Pakistan Daily Economy Update - 2 June

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1. July 02 , 2022 KCCI - eBulletin Riba-free banking Chairman BMG Zubair Motiwala and KCCI President Muhammad Idrees have extended gratitude to PM Shehbaz Sharif for taking interest in the implementation of the Federal Shariah Court’s decision of introducing Riba-free banking in Pakistan. They have requested the govt to introduce interest free banking in Pakistan according to the Islamic Principles and implement the court’s decision in true letter and spirit. This statement was issued in response to an appeal filed by the SBP, and four other banks in the Supreme Court of Pakistan against the Shariah Court’s Judgment. BR. Inflation surges to 13-year high amid sky-high fuel prices Monthly inflation surged to 21.3% in Jun’22 over Jun’21, its highest pace in over 13 years, mainly fueled by rising petroleum product prices, at around 90% since the last week of May’22 after the new coalition govt. scrapped costly fuel subsidies in an attempt to tame a surging fiscal deficit and revive a stalled IMF loan program. The high Jun’22 figure has also taken the monthly average inflation to 12.15% in the FY22. Dawn. List of Indicators Date / Period 1-Jul PKR PKR 204.85 204.50 -0.13% -0.41% KSE-100 index FIPI 1-Jul 1-Jul Pts. $ Mn 41,630 0.46 0.22% NM** Crude Oil 1-Jul $/bbl 108.43 2.52% Gold 1-Jul $/oz 1,801.5 -0.32% Gold (10g) Local 1-Jul PKR 121,660 0.00% Silver 1-Jul $/oz 19.67 -3.37% 1-Jul PKR 17,897 -2.91% Kibor-6M 30-Jun % 15.35 0.02% Forex Reserves 24-Jun $ Bn 16.20 WoW 13.97% Remittances Jul-May 22 $ Bn 28.41 6.26% Exports* Jul-May 22 $ Bn 28.85 27.78% Imports* Jul-May 22 $ Bn 72.18 44.28% Trade Balance* Jul-May 22 $ Bn -43.33 -57.85% Current Account Foreign Direct Inv. Jul-May 22 Jul-May 22 $ Bn $ Bn -15.20 1.60 -1184.8% -4.91% File tax returns by Sept 30 FBR has uploaded separate Income Tax Return Forms for salaried, Association of Persons (AOPs), business individuals, and companies for tax year 2022. The returns can be filed online through smart phones by installing the Tax Aasaan application. Salaried individuals and AOPs can file their income tax returns by 30th Sep’22 whereas companies can file income tax returns according to their due dates. Dawn. Ecommerce startup raises $6Mn Ecommerce startup 24SEVEN has raised $ 6Mn in a Pre-Series round to grow its platform Apni Dukan. Formerly known as 24seven.pk, the business-to-business-to-consumer (B2B2C) startup digitizes and rebrands mom-and-pop stores into 24SEVEN Apni Dukan resellers. It has so far on-boarded more than 2,500 resellers in five cities. It helps them source and store inventory through a digital supply chain system for onward sales to consumers. Dawn. Sindh surpasses collection target for FY22 The SRB has surpassed its revenue target of PKR 150Bn by collecting PKR 153Bn, which shows an increase of PKR 3.5Bn for the FY22, thus achieving another milestone. The said amount comprises PKR 145.3Bn collected under the head of Sindh Sales Tax on Services and PKR 8.2Bn under the Sindh Workers Welfare Fund/Sindh Workers Profit Participation Fund. Thus, SRB exceeded the assigned target of PKR 150Bn by PKR 3.5Bn. Moreover, the growth over last year’s collection of PKR 128.1Bn stands at 20%. Dawn. YoY Jul-Mar 22 LSM Growth* % 9.40 % 12.15 Jul-Jun 22 Avg. CPI Discount Rate % 13.75 May-22 Sources: KCCI Research, PMEX , NCCPL, KSE, SBP, PBS* ** Not Meaningful, WoW= week on week; YoY=Year on Year Major Currencies 275 265 255 245 235 225 215 205 195 185 175 165 155 145 Jun-21 Outflow from domestic bonds exceeds $1bn in FY22 Despite highly attractive returns foreigners avoided investing in T-bills and PIBs instead they withdrew over $ 1Bn from these domestic bonds during FY22, as depicted by the data released by SBP. The inflows almost stopped during Mar-Apr’22 due to political tensions. However, the country received $ 9.9Mn on 6th May’22 after a gap of almost two-and-half months. During the entire FY22, the domestic bonds received a total of $ 341.2Mn ($ 236.9Mn in T-bills and $ 104.3Mn in PIBs) while the outflows were $ 1.055Bn. Dawn. Govt. plans to raise edible oil production to 4.8Mn tons The govt. has planned to increase the annual edible oil production up to 4.79Mn tons over the next 10 years in an effort to take the country towards self-sufficiency in food commodities, especially in edible oil. It was informed that Pakistan imported 4.5Mn tons of edible oil annually to meet its demand. At present, the country produces just 0.745Mn tons of edible oil annually, which is only 8% of the total demand of over 5Mn tons. The move would help minimize the huge import bill of the food group that was recorded at $ 7.57Bn in the 11MFY22. Tribune. LPG prices increased After increasing petrol and diesel prices, the govt has also raised the LPG rates by PKR 2/kg for Jul’22, according to a notification issued by the OGRA. The price now jumped to PKR 220/kg from PKR 218/kg. The domestic LPG cylinder will now cost PKR 2,601 against PKR 2,581 and the commercial cylinder PKR 10,007 against PKR 9,932. Dawn. Oil sales slump 11 % in June Country’s oil sales slumped 11 % to 22.5Mn tones in FY22, according to the Oil Companies Advisory Council (OCAC), while they fell massively in June owing to a humongous increase in the prices of different fuels, after the govt. removed the subsidy and passed on the full impact of the global market to domestic consumers. The sales of petroleum products remained stagnant Jun’22, compared to 1.9Mn tons in the same month last year. The News. EUR, 1-Jul-22, 212.0 USD, 1-Jul-22, 204.5 USD Sep-21 GBP Dec-21 EUR Mar-22 Jun-22 Source: KCCI Research “We cannot solve problems with the kind of thinking we employed when we came up with them.” PM launches ‘Innovation Hub’ programme Balance of payment: Textile sector fears losing $1bn exports in July The textile sector, fearing export losses worth $ 1Bn in the first 15 days of Jul’22 due to gas closure and Eidul Azha holidays, has requested the govt. to restore supplies to exporting industries. In a letter to PM Shehbaz Sharif, the sector said that the textile industry has achieved a new record in terms of exports reaching nearly $ 20Bn from $ 12.5Bn just two years ago, thus it was inexplicable that the exporting sector, which has the capacity to deliver over $ 2Bn in exports/ month was being denied energy/gas. As a consequence of these measures, textile exports would be significantly lower, much to the detriment of Pakistan’s economy. The News. GBP, 1-Jul-22, 246.5 Quote of the Day \ PM Shehbaz Sharif, formally launched the “Innovation Hub” program and stated that the govt. would work with coordinated commitments for making new ideas proposed by the people in policy-making, by soliciting expert advice, input and contribution from domestic and foreign Pakistanis. This initiative will allow putting public back in public policy where they would submit their ideas that would be presented to the policy panel and selected ideas would be presented to the prime minister and in this regard, a program would be launched at state-owned TV channel. BR. Global money transfers: ECs to deduct tax on payment of fee to operators Every exchange company licensed by the SBP shall deduct tax at the time of making payment of service charges or commission or fee to the global money transfer operators, international money transfer operators or such other persons engaged in international money transfers or cross-border remittances for facilitating outward remittances, as according to the Finance Act, 2022. BR. Change Daily 30-Jun Cotton(KHI)-40 kg PA passes bill to regularize katchi abadis formed between 1997-2011 The Sind Provincial Assembly has unanimously passed the Sindh Katchi Abadis (Amendment) Bill, 2022, that extended cut-off date for the regularization of shanty towns in the province from 30th Jun’97, to 31st Dec’11. After the passage of the amended law, the settlements found existing up to 31st Dec’11 would be regularized as under the earlier criteria. Dawn. Value USD-Interbank USD-Open MKT Pak banks refuse to open LCs for Russian crude oil import All Pakistani commercial banks have refused to open LCs for Russian-origin crude oil in the presence of economic sanctions by the US, the UK and EU countries against Moscow for war against Ukraine, saying the payment in dollars terms is not possible against the import of Russian crude oil. However, if the govt. manages to enter a G2G agreement with Russia for the import of crude oil under transaction mode based on the Rouble, ensuring no impact of sanctions on Pakistan, the refineries can utilize crude oil up to 15-30%, keeping in view its technical suitability for making finished products. The News. Budgetary measures: FBR issues notifications FBR has issued notifications for the implementation of the budgetary measures for FY23 including imposition of additional customs duty on the import of specified items and regulatory duties on the import of 611 new non-essential and luxury items from 1st Jul’22. FBR has also abolished customs duty on the import of nine items from Afghanistan from 1st Jul’22. BR. Unit Albert Einstein Pakistan's CPI Inflation 14% 12% 10% 8% 12.2% 10.7% 8.9% 11.8% 10.2% 11.6% 12.7% 10.0% 8.1% 6% 4% 2% 0% National Inflation Urban Inflation FY20 FY21 FY22 Rural Inflation Source: KCCI Research; PBS Note If any member is facing any issues pertaining to PakistanAfghanistan investment and trade policies or has project proposals is requested to share the information at secretary@kcci.com.pk for forwarding to the Board of Investment.