Pakistan Daily Economy Update - 14 January

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1. Jan . 14, 2017 KCCI - eBulletin Companies barred from destroying records before 10 years The SECP has barred companies from destroying physical record before 10 years period and has directed the corporate sector to preserve all such documents in electronic form permanently. It has amended the Companies (Registration Offices) Regulations, 2003 through SRO 20(1)/2017. For destruction of record, the current period is five years. However, the physical documents and record filed at the time of incorporation of a company shall be preserved in the physical form permanently. BR. Relocation of industries: incentive package on the cards The government is formulating a targeted incentive package to attract relocation of appropriate industries into Pakistan with special tax incentives to encourage transfer of efficient technology, and concessions for industrial set-ups. In this respect, an inter-ministerial meeting was recently convened in Board of Investment (BoI) which was chaired by the Secretary BoI. The incentive package would be finalised in the light of suggestions of the FBR, Commerce Ministry and other stakeholders for relevant sectors. BR. Pakistan’s first deep-water terminal to be ready in April The much-delayed Pakistan’s first deep-water container terminal at the Karachi Port has eventually entered the final phase of infrastructure development to welcome mother vessels by mid-April in 2017. Mother vessels have the capacity to carry 17,00018,000 containers of 20-foot each. KPT (Karachi Port Trust) has awarded the dredging contract to Van Oord Dredging and Marine Contractors BV of the Netherlands for PKR 2.98Bn. Tribune. Chinese ministry Okays SEP-Abraaj deal Shanghai Electric Power (SEP) has said that it has received approval from the Chinese Ministry of Commerce to acquire stakes in KElectric. One of Abraaj Group’s companies, KES Power, had reached an agreement with SEP to divest its stake in K-Electric, the country’s largest and only vertically integrated power utility. The deal, when closed, will be worth $1.77Bn. Dawn. Fertilizer subsidy restored on PM's directive Prime Minister Nawaz Sharif has directed that cash subsidy on urea sales should be restored in order to provide relief to the agricultural sector. The govt. had allocated PKR 28Bn in cash subsidy on fertilizer sales, but it was discontinued earlier in the week after the entire amount was consumed. However, the govt. had not withdrawn the General Sales Tax (GST) subsidy on fertilizer amounting to PKR 184 per 50kg bag of urea. Under this subsidy, it has reduced sales tax from 17% to 5%. Tribune. Open-end: All equity funds to maintain at least 5% of net assets in cash SECP has proposed certain measures to improve liquidity risk management in the open end equity oriented funds after consultation with the Mutual Funds Association of Pakistan (MUFAP). As per the requirements, all equity funds and funds of funds shall have to maintain at least 5% of net assets in cash and cash equivalents, to meet immediate liquidity needs. Furthermore, all AMCs on behalf of funds will be required to make arrangements with banks/development finance institutions (DFI), in advance for borrowing to deal with unexpected redemptions. However, the borrowing should not exceed 15% of net assets of the funds, all AMCs will ensure compliance with this requirement by 1st Mar’17. Tribune. Economic Indicators List of Indicators Date / Period Unit Value USD-Interbank 13-Jan PKR 104.85 0.01% USD-Open MKT 13-Jan PKR 108.40 -0.09% KSE-100 index FIPI 13-Jan Pts. $ Mn 49,517 -4.37 0.00% NM** Crude (FE'17) 13-Jan 12-Jan $/bbl 53.06 1.65% Gold (FE'17) 12-Jan $/oz 1,196 0.40% Gold (10g) Local 13-Jan PKR 43,542 0.79% Silver (FE'17) 12-Jan $/oz 16.79 0.02% Cotton(KHI)-40 kg 13-Jan PKR 6,977 0.39% Kibor-6M 13-Jan % 6.12% -0.01% 6-Jan $ Bn 23.20 0.16% Remittances Jul-Dec 16 $ Bn 9.46 -2.27% Exports* Jul-Dec 16 $ Bn 9.91 -3.82% Imports* Jul-Dec 16 $ Bn 24.40 10.10% WoW Forex Reserves YoY Trade Balance* Jul-Dec 16 $ Bn -14.49 -22.20% Current Account Avg. CPI-FY17* Jul-Nov 16 $ Mn % -2,601 3.88 -90.97% Jul-Dec 16 Nov-16 Discount Rate % 5.75 Sources: KCCI Research, PMEX , NCCPL, KSE, SBP, PBS* ** Not Meaningful WoW= week on week; YoY=Year on Year Major Currencies 175 165 155 145 Corporate tax returns drop 26% in 2016 Corporate sector and high net-worth individuals filed 26% less returns in the tax year 2016 than in the preceding year, indicating the tax machinery’s failure to convince the taxpayers into declaring their annual income and assets. Total number of corporate and high net-worth individual taxpayers, registered with the Large Taxpayers Unit (LTU), Karachi, stands at 3,900. Of which, only 2,875 taxpayers filed their returns and wealth statements for the tax year 2016. The News. 135 Imported LNG, better management increase gas availability by 20% The govt. increased gas supply to domestic and industrial consumers up to 20% during the ongoing winter season due to injection of re-gasified liquefied natural gas (RLNG) into the system and its load management practices. There has been a substantial decrease in consumer complaints this winter as gas availability has increased 15-20%. The News. 85 SECP to improve liquidity risk management in mutual funds SECP has proposed certain measures to improve liquidity risk management in open-end equity oriented funds after consultation with the Mutual Funds Association of Pakistan (MUFAP). As per the requirements, all equity funds and funds of funds would have to maintain at least five percent of net assets in cash and cash equivalents, to meet immediate liquidity needs. All AMCs should ensure compliance with this requirement by 15th Feb’17. The News. GBP, 12-Jan-17, 127.7 125 115 EUR, 12-Jan-17, 111.0 USD, 12-Jan-17, 104.5 105 95 75 Jan-16 Apr-16 USD GBP Jul-16 Oct-16 Jan-17 Source: KCCI Research ; Oanda.com EUR Quote of the Day "Only those who will risk going too far can possibly find out how far one can go." Ogra restricts retail network expansion by OMCs The Oil and Gas Regulatory Authority (Ogra) has restricted oil marketing companies (OMCs) for the expansion of their retail network in such areas where they have lesser storage capacity than required, till the construction of backup storage capacity. The marketing of refined oil products is undertaken by licensed OMCs. Among these OMCs, PSO leads with an overall market share of 57%; followed by Shell and Attock Petroleum Limited (APL) with 10% share each. The News. Housing loans up 13% to PKR 65.85Bn in July-Sept Housing loans rose more than 13% year-on-year to PKR 65.85Bn during the quarter ended Sep. 30, 2016, as soft interest rate whetted the consumer appetite. SBP, in its quarterly housing finance review, recorded outstanding loans to home buyers and developers at PKR 58Bn in the same quarter a year earlier. The housing finance market has witnessed a robust growth in recent years due to various reasons, including positive macroeconomic indicators, stability in economy and improving law and order situation. Tribune. Change Daily T. S. Eliot Chart of the Day Pakistan- Province Wise Land Coverage Khyber Pakhtunkhwa, 74521, 9% Nepra to introduce fresh upfront tariff for power projects in Thar NEPRA has decided to introduce a fresh upfront tariff for future coal-based power projects in Thar to replace the existing lucrative rates to “early birds”. Announcement made by the regulator has said that the authority has decided not to extend the already determined Thar coal upfront tariff. The existing rates, criticized at the time by private commentators for being expensive, entailed upfront rate of 8.33 US cents per unit for foreign-funded plants of 660 megawatts and 9.57 cents for locally funded projects. Likewise, the upfront tariff for foreign-funded projects of 1,100MW was set at 7.99 cents and 9.13 cents per unit for locally funded projects. Dawn. Balochistan, 347190, 44% Federally Administered Tribal Area, 27220, 3% Islamabad (Capital), 906, 0% Sindh, 140914, Home loans grow for 11th quarter in a row 18% Punjab, 205344, Aaccording to data released by the volume of outstanding home loans increased for the 11th consecutive quarter in July-Sept 2016. 26% Housing finance extended by all banks and development finance institutions (DFIs) amounted to PKR 65.8Bn on Sept 30, up 13.5% from a year ago. As for fresh disbursements, banks and DFIs extended new loans of PKR 4.1Bn to 851 borrowers in July-Sept, down Area in Sq Km Source: KCCI Research, InfoPak.gov 12.7% from the same three-month period a year ago. HBFC holds the largest share (22%) in terms of outstanding home loans. It Disclaimer accounted for 42% of the new borrowers in the quarter under review while its share in new disbursements remained 14.5% with PKR This report has been prepared by KCCI Research & Development Cell. The information 597Mn. Dawn. FBR collected PKR 1.5Tn in first half of 2016-17 FBR Chairman has informed that FBR has collected PKR 1.5Tn in the 1HFY17 as compared to PKR 1.3Tn during the corresponding period last year. He further said that 7% growth in tax revenues was witnessed, compared to the target of 16% for the FY17. He added that revenue collection during Dec‘16 had been the highest so far in the current fiscal. Dawn. 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