Pakistan Daily Economy Update - 18 November

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1. November 17-18 , 2019 KCCI - eBulletin Worst is over, Hafeez tells business leaders in Karachi In a two-hour long interaction with large foreign investors of the country, Finance Adviser Hafeez Shaikh tried to assuage his audience that the worst of the adjustment might be over and the year 2020 will be better. Investors informed advisor, that people have been adversely hit by interest rate hikes and poor decision making like withdrawing the announcement for axle-load regulation. These things hurt business confidence. Dawn-Sun. $ 71Mn loan approved for Karachi mass transport plan The Asian Infrastructure Investment Bank (AIIB) has approved a loan of $ 71.81Mn for the Karachi Bus Rapid Transit Red Line project. The project will cost $ 503.33Mn, of which ADB will provide $ 235Mn, French Development Agency $ 71.81Mn, Green Climate Fund $ 37.20Mn with a grant of $ 11.80Mn, and Sindh govt. $ 75.71Mn. Dawn-Sun. Economic Indicators List of Indicators Date / Period Unit Value Change Daily USD-Interbank USD-Open MKT 15-Nov PKR PKR 155.39 155.30 -0.01% 0.00% KSE-100 index FIPI Pts. $ Mn 37,584 -0.14 0.91% NM** Crude (AP'19) 15-Nov 15-Nov 15-Nov $/bbl 57.82 1.65% Gold (MA'19) 15-Nov $/oz 1,467.5 -0.29% 15-Nov Gold (10g) Local 15-Nov PKR 73,903 -0.29% Businessmen reject draft amendments in Income Tax Rules 2002 The business community has rejected the draft amendments in Income Tax Rules 2002, binding real estate agents and jewelers to maintain record and report about suspicious transactions to FBR, saying the gold and real estate businesses, which have already been nearly paralysed, will be collapsed completely. According to FBR’s SRO1320(1)2019 issued for draft amendments to the Income Tax Rules, 2002, the record to be maintained by the real estate agents and jewellers under new rules can be inspected by tax authorities along with other law enforcement agencies. Where the record is not maintained in the prescribed form, their business licence shall be suspended, besides they may face penalty and prosecution. The Nation-Mon. Silver (MA'19) 15-Nov $/oz 16.92 -0.41% Cotton(KHI)-40 kg 15-Nov PKR 9,645 -1.10% Kibor-6M 15-Nov % 13.53 0.01% 8-Nov FY20 $ Bn 15.50 WoW -0.10% Remittances Jul-Oct 19 $ Bn 7.48 -1.82% Sindh govt sets up body to re-evaluate K-IV project after Nespak objections As the fate of the Greater Karachi Water Supply Scheme, also called K-IV, hangs in the balance, the Sindh govt. has set up a technical committee to re-evaluate the project after the state-owned Nespak raised objections over its design. The multibillion-rupee scheme, meant to meet the water needs of Karachiites, has remained a distant dream even after 8-years of its formal launch. Dawn-Sun. Exports* Jul-Oct 19 $ Bn 7.55 3.81% Imports* Jul-Oct 19 $ Bn 15.32 -19.21% Trade Balance* Jul-Oct 19 $ Bn -7.78 33.52% -1.55 0.65 63.89% 238.72% Continuing with ex-govt’s policies helped improve business reforms Adviser to PM on Commerce, Abdul Razak Dawood, has said that Pakistan’s improvement in the World Bank’s business reform report was made possible by continuing the policies of the previous govt. He maintained that good actions taken by the previous govt. should be appreciated, including the business reforms. Dawood asserted that water supply is a bigger problem for Sindh industries than gas and electricity and Sindh govt. should not raise water prices for industries. The News-Sun. Forex Reserves Jul-Sep 19 $ Bn $ Bn Jul-Oct 19 Jul-Aug 19 LSM Growth* % % Jul-Oct 19 Avg. CPI Discount Rate % Jul-19 WoW= week, NCCPL, KSE, Sources: KCCI Research, PMEX ** Not Meaningful on week; Current Account Foreign Direct Inv. FBR establishes free of cost helpline to facilitate taxpayers FBR has established a free of cost helpline to provide fast and reliable service to the public. The helpline not only educates the public 215 but also provides them a forum through which the public could put forward their queries and seek resolution of issues that come up 205 from time to time. The Nation-Sun. 195 Turkish companies want JVs and investment in SEZs Ihsan Mustafa Yurdakul, Ambassador of Turkey in Pakistan, has said that Turkish companies are interested to explore JVs and investment in SEZs that would be built in Pakistan under CPEC and added that for this purpose a delegation of Turkish businessmen could be invited to Pakistan to study business opportunities in SEZs. The Nation-Sun. Vehicles stuck at ports: Commerce Division, FBR asked to resolve matter PM's Office has reportedly ‘compelled' the Commerce Division and FBR to recommend release of more than 1,000 stuck up used imported vehicles. Implementation of SRO 52(1)/2019 on 15thJan’19 had reduced misuse of import schemes while certain bonafide overseas Pakistanis were facing problems. This had resulted in vehicles being stuck at the ports. PMO called for necessary action be taken and implementation status be shared with it within 2 weeks. BR-Sun. MFF 2005-18: Pakistan has highest tranche cancellation rates: ADB wing ADB has said that Pakistan has the highest cancellation rates, i.e., 36% of the approved financing in completed tranches of Multitranche Facility Financing (MFF). ADB in its report“ ADB's MFF, 2005-2018: Performance and Results Delivered," stated that in Pakistan, project management and bid evaluation capacity were weak, bid evaluation processes were excessively complex and prone to leakage of information, and payment delays were excessive. BR-Sun. \ CPEC effect: Taiwanese textile companies may relocate to Pakistan Taiwan Textile Federation President Justin Huangm, while speaking to Pakistani media has said that Pakistan being a cheap labor market, can transform into an excellent destination for Taiwanese textile companies, which are willing to relocate their units outside Vietnam. He said that at present, Vietnam is crowded, which causes difficulties for Taiwanese textile firms there, such as labor shortages and in Pakistan, however, labor issues will not emerge at least for the next 10 years and this is something attractive for him. He also stressed the need for easing the visa approval process for the Taiwanese investors. Tribune-Mon. FBR restructuring: seven-member Steering Committee constituted A 7-member Steering Committee has been constituted under the supervision of FBR Chairman Shabbar Zaidi to expedite the reforms process for restructuring the entire tax machinery and introduce centralized collection of GST mechanism on services and goods. Also as many as 4 more sub-committees have been constituted to assist and expedite the reform process of main Steering Committee. The committee on restructuring of FBR comprises FBR members including FBR Members Policy of Customs and Inland Revenue and sub-committees also comprises senior tax officials. BR-Mon. Aramco declares $ 1.71Tn valuation in blockbuster IPO Saudi Arabia has put a value of up to $ 1.71Tn on energy giant Aramco in what could be the world's biggest IPO, but missed its initial target of $ 2Tn. Aramco will sell 1.5% of the company in a blockbuster initial public offering worth $ 24-25.6Bn, scaling down Saudi Arabia's original plan to sell up to 5% of the firm. The energy giant began taking bids from investors in a price range of 30-32 Saudi riyals per share ($ 8-8.5). The much-delayed offering could exceed the world´s biggest listing -- the $ 25Bn float of Chinese retail giant Alibaba in 2014. The News-Mon. -6.04 10.32 13.25 SBP, PBS* Major Currencies GBP, 17-Nov-19, 200.7 185 175 165 155 145 135 125 115 105 95 Nov-18 USD EUR, 17-Nov-19, 171.9 USD, 17-Nov-19, 155.5 Feb-19 GBP May-19 EUR Aug-19 Nov-19 Source: KCCI Research ; Oanda.com Quote of the Day "If you do not conquer self, you will be conquered by self." EU offers technical assistance on FATF action plan The EU has offered technical assistance to Pakistan for implementation of FATF action plan by the country as per a joint press release issued at the conclusion of the 10th session of the EU-Pakistan Joint Commission in Brussels. Implementation of GSP-Plus, issues hampering trade and investment, and improving the business climate remained focus of the discussion. Dawn-Sun. IMF allows Pakistan to issue fresh sovereign guarantees of PKR 250Bn IMF has allowed Pakistan to issue fresh sovereign guarantees of PKR 250Bn in order to reduce the circular debt in the energy sector. It can give such guarantees in other areas as well. Earlier, the global lender had capped sovereign guarantees at PKR 1.27Tn or 3.6% of GDP under the $ 6Bn loan program. The launch of Islamic bond would allow Shariah-compliant banks to extend financing worth PKR 200Bn to the CPPA, which would, in turn, pay dues of oil marketing companies, gas utilities and IPPs. Tribune-Mon. YoY Napoleon Hill Chart of the Day EODB 2020: Protecting Minority Investors Malaysia (2) U.A.E (13) India (13) Taiwan, China (21) Sri Lanka (28) Pakistan (28) Bangladesh (72) Nepal (79) Bhutan (111) Iran (128) Afghanistan (140) Maldives (147) 88 80 80 76 72 72 60 58 46 40 36 32 0 20 40 * Higher score indicates a higher rank 60 80 Source: KCCI Research; WB 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