Pakistan Daily Economy Update - 22 May

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1. May . 21-22, 2017 KCCI - eBulletin Budget FY18: proposals presented to Dar Finance Minister Ishaq Dar chaired a preparatory meeting for the upcoming budget FY18 where Secretary Commerce presented budget and tax related proposals for the trade and commerce sector, based on consultations with industries and exporters’ representatives. The finance minister said the proposals would be accorded due consideration in the budget preparations. BR - Mon. Budget 2017-18: FBR mulling allowing filing of quarterly statements In a recent meeting, FBR is contemplated allowing filing of quarterly statements instead of monthly statements for upcoming budget FY18. The dates for filing monthly statements under the income tax law and payment of monthly sales tax i.e. 15th of each month, coincides with each other, creating excessive burden on the taxpayers. It has been therefore recommended to change filing date of such statement to 25th day of the month following the month to which withholding pertains in order to provide ample time for preparation and filing of withholding statements. BR – Sun. WHT on filers and non-filers: Revenue measure to widen gap based on four principles FBR's major revenue measure to widen the gap of withholding taxes between filers and non-filers in the upcoming budget FY18 has been based on four principles, i.e., revenue generation, sector/areas paying less Withholding Tax (WHT), areas having enforcement issues and non-compliant sectors. There is a possibility that the sectors, where WHT on non-filers have been doubled during last years, would not be touched while sectors which are not performing well under the context of revenue contribution may be subjected to enhanced rates. BR Sun. FBR mulls advance tax on international ticket of economy class FBR will put forward plans for a fixed advance tax on international airline ticket of economy class in the upcoming budget for FY18 to improve revenue collection. The revenue body is likely to recommend a levy of PKR 2,000 to PKR 3,000 advance tax per economy class ticket for international travel. The govt. is currently charging PKR 16,000/person tax on the first class international air ticket and PKR 12,000 tax on air tickets of all other classes, excluding economy class. The News – Sun. Attracted by high population, Turkish group Anadolu eyes retail business in Pakistan The Anadolu group, one of Turkey’s largest business conglomerates, has shown its intentions to enter Pakistan’s vibrant retail sector as part of the group’s strategy to unearth fresh avenues of investments. The company is observing the changing rural-urban dynamics of Pakistan where the rising middle class is taking the lead. Group Chief Executive Officer Hulsit Zorlu said their earlier decision to pour money into Pakistan’s soft drink sector was a good move and the company was happy with what it had achieved in Pakistan. Tribune – Mon. Business community’s budget proposals will be honoured: Dar Finance Minister Senator Ishaq Dar has said that the budget proposals submitted by the business community would be given due consideration during the finalization of the budget. He was talking to a delegation of Pakistan textile millers, led by Zubair Motiwala. He said that the importance the govt. accords to the textile sector, was evident from the Prime Minister's Package of Incentives for Exporters worth PKR 180Bn announced earlier this year. He encouraged the textile industry to make productive use of the package in order to enhance the country's exports. Daily Times – Sun. Key policy rate kept unchanged In its latest Monetary Policy Statement (MPS), the SBP decided to keep the policy rate unchanged at 5.75% for the next two months, indicating that current trends of rising income, surge in imports and accelerating credit to private sector are expected to increase the CPI inflation in FY18. However, it is likely to remain within targets. The MPS further read that real GDP growth in FY17 is provisionally estimated at 5.3%, representing a 10-year high. BR – Sun. Occupancy rates rise, but hotels differ on CPEC-related business Hotel occupancy rates are rising in Pakistan due to better law and order situation along with increase in economic activity, especially related to CPEC. In this regard, hotel managers in Lahore have opined that Karachi is now in a better position as many businessmen who had shifted to Lahore are now going back to Karachi due to better law and order situation. The share of Chinese people in the overall room occupancy in Karachi hotels remained in the range of 3% - 6% during the current year, about 1% higher than the last year. Dawn - Sun. No new taxes to be levied in budget, says Shahbaz Punjab Chief Minister Shahbaz Sharif has said that the next provincial budget will be friendly for people, farmers and industrialists and new schemes will be introduced for public welfare in the budget and no new tax will be levied. The News – Sun. FY17 growth seen at 5.2%: Panama Papers enhanced political risks: World Bank World Bank in its report on "Pakistan Development Update" has stated that Panama Papers issue has enhanced political risks and created some policy uncertainty and macroeconomic policy disorientation in Pakistan. The reports says that a stable PKR/US$ nominal exchange rate has resulted in appreciation of the real effective exchange rate (REER) which can erode Pakistan's export competitiveness. It further maintains that protracted global economic weakness, especially in the Euro area due to Brexit could negatively affect exports. BR - Sun. PKR 10.5Bn proposed for ITTMS project Revenue Division has proposed PKR 10.5Bn for the Integrated Transit Trade Management System (ITTMS) project under PSDP in the upcoming budget FY18. The ITTMS would be launched under Asian Development Bank's Regional Improving Border Service Project where the bank would provide PKR 10Bn during the upcoming year. The project’s cost has been estimated at PKR 31.63Bn with foreign exchange component of PKR 26.05Bn, while remaining of PKR 5.58Bn will be provided by the govt. The Nation – Mon. Govt sets aside PKR 44Bn for CPEC’s western route The govt. is learnt to have set aside PKR 44Bn, or a quarter of CPEC funding, for FY18, giving the western route of CPEC its first serious push, initiating the construction of roads in the country’s underdeveloped areas. At the same time, CPEC’s eastern route, which is at an advanced stage of completion, would also begiven required financial resources in the Public Sector Development Programme 2017-18. The next fiscal will be the third year of execution of CPEC projects. Tribune – Sun. Foreigners eager to invest in Pakistan: minister Federal minister for planning, development and reforms Ahsan Iqbal has said that foreign investors are eager to invest in Pakistan due to the economic policies of the govt. Addressing the National Excellency Awards distribution ceremony. The minister said the govt. policies have not hampered economic activities in the past, but political de-stability was responsible for it. The News – Sun. Economic Indicators List of Indicators Date / Period Unit Value Change Daily Crude (JU'17) Gold (JU'17) Gold (10g) Local Silver (JU'17) Cotton(KHI)-40 kg Kibor-6M 19-May 19-May 19-May 19-May 19-May 19-May 19-May 19-May 19-May 19-May PKR PKR Pts. $ Mn $/bbl $/oz PKR $/oz PKR % 104.86 106.10 50,742 -3.96 50.79 1,255.4 43,071 16.81 7,288 6.15% Forex Reserves 12-May $ Bn 20.68 0.00% 0.19% -0.42% NM** 2.94% -0.35% -0.40% -0.20% -0.72% 0.01% WoW -0.54% YoY -2.79% -2.29% 19.88% -40.12% -204.75% USD-Interbank USD-Open MKT KSE-100 index FIPI 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 % 4.09 Avg. CPI-FY17* Jul-Apr 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, 21-May-17, 136.1 EUR, 21-May-17, 117.0 USD, 21-May-17, 104.4 Aug-16 USD Nov-16 GBP Feb-17 May-17 Source: KCCI Research ; Oanda.com EUR Quote of the Day "Success in business requires training and discipline and hard work. But if you’re not frightened by these things, the opportunities are just as great today as they ever were." David Rockefeller Chart of the Day Net Foreign Direct Investment Receipts in Top Ten Sectors (11MFY17) 475 Food 423 Power 356 Construction 154 Electronics 118 Oil & Gas Explorations 60 Financial Business Tobacco & Cigarettes Transport Automobiles Machinery 47 37 35 26 Exporters visit Saudi Arabia to explore rice market 0 100 200 300 400 500 While addressing a B2B session of rice exporters, Pakistani Ambassador has said that bilateral trade volume between the countries would Value in PKR Mn Source: KCCI Research, SBP enhance in the coming days. He said that the embassy is ready to facilitate Pakistani exporters in entering and capturing their due share in Disclaimer Saudi market and urged Pakistani industrialists to seize on the new opportunities arising from implementation of Saudi Vision 2030. The Nation – Sun. 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 FBR investigating irreconcilable amount of PKR 40Bn tax collection The FBR’s Inland Revenue Service (IRS) authorities in Karachi are looking into an apparently irreconcilable amount of over PKR 40Bn, independently verified. icon represents the sole viewpoint of the KCCI R&D Cell, and is stated to enrich the readers' relating to the Goods Declarations (GDs) filed & cleared at import stage, the taxes collected from them are hitherto untraceable. The News understanding of the news item. The R&D Dept. bears no responsibility for its correctness or – Sun. accuracy. Contact: res@kcci.com.pk