Pakistan Daily Economy Update - 3 August

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1. August 03 , 2022 KCCI - eBulletin Govt. halves fixed tax for non-filers: KCCI Finance Minister Miftah Ismail has announced a plan to reduce the fixed tax rate to PKR 3,000 for non-filers from PKR 6,000 on electricity bills, besides exempting consumers whose bills were up to 150 units. The Karachi Chamber of Commerce and Industry (KCCI) in this regard issued a press release while referring to a zoom meeting held between the Finance Minister, Chairman BMG Zubair Motiwala, President KCCI Muhammad Idrees and small traders. During the session, KCCI leadership expressed concerns over the high rate of taxes charged on electricity bills. The Finance Minister promised to remove all the other taxes, except GST, from the electricity bills once the fixed tax regime is activated, while requiring to submit a document intimating authorities about tax payment throughout the year at year-end. The KCCI leadership urged the govt. to accept the genuine demands of small businessmen who are already struggling to make both ends meet and increase the suggested threshold of 150 units of electricity consumption from the fixed tax regime and remove other taxes from electricity bills. Dawn. List of Indicators Date / Period Unit Value Change Daily USD-Interbank USD-Open MKT 2-Aug 2-Aug PKR PKR 238.38 240.00 -0.19% -1.44% KSE-100 index FIPI 2-Aug 2-Aug Pts. $ Mn 40,192 -0.14 0.29% NM** Crude Oil 2-Aug $/bbl 93.83 0.10% Gold 2-Aug $/oz 1,773.2 -0.89% July exports down 24% to $2.219Bn MoM Pakistan’s exports declined by 24% on a MoM basis in Jul’22 and remained $ 2.219Bn compared to $ 2.918Bn in Jun’22, says the PBS. According to the data released by PBS, the trade deficit narrowed by 46.76% on MoM and stood at $ 2.642Bn in Jul’22 compared to $ 4.962Bn in Jun’22. Whereas, imports declined by 38.31% on MoM basis and remained $ 4.861Bn in Jul’22 compared to $ 7.880Bn in Jun’22. Trade deficit narrowed by 18.33% on a YoY basis and remained $ 2.642Bn in Jul’22 compared to $ 3.235Bn in Jul’21. Exports declined by 5.17% on YoY basis and remained $ 2.219Bn in Jul’22 compared to $ 2.340Bn in Jul’21. Imports declined by 12.81% on YoY basis and remained $ 4.861Bn in Jul’22 compared to $ 5.575Bn in Jul’21. BR. Gold (10g) Local 2-Aug PKR 136,230 0.00% Silver 2-Aug $/oz 19.82 -2.39% Cotton(KHI)-40 kg 2-Aug PKR 20,577 0.00% Kibor-6M 2-Aug % 15.88 15.88% Forex Reserves 22-Jul $ Bn 14.41 WoW -5.43% Pakistan meets final condition for release of funds: IMF IMF has confirmed that Pakistan had completed all prior actions for the revival of its loan program but linked the approval of a $1.18Bn disbursement by its executive board in Aug’22 to confirmation of $ 4Bn in additional inflows from Islamabad’s friendly countries. The finance minister earlier announced the govt. had lined up $8.5-10Bn inflows from friendly countries against a financing gap of $4bn estimated by the IMF. Dawn. Remittances Jul-Jun 22 $ Bn 31.24 6.36% Exports* Jul-22 $ Bn 2.22 -4.76% Imports* Jul-22 $ Bn 4.86 -10.48% Jul-22 $ Bn -2.64 14.77% Jul-Jun 22 Jul-Jun 22 $ Bn $ Bn -17.41 1.87 -839.8% 1.13% SECP enables WeChat service SECP became the first-ever regulatory body and public sector organization to enable the WeChat service, for Chinese investors to incorporate companies in Pakistan. SECP’s WeChat Service will enable users to exchange messages, documents, images and payments for complete support and solution, in Mandarin language. Dawn. Cement sales plunge 47.7% on construction slowdown According to the data shared by the All Pakistan Cement Manufacturers Association (APCMA), local cement dispatch fell 45.28% to 1.88Mn tones in Jul’22 from 3.44Mn tones in Jul’21. Exports fell by 66% to 153,517 tons in Jul’22 from 452,777 tons in Jul’21. Dawn. Oil sales down 26% 1MFY23 began with a 26% YoY decline in oil sales to 1.442Mn tons, the lowest since Feb’21. Oil sales in Jul’21 and Jun’22 were 1.938Mn tons and 1.936Mn tons, respectively. The drop in sales of furnace oil (FO), high speed diesel (HSD), and petrol by 5%, 38%, and 27%, respectively, to 350,000 tons, 444,000 tons, and 594,000 tons in Jul’22 from 367,000 tons, 721,000 tons, and 808,000 tons in Jul’21 was the main reason for the overall drop in country’s oil sales. Dawn. Rupee continues to gain ground vs dollar Pakistani currency maintained its modest recovery for the third consecutive working day on 2nd Aug’22, as it regained 0.19% (PKR 0.46) to PKR 238.38 against the US$ in the inter-bank market after the IMF said “Pakistan has completed prior actions for loan review”. Tribune. Over PKR 129Bn PHL loans: MoF asks PD to engage lenders for rescheduling The Finance Ministry has advised the Power Division to engage lenders for rescheduling of PKR 129.310Bn loans of Power Holding Limited (PHL) as fiscal constraints do not allow it to pay the principal amount. BR. Rupee fall costs PSO PKR 63Bn The free fall of PKR against the US$ has put an additional burden of PKR 63Bn on PSO, that is facing a liquidity crunch and is fearing default on international payments. ECC has recently approved the release of funds amounting to PKR 30Bn for PSO as part of a bailout. ECC approved the stipulation that PKR 20Bn would be provided by the CPPA-G/ Power Division to PSO on 1st Aug’22 and PKR 12.8Bn would be provided by 4th Aug’22. Tribune. Carmakers may be forced to use local parts \ The govt. is expected to bind car producers through some regulations to increase the levels of localization. At a corporate briefing, the management of Honda Atlas Cars (HCAR) disclosed efforts for localization of different auto products and parts. They said Honda City has achieved a localization level of 70%; Civic has achieved 60% and BR-V 50%. Due to the lack of technology, the management indicated that not all completely knocked down (CKD) parts could be localized, and heavy investment is required in this regards. Tribune. Expatriates can open business account SBP said that foreign businesses having 51% or more shareholding held by NRPs might operate business value accounts in foreign currencies and PKR. The businesses would have a foreign currency business value account (FCBVA) to invest from foreign currency-denominated govt. of Pakistan’s registered debt securities (and) foreign currency-denominated term deposit/remunerative product scheme of same AD (authorized dealers/banks). The businesses would opt to open and operate rupee-denominated accounts, nonresident rupee business value account (NRBVA) that could invest in a range of products including rupee-based govt. debt securities, PSX listed companies, and SECP-registered nonlisted companies, among many others. Tribune. YoY Trade Balance* Current Account Foreign Direct Inv. Jul-May 22 LSM Growth* % 7.10 % 24.93 Jul-22 Avg. CPI Discount Rate % 15.00 Jul-22 Sources: KCCI Research, PMEX , NCCPL, KSE, SBP, PBS* ** Not Meaningful, WoW= week on week; YoY=Year on Year Major Currencies 305 295 285 275 265 255 245 235 225 215 205 195 185 175 165 155 145 Aug-21 GBP, 2-Aug-… EUR, 2-Aug-22, 241.0 USD, 2-Aug-22, 240.0 USD Nov-21 GBP Feb-22 EUR May-22 Aug-22 Source: KCCI Research Quote of the Day “You can never cross the ocean until you have the courage to lose sight of the shore. ” Christopher Columbus Imports of chemicals from FY17 to 3MFY22 from FY17 to 3MFY22 (PKR Bn) 3437.196 Violation of AML laws: SECP imposes penalties on 4 firms SECP has imposed penalties on four companies including brokerage houses for committing serious violations of AML laws and regulations. Penalties of PKR 60,000-200,000 have been imposed in accordance with their violations. BR. Ahsan wants dashboard to track daily economic activities Federal Minister for Planning, Development and Special Initiatives directed PBS and the Ministry of IT to develop a dashboard in order to monitor the daily activities of the economy in the country and to promote the innovative projects of national importance under the Innovation Support Fund (ISF) to be launched soon. BR. ICI to become Lucky Core Industries ICI Pakistan Ltd is going to change its name to Lucky Core Industries Ltd, to align the company’s name with its holding company, Lucky Cement Ltd. Dawn. Govt. may sell off 5 to 10 MHz spectrum The govt. is exploring options to sell off 5 to 10 MHz spectrum in an auction in order to fetch $ 150 to $ 300Mn into the national kitty. The News. Agonizing outages hit Karachiites as KE power plant develops fault The KE on 2nd Aug'22 said that the first unit of its Bin Qasim Power Station-3 (BQPS-III) was currently offline following an identified fault, with an estimated restoration time of 8-10 weeks. Dawn. 796.1806 FY17 983.3596 1191.6946 1164.828 561.1884 FY18 FY19 FY20 FY21 3MFY22 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.