Pakistan Daily Economy Update - 26 October

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1. Oct . 26, 2017 KCCI - eBulletin KCCI opposes FBR’s access to bank account holders’ info Karachi Chamber of Commerce & Industry (KCCI) President Muffasar Atta Malik has said that any attempt to implement Section 165 and Section 165-A of the Income Tax Ordinance will be totally rejected by Karachi’s business community. Both sections will give FBR access to bank account holders’ information, which - if given - would only pave way for harassment and bribery and no major breakthrough will be achieved in terms of broadening the tax base. The KCCI President further said that the business community fully supports commercial banks’ reasonable reluctance to give online access as it rightly fears that sensitive information will be misused. Moreover, this information would discourage business community from maintaining their funds in local commercial banks which may result in flight of substantial capital from the country. The Nation. Hike in power tariff to hamper textile production A parliamentary panel has observed that latest surge in electricity prices would further increase the cost of doing business for textile sector and may further hamper the production capacity of export-oriented sector. In this regard, Commerce and Textile Minister said that second LNG terminal will be operational within the next two months, which would help decrease power rates. The Senate’s Commerce Committee would consider whether the PKR 3.10 tariff rationalization surcharge should go away or not. After finalization of recommendations, these would be shared with the PM. The committee was informed that PKR 10Bn have so far been released against the claims of PKR 18Bn of textile sector under the Prime Minister Package of incentives for exporters. An amount of PKR 14.43Bn has been refunded to the textile sector by FBR against RPOs issued up to Apr. 30, 2017. BR. LSM sector posts robust growth in 2MFY18 The country’s Large Scale Manufacturing (LSM) sector recorded higher-than-expected growth of 11.3% in 2MFY18 over a year ago. The main drivers of the LSM sector's growth during the period under review were: iron and steel that recorded 49.6%, automobile 30.8%, nonmetallic mineral products 19.6%, wood products 18.4%, engineering products 18.35% and coke & petroleum products that recorded growth of 16.3%. The Nation. Sindh, Railways’ dispute continues over Karachi Circular Railway section The final approval of the $ 2Bn Karachi Circular Railway (KCR) from the highest forum of CPEC (JCC) is in the balance as the Sindh government and Pakistan Railways have yet to resolve a dispute over the rail corridor of the mass transit scheme. Speaking after chairing a monthly meeting of the CPEC Coordination Review Committee, Minister of Planning and Development Ahsan Iqbal said the dispute is due to the KCR alignment overlapping with the route of another critical CPEC project – upgrading of the railways existing main line from Karachi to Peshawar known as ML-I. Iqbal asked railway authorities to resolve the row in the current week as a meeting of the CPEC Joint Working Group on Infrastructure was going to take place in the first week of Nov’17.Tribune. Long-term CPEC plan to be approved in Beijing: minister Minister for Interior and Planning and Development Mr. Ahsan has claimed that a long-term plan for CPEC will be approved by the Joint Cooperation Council (JCC) at its meeting scheduled for 21st Nov’17 in Beijing. He directed all the stakeholders and provincial governments to firm up their projects and explore further options of mutual interest to be taken up at 7th JCC meeting. Dawn. Chinese approve $ 1.5Bn financing for Hubco’s project A consortium of Chinese banks, led by China Development Bank (CDB), has approved financing of $ 1.5Bn for Hub Power Company Limited’s (Hubco) 1,320MW imported-coal fired power project at Hub, Balochistan. The total cost of the project is estimated at $ 2Bn and includes 75% debt ($ 1.5Bn) and 25% equity ($ 500 Mn) component. Part of CPEC, the project is being set up by China Power Hub Generation Company (CPHGC), a joint venture of the Hub Power Company (HUBCO) and China Power International Holding Ltd (CPIH). Hubco has a 47.5% stake in the joint venture, while the rest lies with CPIH. The project will contribute 9Bn kWh of cheaper electricity annually to the national grid, and will support 4 Mn Pakistani households. Tribune. Proposal seeking increased storage capacity of OMCs rejected ECC of the Cabinet has rejected a proposal of Petroleum Division to raise the OMCs' storage capacity from 20 days to 30 days after Finance Minister opposed it, saying any such decision will widen current account deficit. He argued against the proposal saying that 20-day stock is being maintained in many countries of the world and such stock is sufficient to cater to the needs of the country. The Minister did not agree with the proposed enhancement of storage capacity of OMCs from 20 days to 30 days. BR. Sukuk, Eurobond issuance awaits finance minister’s green signal Lack of decision could delay the issuance of much-needed Sukuk and Eurobond, planned simultaneously in Nov’17, as authorities await the final green light from Finance Minister Mr. Dar. All the paperwork has been done to move ahead, but the government is still awaiting an approval to finalise six banks to simultaneously launch sukuk and Eurobond next month in order to generate much-needed $ 2 to $ 3Bn. If \ the transactions get delayed by another month, all major financial capitals in the world will eneter vocation mode due to Christmas and New Year festivals. The News. Agreement signed for intra-city and intercity bus projects in Sindh The long-awaited financing agreement between the transport and mass transit department and Sindh Modaraba has been signed to launch intra-city and intercity bus projects. Speaking on the occasion, CM Sindh said that the existing public transport facilities were not enough to keep up with the pace of rising population and in this situation the intra-city bus projects were need of the hour. Dawn. 1,250MW RLNG-based power project for Jhang approved The Private Power and Infrastructure Board (PPIB) has approved 1,250MW RLNG-based power project near Jhang and decided to advertise 132MW hydropower project in Azad Kashmir for bidding. Dawn. ‘Technical fault’ disrupts shares trading at PSX Trading hours at PSX were cut short by one hour and 20 minutes on 25th Oct’17 (Wednesday) as the market came to a halt at 2:10pm due to a “technical fault”. Admitting that such glitches hurt the market’s perception, PSX Acting MD said PSX is subject to such technical issues as much as any other global market. Dawn. PBS briefs Cabinet on census A meeting of the federal cabinet chaired by the Prime Minister Shahid Khaqan Abbasi was given a presentation on Census 2017. The Election Commission has expressed concern that if a constitutional amendment for delimitation is not passed, the next general elections may face delay. In this regard, the bill would be introduced as soon as possible in the parliament to discuss and decide whether the seats of national and provincial assemblies, could be increased or not based on the increase in population. BR. Ogra ‘incurred’ loss of PKR 370Mn on exchequer Public Accounts Committee (PAC) has informed that OGRA awarded yearly inspection contract of over 300 CNG stations to a third party contractor, which caused a loss of PKR 370Mn to the national exchequer. The committee was reviewing the audit of the Petroleum Ministry for FY17. Audit officials said that the Petroleum Ministry did not cooperate with respect to the audit objections. The PAC Chairman ordered to summon chairman OGRA in next PAC committee meeting to enquire why the contract was not awarded to the Hydro Carbon Institute of Pakistan (HCIP). The Nation. Economic Indicators List of Indicators Date / Period Unit Value Change Daily 25-Oct 25-Oct 25-Oct 25-Oct 25-Oct 25-Oct 25-Oct 25-Oct 25-Oct 25-Oct PKR PKR Pts. $ Mn $/bbl $/oz PKR $/oz PKR % 105.45 107.30 41,595 -6.66 52.22 1,276.1 45,300 16.92 6,752 6.17% 0.00% 0.09% 0.74% NM** -0.59% 0.01% 0.00% -0.06% 0.00% 0.00% WoW 1.93% YoY 1.05% 10.84% 22.19% -29.75% -117.29% 56.33% USD-Interbank USD-Open MKT KSE-100 index FIPI Crude (DE'17) Gold (NO'17) Gold (10g) Local Silver (NO'17) Cotton(KHI)-40 kg Kibor-6M Forex Reserves $ Bn 20.05 13-Oct FY18 Jul-Sep 17 Remittances $ Bn 4.79 Jul-Sep 17 Exports* $ Bn 5.17 Jul-Sep 17 Imports* $ Bn 14.26 Jul-Sep 17 Trade Balance* $ Bn -9.09 Jul-Sep 17 Current Account $ Mn -3,557 Foreign Direct Inv. $ Bn 0.66 Jul-Sep 17 Jul-Aug 17 LSM Growth* % 11.30 % 3.39 Jul-Sep 17 Avg. CPI Discount Rate % 5.75 Sep-17 WoW= week Sources: KCCI Research, PMEX , NCCPL, KSE, SBP, PBS* ** Not Meaningful on week; Major Currencies 155 GBP, 25-Oct-17, 139.1 145 135 125 EUR, 25-Oct-17, 124.1 115 105 95 Oct-16 USD Jan-17 GBP EUR Apr-17 Jul-17 USD, 25-Oct-17, 106.0 Oct-17 Source: KCCI Research ; Oanda.com Quote of the Day "Vision without power does bring moral elevation but cannot give a lasting culture." Muhammad Iqbal Chart of the Day Countries with Highest National Debt-to-GDP Ratio (2017) 270% 230% 190% 150% 221% 179% 138% 138% 119% 115% 115% 110% 106% 106% 105% 70% Source: KCCI Research, StashInvest.com 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 Worldwide debt more than triple economic output sources believed to be reliable and in good faith. Such information has not been independently Global debt now amounts to 324% of the world’s annual economic output, the Institute of International Finance (IIF) has reported. Global verified. Debt has risen to a record $ 226Tn which is more than three times global annual economic output and firms in more countries are 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 struggling to service loans. Dawn. accuracy. Contact: res@kcci.com.pk