Pakistan Daily Economy Update - 14 June

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1. Jun . 14, 2016 KCCI - eBulletin Sindh rejects advance taxation proposal Sindh has refused to collect advance income tax from provincial sales tax filers on behalf of the federation, terming the proposed measure unconstitutional. The Sindh Revenue Board’s (SRB) refusal can virtually derail the federal govt. plan to use the provincial revenue authorities to broaden the federal tax base. The rejection also jeopardizes the Centre’s plan to collect PKR 30Bn in additional taxes by levying 3% advance income tax on provincial sales tax filers from FY17. The committee also did not accept the FBR’s logic of bringing an amendment into the law to address pure administrative issue. Tribune. Big businesses: Govt. proposes amendments to income tax calculation method The federal govt. has proposed changing the income tax calculation method for collecting super tax from big businesses and high net worth individuals, imposed to meet financing needs of temporarily displaced persons (TDPs) and the security establishment. According to the Finance Bill 2016, in Section 4B, the govt. has proposed 2 amendments. In 1st amendment, it has proposed extending the super tax by another year, i.e. FY17, although all the big businesses and multinational companies are opposing the levy. Through the 2nd amendment, it has been proposed that after the word income, occurring for the first time, the expression “other than depreciation losses and business losses” will be inserted. The change in definition would increase tax collection from this head to about PKR 35Bn in FY17. Tribune. PKR 550Bn ADP announced in Punjab Budget The Punjab govt. has announced a PKR 550Bn Annual Development Program (ADP) for FY17. The social sector has received the highest priority (31%) with major focus on education (PKR 73Bn, 13%), health (PKR 44Bn, 8%) and clean drinking water (PKR 45Bn, 8%) followed by physical infrastructure. An allocation of PKR 9Bn has also been made for investment in the energy sector to overcome power shortages in the province and stimulate industrial growth. BR. Economic Indicators Date / Period Unit Value USD-Interbank List of Indicators 13-Jun PKR 104.61 Change Daily 0.36% USD-Open MKT 13-Jun PKR 104.10 -0.58% KSE-100 index FIPI 13-Jun 13-Jun Pts. $ Mn 36,980 0.45 0.11% NM** Crude (JU'16) 13-Jun $/bbl 49.20 -3.74% Gold (MY'16) 13-Jun $/oz 1,285.1 1.01% Gold (10g) Local 13-Jun PKR 41,485 -0.10% Silver (MY'16) 13-Jun $/oz 17.44 0.85% Cotton(KHI)-40 kg 13-Jun PKR 6,039 0.00% Kibor-6M 13-Jun % 6.12% 0.00% 3-Jun $ Bn 21.26 -1.57% Remittances Jul-May 16 $ Bn 17.84 5.58% Exports* Jul-May 16 $ Bn 19.15 -12.39% Imports* Jul-May 16 $ Bn 40.32 -2.74% Trade Balance* Jul-May 16 $ Bn -21.17 -7.28% Current Account Avg. CPI-FY16* Jul-Apr 16 Jul-May 16 $ Mn % -1,519 2.82 17.71% WoW Forex Reserves YoY With two new services, Punjab expects to receive PKR 184Bn in revenues May-16 Discount Rate % 5.75 The Punjab govt. has declared that it would be increasing tax revenues to PKR 184.43Bn FY17 with the addition of two more Sources: KCCI Research, PMEX, NCCPL, KSE, SBP, PBS* services to the tax net. However, the province is expected to fall short of current year’s tax collection target as a majority of ** Not Meaningful WoW= week on week; YoY=Year on Year new services are reluctant to pay taxes. Initially, the target was PKR 160.59Bn, but because of a slow growth in collections, it Major Currencies was revised downwards to PKR 150.79Bn. Whereas, non-tax revenues are expected to be PKR 95.62Bn. Tribune. Allocation for energy sector cut to PKR 9Bn The Punjab govt. has “rationalised” energy allocations for 2016-17 to PKR 9Bn against PKR 31Bn last year as it was able to attract “sufficient private investment” for the sector, with a number of projects already at various phases of completion. Out of these PKR 9Bn, PKR 4.36Bn would go to small hydro projects which the government has been executing for the last few years at Marala, Pakpattan, Chianwali and Deg Outfall. Dawn. Govt. plans to contract $ 8Bn foreign loans Despite a 39% cut in assistance from the United States, the government plans to contract $ 8Bn foreign loans, including $ 1.8Bn through international commercial bonds and Islamic Sukuk, during 2016-17. In the budget documents submitted to parliament, the finance ministry has estimated PKR 1.2Bn US assistance for public sector development projects next year, compared with PKR 1.8Bn during the outgoing financial year. Dawn. PKR 3.1Tn revenue target: FBR needs to collect PKR 448Bn in Jun.’16 FBR has to meet the ambitious revenue collection target of PKR 448Bn in the month of Jun.’16 to meet the annual target of PKR 3.10Tn for FY16. During May.’16, FBR collected PKR 298Bn against revenue collection of PKR 233Bn in the same period of last fiscal year, reflecting a growth of around 26% compared with the target of PKR 305Bn for May.’16. Similarly, the gross collection amounted to PKR 2.69Tn during 11MFY16 and after payment of refunds of PKR 53Bn, the net collection stood at PKR 2.65Tn during the period under review. BR. FBR told to resolve Sindh’s WHT issue The Senate Standing Committee on Finance held a hearing of tax collecting bodies of the federal government and the Sindh government to understand the issue of input tax adjustment and deduction of 3% withholding tax from non-filers. Sindh had complained that the enforcement of 3% withholding tax through the Finance Bill would lead to a collapse of their tax collection system. The Senate committee has directed the FBR to resolve the issue. Dawn. 12,568MW to be added to national grid by 2018 Over 12,568MWs of electricity would be added to the national grid after completion of a number of power generation projects by year 2018. Under a long term plan, the country would have an additional generation capacity of 30,948MW by the year 2022 through Neelum Jhelum, Chashma nuclear, wind, hydel, LNG, Jamshoro Coal and Bagasse power projects. Furthermore, around 8,630 MW would be generated under the prioritized China Pakistan Economic Corridor (CPEC) projects in the same period. The Nation. SBP issues rules for payment card security SBP has issued regulations for payment card security to promote modern payment systems to safeguard the interests of consumers. The regulations are to secure payment card operations of the financial institutions and payment systems operators and payment service providers in Pakistan and are based on international best practices and standards. The News. Nepra asks firms to maintain details of transmission, distribution The Nepra has made it mandatory for all the transmission and distribution companies to offer non-discriminatory open access to its respective systems and interconnection services for wheeling of electricity. According to the Nepra (Wheeling of Electric Power) Regulations 2016, has notified that every transmission licensee and distribution company will prepare and maintain a detailed report of the electric power capacity of its respective transmission or distribution system. The News. SOLAS amended: VGM certificate mandatory for export containers No export container will be allowed to sail sans Verified Gross Mass (VGM) certificate from Jul. 1, 2016 under new amendment to Safety of Life at Sea Convention (SOLAS). The International Maritime Organization (IMO) has amended the SOLAS and put new requirements for loading a packed container onto a ship for export to ensure verified weight. The shipper is responsible for the verification of the packed container's weight and after Jul. 1, 2016, it would be a violation of SOLAS to load a packed container onto a vessel if the vessel operator and marine terminal operator did not have verified container weight. BR. 175 165 GBP, 13-Jun-16, 147.0 155 145 135 EUR, 13-Jun-16, 116.6 125 115 105 95 USD, 13-Jun-16, 103.5 85 75 Jun-15 Sep-15 USD GBP Dec-15 EUR Mar-16 Jun-16 Source: KCCI Research ; Oanda.com Quote of the Day “Those people, who when they spend, are neither extravagant nor miserly but keep the golden mean between the two (extremes)” Al-Furqan: 67 Chart of the Day CURRENT & DEVELOPMENT EXPENDITURES (FY12-FY17) 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 2011-12 2012-13 2013-14 Current Expenditure Value in PKR Bn 2014-15 2015-16 2016-17 Development Expenditure Source: KCCI Research, MoF 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