Pakistan Daily Economy Update - 2 June

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1. Jun . 2, 2017 KCCI - eBulletin TDAP launches online exporters’ directory The Trade Development Authority of Pakistan (TDAP) has developed its first online Pakistan Exporters' Directory. The directory is now on stream and can be accessed both through TDAP's website and direct search using the link www.pakistanexportersdirectory.gov.pk. The directory provides an extensive online database of Pakistani exporters to assist foreign buyers in sourcing their requirements from Pakistan. The directory provides an elaborate search facility based on three key parameters that include HS Code, Product Category, and Company Name. Companies in the directory have been placed into large, medium, and small categories based on their annual export turnovers. Daily Times. Pakistan stocks plunge 3.6% as budget, MSCI spooks investors Stocks tumbled over 3.5%, posting their biggest single-day drop since Aug’15 as foreign investors sold off shares valued at $ 16.5Mn on the day the country reentered Emerging Market index. The Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index lost 1,810.76 points to close at 48,780.81 points. All classes of investors followed the footsteps of foreign funds and opted for offloading as the volume of speculative buying seemed to have surpassed actual fresh demand from passive funds. The News. CPI rises to 5.02% in May CPI has increased 5.02% during May 2017 over the same month of last fiscal year, according to Pakistan Bureau of Statistics (PBS). During 11MFY17, an average inflation stood at 4.18% as opposed to the same period of last fiscal year. Year-on-Year data showed that inflation in food & non-alcoholic beverages increased by 4.55% in May.’17 while prices of non-perishable food items increased by 2.40% over May.’16. BR. High earning companies, individuals: Senate body rejects proposed extension in super tax Senate’s Finance Standing Committee has unanimously rejected the proposed extension in super tax imposed on high earning companies and individuals earning more than 500Mn for the upcoming FY18. In this regard, one of the Senators stated that amount collected from super tax in the previous years has not been utilized on IDPs. The committee also rejected another proposal to increase the limit of claim by pharmaceutical companies on their expenditure to 10% from 5% and stated that there is no need to increase the limit for pharmaceutical companies. BR. Foreign investors repatriate $ 1.5Bn in 10MFY17 Foreign investors repatriated $ 1.5Bn on account of profit and dividend during 10MFY17 as against $ 1.46Bn during 10MFY16 posting a growth of 5%. On account of return on FDI, foreign investors sent $ 1.23Bn as compared to $ 1.14Bn a year earlier. Most of the repatriation has been made from financial business which stood at $ 274Mn. With 10% decline, $ 288Mn were repatriated on account of returns on portfolio investment as compared to $ 316.7Mn in 10MFY16. BR. FBR disallows refund against withholding tax on property sale The FBR has disallowed refund and adjustment against tax withheld on sale of properties in line with a budgetary announcement for FY18. The government, through Finance Bill 2017, has proposed an amendment into Income Tax Ordinance 2001 whereby the withholding tax deducted under section 236C of the ordinance would be treated as minimum tax if the immovable property is acquired and disposed off within the same tax year – within 12 months. The News. SECP approves draft insurance bill The SECP has approved the draft Insurance Bill, 2017, which has been sent to the ministry of finance for its onward submission to the ministry of commerce to start the necessary legislative process. The bill has been formulated to institute significant reforms in the insurance regulatory framework to bring it at par with the international standards and to ensure development of financially sound insurance sector where interests of policyholders are protected. The News. SimSim gets SBP’s approval Pakistan’s first free mobile wallet – SimSim – has received regulatory approval from the SBP. The approval was granted under the Branchless Banking Regulation framework formulated by the SBP. SimSim is the product of collaboration between FINCA Microfinance Bank Limited and FINJA Pvt Limited and this is the first time that a bank and a fintech, acting as the super-agent of the bank, have partnered to create a digital financial product. Tribune. Power consumers to get a refund of PKR 1.96/unit this month Nepra has directed all distribution companies of Wapda to refund PKR 1.96 per unit to consumers this month, after overcharging them in Apr.’17. The refund would not be applicable to agricultural consumers and residential consumers using less than 300 units per month and K-Electric. Dawn. Govt. to raise PKR 3.6Tn in three months Govt. will raise PKR 3.65Tn through treasury bills and the Pakistan Investment Bonds (PIBs) during Jun.-Aug.’17. The govt. will raise PKR 250Bn through PIBs during this period while the maturing amount is PKR 734Bn. Similarly, an additional amount of PKR 262Bn will be raised through treasury bills with maturing amount of PKR 3.14Tn. The amount is almost equal to the revenue target for FY17. With one month left before the end of FY17, borrowing for budgetary support has reached PKR 849.5Bn which means borrowing can easily surpass the PKR 1Tn mark for FY17. Dawn. MCB Bank delists from London Stock Exchange MCB Bank has delisted itself from the London Stock Exchange after 11 years, helping the bank relax its financial reporting rules. MCB was the first Pakistani bank to be part of the international bourse; it was listed at the London Stock Exchange in October 2006. The bank issued 8.6Mn GDPKR worth $ 151Mn to institutional investors. The other Pakistani companies listed at the global bourse include Oil and Gas Development Company and United Bank Limited. Tribune. Economic Indicators List of Indicators Date / Period Unit Value Change Daily 1-Jun 1-Jun 1-Jun 1-Jun 1-Jun 1-Jun 1-Jun 1-Jun 1-Jun 1-Jun PKR PKR Pts. $ Mn $/bbl $/oz PKR $/oz PKR % 104.87 106.00 48,781 -16.51 48.00 1,266.3 42,857 17.25 7,288 6.16% 26-May $ Bn 21.77 0.01% 0.00% -3.58% NM** -1.54% -0.29% 0.10% -0.40% 0.00% 0.02% WoW 3.63% YoY -2.79% -2.29% 19.88% -40.12% -204.75% USD-Interbank USD-Open MKT KSE-100 index FIPI Crude (JY'17) Gold (JY'17) Gold (10g) Local Silver (JY'17) Cotton(KHI)-40 kg Kibor-6M Forex Reserves Jul-Apr 17 Remittances $ Bn 15.60 Jul-Apr 17 Exports* $ Bn 16.92 Jul-Apr 17 Imports* $ Bn 43.47 Jul-Apr 17 Trade Balance* $ Bn -26.56 Jul-Apr 17 Current Account $ Mn -7,247 % 4.18 Avg. CPI-FY17* Jul-May 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 May-16 GBP, 1-Jun-17, 134.8 EUR, 1-Jun-17, 117.6 USD, 1-Jun-17, 104.7 Aug-16 USD GBP Nov-16 Feb-17 May-17 Source: KCCI Research ; Oanda.com EUR Quote of the Day "We didn't actually overspend our budget. The allocation simply fell short of our expenditure." Keith Davis Chart of the Day INDIRECT BUDGETARY TAX MEASURES (FY17 Vs. FY18) 1,800 1,600 1,437 1,605 1,400 1,200 1,000 581 800 413 600 213 400 232 200 0 Sales Tax (PKR Bn) FY17 (B) Custom Duty (PKR Bn) FY18 (B) FED (PKR Bn) Source: KCCI Research, MoF Disclaimer This report has been prepared by KCCI Research & Development Cell. The information Reserves up by $ 763Mn contained herein have been compiled or arrived at based upon information obtained from According to State Bank of Pakistan (SBP) weekly foreign exchange reserves report, the total liquid foreign reserves held sources believed to be reliable and in good faith. Such information has not been by the country stood at $ 21.77Bn as on May 26, 2017 compared to $ 21.01Bn as on May 19, 2017. During the week independently verified. icon represents the sole viewpoint of the KCCI R&D Cell, and is stated to enrich the readers' under review, SBP's reserves increased by $ 709Mn to $ 16.92Mn against $ 16.21Bn a week earlier. Similarly, reserves understanding of the news item. The R&D Dept. bears no responsibility for its correctness or accuracy. Contact: res@kcci.com.pk held by banks mounted up by $ 53Mn to $ 4.85Bn end of the week up from $ 4.80Bn at the end of previous week. BR.