Pakistan Daily Economy Update - 23 May

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1. May . 23, 2017 KCCI - eBulletin Budgetary proposals discussed Finance Minister Ishaq Dar and textile industry have discussed major budgetary proposals of textile sector to bring SRO 1125 “pertaining to five export oriented sectors” into the Sales Tax Act 1990, rate of sales tax at retail stage and continuation of existing zero-rating regime without any changes in sales tax rates from 2017-18. While FBR officials hinted at increasing sales tax rate on retail stage, textile representatives strongly contended that the rate of sales tax at retail stage under SRO No. 1125 must be kept at existing 5%. It has also been agreed that the zero-rating regime would continue in future without any major changes or modifications. BR. PM’s package: Textile ministry wants PKR 40Bn Textile Ministry is seeking PKR 40Bn in the upcoming budget of FY18 for implementation of Prime Minister's Incentives Package for Exporters and Textile Policy (2014-19) and has written a letter to the Finance Division in this regard. The finance minister is likely to commit the amount required for implementation of the PM Incentives' Package. For the ongoing FY17, Textile Ministry had demanded PKR 30Bn however, govt. committed PKR 6Bn for FY17 and has released PKR 2.6Bn so far. Out of this amount, Finance Ministry had released PKR 1Bn to the SBP for duty drawbacks on local taxes. BR. Economic Survey on May 25 The Pakistan Economic Survey 2016-17, a pre-budget document presenting state of the country's economy, is likely to be launched on 25th May’17. The survey will cover the development of all the important sectors of the economy, including growth and investment, agriculture, manufacturing, mining, fiscal development, money and credit, capital markets, inflation, debt and liabilities. The News. Investment in Sukuk: Finance Bill 2017 may grant tax credit Finance Bill 2017 is likely to grant tax credit for investment in Sukuks in budget (2017-18) to encourage individuals to invest in Sukuks, bringing its investors at par with the investors of shares. The FBR has agreed to the said proposal of the SECP for incorporation in the Finance Bill 2017. BR. Govt allocates PKR 250Bn for special socioeconomic uplift schemes in FY18 The govt. has allocated PKR 250Bn for various special programs for the forthcoming budget of FY18 to improve socioeconomic developments. The allocations for the special programs include PKR 30Bn for Prime Minister’s (PM) global sustainable development goals (SDGs) program for the next budget. The News. Ramadan package unveiled Minister for Industries and Production has unveiled Ramadan Relief Package 2017 of PKR 1.6Bn, according to which 19 essential commodities will be sold to consumers at subsidized rates. The govt. would extend subsidy of PKR 4/kg on flour (Atta) and PKR 5/kg on sugar. The Utility Store Corporation (USC) will also reduce prices of essential food and non-food items under different brands by 5% - 10% after obtaining special discount from the vendors/suppliers and cutting down its own profit margin. BR. PayPal, Alibaba due soon for key talks Commerce Minister Khurram Dastgir has said the managements of global online payment system provider, PayPal, and Chinese ecommerce giant, Alibaba, were due soon in Pakistan to hold key talks with the govt. Negotiations are underway with Alibaba for reduced registration fees for Sialkot based businessmen, while all out efforts are also being made to bring PayPal and other payment gateways to Pakistan. He said that PayPal is expected to start its regular services in Pakistan shortly and in this regard, legislation is underway under the supervision of SBP. The News. Privatisation no longer under the spotlight The govt. is likely to project less than PKR 50Bn from privatisation proceeds in the budget 2017-18 as against the unmet target of PKR 50Bn for FY17 would set a much lower target for privatisation proceeds. The privatisation program of the govt. is now on the back burner till after the general elections 2018; it is evident from there being no Chairman of the Commission and an acting secretary. With privatisation on the back burner, the sorely needed restructuring plan for public sector entities is also being ignored. BR. 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 22-May 22-May 22-May 22-May 22-May 22-May 22-May 22-May 22-May 22-May PKR PKR Pts. $ Mn $/bbl $/oz PKR $/oz PKR % 104.86 106.10 51,374 0.20 51.04 1,259.8 43,071 17.12 7,288 6.15% Forex Reserves 12-May $ Bn 20.68 0.00% 0.00% 1.24% NM** 2.86% 0.98% 0.00% 3.46% 0.00% 0.00% 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 EUR, 22-May-17, 117.3 USD, 22-May-17, 104.6 Aug-16 USD GBP Nov-16 EUR Feb-17 May-17 Source: KCCI Research ; Oanda.com Quote of the Day Textile exports continue to weaken Pakistan textile exports continue to slide as exports contracted to $ 10.30Bn during 10MFY17, down by 0.92% for the same period a year before. The govt. had announced an incentive package for exporters however, there is no conspicuous improvement in the exports. Provisional exports data also showed that textile exports have declined to $ 1.03Bn in Apr.’17, 0.34% less as compared to $ 1.06Bn for Apr.’16. However, exports of bed wear increased to $1,763 million from $1,678 million, showing an increase of 5.01 per cent while exports of tents, canvas & tarpulin increased to $119.470 million from $76.477 million and readymade garments $1,893 million from $1,797 million. BR. “Turn a perceived risk into an asset." Aaron Patzer Chart of the Day Inflation Vs. Policy Rate (Jan.'13 - Apr.'17) 12.0 10.0 8.0 ADB approves $ 20Mn loan for micro, small and medium enterprises The Asian Development Bank (ADB) has approved a $ 20Mn loan to help Khushhali Microfinance Bank Limited (KMBL) expand access to credit for agriculture-related borrowers and small businesses in Pakistan. The assistance will help KMBL increase the provision of financial services to micro, small, and medium-sized enterprises from 5,700 at present to over 30,000 by 2020. Additionally, women are expected to comprise up to 25% of the loan recipients. Tribune. 2.0 5.8 5.8 5.8 5.8 5.8 5.8 5.8 5.8 5.8 5.8 5.8 5.8 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.5 6.5 6.5 6.5 Thar mining firm to supply 1.9Mn tons of coal to two power plants Sindh Engro Coal Mining Company (SECMC) has signed two separate agreements with ThalNova and Thar Energy for the supply of 1.9Mn tons of coal per annum each from Thar deposits. After the commissioning of these power projects, SECMC will be mining 7.6Mn tons of coal per annum from Thar coal block-II, which will bring down coal tariff to around $ 41.35 per ton. Thar Energy and ThalNova are setting up mine-mouth power plants of 330MW each at Thar block-II, which will be fully capable of running 100% on domestic coal production. Both the power plants are scheduled to be commissioned by early 2020. Tribune. 8.0 8.0 8.5 8.5 9.5 9.5 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 ICI acquires pharma facility, brands for PKR 1.9Bn ICI Pakistan Ltd has executed an asset purchase agreement with Wyeth Pakistan Ltd and Pfizer Pakistan Ltd for the acquisition of certain assets at the aggregate purchase price of PKR 1.91Bn. ICI stated in a stock notice that the agreement was signed on May 19th under which the company will acquire a Wyeth-owned pharmaceutical manufacturing facility located on Hawkesbay Road in Karachi along with the following pharmaceutical brands: Entox-P, Lederplex, Lederiff, Mucaine, Nilstat, Tri-Hemic and Wymox. Two other products with registrations of Pfizer in the acquisition deal are Citralka and Combatrin. Dawn. GBP, 22-May-17, 136.1 6.0 4.0 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 0.0 Real Interest Rate(%) CPI (%) Policy Rate (%) Govt-farmers talks fail Source: KCCI Research, SPB, PBS Farmers from across the country have said that their talks with the government on reducing the cost of production in the agriculture Disclaimer sector have failed after Finance Minister Mr. Dar refused to consider their demands. However, a press release later issued by the Ministry of Finance said the finance minister assured the delegation that the government would give consideration to their proposals. This report has been prepared by KCCI Research & Development Cell. The information Mr. Dar said the government has already given a number of incentives to the agriculture sector and the farming community must 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 make full use of the facilities. Dawn. 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