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Pakistan Daily Economy Update - 12 May

IM Insights
By IM Insights
4 years ago
Pakistan Daily Economy Update - 12 May

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  1. May . 12, 2018 KCCI - eBulletin Foreign currencies: SBP seeks FIA help against illegal inland movement In the wake of ongoing evaluation of Financial Action Task Force (FATF), the SBP has sought help from the Federal Investigation Agency (FIA) to stop the illegal inland movement of foreign currencies. In this respect, it has sent a letter to the FIA requesting immediate action against the culprits involved in illegal movement of foreign currencies. According to the letter, unhindered and unexplained inland movement of such currencies in bulk may serve as a conduit of its smuggling. The motives of such transactions could be manifold including settlement of Hawala transactions. Further, the inland movement of foreign currencies entails serious risks from the perspective of money laundering and financing of terrorism through provision of such funds in cash to the proscribed individuals or entities. Accordingly there is need for a proactive approach to discourage the inland movement of foreign currencies and avert their potential damaging ramifications for the system, the letter read. BR. PM Abbasi launches deep-water container terminal at Karachi port PM Shahid Khaqan Abbasi has inaugurated the country’s first-of-its-kind purpose-built, deep-water container terminal established under the public-private partnership mode. Hutchison Ports Pakistan (HPP), which is a public-private joint venture between Karachi Port Trust (KPT) and Hong-Kong-based Hutchison Ports, has been operating the terminal on trial basis since Dec’16. The KPT has invested more than $ 800Mn to prepare the site for the container terminal and dredge the deep-water channel. The terminal will launch a new regional operations centre in Dec’18, allowing it to engage in remote ship planning for ports in other markets that are part of the Hutchison Ports network. The News. Traders give thumbs-up to senate’s advice The business community has welcomed Senate’s adoption of a recommendation that makes it mandatory for every businessman to have a membership of a trade body to become a tax return filer. Welcoming the recommendations that also include establishment of a central business data record system to improve taxation apparatus, Mufassar Malik, President KCCI, said it was a good proposal and should be implemented without any delay. However, there will be certain challenges - primarily resistance by the businessmenas most of them do not wish to be documented. As the membership base of chambers will increase, the number of return-filers will also go up, he said, adding a large number of non-filing businessmen, having turnover in billions of rupees, would be compelled to get themselves documented if this recommendation is passed by the National Assembly. The News. Miftah to reject Senate body’s recommendations Federal Minister for Finance Miftah Ismail is reportedly going to reject the Senate Standing Committee on Finance’s recommendations which have major revenue impacts, including increasing salaries, pension, reducing petroleum development levy, further tax and additional customs duty. In his windup speech, expected to be delivered on Monday (14th May), the govt. is also expected to give relief to businessmen on account of 6% minimum tax for commercial importers. Either the rate of commercial and industrial imports will be reduced or it will be reversed to final taxation regime. The Finance Minister was to deliver the speech on Friday (11th May) but a lack of quorum compelled him to postpone the speech. A lack of quorum on eve of passing budget can pose threat to survival of the govt. if it fails to manage smooth approval of the finance bill 2018 and other budgetary motions. The News. ECC approves another PKR 20Bn bailout for PIA The govt. has approved a PKR 20Bn bailout package for PIA – the fifth such relief in less than 18 months – and enhanced its sovereign guarantee ceiling to PKR 195Bn from PKR 175Bn to keep the national air carrier afloat. The ECC approved the bailout so that PIA could meet expenditures for the overhaul of aircraft engines. The ECC has approved the fresh borrowing backed by sovereign guarantees at a time when contingent liabilities of the finance ministry have soared above PKR 1Tn. Tribune. Prime minister extends tax break for Pakistan's IT exports by six years PM Shahid Khaqan Abbasi has given a six-year extension in the tax holiday for exports of IT to 2025, a major move aimed at encouraging exports in this era of rapid technological advancement. Cash reward for IT and IT-enabled services similar to the rebate for textile will be given to promote IT exports, announced the PM at the launch of National Incubation Centre (NIC) Karachi programme. The PM also announced a 5% reduction in sales tax on IT, hoping provincial govts would follow suit as after the 18th Amendment to the Constitution, provinces were empowered to impose and collect tax on services. This means that now only Islamabad based companies will enjoy the sales tax relief. He also revealed that the SBP would ask banks to keep a significant part of financing for IT companies and IT-enabled services. Tribune. \ ECC waives duty on items imported from Afghanistan Economic Indicators List of Indicators Date / Period Unit Value Change Daily 11-May 115.62 117.85 0.00% 0.08% Crude (JU'18) 11-May 11-May 11-May 10-May PKR PKR Pts. $ Mn $/bbl 43,595 -1.79 71.41 -0.60% NM** 0.18% Gold (MY'18) Gold (10g) Local 10-May 11-May $/oz PKR 1,321.6 49,671 0.69% 0.26% Silver (MY'18) Cotton(KHI)-40 kg 10-May 11-May $/oz PKR 16.70 7,931 1.45% 0.00% Kibor-6M 11-May % 6.51 $ Bn 17.29 0.00% WoW -2.41% Remittances 4-May FY18 Jul-Apr 18 $ Bn 16.26 YoY 3.93% Exports* Imports* Jul-Apr 18 Jul-Apr 18 $ Bn $ Bn 19.21 49.45 13.68% 14.13% USD-Interbank USD-Open MKT KSE-100 index FIPI Forex Reserves Jul-Apr 18 Trade Balance* $ Bn -30.25 Jul-Mar 18 Current Account $ Mn -12,029 Foreign Direct Inv. $ Bn 2.09 Jul-Mar 18 Jul-Feb 18 LSM Growth* % 6.24 % 3.70 Jul-Apr 18 Avg. CPI Discount Rate % 6.00 Mar-18 WoW= Sources: KCCI Research, PMEXweek , NCCPL, KSE, SBP, PBS* ** Not Meaningful on week; Major Currencies 175 GBP, 11-May-18, 156.5 165 155 145 EUR, 11-May-18, 137.9 135 125 115 USD, 11-May-18, 115.6 105 95 May-17 USD Aug-17 GBP Centre denying Sindh its divisible pool, water shares: CM Accusing the Centre of depriving Sindh of its due share in the divisible pool and water, CM Murad Ali Shah has warned that if the federal govt. did not provide the provincial govt. with its share of PKR 175Bn, several development projects in Karachi and other parts of Sindh would be badly affected. Addressing a post-budget press conference, he maintained that the federal govt. is not only depriving Sindh of financial resources but also denying the province its water share. The News. Pakistan urged to focus on EU, not just China Pakistan, while focusing on CPEC, should also look beyond in the EU, amid the scenario evolving in the aftermath of Brexit, due in 2019. This was the crux of the deliberation during the seminar titled “Post-Brexit trade relations in European Union: Implications for Pakistan”. Speaking on the occasion, Dr Pál Belényesi, Independent Scientific Adviser to the European Parliament, said Pakistan should explore more options for trade and expand its export markets, as relying on a single trading partner is not wise. He said Pakistan’s economy is not diversified enough and its industries should be open to transformation to reap maximum trade benefits. Tribune. April 2018: Auto sales rev up 40%, stand at 25,567 units Sales of locally assembled automobiles, including jeeps and light commercial vehicles, increased to 25,567 units in Apr’18, up 40% compared with 18,326 units in Apr’18, data released by PAMA showed. Cumulatively, in 10MFY18, car sales depicted 23% growth rate to 218,301 units. Tribune. Nov-17 EUR Feb-18 Source: KCCI Research ; Oanda.com Quote of the Day “A penny saved is worth two pennies earned after taxes. ” Randy Thurman The ECC of the cabinet has approved, in principle, exemption of regulatory duties on import of fresh fruits, vegetables and dry fruits from Afghanistan, as announced by the PM during his visit to Afghanistan. The ECC also approved a proposal for introducing necessary amendments to the Ogra Ordinance 2002 to cover the entire LNG/RLNG supply chain in the Ogra regulatory framework. The News. Local govt. allocation increased by 16.5% The Sindh govt. has increased funding for local govt. in its budget announced for FY19 with an allocation of PKR 9.1Bn – a 16.5% raise from last year’s PKR 7.8Bn. Moreover, the development budget for ongoing development schemes of the local govt. has been estimated at PKR 27.9Bn. This amount does not include allocation for any new uplift schemes. The budget also includes a 7.6% increase in the Sindh govt.’s grant for local bodies in FY19 from PKR 66Bn to PKR 71Bn. The Sindh Solid Waste Management Board will get a grant-in-aid of PKR 5.55Bn and a sum of PKR 800Mn has been set aside for the installation of full bore electromagnetic water flow meters at KW&SB. The News. -14.41% -50.55% 4.44% Chart of the Day SINDH - BUGETED TOTAL EXPENDITURE VS. DEVELOPMENT EXPENDITURE (PKR BN) 1,144 1,200 1,000 800 600 458 400 200 141 578 231 617 230 869 739 686 215 214 266 988 282 344 0 Total Provincial Expenditure (B) Provincial Expenditure on development (B) Source: KCCI Research, Sindh Govt. Disclaimer This report has been prepared by KCCI Research & Development Cell. The information contained herein have been compiled or arrived at based upon information obtained from sources believed to be reliable and in good faith. Such information has not been independently verified. icon represents the sole viewpoint of the KCCI R&D Cell, and is stated to enrich the readers' understanding of the news item. The R&D Dept. bears no responsibility for its correctness or accuracy. Contact: res@kcci.com.pk