes free movement of goods including from India through land route. This condition is not acceptable to Pakistan. BR. Nepra approves PKR 3.30 per unit raise in electricity price The New Year is unlikely to bring any relief to power consumers as Nepra has approved an increase of 24.72% or PKR 3.30 per unit in the average base electricity price of X-WAPDA Distribution Companies for FY19 and FY20. The decision if approved by the federal govt. will jack up the base electricity price from the existing PKR 13.35 per unit to PKR 16.65 per unit. The increase will have an impact of around PKR 275Bn on power consumers. The Nation. 47% Pakistanis hopeful of good future A predominant percentage of 47 Pakistanis was hopeful of good future in the New Year 2021 in response to the Gallup Pakistan Survey, in comparison to 43% hope prevailing among 46 nations surveyed. According to Gullup Hope Index, among 5 countries that scored highest on the net score, Nigeria was first with 69% hope followed by Indonesia 66%, Azerbaijan 65%, Vietnam 59%, and Kazakhstan 58%. The most disappointed people turned out to be those of Italy who scored -43%. The News. Stocks close year 2020 at 30-month high The benchmark KSE-100 index gained 60.62 points on Thursday (31st Dec’20) to close the year 2020 at 43,755, which was about the same as closing at the 30-month high of 43,767 points seen on the 17th of Dec’20. On an annualised basis, the index provided a return of 7%. Dawn. Private sector companies again asked to import 100-250mmcfd LNG \ Under the Third Party Access rules, the govt. has once again asked the private sector to import LNG by using the unutilized capacity of the govt. against 600 mmcfd available at PGPL LNG terminal and to this effect Pakistan LNG Limited has issued an advertisement to national dailies, seeking the interest of private sector companies to utilize the govt.’s capacity. The News. Two state-owned LNG companies merged In a much-awaited development, at last two 100% state-owned LNG entities, Pakistan LNG Limited and Pakistan LNG Terminal Limited, formally got merged. The merger will be effective from 1st Jan’21 as PLTL and its board stand abolished. The News. SSGC launches Mega Service Centre to facilitate customers SSGC’s first-ever Mega Service Centre was formally launched at the company’s East Zone in Korangi Industrial Area. The center will offer all gasrelated services under one roof to walk-in customers from 7.30am till 10pm without any break from Monday to Saturday, while on Sundays it will be operational from 9am till 3pm. The center will provide its multifarious services for the public from 1st Jan’21. The News. Economic Indicators List of Indicators Date / Period Unit Value Change Daily USD-Interbank USD-Open MKT 31-Dec 31-Dec PKR PKR 159.83 160.50 -0.28% -0.06% KSE-100 index FIPI 31-Dec 31-Dec Pts. $ Mn 43,755 -1.74 0.14% NM** Crude (AP'19) 31-Dec $/bbl 48.52 0.25% Gold (MA'19) 31-Dec $/oz 1,901.6 0.43% Gold (10g) Local 31-Dec PKR 97,220 0.00% Silver (MA'19) 31-Dec $/oz 26.41 -0.61% Cotton(KHI)-40 kg 31-Dec PKR 10,814 0.91% Kibor-6M 31-Dec % 7.35 0.00% Forex Reserves 24-Dec $ Bn 20.25 WoW -0.29% Remittances Jul-Nov 20 $ Bn 11.77 26.58% Exports* Jul-Nov 20 $ Bn 9.74 2.11% Imports* Jul-Nov 20 $ Bn 19.42 1.29% Trade Balance* Jul-Nov 20 $ Bn -9.69 -0.48% Current Account Foreign Direct Inv. Jul-Nov 20 Jul-Nov 20 $ Bn $ Bn 1.64 0.72 193.98% -18.87% YoY Jul-Oct 20 LSM Growth* % 5.46 % 8.76 Jul-Nov 20 Avg. CPI Discount Rate % 7.00 Jul-20 Sources: KCCI Research, PMEX , NCCPL, KSE, SBP, PBS* ** Not Meaningful, WoW= week on week; YoY=Year on Year Major Currencies 235 GBP, 31-Dec-20, 218.8 225 215 205 195 EUR, 31-Dec-20, 196.6 185 175 165 155 145 USD Jan-20 GBP Apr-20 Jan-21 Paulo Coelho Loans to Private Sector Businesses PKR Bn 35.1 Fixed Investment 103.1 China vows $ 100Mn grant for road infrastructure in Sindh China will provide $ 100Mn grant assistance to Pakistan to upgrade road infrastructure in Sindh under the Chinese-funded framework that envisages economic integration. The govt. have signed a letter of exchange for rehabilitation of specific sections of N-5 project. The News. Total Loans Private sector can import any approved vaccine: Fawad Minister for Science Fawad Hussain has said that the cabinet committee had decided to initially purchase 1.2Mn doses of the COVID-19 vaccine from the Chinese company Sinoform. He also said that the private sector is allowed to import any internationally approved vaccine on its own. The Nation. Oct-20 “Life has many ways of testing a person’s will, either by having nothing happen at all or by having everything happen all at once.” Working Capital -139.6 SECP launches digital onboarding SECP has introduced digital onboarding mechanism for investors of the Asset Management Companies. In this respect, the commission has issued Circular No 35 of 2020 and placed it on the website. The digital onboarding mechanism offers investors not only a seamless account opening process for investments in mutual funds, but also eliminates the requirement of physical presence and submission of physical documents. The News. USD, 31-Dec-20, 160.3 Source: KCCI Research ; Oanda.com Quote of the Day Container shortage fuels upsurge in steel scrap prices Swelling freight charges are hand in glove with imported price pressure to send iron and steel scrap prices up 100% in the local market since lockdown associated with the Covid-19 coronavirus early this year. At Port Qasim, price-on-arrival of iron and steel scrap has doubled to $ 500/ton for booking in Dec’20 from $ 250/ton in Apr’20. Local steelmakers have jacked up rates of their products by PKR 7,000/ton. The News. Profit repatriation increases 12% in July-Nov Repatriation of profits and dividends on foreign investment in Pakistan increased 11.64% to $ 748.1Mn in 5MFY21 compared to profit outflows amounting to $ 670.1Mn in 5MFY20. The highest outflows were from the food sector at $ 161.9Mn followed by the communications sector at $ 119.4Mn. The News. EUR Jul-20 -35.2 -0.1 -36.6 -150 -50 5MFY20 50 5MFY21 150 Source: KCCI Research, MoF APPEAL TO HIRE DIFFERENTLY ABLED PEOPLE IN YOUR SHOPS, OFFICES AND FACTORIES KCCI wants to appeal to its esteemed members to provide suitable job opportunities to differently abled people. KCCI urges Business and Industrial Community to cooperate and join hands with KCCI in this noble cause and contribute towards society as socially responsible entities.