Pakistan Daily Economy Update - 16 May

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1. May 15-16 , 2016 KCCI - eBulletin Road to development: CM approves PKR 1.98Bn to improve Karachi’s roads To improve the overall infrastructure of the city, Chief Minister Syed Qaim Ali has approved a special Karachi Package costing PKR 1.98Bn. The plan seeks to repair important roads, upgrade main roundabouts and footpaths and also provide necessary equipment and facilities to the hospitals of Karachi Metropolitan Corporation (KMC). Moreover, around PKR 1.5Bn will be spent on the beautification and uplift works of roads in Clifton, Tariq Road and old National Highway. Tribune – Sun. Economic Indicators Date / Period Unit Value Change Daily USD-Interbank 13-May PKR 104.68 -0.01% USD-Open MKT 13-May PKR 104.85 0.05% US Exim bank interested in financing LNG plants Finance Minister Ishaq Dar has met with vice-president of US Exim Bank, Annette Maresh and gave a detailed account of the business and investment opportunities, urging the US Exim Bank to explore financing development projects in Pakistan. Consequently, US Exim Bank is interested in providing financing for three LNG-based power projects, Baloki, Bhikki and Haveli Bahadar Shah. Tribune – Sun. KSE-100 index FIPI 13-May 13-May Pts. $ Mn 36,122 -0.28 0.20% NM** Crude (JU'16) 13-May $/bbl 47.03 -0.80% Gold (MY'16) 13-May $/oz 1,274.6 0.50% Huge funds for power generation in FY17 Minister for Water and Power Khawaja Muhammad Asif has said that the govt. is committed to coping with energy crisis on top priority basis. The govt. will allocate huge funds in FY17 for power generation and this process will continue to fulfil its promise for getting rid of the load shedding. He further said that under the Program long, medium and short term power generation plans had already been initiated in the country. Daily Times – Mon. Gold (10g) Local 13-May PKR 43,560 3.19% Silver (MY'16) 13-May $/oz 17.14 -0.82% Cotton(KHI)-40 kg 13-May PKR 6,055 1.80% Kibor-6M 13-May % 6.39% 0.01% 6-May $ Bn 20.83 0.22% Remittances Jul-Apr 16 $ Bn 16.03 5.18% Exports* Jul-Apr 16 $ Bn 17.32 -12.99% Imports* Jul-Apr 16 $ Bn 36.34 -3.70% Trade Balance* Jul-Apr 16 $ Bn -19.02 -6.68% Current Account Avg. CPI-FY16* Jul-Mar 16 Jul-Apr 16 $ Mn % -1,606 2.79 18.52% Withdrawal of duty exemptions: SRO reforms – levelling the playing field A major reform process initiated by the current government, at the behest of IMF, was to eliminate Statutory Regulatory Orders (SROs), which provide exceptions or partial exemptions from normal tariffs or import duties and taxes. While launching the exercise, the government claimed that not only a level playing field would be restored for all the industrial players, small or large, but also the country’s exchequer would benefit substantially. This would be because even though the customs duty was around 15% on the average, actual collection was only a third of that. Similarly, sales tax collection would be restored to its original value of 17%, rather than an effective 9.4%. Tribune – Sun. Fiscal year 2017 budget: Telecom sector likely to get incentives, concessions The telecom sector is likely to get major incentives in the upcoming budget 2016-17, including extension in tax holiday and tax reduction for IT services companies. The govt. is considering extension in tax holiday on telecom exports for three years whereas a reduction in the tax on revenue of IT companies from 8% to 2% is also under consideration in the budget for FY17. BR - Sun. Budget 2016-17: FED on many items to be restored A key revenue generation measure to be taken in budget (2016-17) is the restoration of Federal Excise Duty (FED) on a number of items including cosmetics, paints/varnishes and lubricating oils and enhancement in excise duty on beverages and cigarettes. If this proposal is finalized, 10% FED may be imposed on cosmetics, paints/varnishes and lubricating oils from 2016-17. BR - Mon. Budget 2016-17: govt. decides to implement short-term recommendations of TRC The govt. has decided to implement short-term recommendations of the Tax Reform Commission (TRC) in the upcoming budget through Finance Bill 2016. Some of the short-term recommendations of the TRC included; proper valuation of immovable properties, simplification of laws, structural ethics and Grievance Redressal System both at Chief Commissioner/Collector level and FBR (HQs) and use of Mufassil units for the purpose of Broadening of Tax Base (BTB). Other short-term recommendations of the TRC included utilization of withholding tax data, utilization of NADRA data for the purpose of BTB and changes in procedure of Alternative Dispute Resolution (ADR). BR - Sun. Customs lacks mechanism to auction confiscated items: FBR Pakistan Customs is sitting on stockpiles of confiscated goods at the ports, as it lacks mechanism to auction the items, causing revenue losses to national exchequer. In this regard, FBR’s Directorate of Internal Audit has said that a large quantity of imported goods, seized on various grounds, are lying idle at Karachi’s port terminals and have not been put on auction despite a lapse of prescribed time. He further said that these goods are depreciating fast and may not fetch the amount even close to their actual value. The News – Sun. FBR negligence costs exchequer millions Sheer negligence showed by the FBR, in regard to the extinction of sales tax registration of service providers, has cost millions to the national kitty. The service providers, who got registered with the FBR before the 18th Amendment, had now been paying tax on services to the provincial authorities since 2011. However, the FBR instead of blocking their sales tax registration has made all sales tax registration active in the system, providing a chance to the unscrupulous elements for using these registrations for fake tax adjustments. BR - Mon. List of Indicators WoW Forex Reserves YoY Apr-16 Discount Rate % 6.00 Sources: KCCI Research, PMEX, NCCPL, KSE, SBP, PBS* ** Not Meaningful WoW= week on week; YoY=Year on Year Major Currencies 175 165 GBP, 13-May-16, 150.9 155 145 EUR, 13-May-16, 118.8 135 125 115 105 95 USD, 13-May-16, 104.8 85 75 May-15 Aug-15 USD Improving network: SNGPL upgrading transmission system Sui Northern Gas Pipelines Limited (SNGPL) has said that it is upgrading the existing transmission system to ensure normal gas pressure in its pipelines. Under the revamping plan, PKR 8.7Mn has been allocated for improving the Rawalpindi transmission system to end the low gas pressure, especially in winter. The low pressure is mainly the result of gas shortage and due to obsolete supply lines. Tribune – Sun. Cotton crop: Ministry proposes strict monitoring of Bt varieties The Ministry of Textile Industry has suggested that the approval of new Bt cotton varieties may be strictly linked with good gene expression and toxic level in order to avoid any further sharp fall in crop production in the future. Following a 40% drop in cotton output in the 2015-16 season, the ministry has strongly recommended that the departments concerned should ensure that seed varieties are strictly linked with the gene expression. Tribune – Sun. SECP registered 625 companies in April SECP has registered 625 new companies, witnessing an increase of 22% during the month of April 2016 as compared to the same month of 2015. During 10MFY16, 4,984 new companies were registered, as compared to the corresponding period last year, it represents a growth of 21%. Around 92% of companies have been registered as private limited companies, while around 6% were registered as single member companies and 2% of the companies were registered as public unlisted, non-profit associations, trade organizations and foreign companies. Daily Times – Sun. Feb-16 EUR May-16 Source: KCCI Research ; Oanda.com Quote of the Day "You always have to put out to the universe what your dream is—that is in part how they become actualized.” Isabella Boylston Pakistan Banking Awards: UBL crowned country’s best bank In collaboration with global accountancy firm A F Ferguson, the Institute of Bankers Pakistan (IBP) has instituted the Pakistan Banking Awards in which United Bank (UBL) was declared the country’s best bank for making a significant contribution to national development and demonstrating effective management of its resources. Tribune – Sun. Inventories: PSO seeks PKR 190Bn payment plan from govt. Pakistan State Oil (PSO) has sought a detailed plan of payment of PKR 190Bn from the govt. to maintain sufficient inventories of all the products. Water and Power Ministry has conveyed that the power sector would need supply of 18,000 MT furnace oil per day in May and June to run public sector power plants aimed at ensuring supply from all plants. The projected demand of power sector for Jun.’16 is almost 16% more than supply. BR - Sun. Nov-15 GBP Chart of the Day Country Wise Remittances Received by Pakistan (10MFY16) SAUDI ARABIA 4,833 DUBAI 2,364 USA 2,088 U.K. 2,022 ABU DHABI 1,124 920 OTHER COUNTRIES OMAN 668 KUWAIT 618 371 BEHRAIN 308 QATAR 0 1000 2000 Value in $ Mn 3000 4000 5000 Source: KCCI Research, SBP 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