Pakistan Daily Economy Update - 18 June

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1. Jun . 18, 2016 KCCI - eBulletin Other countries pull out, China increases investment in Pakistan According to the SBP, Foreign direct investment (FDI) increased by 10.5% in 11MFY16 on a year-on-year basis. Pakistan received FDI of $ 1,083.6Mn in July-May, which is $ 103.3Mn higher than the FDI received in 11MFY15. Whereas, more than half of the total FDI that Pakistan received in 11MFY16 originated from China alone. FDI from China amounted to $ 571.2Mn in the first 11 months of the fiscal year, which is up 144.2% year on year and equals 52.7% of the total FDI Pakistan received over the same period. Tribune. Imported, locally-manufactured tractors: sales tax rate reduced to 5% Finance Minister Ishaq Dar has announced in the National Assembly that the govt. has decided to reduce general sales tax on imported and locally-manufactured tractors from 10% to 5% while customs duty on agricultural machinery, including harvesters, planters and laser land levelers, has been abolished. The minister further said that these incentives would come into effect immediately after signing of the Finance Bill by President instead of Jul. 1, 2016. The govt. has accepted 86 (62%) recommendations, in principle or partially, out of a total 139 recommendations of the Senate. BR. Economic Indicators Date / Period Unit Value Change Daily USD-Interbank List of Indicators 17-Jun PKR 104.66 0.00% USD-Open MKT 17-Jun PKR 104.80 0.00% KSE-100 index FIPI 17-Jun 17-Jun Pts. $ Mn 38,777 9.00 0.07% NM** Crude (JU'16) 17-Jun $/bbl 46.47 -0.41% Gold (MY'16) 17-Jun $/oz 1,283.4 0.12% Gold (10g) Local 17-Jun PKR 43,332 2.97% Silver (MY'16) 17-Jun $/oz 17.23 0.04% Cotton(KHI)-40 kg 17-Jun PKR 6,039 0.00% Kibor-6M 17-Jun % 6.11% -0.01% 10-Jun $ Bn 21.42 0.75% 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% Proposed Benami Act Provisions not apply to deals made in names of spouses, kin: FBR The provisions of the proposed Benami Transaction (Prohibition) Act, 2016 will not apply to any transaction entered into by an Forex Reserves individual in the name of his spouse, brother or sister, or any lineal ascendant or descendant. The proposed bill restricts the right of any person who is claiming to be the real owner to recover such property. In addition, no person would be able to retransfer Remittances such property to the beneficial owner. BR. Investment in new plant, machinery: provisions allowing tax credits being extended for three years FBR has said that the operation of provisions allowing tax credits on investment in new plant and machinery by an existing industrial undertaking or establishment of new industrial undertakings is being extended for further three years in the budget FY17. Most of the provisions allowing tax credits on investment in new plant and machinery by an existing industrial undertaking or establishment of new industrial undertakings were going to expire by Jun.’16. BR. WoW YoY May-16 Discount Rate % 5.75 Sources: KCCI Research, PMEX (At 4:00PM), NCCPL, KSE, SBP, PBS* WoW= week on week; YoY=Year on Year Amended Finance Bill 2016: FBR restrained from attaching bank accounts ** Not Meaningful The amended Finance Bill 2016 has restrained FBR from attachment of bank accounts of taxpayers till Commissioner Appeal decides first stage of appeal of taxpayers. An amendment has been proposed in the section 140 of the Income Tax Ordinance through amendment in the Finance Bill 2016. At present, tax officials of the FBR were attaching the bank accounts to recover 175 taxes without waiting for the decision of the first stage of appeal i.e. Commissioner Appeals. BR. 165 Textile millers rejects duty on import of Indian cotton Textile millers have said that step to impose regulatory duty on import of cotton from India through Wagha Border is the outcome of false data and non-professional approach of Food Security and Research Standing Committee. While rejecting the recommendation of the committee, the members said the country only has 100,000 plus cotton bales remaining and the stock would be consumed before the arrival of new crop, adding that the quality of available lint with the ginners is very low and can only be used in the open end processing or for production of lower count of yarn.Daily Times. Dar seeks PKR 10.4Tn to service debt Finance Minister Ishaq Dar has placed a demand before National Assembly for borrowing a whopping PKR 10.4Tn in FY17 to service maturing public debt while announcing the withdrawal of a controversial amendment in the income tax law. The govt. will borrow PKR 8.38Tn to pay domestic debt that is maturing in FY17. Whereas, PKR 698Bn will be borrowed from external sources to repay foreign debt inducing short-term loans. He said public debt increased by PKR 4.9Tn to PKR 19.2Tn from July 2013 to March 2016. Tribune. China cuts cost estimate by another $ 200Mn for Gwadar LNG pipeline Pakistan and the Chinese company had initialed an agreement for building a liquefied natural gas (LNG) pipeline from Gwadar, but the company has now lowered the contract price to $ 1.3Bn compared to $ 1.5Bn quoted in the financial bid given to Inter-state Gas Systems. For the Gwadar LNG pipeline and terminal project, China will provide 85% of financing whereas Pakistan will contribute the remaining 15%. The project has been sent to the Executive Committee of National Economic Council (Ecnec) for formal approval. Tribune. Eastern alignment of CPEC: CDWP clears PKR 34Bn Burhan Havelian Expressway The govt. has cleared the Burhan-Havelian road to complete a missing link on the eastern alignment of CPEC at a cost of over PKR 34Bn, while also giving the green light to a PKR 202Mn scheme for renovating the sprawling Prime Minister’s Office. The Central Development Working Party (CDWP) sanctioned 13 development projects worth PKR 91Bn including 7 development projects that will be now placed before the Ecnec for final approval. Tribune. SECP allows NCCPL to send SMS, emails to traders SECP has approved the proposed amendments in the National Clearing Company of Pakistan Limited (NCCPL) regulations with necessary changes. The NCCPL had requested SECP to approve certain amendments in regulations in relation to change in its regulations regarding SMS and E-alerts. The SECP has approved the proposed amendments asked NCCPL to must ensure that requisite system developments relating to SMS and E-alerts are complete and operational before July 1. Daily Times. Pakistan plans to hold trade fair in Hungary Commerce Minister Khurram Dastgir has said in a meeting with Hungary Ambassador Istvan Szabo that Pakistan has planned to organize a trade exhibition and business forum in Hungary in a bid to enhance exports to the eastern European country. He encouraged Hungarian companies to take benefit of investment opportunities in agricultural technology, food processing, dairy processing, infrastructure building, renewable energy, information technology, water management, transportation and waste management, where investment was currently lacking. The ambassador suggested that the two sides could sign the Economic Cooperation Agreement as the Hungarian govt. had already forwarded the agreement to the European Union for comments. Tribune. Oil, gas discovered at Makori Deep-1 Pakistan Oilfields Limited, the operator of Tal block, has discovered a “significant amount” of hydrocarbon reserves in an exploratory well — Makori Deep-1. As a result of drill stem test (DST) conducted at the well to test the potential of Lockhart formation, the well has tested 2,020 barrels per day of crude oil, 5.4mmscfd of gas at 40/64” fixed choke size at the flowing well head pressure of 1,177 psi. The revenues from the well would augment the bottom lines of OGDC which has 27.8% interest; PPL also with 27.8% and POL with 21.1% stake in the block. Going forward, the operator of Tal block is also testing for hydrocarbon presence in Tolanj West -01, which has reached its target depth. Dawn. Major Currencies GBP, 17-Jun-16, 149.6 155 145 135 EUR, 17-Jun-16, 118.0 125 115 105 95 USD, 17-Jun-16, 104.8 85 75 Jun-15 Sep-15 USD GBP Dec-15 Mar-16 EUR Jun-16 Source: KCCI Research ; Oanda.com Quote of the Day "It is an immutable law in business that words are words, explanations are explanations, promises are promises but only performance is reality." Harold Geneen Chart of the Day 1,800 1,600 Net Foreign Direct Investment in Pakistan 1,699 1,635 1,456 1,400 1,084 1,200 1,000 923 821 800 600 400 200 - FY11 Value in $ Mn FY12 FY13 FY14 FY15 11M-FY16 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. 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