Pakistan Daily Economy Update - 19 October

Transcription

1. Oct . 19, 2016 KCCI - eBulletin Pakistan urges US to ease travel advisory Pakistan has urged the US to revise its travel advisory pertaining to the country in a bid to promote a softer and more investor-friendly image to US citizens. This request was put forth by Commerce Minister Khurram Dastgir Khan, during the 8th Trade and Investment Framework Agreement (TIFA) Council Meeting. During the meeting, the two sides discussed ways and means to improve access of Pakistani exports to the United States, including those of textiles and agricultural items, enforcement of Intellectual Property Rights in Pakistan, opening up of defence procurement in Afghanistan to Pakistani companies among others. Tribune. Preferential treatment to textiles: US rejects key demand USA has rejected Pakistan's foremost demand of preferential treatment to its textile products in the US market, saying that Pakistan has to rely on the existing Generalized System of Preference (GSP). In this regard, Commerce Minister has asked USA to revise travel advisory, ensure preferential access to its textile market and ease visa regime for exporters of IT related services to further strengthen trade ties between the two countries. BR. Prime Minister underscores need for increased trade volume In a meeting with Ambassador Michael Froman, US Trade Representative to Pakistan; Prime Minister Muhammad Nawaz Sharif has said that the US is one of the largest trading partners of Pakistan and it would be in the interest of both countries to enhance their trade volume which had been hovering around $ 5Bn for the last five years. He further said that the foreign companies are making handsome profits on their investments in Pakistan which indicated great opportunities and potential of the country and that preferential market access might be granted for Pakistani textile products which would greatly boost Pakistani exports to the US markets. BR. Dollar gains vs rupee as foreign inflows drop A tax on real estate has resulted in a drop in foreign investment in properties across Pakistan, which is slowing down foreign currency inflows and appreciating the dollar against the rupee in the open market. Currency dealers said the dollar rose as high as PKR 106.20 on 18th Oct 2016 and settled at PKR 105.90, reflecting the supply and demand gap in the open market. It remained stable in the interbank market. Dawn. Economic expansion: Govt. wants private sector to invest in Pakistan Board of Investment (BoI) Chairman has said that the govt. is encouraging the private sector to set up industries in Pakistan. Speaking to a delegation of the Pakistan Business Council (PBC) of UAE, that Special Economic Zones (SEZs) have been established in the country to meet global challenges of competiveness to attract foreign direct investment (FDI). He further said that the govt. offered a one-time exemption from all taxes on all imported capital goods and exemption from income tax for a period of ten years till June 30th 2020 and 5 years thereafter for SEZ Zone enterprises. Tribune. Probing investments: Property's fair value to be the value notified by FBR The fair market value of immovable property shall be the value notified by the FBR for the purpose of investigating cases of unexplained assets or investments within the real estate sector under section 111 of the Income Tax Ordinance 2001. In this regard, the FBR has amended Income Tax Rules, 2002 through SRO 978(l)/2O16 to specify procedure for valuation of assets for the purposes of section 111 of the Income Tax Ordinance. BR. Real estate sector: No amnesty scheme under study: FBR FBR Chairman Nisar Muhammad Khan has made it clear that there is no amnesty scheme under consideration for the real estate sector. The tax authorities are not in agreement to suggestion of National Assembly Standing Committee on Finance of giving one time exemption or imposing a fixed tax on the difference amount and are not introducing any amnesty scheme. BR. First license for private equity fund approved SECP has approved first ever application for a private equity and venture capital fund under the newly promulgated Private Funds Regulations, 2015. The license will allow Lakson Investments Limited to launch private equity (PE) and venture capital funds (VC) as well as alternative funds. The license granted by the SECP is the first step for regulation of private pools of capital that are raised locally for deployment by various types of investment funds. Dawn. Nepra accused of hurting investment climate Water and Power Ministry has accused Nepra of hampering investment climate in power sector through abrupt shifting towards competitive bidding regime from upfront tariff regime without any formal consultation. In this regard, Ministry has recently stated that it envisages competitive bidding as the next logical step after success of upfront tariff regime. This will not only assure reduced Market Clearing Price (MCP) and thus Locational Marginal Price (LMP) but also assist in smooth transition towards the Competitive Trading & Bilateral Contract Market (CTBCM) which is a pre-requisite for the establishment of Wholesale market regime. BR. Economic Indicators Date / Period Unit Value Change Daily USD-Interbank List of Indicators 18-Oct PKR 104.73 -0.04% USD-Open MKT 18-Oct PKR 105.60 1.35% KSE-100 index FIPI 18-Oct 18-Oct Pts. $ Mn 40,954 -3.13 -0.80% NM** Crude (DE'16) 18-Oct $/bbl 51.05 1.11% Gold (DE'16) 18-Oct $/oz 1,262 0.61% Gold (10g) Local 18-Oct PKR 43,971 2.12% Silver (DE'16) 18-Oct $/oz 17.60 0.87% Cotton(KHI)-40 kg 18-Oct PKR 6,629 0.00% Kibor-6M 18-Oct % 6.05% 0.01% 7-Oct $ Bn 23.49 -0.50% Remittances Jul-Sep 16 $ Bn 4.70 -5.28% Exports* Jul-Sep 16 $ Bn 4.68 -8.98% Imports* Jul-Sep 16 $ Bn 11.75 10.70% WoW Forex Reserves YoY Trade Balance* Jul-Sep 16 $ Bn -7.07 -29.21% Current Account Avg. CPI-FY17* Jul-Aug 16 Jul-Sep 16 $ Mn % -1,316 3.88 -1107.34% Sep-16 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 GBP, 18-Oct-16, EUR, 128.3 18-Oct-16, 115.1 135 125 115 105 95 USD, 18-Oct-16, 104.6 85 75 Oct-15 Privatisation: PAC asks govt. to remove PSMC from active list The Public Accounts Committee (PAC) has recommended the govt. to remove Pakistan Steel Mills Corporation (PSMC) from active list of privatisation with its liability reaching to whopping PKR 170Bn in 2016 including loans obtained from NBP and PKR 40Bn outstanding gas bills. Since June 2015, PSM has been non-operational and there is no plan for its revival as it has been put on the privatization list. BR. Housing finance rises by PKR 4.9Bn in 1HCY16 Housing finance is gradually growing and the gross outstanding of all banks and DFIs surged to PKR 65.70Bn as of Jun. 30, 2016 compared to PKR 60.80Bn in Dec.’15, showing an increase of 8%. The SBP's Quarterly Housing Finance Review revealed that the housing finance is continuously increasing and posted a healthy growth of some PKR 4.9Bn during the 1HCY16. HBFCL remained the largest shareholder, in terms of gross outstanding, with 24%. However, based on category, Islamic banks remained the largest players with 38% share in gross outstanding. BR. ‘Distorted policies hinder competition in S. Asia’s agribusiness’ A low agricultural yield and high waste continue to plague the upstream parts of the value chain while downstream activities remain small, leading to low productivity across South Asia, according to a new World Bank report. The World Bank study, titled Agribusiness in South Asia, says outdated support prices for cereals, farm inputs and subsidies impede diversification to more productive systems while distorted trade policies also hinder competition, thereby rendering the sector insulated and limiting growth. Dawn. GBP Apr-16 Jul-16 Oct-16 Source: KCCI Research ; Oanda.com EUR Quote of the Day "Everyone wants to live on top of the mountain, but all the happiness and growth occurs while you're climbing it.” Andy Rooney Hubco mulls power project’s capacity cut Hub Power Company is mulling to slice the planned 600x2MW coal-fired project in Hub to half as the majority stake-holder Chinese partner showed willingness to start the production ahead of its planned date on the government’s persuasion. The potential implication of which could be project getting reduced to 1X660MW, which would impact the project. Hubco has 26% stake in the joint venture company China Power Hub Generation Company (CPHGC), which has a generation license for a 660x2MW coal-fired plants in Hub in Baluchistan. The News. Exploration firms resist changes to petroleum policy The Ministry of Petroleum and oil and gas exploration companies are locked in a tug of war over the amendments proposed to be made in the Petroleum Policy 2012. The ministry had suggested that if the holders of working interest in exploration blocks failed to amend the supplemental agreements, they would not remain eligible for the gas price incentive. In response, the industry warned that any attempt to amend the agreements unilaterally would challenge by courts. The ministry has also proposed the imposition of a windfall levy on the investors that are waiting for the govt. to process their supplemental agreements. Tribune. Jan-16 USD Chart of the Day Snapshot of Foreign Investment in Pakistan 3,000 2,500 2,000 1,500 1,000 500 0 FY10 FY11 FY12 FY13 Foreign Private Investment FY14 FY15 FY16 Direct Investment Source: KCCI Research, SBP Amount in Mn US$ 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