Pakistan Daily Economy Update - 20 February

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1. Feb . 19-20, 2017 KCCI - eBulletin Duty on onyx slows value added export High import valuation of duty on onyx from Afghanistan dragged down export of value added onyx products by 26% to $ 24.25Mn in July-Jan 2017. Ignoring all stakeholders the actions of the FBR and Pakistan Customs for duty revision has negatively impacted exporters who add value to onyx to export it from Pakistan, has caused foreign exchange losses, exporters said. Valuation of importing onyx to $250 per metric tonne from $55 per metric tonne, a more than 200% increase has irked exporters and importers. Daily Times-Sun. $ Bn 21.82 Jul-Jan 17 Remittances $ Bn 10.95 Jul-Jan 17 Exports* $ Bn 11.69 Jul-Jan 17 Imports* $ Bn 29.11 Jul-Jan 17 Trade Balance* $ Bn -17.43 Jul-Jan 17 Current Account $ Mn -4,716 % 3.85 Avg. CPI-FY17* Jul-Jan 17 Jan-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 Feb-16 GBP, 19-Feb-17, 130.4 EUR, 19-Feb-17, 111.6 USD, 19-Feb-17, 105.1 May-16 USD Aug-16 GBP Nov-16 Feb-17 Source: KCCI Research ; Oanda.com EUR Quote of the Day “Any man who reads too much and uses his own brain too little falls into lazy habits of thinking.” Albert Einstein Chart of the Day 245.32 468.26 237.63 469.10 Top 10 FDI received by countries and sectors (7MFY17) China Netherlands Turkey U.A.E France U.S U.K Italy Hungary 21.98 22.70 37.40 43.02 48.52 83.65 96.55 129.77 Japan Food 500 450 400 350 300 250 200 150 100 50 0 Power Commerce minister not expecting any change Ministry of Commerce has prepared a paper assessing possible consequences of the change in US administration on Pakistan’s trade relations with the US. Minister ruled out any immediate change in trade regime with Washington because Trump administration’s current focus is on China and NAFTA. Dawn-Sun. 10-Feb Electronics Bank deposits dip Government raised PKR 630.87Bn from the auction of Pakistan Market Treasury Bills of various tenors, smaller against the received bids of PKR 731.32Bn. It however, exceeded the auction target of PKR 550Bn. Of the total raised amount, three month T-bills fetched the highest PKR 283.06Bn at a cut off yield of 5.94%, followed by six month T-bill PKR 204.56Bn at 5.98%, and 12 month T-bill PKR 143.25Bn at 5.99%. Deposits and other accounts of all commercial banks stood at PKR 10.619Tn against preceding week’s deposits of PKR 10.634Tn, showing a decline of 0.14%. Dawn-Mon. Forex Reserves Oil & Gas… Govt. may enhance sugar export quantity The govt. is likely to enhance sugar export quantity from 0.25Mn tons to 0.5Mn tons without subsidy aimed at stabilizing the market and ensuring payments to the growers. However, govt. would take firm undertaking that local market prices’ do not increase as a result of export approval. Presently, sugar price in the international market is around $ 550 per ton and it is the best time to export surplus commodity sans rebate. Sugarcane crop is bumper this year with its surplus to remain around 0.8Mn tons. BR - Mon. Crude (AP'17) Gold (MA'17) Gold (10g) Local Silver (MA'17) Cotton(KHI)-40 kg Kibor-6M 0.01% -0.33% -0.43% NM** -0.13% -0.24% 0.40% -0.33% 0.00% 0.01% WoW -0.94% YoY -1.86% -3.21% 19.32% -20.29% -90.24% Construction SECP mulls regulatory changes for derivative products SECP is likely to relax certain regulations on stock futures in an attempt to enable the Pakistan Stock Exchange (PSX) to roll out new derivative products. The SECP constituted a seven-member committee to review the product structure, operational aspects of regulatory regime of cash-settled derivatives and circuit breaker regime. It is hoped that this will enable SECP to make appropriate regulatory changes in order for PSX to launch derivatives trading in Pakistan capital market. Tribune - Sun. Change Daily 104.84 107.10 49,376 -3.49 53.75 1,236 43,457 18.01 7,218 6.14% Tobacco &… Gas consumers to pay PKR 20Bn for leakage, theft Consumers are estimated to additionally pay PKR 20Bn to gas utilities for leakages in the system this year as the companies have failed to overcome the losses and continue to recover them from the consumers. KPMG Taseer Hadi & Company, a consultant, has recommended in a draft to Ogra to recover uniform 5% gas losses from the consumers. The recommendation is for the next 5 years. According to the draft report, losses were caused by gas leakage, theft, minimum billing system, bulk-to-retail shift, law and order situation and other factors. The report also identified that 1% gas losses (UFG) cost PKR 4Bn. This suggests that the recovery of 5% losses from the consumers will cost them a total of PKR 20Bn in a year. Tribune – Sun. Value PKR PKR Pts. $ Mn $/bbl $/oz PKR $/oz PKR % Textiles Power sector taxation issues: FBR likely to take policy decision on Feb. 21, 2017 FBR is expected to take policy decisions on non-chargeability of sales tax on the supply of electricity to Azad Jammu & Kashmir (AJ&K) and other major tax-related issues of power sector. On the other hand, in case zero-rating of sales tax has been extended to the supply of electricity to the AJ&K, input adjustment would be available. In this regard, FBR, Finance, Water and Power Ministries will convene a meeting on Feb. 21, 2017 to discuss these taxation related issues. BR – Sun. Unit 17-Feb 17-Feb 17-Feb 17-Feb 17-Feb 17-Feb 17-Feb 17-Feb 17-Feb 17-Feb Transport 200MW wind energy projects under CPEC to be completed this year Three wind power projects under CPEC with installed capacity of 200MWs would start their commercial operation by mid of 2017. In this regard, 50MW HydroChina Dawood wind power project is expected to be completed by Mar.’17 whereas United Energy Pakistan (UEP) wind power project with installed capacity of 99MWs is likely to be completed by Sept.’17. Additionally, the commercial operation date of the 50MWs Sachal Energy Development wind project is set in Jun.’17. The Nation – Sun. Date / Period 23.28 23.64 25.79 27.17 37.28 92.88 119.61 134.82 Power sector arrears in three years: Ministry says PKR 348Bn accumulated Water and Power Ministry, in its presentation to the Economic Co-ordination Committee (ECC), has acknowledged that PKR 348Bn have been accumulated in the head of power sector arrears during the last three years. The recoveries which remained in the range of 88-89% crossed 93% in 2015 and 2016. Similarly, the Transmission and Distribution (T&D) losses which were around 19% in 2014 came down to 17.8% in Dec.’16. BR - Mon. List of Indicators USD-Interbank USD-Open MKT KSE-100 index FIPI Transport… Exporting industrial sectors; Power tariff may be fixed at PKR 7.37/unit The federal govt. has agreed to mull fixing the five exporting industrial sectors’ tariff at PKR 7.37 per unit for three years. The industry representatives have urged the federal textile board to remove PKR 3.63 tariff rationalization and financing cost (TR&FC) surcharge to make it competitive internationally. The industrial sectors, particularly the one exporting in the international market, has been lagged behind against the regional competitors like India, Bangladesh and China where the industrial units of similar category are paying PKR 7 per unit against the electricity consumption. BR – Sun. Economic Indicators Personal Services FTA with Indonesia linked to removal of NTMs In a two-day parleys held in Islamabad on deepening Preferential Trade Agreement (PTA) after three years implementation in 2013, Pakistan has reportedly not encourage Indonesia to have a Free Trade Agreement (FTA) with it as long as the existing Non-Tariff Measures (NTMs) on Pakistani products are removed and more market access is granted. The Indonesian team argued that they should be informed about specific NTMs so they could address those barriers as they have already resolved the issue of Kinnows by granting two months (Jan. – Feb, 2017) which can be extended for two more months i.e. Mar.–Apr.’17. However, Pakistan urged Indonesia to allow Kinnows import from Dec. 2016 to Apr. 2017 each year. BR – Sun. Source: KCCI Research, SBP Value in (US $ Mn) 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