Pakistan Daily Economy Update - 20 April

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1. Apr . 20, 2018 KCCI - eBulletin CM to inaugurate 15th My Karachi – Oasis of Harmony Exhibition today CM Sindh Syed Murad Ali Shah will inaugurate the 15th sequel of My Karachi – Oasis of Harmony Exhibition of the Karachi Chamber of Commerce & Industry (KCCI) today (20th Apr) at the Karachi Expo Center in which local and foreign exhibitors will be showcasing their products and services in front of around 1Mn visitors. The three-day long exhibition, which will conclude on April 22nd, will provide a perfect platform for Business-to-Business and Business-to-Consumer meetings, besides providing expanded recreational facilities to Karachiites who densely participate in this glittering event every year. President KCCI, Muffasar Atta Malik, said that KCCI has been regularly organizing this exhibition without any commercial objective but with a vision to promote the positive image of Karachi and the tag line of ‘Made in Pakistan’ worldwide. Thailand, Indonesia, Turkey, Sri Lanka, Vietnam, Philippines, Malaysia, Romania and Ukraine are participating in this year’s event whereas Thailand and Indonesia will be establishing special pavilions. Current account deficit sharply widens to five% of GDP in July-March Pakistan’s current account deficit (CAD) swelled to an 8-year high of 5% of the GDP in 9MFY18 as the country’s foreign trade gap continued to expand. SBP’s data showed that CAD widened 50.55% to $ 12.03Bn in Jul-Mar’18 period as compared with 9MFY17, posing challenges to the govt. to replenish its fast depleting foreign currency reserves. Imports of energy products, steel and textile inputs continued to go up and overshadowed a healthy turnaround in the foreign exchange receipts from exports. The current account gap, however, narrowed to $ 1.16Bn in Mar’18 from $ 1.28Bn in Feb’18. The govt. had estimated CAD for FY18 at 4.4% or $ 13.7Bn, while it has set an ambitious target of 3.8% of GDP or $ 12.5Bn for FY19. The News. Nepra threatens to take over K-Electric? Nepra has informed the National Assembly Standing Committee on Cabinet Secretariat that it has the authority to take over KElectric and its management, if the issue of load-shedding in Karachi is not resolved immediately. Nepra Vice Chairman told the committee that Karachi is facing 600MW shortfall of electricity, due to which residential and industrial areas of Karachi are facing 410 hour load-shedding daily, which is a very serious situation. He said that NEPRA can impose a fine from PKR 0.5Mn to PKR 100Mn. The Committee Chairman remarked that if Nepra can take over K-Electric then it should do so. BR. Govt. summons K-Electric, SSGC as dispute leaves Karachi simmering The govt. has called two separate meetings of the directors of the K-Electric (KE), SSGC, electricity and gas stakeholders today (20th Apr) to find out a way out of the power crisis currently crippling public life in Karachi. NEPRA is separately initiating legal proceedings against KE for violations of various responsibilities including non-utilisation of its full power generation capacity and to load shedding on account of gas curtailment. Dawn. Economic Indicators List of Indicators Date / Period Unit Value Change Daily 19-Apr 115.62 117.55 0.00% 0.60% Crude (JU'18) 19-Apr 19-Apr 19-Apr 19-Apr PKR PKR Pts. $ Mn $/bbl 45,388 0.31 68.19 -0.20% NM** -0.92% Gold (MY'18) Gold (10g) Local 19-Apr 19-Apr $/oz PKR 1,345.3 51,642 -0.28% 0.42% Silver (MY'18) Cotton(KHI)-40 kg 19-Apr 19-Apr $/oz PKR 17.26 8,145 0.35% 0.00% Kibor-6M 19-Apr % 6.51 $ Bn 17.55 0.00% WoW -0.53% Remittances 13-Apr FY18 Jul-Mar 18 $ Bn 14.61 YoY 3.55% Exports* Imports* Jul-Mar 18 Jul-Mar 18 $ Bn $ Bn 17.08 44.38 13.08% 15.57% USD-Interbank USD-Open MKT KSE-100 index FIPI Forex Reserves Jul-Mar 18 Trade Balance* $ Bn -27.30 Jul-Mar 18 Current Account $ Mn -12,029 Foreign Direct Inv. $ Bn 2.09 Jul-Mar 18 Jul-Feb 18 LSM Growth* % 6.24 % 3.20 Jul-Mar 18 Avg. CPI Discount Rate % 6.00 Mar-18 WoW= Sources: KCCI Research, PMEXweek , NCCPL, KSE, SBP, PBS* ** Not Meaningful on week; Major Currencies Govt mulls 30% tax cut for shariah-compliant listed firms The govt. is mulling a tax cut of 30% in budget FY19 to encourage listings of shariah-compliant companies on the stock exchange. The proposal was floated by the SECP to the FBR in order to develop the Islamic capital market in line with govt. policy. The SECP also proposed that additional tax credit should be available to those shariah-compliant companies which have issued dividends for the last five consecutive tax years or paid minimum 20% for the last financial year. Shariah-compliant listings are expected to attract capital inflows from Islamic countries, which hold billions of dollars in surplus and are searching for investment avenues. The News. 175 Shariah rules credit positive: Moody’s Moody’s Investors Service has said that Pakistan’s new Shariah regulations for Islamic banks are credit positive because they promote standardization across Islamic financial institutions and will help address persistent liquidity management challenges. Moody’s, in its latest report on Pakistan, stated that on 10th Apr’18, the SECP notified for public consultation that it would adopt 7 Shariah standards covering a variety of Islamic finance transactions relating to indexes, liquidity tools, capital protection and agency agreements. The SECP is implementing standards issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI); only a handful of regulators, including Bahrain, Oman and Pakistan, have so far made AAOIFI standards adoption mandatory. BR. 125 PSX proposes 20 new members for board The board of directors of Pakistan Stock Exchange (PSX) have proposed 20 independent members for the board of directors to the SECP for approval. Out of these 20 proposed members, the SECP will approve seven, to complete the process of elections. The proposed members include Masud Naqvi, Hussain Lawai, Zafar Sobhani, Shabbar Zaidi, Zubair Palwala, Najeeb Ghori, Maliha \ Bangash, Yun, Usman Asghar, Amjad Pervez, Razi ur Rahman, Qadir Memon, Ali Naqvi, Ali Sultan, Suleman Mehdi, and Naz Khan. On the other hand, four existing directors proposed as independents are Shehzad Chamdia, Shehzad Dada, Munir Kamal and Moin Fudda. The News. Karachi industrialists call off strike Industrialists of Karachi have called off their strike against power and water crisis after the PM office assured them to resolve the issue. The secretary to the PM said the federal govt. has taken notice of the power and water crisis in Karachi and assured the businessmen of resolving their problems on priority. Presidents of all town and industrial associations have agreed to call off strike and thanked the federal govt. for timely intervention in the matter. The News. Pakistan to launch dollar-based savings certificates for overseas residents The govt. is all set to launch for the first time, a dollar-based savings certificates for overseas Pakistanis at a time when the country’s foreign exchange reserves are dwindling fast. Non-residents are expected to invest $ 500Mn- $1Bn in savings certificates over the next one year, said the Central Directorate of National Savings (CDNS) Director General, on the sidelines of a ceremony held for announcing the appointment of the Manager to the Issue. The objective of the certificates is to help stabilise foreign exchange reserves of the country. The savings certificates have nothing to do with the amnesty scheme, the DG clarified. These will be offered to only offshore Pakistanis and not to onshore Pakistanis, so that beneficiaries of the amnesty scheme could not invest in the certificates. Tribune. UK firms announce £ 100Mn investments in Pakistan Trade ministers of UK and Pakistan have welcomed almost £ 100Mn of new British business investment into Pakistan. Anglo-Dutch oil giant, Shell, is planning to set up around 100 new fuel stations along CPEC route at selective locations by 2020, representing up to £ 13Mn of investment. Moreover, Unilever will also invest £ 86Mn in new manufacturing capacities at its four factories in Pakistan. UK Trade Minister Greg Hands and Minister of Commerce, Pervaiz Malik, at a meeting in London, also noted UK’s ambition to continue the GSP+ scheme. The Nation. SHC orders SBP to reconsider valuation of KASB Bank Almost three years after the questionable merger, the Sindh High Court (SHC) has ordered the SBP to reconsider valuation of the defunct KASB Bank and ruled that the SBP did not adequately fulfill its statutory duty to protect the interests of all stakeholders. The SHC directed the SBP to reconsider the defunct bank’s valuation of PKR 1,000 and asked it to revisit the whole process set out for determination of the valuation. Earlier, the National Accountability Bureau and Auditor General of Pakistan (AGP) also raised objections, pointing at billions of rupees in losses to the exchequer and shareholders of the defunct KASB Bank. Tribune. -17.18% -50.55% 4.44% GBP, 19-Apr-18, 163.9 165 155 145 EUR, 19-Apr-18, 143.0 135 115 USD, 19-Apr-18, 115.7 105 95 Apr-17 Jul-17 GBP USD EUR Oct-17 Jan-18 Source: KCCI Research ; Oanda.com Quote of the Day "Stop chasing the money and start chasing passion." Tony Hsieh Chart of the Day FOREIGN INVESTMENT IN PAKISTAN 2.5 2.00 2 2.09 1.66 2.00 1.5 1 0.5 0.35 -0.09 0 -0.5 Foreign Portfolio Investment Foreign Direct Investment 9MFY17 ($ Bn) Foreign Private Investment 9MFY18 ($ Bn) Disclaimer Source: KCCI Research, PBS 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