Pakistan Daily Economy Update - 24 March

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1. Mar . 23 - 24, 2018 KCCI - eBulletin Govt. mulls slashing duties on 515 raw material imports to boost exports Govt. is mulling to reduce customs and regulatory duties on import of more than 500 raw materials used by export-oriented industry in the upcoming budget of FY19 to boost exports. Commerce division is currently working on the formulation of a five-year strategic trade policy framework 2018-23 in consultation with the stakeholders. Inviting feedback on the proposed tariff structure from all the stakeholders by Mar. 28, 2018, Commerce division has stated that immediate rationalization of tariff will be considered on 515 tariff lines in the short term while a comprehensive tariff policy for industrial expansion including the medium and long-term measures is being developed. The News - Fri. Govt. unlikely to increase taxes in next budget FBR has stated that govt. is unlikely to increase taxes in the upcoming budget of FY19 however it might take some measures to provide relief to business community. State Minister for Finance Rana Afzal has also stated earlier that govt. would present pro-people budget for the next fiscal year 2018-19. The govt. has decided to fix tax collection target at PKR 4.5Tn FY19 as against PKR 4Tn set for the ongoing FY18. The govt. would also increase the current income tax exemption threshold of PKR 400, 000 per annum. The Nation – Fri. Incoming govt. to hold ninth NFC meeting The federal govt. and provinces have decided that the next meeting of the 9th National Finance Commission (NFC) will be held by the new govt. after elections. The decision has been taken during the last meeting of provincial finance secretaries held under the chairmanship of additional finance secretary (budget) in the Finance Division. BR – Sat. Pakistan, Sri Lanka agree to diversify, deepen bilateral relations Sri Lankan President, on three days visit to Pakistan, has agreed to diversify and deepen the bilateral relations hoping that the ties would continue to grow in future. During one-on-one meeting with PM Abbasi, Sri Lankan President extended support for holding SAARC Summit in Pakistan. Both the countries signed three MoUs to enhance cooperation in the fields of youth development and training of civil and diplomatic personnel. BR – Sat. Economic Indicators List of Indicators Date / Period Unit Value Change Daily 22-Mar 115.40 114.50 0.34% 0.00% Crude (MY'18) 22-Mar 22-Mar 22-Mar 22-Mar PKR PKR Pts. $ Mn $/bbl 45,030 9.77 64.27 0.86% NM** -1.82% Gold (AP'18) Gold (10g) Local 22-Mar 22-Mar $/oz PKR 1,328.6 49,285 -0.29% 0.26% Silver (AP'18) Cotton(KHI)-40 kg 22-Mar 22-Mar $/oz PKR 16.34 8,145 -1.21% 1.33% Kibor-6M 22-Mar % 6.53 $ Bn 18.08 0.01% WoW -0.88% Remittances 16-Mar FY18 Jul-Feb 18 $ Bn 12.83 YoY 3.41% Exports* Imports* Jul-Feb 18 Jul-Feb 18 $ Bn $ Bn 14.85 39.13 11.66% 17.19% USD-Interbank USD-Open MKT KSE-100 index FIPI Forex Reserves Jul-Feb 18 Trade Balance* $ Bn -24.28 Jul-Feb 18 Current Account $ Mn -10,826 Foreign Direct Inv. $ Bn 1.94 Jul-Feb 18 Jul-Jan 18 LSM Growth* % 6.33 % 3.84 Jul-Feb 18 Avg. CPI Discount Rate % 6.00 Jan-18 WoW= Sources: KCCI Research, PMEXweek , NCCPL, KSE, SBP, PBS* ** Not Meaningful on week; Major Currencies 175 Diesel, petrol prices likely to go up by PKR 3-4 per liter The diesel and petrol prices are likely to go up by PKR 3-4/liter in the month of Apr.’18. The govt. will be forced to increase the petroleum prices on the back of rupee depreciation by 5% against dollar and hike of $ 5 in the price of crude oil in the international markets since Mar.’18. The decision, in this regard, will be finalized on Mar. 31, 2018. The Nation – Fri. 165 Levy and collect AIT: FBR, provinces agree to share data on AIT FBR and provinces have decided to explore possibility for sharing of data on Agriculture Income Tax (AIT) to levy and collect AIT from those who have voluntarily declared agriculture income in their income tax returns with the FBR. The issue of AIT has been discussed threadbare during the last meeting of provincial finance secretaries held under the chairmanship of additional finance secretary (budget) in Finance Division. The member FBR informed provinces that there are legal restrictions in Income Tax Ordinance 2001 due to which it is not possible to share the information of income tax payers. He, however, assured that FBR is ready to extend full cooperation and facilitate Sindh govt. for further deliberations in the matter and to find out solution of the issue. BR – Fri. 115 Sindh slaps tax on rental for commercial activities \ Sindh govt. has slapped sales tax on income from properties rented for commercial activities, although there is tax exemption if annual rent is below PKR 0.4Mn and in case of renting for residence. In this regard, member of the Sindh Revenue Board has stated that there have been misconceptions after the provincial parliament approved a bill, which brought rent of immovable property under the ambit of economic activity. He further said that services sales tax has only been imposed on income from renting shops, banks or other commercial operation. The News – Sat. Online custom clearance system at Torkham The govt. has installed online custom clearance and registration system on Pak-Afghan border at Torkham. A member of Collectorates of Customs in KP said that irregularities in export and import will be controlled with the installation of this system. It will facilitate trade with Afghanistan and Central Asian countries. He further said that more than two hundred vehicles loaded with goads are being cleared every day. The Nation – Sat. Ex-refinery price of JP-8 to be linked with JP-1’s The federal govt. has decided to link ex-refinery price of JP-8 with ex-refinery price of JP-1 with effect from upcoming FY19 based on Import Parity Price (IPP). The prices of petroleum products have been determined by refineries and Oil Marketing Companies (OMCs) under the parameters approved by the ECC on October 15, 2010 and August 16, 2011, whereby ex-refinery prices are linked with the PSO's actual import price, while in the absence of PSO's import, the prices are determined as per the ECC's approved IPP formula based on the international oil market prices quoted in Arab Gulf Market. BR – Sat. Forex reserves fall to $ 18.08Bn Pakistan’s foreign exchange reserves dropped to $ 18.08Bn on Mar. 16, 2018 from $ 18.24Bn a week ago. The reserves held by the SBP stood at $ 11.94Bn as compared to $ 12.13Bn in the previous week. However, the forex reserves held by commercial banks increase to $ 6.14Bn against $ 6.11Bn in the preceding week. The decline in foreign exchange reserves has been observed due to payments on account of external debt servicing. The News – Fri. -20.85% -50.03% 15.64% GBP, 23-Mar-18, 163.2 155 145 EUR, 23-Mar-18, 142.6 135 125 USD, 23-Mar-18, 115.5 105 95 Mar-17 USD Jun-17 GBP EUR Sep-17 Dec-17 Source: KCCI Research ; Oanda.com Quote of the Day "Disobedience is the true foundation of liberty." Henry David Thoreau Chart of the Day BREAKUP OF NON TAX REVENUES (1H FY18) Defence 2% Passport Fee 2% Discount & Widfall on Crude Price, Petroleum Levy on LPG 2% Profits Mark-up 4% SBP Surplus Profit & others 76% Dividend 5% Royalties on Oil\ Gas 7% Source: KCCI Research, MoF 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