Pakistan Daily Economy Update - 20 June

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1. June .20, 2018 KCCI - eBulletin Rupee losses grow as payment pressure continues to mount The rupee extended its losses against the dollar, dropping to a fresh all-time low in the open and interbank markets as concerns about depleting foreign currency reserves and high import payments mounted. It traded as low as 122 in the interbank market against the dollar before finally closing at 121.73. It sank further in the open market as well, and closed at 123.50 against the dollar for buying and 124.50 for selling. Dealers are of the view that there is no supply of the greenback as exporters and ordinary citizens are not willing to sell dollars. The rupee is expect to weaken further in the coming days as the central bank is not taking measures to prop up the currency. The News. Rapid devaluation of PKR perturbs KCCI chief Karachi Chamber of Commerce and Industry (KCCI) President Muffasar Atta Malik has urged the federal govt. to take measures to stop further devaluation of rupee against dollar before it gets too late and a situation emerges when Pakistan has no other option but to seek support from the IMF. Steps have to be taken to create an enabling business environment which is the only way forward to pull the economy out of crisis, he said, while expressing deep concerns over the continuous devaluation. Malik said the PKR devaluation has to be controlled which otherwise will have a devastating impact on the already beleaguered economy. He apprehended that the rupee may fall further in the coming months keeping in view Pakistan's dwindling foreign exchange reserves. BR. Practitioners want clarity on tax amnesty Tax practitioners have urged the authorities to explain how the tax amnesty scheme would be availed in the last two days of its deadline. 30th Jun’18, the last day of the scheme is falling on Saturday, which is a weekly holiday. Since offices are closed on the day, amnesty for foreign assets cannot be availed. Foreign assets’ holders may also not process their request on 29th June (Friday) due to wire transfer problem. Hence, the govt. has been urged to extend the deadline for the amnesty by 15 days, which can be done through presidential ordinance. The News. Appeal disposed of by SC: FBR set to recover RD lying with Nazir of SHC The FBR is poised to recover Regulatory Duty (RD) lying with the Nazir of Sindh High Court (SHC) as the title appeal in this regard has been disposed of by the Supreme Court of Pakistan. The FBR is likely to miss its revised revenue target of PKR 3.935Tn and this decision would give a sigh of relief to the FBR in order to meet its revenue target for FY18. The govt. on 17th Oct’18 increased RD on the import of 713 items including imposition of RD on 97 new items. However, the SHC quashed the amendment to the Customs Act as it was challenged by the affected parties. The SHC also directed the FBR to refund the duty that the petitioners paid after the issuance of the SRO. But the court later suspended its judgment in order to enable any aggrieved person or party to appeal against the verdict. BR. Traders lament ‘unsatisfactorily’ low Eid sales Dwindling purchasing power forced the customers to a comparatively lower buying for Eid, as traders estimated that the grand sales season hardly fetched PKR 40Bn in Karachi against expectations of PKR 60Bn. Calling the seasonal sales unsatisfactory, they said the weak national economy has widely restricted the buyers as major markets known for their huge trading just remained unattended. The other key factor that kept buyers away from local traders is the new trend of online business and big shopping centres. BR. K-Electric gets Nepra nod to use RLNG for its power plants Nepra has allowed K-Electric to immediately start using RLNG as alternative fuel to reduce electricity shortfalls in Karachi. The permission has been granted on a provisional basis to provide immediate relief to end-consumers as the regulator completes the normal legal and procedural processes and puts in place the mechanism for dealing with the difference in cost between imported RLNG and domestic gas that KE currently uses. Dawn. Pakistan, Tajikistan agree on reviving air links, taking trade to $ 500Mn Pakistan and Tajikistan have agreed to further strengthen their relations by adopting measures to take bilateral trade to US$ \ 500Mn per annum, immediate revival of air links and early implementation of CASA-1000 electricity project. The two sides reached this agreement during talks between President Mamnoon Hussain and President Emomali Rahmon of Tajikistan. The News. Pakistan trying to ink fresh LNG deals at lower rates Efforts are under way to enter into LNG import deals at old or better prices which may save $ 300-400Mn annually or $ 3.54Bn over the next decade in oil imports as well as bring down average LNG prices in Pakistan. As LNG has replaced furnace oil in power plants, Pakistan is expected to save more than $ 2Bn annually through more efficient power generation, at 62% efficiency, with a lower tariff of PKR 7-8 per kilowatt-hour. Tribune. Shell plans to invest $ 15-16Mn to meet growing demand Shell Pakistan has planned to invest $ 15-16Mn in its retail stations in the wake of expectations of an increase in vehicle sales, as more automakers enter Pakistan and activities under CPEC gain momentum. The new entrants will add 60% to the industry’s production capacity over the next few years. However, Shell has not yet devised any plan for setting up charging points for electric cars, but when demand would rise, it may establish charging units at its existing filling stations. Tribune. Mayor to present KMC budget on June 26 Karachi Mayor Wasim Akhtar will present the Karachi Municipal Corporation’s annual budget of about PKR 25Bn for FY19 on 26th Jun’18. The News. In tit-for-tat, Trump threatens more tariffs against China US President Trump has directed the US Trade Representative to prepare new tariffs on $ 200Bn in Chinese imports as the two nations move closer to a potential trade war. Trump recently ordered tariffs on $ 50Bn in Chinese goods in retaliation for intellectual property theft while China is retaliating by raising import duties on $ 34Bn worth of American goods. Trump also has slapped tariffs on steel and aluminum imports from Canada, Mexico and European allies. Daily Times. Economic Indicators List of Indicators Date / Period Unit Value Change Daily 19-Jun 19-Jun 19-Jun 19-Jun 19-Jun PKR PKR 121.73 124.00 1.23% 0.81% Pts. $ Mn $/bbl 43,683 -0.45 64.92 0.00% NM** -1.35% 19-Jun 19-Jun $/oz PKR 1,275.1 50,925 -0.28% 0.00% Cotton(KHI)-40 kg 19-Jun 19-Jun $/oz PKR 16.31 8,145 -1.09% 0.00% Kibor-6M 19-Jun % 7.01 $ Bn 16.46 0.01% WoW 0.23% Remittances 8-Jun FY18 Jul-May 18 $ Bn 18.03 YoY 2.95% Exports* Imports* Jul-May 18 Jul-May 18 $ Bn $ Bn 21.35 55.23 15.28% 14.12% USD-Interbank USD-Open MKT KSE-100 index FIPI Crude (AU'18) Gold (JY'18) Gold (10g) Local Silver (JY'18) Forex Reserves Jul-May 18 Trade Balance* $ Bn -33.89 Jul-Apr 18 Current Account $ Mn -14,035 Foreign Direct Inv. $ Bn 2.24 Jul-Apr 18 Jul-Mar 18 LSM Growth* % 5.89 % 4.20 Jul-May 18 Avg. CPI Discount Rate % 6.50 May-18 WoW= Sources: KCCI Research, PMEXweek , NCCPL, KSE, SBP, PBS* ** Not Meaningful on week; -13.40% -50.04% 2.56% Major Currencies 175 GBP, 19-Jun-18, 159.2 165 155 145 EUR, 19-Jun-18, 139.7 135 125 115 USD, 19-Jun-18, 120.6 105 95 Jun-17 USD Sep-17 GBP Dec-17 EUR Mar-18 Source: KCCI Research ; Oanda.com Quote of the Day "Good or great leadership is rooted in a deep sense of personal accountability". Vince Molinaro Chart of the Day Allocation For External Loans (Budgted Vs. Revised) PKR Bn 1,200 1,080 1,000 728 800 600 400 797 800 624 467 287 275 200 0 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 External Loans (Budgeted) External Loans (Revised) Source: KCCI Research, MoF Disclaimer This report has been prepared by KCCI Research & Development Cell. The information contained Abu Dhabi group offers $ 50Mn for Abraaj’s investment business herein have been compiled or arrived at based upon information obtained from sources believed to An Abu Dhabi Financial Group company has made a conditional $ 50Mn offer to buy private equity firm Abraaj’s investment be reliable and in good faith. Such information has not been independently verified. management business. Abu Dhabi Capital Management’s bid is well below the $ 125Mn offered by New York-based icon represents the sole viewpoint of the KCCI R&D Cell, and is stated to enrich the readers' Cerberus Capital Management before Dubai-based Abraaj filed for provisional liquidation in the Cayman Islands last week. understanding of the news item. The R&D Dept. bears no responsibility for its correctness or accuracy. Contact: res@kcci.com.pk Abraaj, which declined to comment on ADCM’s offer, has debt estimated at more than $ 1Bn. Dawn.