Pakistan Daily Economy Update - 18 July

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1. Jul . 18, 2017 KCCI - eBulletin FBR to settle refund claims in two days The FBR will clear refund claims of up to PKR 1Mn against PKR 6,853 refund pay orders (RPOs) issued by 30th Apr’17 within the next two days. The payments will be transferred by direct electronic transfer to claimant’s accounts through the SBP. The next part of the refund commitment would be fulfilled by making payments against RPOs with amount more than PKR 1 Mn by 14th August’17. The News. FBR forays new team to meet mammoth tax target for 2017/18 The FBR’s top management has brought in a major team reshuffling at its key Inland Revenue Service (IRS) arm with the revenue body facing an arduous task of meeting the ambitious tax collection target of PKR 4.01Tn during FY18. In a first but major jolt after the newly appointed Chairman Tariq Bajwa assumed charge, the tax machinery has made transfer and postings of 18 officers of IRS in BS 20 to 22. The News. Foreign investment hits 8-year high Pakistan’s Foreign Direct Investment (FDI) rose by some 4.6% to $ 2.4Bn to reach 8-year high during FY17 compared to $ 2.31Bn in FY16. Net FDI inflows stood at $ 2.81Bn against the outflow of $ 403Mn. Portfolio investment declined by 66%, standing at negative $ 531Mn while total foreign investment surged 9% to reach $ 2.16Bn at the end of FY17 compared to $ 1.98Bn in FY16. Chinese investment accounted for about 50% while other major inflows were received from Netherlands, Turkey, France and UK. Year-on-Year basis, with $ 228.5Mn inflows and $ 29.6Mn outflows, overall FDI stood at $ 199Mn in Jun.’17 compared to $ 269Mn in Jun.’16, showing a decline of 26% or $ 70Mn. BR/Dawn. Dar urged to maintain cash subsidy on exports Commerce and textile ministries have urged Finance Ministry to allow the continuation of an unconditional cash subsidy on exports in FY18 under the PM’s PKR 180Bn support package. So far, PKR 4.5bn have been released against total submitted claims of more than PKR 15Bn which would be released soon. The exporters are not willing to fulfil the prerequisite for claiming export subsidy on the basis of an incremental increase in export proceeds. They are trying to convince Finance Ministry to change policy and continue the package on the pattern of the first six months. However, no final decision has been taken in this regard. Dawn. $ 10Bn invested in oil E&P sector in four years: Khaqan Petroleum Minister Shahid Khaqan Abbasi has said that foreign and domestic companies have invested $ 10Bn in petroleum Exploration & Production (E&P) sector of Pakistan in the last four years when the investment dropped down 40% globally as a result of low oil prices. BR. New gas discovery to boost domestic, industrial supplies: Abbasi The govt. has announced three new hydrocarbon finds in Sindh with a total estimated flow of about 52Mn cubic feet per day (mmcfd) and further claimed credit for achieving 101 discoveries in four years of its tenure. Sharing details, Petroleum Minister Shahid Khaqan Abbasi said that Petroleum Exploration Limited (PEL), a private firm, made the gas condensate discovery in Badin-IV North exploration licence at Zainab-1 well in Tando Mohammad Khan district of Sindh province. Dawn. Threats to businesses significantly reduced: OICCI survey A latest survey conducted by Overseas Investors Chamber of Commerce and Industry (OICCI) in Jun.’17 showed that threats and security concerns have substantially reduced in Pakistan for all key stakeholders of businesses. The result mirrors the improved security environment all over Pakistan, especially in Karachi. The respondents experienced 69% reduction in petty crimes i.e. mobile and cash snatching and 90% decrease in the higher intensity street crimes like car snatching. Serious crimes like abductions/hostage taking and extortion demands, respondents across Pakistan reported major reductions as compared to 2016, ranging from 94% decrease in Lahore and 92% in Karachi. The Nation. Sindh: SSGC to complete Shikarpur-Jacobabad pipeline next month The Sui Southern Gas Company (SSGC) is confident of completing the 34Km, 24-inch diameter gas pipeline from Shikarpur to \ Jacobbabad in Sindh by the end of Aug’17. The company is also executing a number of projects to augment its existing transmission network with 8 more gas pipelines being laid in different areas of Sindh and Balochistan, of which 3 are spread across different areas of Karachi. Tribune. DG Khan Cement’s Hub plant to come online by December this year DG Khan Cement’s latest manufacturing plant at Gadani, which would be Pakistan’s largest in terms of installed capacity, will officially begin production by Dec’17. The 9,000 ton per day plant at Hub is being constructed at an estimated cost of $ 300Mn. This is the only expansion project to become operational in 2017 while new capacities additions 25.5-26 Mn ton by other players of would come online by 2020-21. Tribune. Export of more sugar in two phases sans rebate likely Economic Co-ordination Committee (ECC), in its upcoming meeting, is likely to approve additional export of 0.6Mn tons sugar in two phases without rebate. Once 0.45Mn tons out of the allowed 0.6Mn is exported, the committee headed by Commerce Minister will meet again and recommend enhancement of export quantities, if deemed appropriate. BR. Agricultural development: World Bank to give PKR 39.2Bn loan to Punjab The World Bank would give a PKR 39.2Bn loan to the Punjab govt. for “Punjab Irrigated-Agriculture Productivity Improvement Project” to improve irrigation technologies at the grass root level for farmers. The total project cost is PKR 67.5Bn including a PKR 39.2Bn (58.08%) loan from the World Bank, a PKR 2.6Bn (3.8%) contribution from Punjab govt. and PKR 25.7Bn (38.13%) farmers' contribution. Through project’s implementation, 40% losses will be averted in irrigation channels. Accordingly, the cropping intensity will increase by 9% and enhancement in crop yield will be 31%. BR. Foreign banks: FBR exempts profit on loans borrowed by government FBR has exempted profit on loans borrowed by Pakistani govt. under Facilities Agreement from four foreign banks from payment of income tax. In this regard, FBR has issued SRO 655(I)/2017 where profit on loan has been exempted from M/s Credit Suisse AG borrowed for $ 200Mn on Mar. 3, 2014; $ 250Mn on Sept. 7, 2015; $ 325Mn on Dec. 10, 2015; and $ 408Mn on Mar. 29, 2016. Similarly, under SRO 656(I)/2017, FBR has exempted profit on loans of $ 70 Mn on Oct. 24, 2015 from M/s Dubai Islamic Bank PJSC, under SRO 657(I)/2017, profit on loans of $ 100 Mn has been exempted borrowed on Jun. 29, 2015 from M/s Standard Chartered (as Lead Manager) and M/s Noor Bank PJSC (as Investment Agent). BR. Economic Indicators List of Indicators Date / Period Unit Value Change Daily 17-Jul 17-Jul 17-Jul 17-Jul 17-Jul 17-Jul 17-Jul 17-Jul 17-Jul 17-Jul PKR PKR Pts. $ Mn $/bbl $/oz PKR $/oz PKR % 105.39 107.00 44,523 3.32 46.19 1,233.4 43,500 16.51 6,645 6.15% 7-Jul $ Bn 21.45 0.01% 0.14% 0.42% NM** -0.09% 1.33% 0.60% 5.46% 0.00% 0.01% WoW 0.37% YoY -3.08% -1.63% 18.67% -36.32% -132.03% USD-Interbank USD-Open MKT KSE-100 index FIPI Crude (AU'17) Gold (JY'17) Gold (10g) Local Silver (JY'17) Cotton(KHI)-40 kg Kibor-6M Forex Reserves Jul-Jun 17 Remittances $ Bn 19.30 Jul-Jun 17 Exports* $ Bn 20.45 Jul-Jun 17 Imports* $ Bn 53.03 Jul-Jun 17 Trade Balance* $ Bn -32.58 Jul-May 17 Current Account $ Mn -10,641 % 4.16 Avg. CPI-FY17* Jul-Jun 17 May-17 Discount Rate % 5.75 Sources: KCCI Research, PMEX , NCCPL, KSE, SBP, PBS* ** Not Meaningful WoW= week on week; YoY=Year on Year Major Currencies 175 165 155 145 135 125 115 105 95 85 75 Jul-16 GBP, 17-Jul-17, 137.3 EUR, 17-Jul-17, 120.4 USD, 17-Jul-17, 105.0 Oct-16 USD Jan-17 GBP Apr-17 Jul-17 Source: KCCI Research ; Oanda.com EUR Quote of the Day "He who knows, does not speak. He who speaks, does not know." Lao Tzu Chart of the Day Market Capitalization Vs No. of Listed Companies at PSX 10,000 9,000 8,000 7,000 569 7,421 6,655 4,000 9,522 5,155 565 560 560 6,000 5,000 7,588 570 560 560 557 FY13 FY14 Listed Companies (RHS) FY15 FY16 FY17 Total Market Capitalization 555 550 Source: KCCI Research, MoF, PSX Capitalization value in PKR Bn 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