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Pakistan Daily Economy Update - 3 May

IM Insights
By IM Insights
5 years ago
Pakistan Daily Economy Update - 3 May


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  1. May . 01-03, 2018 KCCI - eBulletin Amendment in Income Tax Ordinance to drive many importers out of business, KCCI Commercial importers and traders have expressed deep concerns over the changes in Income Tax Ordinance through the Finance Bill 2018, which would compound tax burden on importers of industrial raw materials and other essential items. In an urgent joint meeting of GST & Refunds, Income Tax & FED, and Customs, Valuation, Import & Anti-Smuggling Sub-Committees held at KCCI, participants noted that through an amendment in Section 148, an existing anomaly in IT and ST on Commercial Imports of Raw Materials has been further compounded, which will eliminate many importers out of business. They pointed out that WHT of 4.5-6.0% paid on import of raw materials by commercial importers has been redefined as minimum tax and the importers have been taken out of Fixed Tax Regime (FTR).They believe these measures would open up more avenues of corruption by exposing commercial importers to audits and extortion by tax authorities, despite the fact that they have been paying high rate of WHT tax at source. They urged KCCI to take up the numerous anomalies with the govt. and FBR so that the same could immediately be removed before Finance Bill is passed by the Parliament. Daily Times- Thurs. Revenue for govt: FBR collects PKR 2.92Tn in July-April, up 16% Despite a decent growth rate, the FBR has missed its 10-month target by PKR 135Bn, indicating that it will not be able to achieve even the downward revised tax target of PKR 3.94Tn for FY18. It recorded a provisional net revenue of over PKR 2.92Tn for the period, 16% higher than the PKR 2.51Tn collected in 10MFY17. Tribune-Tues. Businessmen fear dumping of Chinese goods under CPEC Though the govt. has have been highlighting CPEC as a great achievement for the past three years, the project has sparked fears that domestic industries will be crippled as China will dump its commodities in Pakistan. China has already eaten half of the economy, what else it could do, said KCCI President Mufassar Ata Malik, while referring to the business community’s apprehensions about CPEC. Mufassar emphasised that Pakistan’s business community needs to learn to compete in the market and add value to their products, adding it should not always look at the govt. for a helping hand. CPEC is not a one-way road as it will also give access for Pakistan’s businesses to Central Asian markets, he said. Tribune-Wed. Barring K-P, provinces refuse to subsidize CPEC’s SEZs In a major blow to timely rollout of the 2nd phase of CPEC, special regions and provinces – except K-P– have reportedly refused to provide subsidised loans and land on concessionary terms to developers of planned prioritized Special Economic Zones (SEZ) under CPEC. In addition, the Baluchistan Development Authority has also informed the centre that there is no federal land available in Gwadar to set up the federal govt.-owned SEZ. In May’17, Pakistan approved the Special Incentive Package for the Relocation of Industries from China in order to bring investment in nine SEZs to be set up under CPEC. The Board of Investment would now hold a meeting with the finance ministry to review the possibility whether the federal govt. can pick the cost of such subsidies. Tribune-Tues. Economic Indicators List of Indicators Date / Period Unit Value Change Daily 2-May 115.62 118.55 0.00% 0.15% Crude (JU'18) 2-May 2-May 2-May 2-May PKR PKR Pts. $ Mn $/bbl 45,196 -1.23 67.69 -0.76% NM** 0.33% Gold (MY'18) Gold (10g) Local 2-May 2-May $/oz PKR 1,305.1 50,700 0.04% 0.08% Silver (MY'18) Cotton(KHI)-40 kg 2-May 2-May $/oz PKR 16.35 8,038 1.26% -1.31% Kibor-6M 2-May % 6.52 $ Bn 17.13 0.00% WoW -2.37% Remittances 20-Apr FY18 Jul-Mar 18 $ Bn 14.61 YoY 3.55% Exports* Imports* Jul-Mar 18 Jul-Mar 18 $ Bn $ Bn 17.08 44.38 13.08% 15.57% USD-Interbank USD-Open MKT KSE-100 index FIPI Forex Reserves Jul-Mar 18 Trade Balance* $ Bn -27.30 Jul-Mar 18 Current Account $ Mn -12,029 Foreign Direct Inv. $ Bn 2.09 Jul-Mar 18 Jul-Feb 18 LSM Growth* % 6.24 % 3.70 Jul-Apr 18 Avg. CPI Discount Rate % 6.00 Mar-18 WoW= Sources: KCCI Research, PMEXweek , NCCPL, KSE, SBP, PBS* ** Not Meaningful on week; Major Currencies Sindh to now announce next budget on May 10 Without issuing any formal reason, the Sindh govt. has delayed the announcement of budget FY19 till 10th May from 5th May. While CM Murad Ali Shah will present the provincial budget for the entire tax year, the legislature will pass the financial plan for only three months, enabling the incoming caretaker govt. to spend the new budget until 30th Sep’18. The News-Thurs. 175 Petroleum products: Sindh govt. may impose”Infrastructure Cess” Following in the footsteps of the federal govt., the Sindh govt. is likely to impose "Infrastructure Cess" exclusively on petroleum products in the provincial budget FY19. There has been suggestion of a levy on petroleum products at 0.25- 0.5% initially in order to generate additional revenue of PKR 2.5Bn. The levy would be imposed on POL products either transported by pipelines or by road. A similar proposal has also been forwarded for LNG products. BR-Wed. 135 Probe against tax evasion: Legal cover given to actions of DG I&IIR The Finance Bill 2018 has provided legal cover to the actions of Directorate General (Intelligence and Investigation) Inland Revenue against tax evaders and investigations in sales tax matters. The Bill has proposed to insert Section 30A in the Sales Tax Act whereby powers are conferred to Directorate General Investigation to exercise power and function of investigation into sales tax evasion. BR-Wed. Trade Facilitation Agreement: FBR reduces Customs clearance requirements The FBR has reduced documentary and data requirements for Customs clearance in compliance with the Trade Facilitation Agreement. Through the Finance Bill 2018, a concept of Economic Operator Program (EOP) has been introduced, which aims at lowering documentary and data requirements, low rate of physical inspections and examinations, rapid release time, payment of deferred duty, taxes, fee and \ charges, use of comprehensive or reduced guarantees, a single Customs declaration for all imports or exports in a given period, and clearance of goods at the premises of the authorised operator or another place authorised by the Customs authorities. The News-Wed. Govt takes steps to avoid new IMF loan programme: minister The govt. has taken several measures in budget FY19, including curtailing budget deficit and increase in exports, to avoid any new IMF loan programme, Finance Minister Miftah Ismail said. Addressing a post-budget seminar, he said, the govt. has given its best in the budget and now it is the duty of the new govt. to maintain economic growth. Higher rate of tax attracts more revenue, but it cannot yield results in the long-term; rich people are buying properties and motor vehicles, but not paying taxes and avoiding registration. Now they have no other option but to come into the tax net, he said. He also assured the gathering of rectifying the mistakes pointed out by them in the next two weeks. The News-Wed. FBR empowered to recover CGT on foreign transactions The govt. has empowered the FBR to recover capital gains tax on transactions made abroad on assets located in Pakistan under a new law. Any gain from disposal made outside Pakistan, of an asset located in Pakistan, shall be considered as Pakistan source income, reads an amendment introduced into Income Tax Ordinance 2001 through Finance Bill 2018. Currently energy and other companies are said to be taking advantage of a lacuna in the income tax laws. The News-Wed. Bill allowing govt. to use amenity land for BRTS projects sails through Sindh Assembly The Sindh Assembly has unanimously passed the Karachi Development Authority (Sindh Amendment) Bill-2018 allowing the provincial govt. to use 2 amenity plots, one in Surjani Town and one at Numaish intersection, to facilitate the completion of the Green Line section. The News-Tues. Inflation crawls up to 3.7% in April CPI inflation perked up to 3.7% in Apr’18 after witnessing a declining trend in the past three months, mainly because of increase in prices of perishable food items. Prices of non-perishable food items went up 0.82% while those of perishable products up 6.6% during the month. Average inflation in 10MFY18 was recorded at 3.77% as compared to 4.09% in 10MFY17. Core inflation, which excludes volatile food and energy prices, was recorded at 7% y-on-y in Apr’18. Core inflation has been steadily rising for the past couple of months. Dawn – Thur. Load shedding rears its head as fuel stocks dip Power load shedding returned with a bang on 1st May’18 when the mercury rose to 49 degrees Celsius in some parts of the country and transmission system and power plants tripped amid falling fuel stocks. Power shortfall exceeded 5,000MW megawatts due to shortage of furnace oil stocks levels and belated oil shipments are expected to aggravate the situation. Dawn – Tues. -17.18% -50.55% 4.44% GBP, 2-May-18, 157.8 165 155 145 EUR, 2-May-18, 139.0 125 115 USD, 2-May-18, 115.9 105 95 May-17 USD Aug-17 GBP EUR Nov-17 Feb-18 Source: KCCI Research ; Oanda.com Quote of the Day "We make a living by what we get but we make a life by what we give." Winston Churchill Chart of the Day Currency- in- Circulation in Pakistan (PKR Bn) 5,000 4,500 4,167 4,000 3,555 3,500 3,000 2,500 2,000 1,500 1,000 4,287 1,046 1,224 1,600 1,377 1,777 2,309 2,041 2,707 500 0 Source: KCCI Research, SBP 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