Pakistan Daily Economy Update - 11 May

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1. May 11 , 2022 KCCI - eBulletin Norwegian envoy underscores need for deepening trade ties Ambassador of Norway Per Albert Ilsaas, while visiting KCCI has said that although Norway and Pakistan have been enjoying excellent relations, the trade volume was increasing was not very impressive due to many reasons. He said that Norway is fortunate enough to be home to a large and well-integrated Pakistani diaspora of 39,700 which was a sizeable number for Norway as its overall population was 5.3Mn only. He said that President KCCI Muhammad Idrees rightly pointed out immense opportunities in blue economy and Norway is a seafaring nation because the country has a large coastline. He said that a Norwegian company Scatec in collaboration with Nizam Energy has undertaken a project of setting up a solar power plant of 150 megawatts in Sukkur and the financial closure for this project was achieved in Feb’21. In his remarks, President KCCI Muhammad Idrees stated that there was much potential of trade enhancement between the two countries as Norway imports around $3Bn to $ 4Bn of textiles related items from around the globe, while Pakistan exports around $ 96Mn worth of textile items to Norway. He underscored the need to undertake joint ventures in Pakistan. He pointed out that Karachi has the capacity to provide unlimited opportunities in various sectors including marine transportation, fisheries, shipbuilding, and coastal/ecotourism. He said that businesses in both countries can hold dialogues to capitalize upon Pakistan coastline of around 1,000 km. BR. List of Indicators Date / Period Unit Value Change Daily USD-Interbank USD-Open MKT 10-May 10-May PKR PKR 188.66 188.00 0.60% -0.13% KSE-100 index FIPI 10-May 10-May Pts. $ Mn 43,504 -1.16 0.26% NM** Crude Oil 10-May $/bbl 99.76 -2.94% Gold 10-May $/oz 1,841.0 -0.69% Gold (10g) Local 10-May PKR 114,460 0.00% Silver 10-May $/oz 21.42 -1.77% Cotton(KHI)-40 kg 10-May PKR 22,506 0.00% FBR urged to wave further tax on providing CNIC number FBR has been urged to wave further tax where CNIC number is provided by unregistered supplier. KCCI, in its proposals for the FY23 budget has highlighted an issue stating that an obvious anomaly is perpetuated by imposing 3% penal tax (further tax) on registered persons on supplies made to unregistered persons. Despite providing CNIC number of unregistered buyers, the registered seller has still to pay 3% further tax. Moreover, prior to Supplementary Finance Bill 2022, registered seller was not held responsible in case a fake CNIC was provided by buyer. In case CNIC number of unregistered buyer of raw materials is not provided, VAT may be charged at 1.7% on sales of raw material. Giving rationale to the suggestion, KCCI said it would discourage cash economy and encourage documentation by placing the trust in registered persons. Pakrevenue. Kibor-6M 10-May % 14.90 0.03% Forex Reserves 30-Apr $ Bn 16.55 WoW -0.69% Remittances Jul-Mar 22 $ Bn 22.95 7.04% Exports* Jul-Apr 22 $ Bn 26.23 25.46% Imports* Jul-Apr 22 $ Bn 65.49 46.41% Trade Balance* Jul-Apr 22 $ Bn -39.26 -64.79% IMF asks for PKR 7.25Tn tax collection target IMF has demanded that Pakistan fix next fiscal year’s tax collection target at PKR 7.25Tn, which will require imposition of additional taxes of around PKR 300Bn, including withdrawal of agriculture tax exemptions and increase in burden on the salaried class. The target is nearly PKR 350Bn higher than what tax authorities believe can be generated in FY23 without imposing new taxes. The PKR 7.25Tn tax collection target will be PKR 1.15Tn, or 19%, higher than this year’s revised target of PKR 6.1Tn. Tribune. Current Account Foreign Direct Inv. Jul-Mar 22 Jul-Mar 22 $ Bn $ Bn -13.17 1.29 -4688.7% -1.99% Against global trend, gold tola rate hits record PKR 134,400 Domestic gold prices hit an all-time high of PKR 134,400 per tola and PKR 115,226 per 10 grams on Tuesday (10th May’22), up PKR 1,400 and PKR 1,200 from Monday’s rate despite falling bullion rates on the world markets during the last one month. Despite a $ 64 per ounce drop in world gold prices since 7th Apr’22, local consumers will face no price relief because the dollar’s persistent rise against the rupee has negated the benefit. Dawn. CM sets deadline for completion of Orange Line BRTS project Sindh CM Syed Murad Ali Shah has directed Karachi Mass Transit Authority to complete remaining work on BRT Orange Line corridor by endMay’22 so that from the beginning of Jun’22, it could be made operational. He said that 95% of work on the 3.8km orange line had been completed. BR. PM’s electricity relief package: Govt’s nod sought to discontinue PKR 5 subsidy Power Division has sought Federal Govt.’s nod to do away with PM’s relief package on electricity of PKR 5 per unit from 1st May’22 and continue unscheduled load shedding for the next two or three months aimed at passing minimum impact of FCA to consumers and avoid drain of over PKR 300Bn on expensive fuels. IMF, World Bank and Asian Development Bank (ADB) are strongly opposed to the relief package. BR. Drive to check vehicle tax evaders to begin on 16th The Excise and Taxation (E&T) has finalized all arrangements to nab vehicle tax defaulters from 16th May’22. The road checking campaign of Sindh excise department to collect tax from the owners of tax defaulting vehicles will continue till 3rd Jun’22. In Karachi, vehicles would be checked at more than 37 places while the directors of other divisions of the province would determine the places of checking according to their strategy. BR. Rupee hits all-time low against dollar The rupee continued its slide against the dollar on Tuesday (10th Apr’22) with the international currency hitting an all-time high of PKR \ 188.66 in the interbank market, losing 0.6% or PKR 1.13 on a day-on-day basis. Dawn. Harassment of bureaucracy, businessmen: Changes in NAB law under consideration Major changes in the NAB law, based on the decisions and observations of superior judiciary, are under consideration amid reports that Pakistan has even been conveyed by some foreign capitals about their investors' reluctance to invest in Pakistan because of NAB. The News. Govt assures World Bank of reform push in upcoming budget Amid a rising fiscal deficit because of heavy fuel and energy subsidies, Pakistan has assured the World Bank (WB) that it would push through reforms in the upcoming budget for fiscal consolidation to build economic resilience. Critical of the tariff subsidies at the rate of PKR 5 per unit announced by former PM Imran Khan, WB has been asking the authorities to withdraw or phase out the fresh subsidy package because the circular debt was estimated to increase by more than PKR 500Bn during FY22. Dawn. Murad opens e-stamping system Sindh CM Syed Murad Ali Shah has said that the establishment of an e-stamping system would plug revenue leakages, improve compliance ratio, as well as, facilitate taxpayer and build their confidence in the system. The e-stamping system envisages online generation and printing of stamp duty challan from the web-based application, as well as, issuance of e-stamp papers from branches of National Bank of Pakistan. BR. Asaan Mobile Account: SBP announces temporary waiver of OTP/CBC SBP has announced a temporary waiver of One Time Password (OTP)/ Call Back Confirmation (CBC) requirements for opening of Asaan Mobile Account (AMA). SBP, in Dec’19, issued Branchless Banking (BB) Regulations for Financial Institutions and the Asaan Mobile Account (AMA) launched in Dec’21. BR. Withholding tax on profits: SHC bars banks/tax dept from making deductions A Division Bench of Sindh High Court (SHC) has barred the banks/tax department from deduction of withholding tax on bank profits of Provident Funds and Pension and Gratuity Funds, which were earlier recognized and approved under the Income Tax Ordinance, 2001 after their registration under the Trust Act 1892. BR. PTA begins accepting applications for LPWAN licence to proliferate usage of IoTs PTA has started accepting applications for Low Power Wide Area Network (LPWAN) license to proliferate the usage of Internet of Things (IoTs) in the country. This license shall be valid for a term of five years. Applicants for the license will have to provide a letter of application, the CNIC along with other relevant details/documents. This is in pursuance to the Rolling Spectrum Strategy 2020-2023 issued by the Govt. of Pakistan, and to facilitate the introduction of futuristic technologies through automation in various industries. BR. YoY Jul-Feb 22 LSM Growth* % 7.80 % 11.04 Jul-Apr 22 Avg. CPI Discount Rate % 12.25 Apr-22 Sources: KCCI Research, PMEX , NCCPL, KSE, SBP, PBS* ** Not Meaningful, WoW= week on week; YoY=Year on Year Major Currencies 255 245 235 225 215 205 195 185 175 165 155 145 May-21 GBP, 10-May-22, 238.5 EUR, 10-May-22, 198.0 USD, 10-May-22, 188.0 USD Aug-21 GBP Nov-21 EUR Feb-22 May-22 Source: KCCI Research Quote of the Day "Optimism is the faith that leads to achievement. Nothing can be done without hope and confidence." Helen Keller World Press Freedom Index 2022 Norway (1st) Denmark (2nd) Sweden (3rd) Germany (16th) Canada (19th) UK (24th) USA (42nd) Nepal (76th) Ukraine (106th) India (150th) Pakistan (157th) Bangladesh (162nd) Iran (178th) N.Korea (180th) 23.2 13.9 0.0 41.0 38.0 36.6 62.7 55.8 92.7 90.3 88.8 82.0 81.7 78.7 72.7 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0 Reflects the degree of freedom that journalists, news organisations, and netizens have in each country Source: KCCI Research; RSF.org Note If any member is facing any issues pertaining to PakistanAfghanistan investment and trade policies or has project proposals is requested to share the information at secretary@kcci.com.pk for forwarding to the Board of Investment.