Pakistan Daily Economy Update - 2 July

Transcription

1. Jul . 2, 2016 KCCI - eBulletin Govt. breaches new budget on very first day The federal govt. has breached the sanctity of the new budget on the very first day of its enforcement, as it lowered the withholding tax (WHT) rate on banking transactions valued at over PKR 50,000 by a third for non-filers of income tax returns. The ECC of the Cabinet has approved the reduction in WHT rates on banking transactions from 0.6% to 0.4%. For almost the last full year, the govt. charged the 0.4% WHT and generated PKR 18Bn in revenues. The cabinet’s economic committee has also approved an increase in charges for using water for electricity generation by 180%, which will increase overall electricity tariffs. Tribune. Forex reserves climb to historic $ 23Bn The govt. has achieved a historic achievement by enhancing country’s foreign exchange reserves to the highest-ever level of $ 23Bn. Giving the breakup of $ 23Bn foreign exchange reserves, Finance Minister Ishaq Dar has said that $ 18Bn are held by the SBP and $ 4.9Bn with the private banks. Pakistan has recently received $ 1.3Bn from the IMF, World Bank and Asian Development Bank. The Nation. Five major sectors: revised zero-rated ST regime unveiled FBR has issued revised sales tax zero-rating regime for five export oriented sectors, i.e., textile, leather, carpets, surgical and sports goods from Jul. 1, 2016 under which 5% sales tax is chargeable on supplies of locally-made finished article of textile and leather including finished fabrics to retailers or any other category of persons. In this regard, the FBR has issued SRO. 491(I)/2016. The main feature of the scheme is extending zero rate facility to entire supply chain of the export sectors up-till, retail stage to eliminate accrual of sales tax refund at maximum extent. Attempt has also been made to ensure collection of standard rate of sales tax, i.e., 17% from persons outside five sectors. BR. Govt. transactions: Banks to provide special clearing facility on 4th: SBP SBP has asked banks to provide special clearing facility for govt. transactions on Jul. 4, 2016. In this regard, NBP branches will settle the federal/provincial govt. transactions on Jul. 4, 2016 (same day) with respective SBP Banking Services Corporation (SBP-BSC) field offices. Banks have, accordingly, been advised to keep their concerned branches open on Jul. 4, 2016 till such time that is necessary to facilitate special clearing for govt. transactions. BR. ECC Okays sovereign guarantee to finance 1,320MW coal power plant The Economic Coordination Committee (ECC) has approved grant of govt.’s sovereign guarantee against financing facility of PKR 10.40Bn from local banks for interconnection of imported coal based 1,320 MW power plants at Bin Qasim. On a proposal submitted by Water and Power Ministry, the ECC accorded approval in principle for transfer of all hydropower projects (based on BOOT model) being implemented under 2002 Power Policy, to the respective Provincial/AJK/Gilgit-Baltistan Govt. after expiry of the term of the Implementation Agreement. The Nation. PARCO to resume work on $ 6Bn Khalifa Refinery The govt. has decided to revive the $ 6Bn Khalifa Coastal Refinery project that was stalled by the United Arab Emirates (UAE). Under a fresh plan, Pakistan Arab Refinery Limited (Parco) will start work on the Khalifa Refinery with a refining capacity of 250,000 barrels per day. In Parco, UAE holds 40% shares whereas the govt. of Pakistan has a 60% stake. Petroleum and Natural Resources Minister has revealed that all approvals have been given and this will be the country’s largest refinery which will be completed in 3 to 5 years. Tribune. Govt. to raise PKR 1.75Tn from banks in July-September The govt. will raise PKR 1.75Tn through the auction of securities during 1QFY17 for budget financing and payment of the matured debts. The govt. auction target issued by SBP has shown that it intended to raise PKR 1.45Tn and PKR 300Bn through the sale of market treasury bills (MTBs) and Pakistan Investment Bonds (PIBs), respectively in the July-September period of 2016/17. The News. 3rd Quarterly report 2015-16: Despite losses, economy continues to grow: SBP According to 3rd Quarterly report 2015-16 issued by the SBP, Pakistan’s economy maintained its growth momentum during 2015-16 despite suffering from heavy losses in the agriculture sector. The state of Pakistan’s economy, industrial and services sectors’ growth accelerated on the back of better energy supply and improvement in security situation. Another positive for the economy was the surplus in the external account during the 9MFY16, which was led by largely contained oil payments, a modest rise in worker remittances and foreign currency loans. Tribune. Tariff adjustment: NEPRA’s differences with K-Electric continue The regulator has again disagreed with K-Electric over the adjustment in tariffs for consumers as it has asked the privatized firm to cut power-price by PKR 0.33 per unit against its request of PKR 0.16 per unit in July billing. The Nepra has said that the adjustment shall be shown separately in the consumer bills of July 2016, on the basis of billed units for the month of April. The adjustment for the month of April shall be applicable to all the consumer categories except lifeline consumers, agriculture consumers and domestic consumers consuming up-to 300 units. Tribune. Economic Indicators Date / Period Unit Value Change Daily USD-Interbank List of Indicators 30-Jun PKR 104.73 0.12% USD-Open MKT 1-Jul PKR 105.10 0.26% KSE-100 index FIPI 1-Jul 30-Jun Pts. $ Mn 37,784 3.56 0.00% NM** Crude (JU'16) 1-Jul $/bbl 48.40 0.00% Gold (MY'16) 1-Jul $/oz 1,324.3 0.00% Gold (10g) Local 1-Jul PKR 45,891 7.73% Silver (MY'16) 1-Jul $/oz 18.81 0.16% Cotton(KHI)-40 kg 1-Jul PKR 6,522 3.41% Kibor-6M 30-Jun % 6.08% 0.02% Forex Reserves 24-Jun $ Bn 21.76 -0.05% Remittances 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% WoW YoY May-16 Discount Rate % 5.75 Sources: KCCI Research, PMEX(At 4:00PM), NCCPL, KSE, SBP, PBS* ** Not Meaningful WoW= week on week; YoY=Year on Year Major Currencies 175 165 155 135 Withholding tax slows down bank deposit growth: State Bank Withholding tax (WHT) on financial transactions is acting against the goal of achieving financial depth, a State Bank of Pakistan’s (SBP) report said on June. 1st, 2016 , highlighting that for the first time since 2009-10 the monetary expansion came more from currency in circulation than the bank deposit growth. The tax has also been bitterly criticized by the business community which not only has campaigned against it but has also tried to find other modes of payment to avoid it. Dawn. Regulations for valuers notified The SECP notified the draft Valuers Registration and Governance Regulations 2016, and has also placed the same on its website to obtain public opinion within 30 days. The draft regulations are aimed at the regulation and supervision of the work of professional valuers. The regulations provide for the registration mechanism of professional valuers in the form of company, on five specialized valuation panels, for which the prescribed eligibility and fit-and-proper criteria have been defined. Dawn. PSX provided return of 15% in first half The Pakistan stock market gave investors a return of 15% in the first half of the CY16, outperforming Asian peers including Sri Lanka and Bangladesh that provided negative return of 10% and 3%. The MSCI Pakistan Index with an upside of 10% was also far ahead of the MSCI Frontier Market (FM) Index’s gain of 3% but almost all of the KSE-100 gain (14%) accrued in the 2QCY16. In four months March-June, the KSE-100 index rose by almost 20%. The excitement was built in anticipation of Pakistan market reclassification from Frontier Markets to Emerging Markets by MSCI. Dawn. EUR, 1-Jul-16, 116.7 125 115 105 95 USD, 1-Jul-16, 105.0 85 75 Jul-15 Oct-15 USD GBP Jan-16 Apr-16 EUR Jul-16 Source: KCCI Research ; Oanda.com Quote of the Day “You're not going to be great at everything. Surround yourself with people that can compliment you so you can work together and then everybody can be successful.” Jonathan Tisch $ 22Bn deal for supply of LNG to Pakistan Global Energy Infrastructure Ltd (GEIL) of Turkey and Qatargas have announced signing of about $ 22Bn agreement for import of LNG to Pakistan for 20 years. GEIL has said that it concluded a 20-year long-term LNG Sale and Purchase Agreement (SPA) with Qatargas for supply of LNG/RLNG to Pakistan’s market, on private-to-private basis. GEI Pakistan (GEIP), the local company of the Group, is setting up LNG regasification terminal at Port Qasim LNG Zone, on a site procured from the Port Qasim Authority (PQA) and the terminal will be completed in the first half of 2018. Tribune. Turkish company says it will acquire Dawlance for $ 258Mn Turkish company Arcelik has said it is going to acquire Dawlance, a privately held Pakistani manufacturer of consumer durables, for $ 258Mn. Firm of the Turkish company, Ardutch BV, has signed an agreement to acquire 3 companies based in Pakistan and British Virgin Islands that collectively own 100% shares of Dawlance. The deal is likely to be closed by the end of 2016, as it requires approvals from competition authorities, purchase of minority stakes and transferring of land and buildings to the ownership of the company. Tribune. GBP, 1-Jul-16, 139.6 145 Chart of the Day KSE-100 Index (2HFY-16) 40,000 39,000 38,000 37,000 36,000 35,000 34,000 33,000 32,000 31,000 30,000 42370 42377 42384 42391 42398 42408 42415 42422 42429 42436 42443 42450 42458 42465 42472 42479 42486 42493 42500 42507 42514 42521 42528 42535 42542 42549 KCCI irked by property valuation amendment Karachi Chamber of Commerce and Industry (KCCI) President Younus Muhammad Bashir has stated that the amendment made to Section 68 of the Income Tax Ordinance 2001 through the Finance Act 2016, must be immediately revoked as it will open more avenues for corruption. He urged the govt. to take a decision at the earliest in this regard because this amendment, which has come into force from 1st Jul, 2016, would cause immense problems for buyers and sellers of immovable properties. He also said that under the amendment, a new mechanism would be introduced which would bind the investors to get their properties evaluated through valuers of SBP and refer it to the FBR Inland Revenue Dept. Tribune. Source: KCCI Research, SCS Trade Disclaimer This report has been prepared by KCCI Research & Development Cell. The information contained herein have been compiled or arrived at based upon Legal framework vital for declaration of offshore assets Finance Minister Ishaq Dar has underlined the need for a legal mandatory framework for declaration of non-tax paid offshore assets abroad and information obtained from sources believed to be reliable and in good faith. Such penalties on concealment. In this regard, he said that it should be mandatory for every Pakistani to declare his assets in any country abroad and information has not been independently verified. icon represents the sole viewpoint of the KCCI R&D Cell, and is anybody concealing this information must be penalized. He further said that OECD has been approached and that federal cabinet has also been stated to enrich the readers' understanding of the news item. The allowed to negotiate with the Swiss authorities on this issue. Daily Times.