Pakistan Daily Economy Update - 14 May

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1. May . 13-14, 2018 KCCI - eBulletin Govt plans to settle PKR 100Bn tax refunds before its term ends Finance Minister Miftah Ismail has assured businessmen that the govt. would settle PKR 100Bn of tax refunds before of the end of its term. Talking to textile exporters, he said that exporters would get money in May’18 and even more in Jun’18. Ismail said Pakistan’s exports would reach $ 23Bn this year and the govt. has set exports target of $ 28Bn for FY19; if the govt. gives 3% rebate on exports, exports will reach around $ 70Bn. Every sector is demanding incentives, while taxes paid by all exporters barely reach PKR 31Bn at the rate of 1.25%. The finance minister also said that the business community in Karachi should imitate businessmen who set up Sialkot airport with their own resources. Zubair Motiwala, former President of KCCI, said the industry is facing liquidity crunch and if their issues are not immediately resolved, small exporters would be wiped out. The News-Sun. Ismail says under-invoicing exists, raises questions on trade data Speaking to the business community, Finance Minister Miftah Ismail said that massive under-invoicing exists in the amount of goods imported from China and the UAE, a statement that puts question marks not just over Pakistan’s trade deficit figure but also mechanisms put in place to analyze the data. It is important to curb massive under-invoicing, he said; China’s records state Pakistan imports $ 16Bn worth of goods, while according to the invoices Pakistan receives, it import $ 12Bn worth of material from China. The same goes with the UAE, where the difference is around $ 2-2.5Bn. Pakistan is already pursuing a plan to digitally exchange trade data to capture the real value of imports from China, although the second deadline to make the system operational has been missed. Businessmen asked Ismail to refrain from changing the previous tax regime of commercial imports from the final 6% to a minimum 6%; they showed apprehension on the change in regime and said that it will open gates for corruption. Tribune-Sun. Govt plans to recover all GIDC arrears with interest The govt. has planned to recover all outstanding Gas Infrastructure Development Cess (GIDC) along with interest from all consumers except for CNG stations, which will get a 50% relief in cess payment. In a bid to pave the way for the recovery, the Senate Standing Committee on Petroleum and Natural Resources has recently approved the GIDC (Amendment) Bill 2018. Amendments to the law will facilitate the govts plan to recover the entire outstanding cess along with mark-up at 4% above Kibor. The mark-up will continue to build until all the arrears are cleared. The govt. will apply old cess rates which include PKR 300 per mmbtu on fertiliser feedstock, PKR 150 per mmbtu on fertiliser fuel, PKR 200 per unit on captive power plants, PKR 100 per unit on the industry, K-Electric, state power generation companies and independent power plants, PKR 263.56 per unit on CNG stations in region-I and PKR 200 per unit on CNG stations in region-II. The previous govt. had imposed the cess in an effort to finance the building of pipelines for gas import but so far, not a single pipeline has been laid with the help of GIDC. Tribune-Sun. Commerce, FBR lock horns over tariff reductions Commerce Division has shown a rare displeasure over the Revenue Division for not considering reduction across all 481 tariff lines in budget FY19 to enhance export competitiveness and productivity of the domestic industries. The FBR has only considered 104 tariff lines, mostly raw materials, by withdrawing the customs duty while reducing duty on other 28 tariff lines. The rest of the tariff lines were dropped, which has triggered resistance from the Commerce Division. Showing its annoyance, the Commerce Division has sent a formal letter to FBR by highlighting that all tariff proposals announced in the budget FY19 are in violation of rules of business and are not transparent. Dawn-Sun. PM wants exporters to reach PKR 100Bn mark PM Abbasi has said that the country had immense potential to compete in the global market and Pakistani exporters should increase their exports to at least PKR 100Bn. He said the govt. had already met the demands of investors and exporters and now it was up to them to enhance the exports volume. He said 3-month exports incentives announced by the govt. are now paying dividends and hinted that the incentives period could be enhanced to three years. The News-Mon. 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 11-May PKR PKR Pts. $ Mn $/bbl 43,595 -1.79 70.56 -0.60% NM** -1.19% Gold (JU'18) Gold (10g) Local 11-May 11-May $/oz PKR 1,319.1 49,671 -0.19% 0.26% Silver (JU'18) Cotton(KHI)-40 kg 11-May 11-May $/oz PKR 16.65 7,931 -0.32% 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; -14.41% -50.55% 4.44% Major Currencies 175 GBP, 13-May-18, 156.5 165 155 145 EUR, 13-May-18, 138.1 135 125 115 USD, 13-May-18, 115.6 105 95 May-17 USD Aug-17 GBP EUR Nov-17 Feb-18 Source: KCCI Research ; Oanda.com Quote of the Day \ SECP chairman appointed after 10 months The govt. has appointed Shaukat Hussain as the new chairman of the SECP after almost 10 months, with the top echelon served under acting chairmanship since the suspension of Zafar Hijazi as the commission’s chief. Hussain was serving as Commissioner in SECP and has served as executive director/registrar of Companies and head of Corporatization and Compliance Department at the SECP. The News-Sun. Import of vehicles: Ministry convenes meeting of stakeholders today The Commerce Division has convened a meeting of stakeholders on Monday (14th May) to chalk out a practicable mechanism for import of vehicles under Personal Baggage, Transfer of Residence and Gift Schemes. The facilities are being misused by importers who buy the use of the passports of overseas Pakistanis to import used cars and sell them in the market as commercially imported vehicles. BR-Mon. SC comes down hard on K-Electric The Supreme Court (SC) has come hard on K-Electric for prolonged and unannounced load shedding in Karachi and has directed the utility to submit a report on 20th May. The SC has also restrained it from resorting to unannounced load shedding on the pretext of load management. The SC observed that Ramadan is approaching fast and if the situation remained the same, citizens would be subjected to hardships due to power load shedding. CEO K-Electric submitted before the court that the utility is working to remove the faults, which developed in two of its 18 units. The required parts would arrive in two weeks’ time to fix the problems. Meanwhile, the SC has given one-month time to Mayor Karachi to complete the cleaning of nullahs in Karachi and directed that matters pertaining to hurdles in tenders and development works should be forwarded to the Sindh Water Commission. BR-Sun. PTA to block unregistered mobile devices after June 15, 2018 PTA has advised all mobile phone consumers, importers and sellers to get non-operational/inactive mobile devices verified before 15th Jun’18 as all unregistered mobile devices will be blocked after the deadline. Mobile phone users in Pakistan must verify authenticity of the mobile device in line with PTA regulations prior to buying a mobile device(s), said the telecom regulator. The PTA has launched Device Identification, Registration and Blocking System (DIRBS) that will atomically block all smuggled and unregistered smart-phones as well as feature phones in the country. It is important to note that PTA has assured that mobile devices currently operational/active on mobile networks in Pakistan will not be affected and do not need to be verified. However, mobile devices non-operational/inactive must be made compliant by 15th Jun’18. Daily Times-Sun. Two oil firms told to suspend work at Keamari terminal On the request of the Ministry of Defence (MoD) authorities, the federal govt. has finally ordered immediate suspension of unauthorized operations at two key oil installations at Keamari, being carried out by private oil marketing companies (OMCs), AlNoor Terminal and Hascol Petroleum, without prior security clearance. The MoD had complained that the storage terminals of the two firms at Keamari were being operated without getting NoC from it. Dawn-Mon. "Collecting more taxes than is absolutely necessary is legalized robbery". Calvin Coolidge Chart of the Day Sindh Current Revenue Receipts FY19 (PKR Bn) Federal Straight Transfers , 44, 5% Federal Grants Federal Revenue Assignment, 605, 67% to Offset Losses, 16, 2% Provincial Tax Receipts, 103, 11% Source: KCCI Research, Sindh Govt. Provincial NonTax Receipts , 20, 2% Collection by SRB, 120, 13% 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