Pakistan Daily Economy Update - 5 May

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1. May . 5, 2017 KCCI - eBulletin $ Bn 21.00 Jul-Mar 17 Remittances $ Bn 14.06 Jul-Mar 17 Exports* $ Bn 15.12 Jul-Mar 17 Imports* $ Bn 38.50 Jul-Mar 17 Trade Balance* $ Bn -23.39 Jul-Mar 17 Current Account $ Mn -6,130 % 4.09 Avg. CPI-FY17* Jul-Apr 17 Mar-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 USD, 4-May-17, 104.9 Aug-16 Nov-16 GBP Feb-17 May-17 Source: KCCI Research ; Oanda.com EUR Quote of the Day “Managers need adaptability, curiosity, courage and transformational leadership to succeed in the global economy.” Brigitte Carbonneau 2.52 6MFY17 -0.80 1.99 2.00 -0.52 6MFY16 2.40 6MFY15 -0.65 1.75 2.21 1.67 -0.54 6MFY14 1.46 -0.62 6MFY13 6MFY10 -0.25 0.83 1.08 0.91 1.31 2.09 PAKISTAN'S HALF YEARLY BUDGETARY POSITION (6MFY09 - 6MFY17) 2.79 Chart of the Day 6MFY09 Telenor’s Punjab head office sealed for alleged tax default The Punjab government has sealed the provincial head office of Telenor Pakistan for an alleged tax default of PKR 1.69Bn. Punjab Revenue Authority (PRA) took the action after its commissioner of appeals rejected the plea of the cellular company. It ordered the company to clear the tax or face the closure of all Punjab offices. Telenor Pakistan has been held defaulter and liable to pay Punjab sales tax amounting PKR 1,612.9Mn. Dawn. EUR, 4-May-17, 114.6 USD Dar seeks $ 2.5Bn ADB loan Finance Minister Mr. Dar has said that Pakistan is likely to get a $ 2.5Bn loan in infrastructural financing from the ADB. The loan is expected to help economy achieve a growth rate of 7% by 2019. Mr. Dar said he met ADB President Takehiko Nakao and requested him to consider the loan under infrastructural financing in view of the surging requirements of the sector. He said the Asian bank had already agreed in principle to increase its annual financial allocation for Pakistan to $ 2Bn. Dawn. Iran for better trade ties with Pakistan Consul General of the Islamic Republic of Iran Mr. Mohammad Rafiei has said that Iran and Pakistan enjoy cordial relations in different fields since long and they are mainly focusing on strengthening ties with Pakistan in the field of trade and economic cooperation. Since CPEC originates from Balochistan, and as Iran mainly focus on Balochistan, in terms of trade and economics, it is keen to join the project. Chabahar and Gwadar are two sister ports and are not rivals to each other. Dawn. GBP, 4-May-17, 135.2 1.67 Japan to provide 2.67Bn yen loan The Japanese govt. has agreed to provide a concessional loan of 2.67Bn yen (approximately $ 24Mn) to the govt. of Pakistan for Islamabad and Burhan Transmission Line Reinforcement Project with interest rate of Japanese Yen LIBOR plus 10 bases point (equivalent to 0.12%) and repayment during 30 years including 10 years grace period. Japan International Cooperation Agency (JICA) will implement the loan project which includes civil work and equipment for transmission lines of 220 KV between the Tarbela Hydropower Plant and the Burhan sub-station. The Nation. 28-Apr 1.14 Customs may launch Chinese trade data verification this month Pakistan Customs has completed all arrangements to launch online trade data verification to eliminate the menace of under-invoicing and plugging revenue leakages with the Chinese authorities from this month. The IT infrastructure necessary for creating linkages with the Chinese customs has already been developed. The Pakistan side has already completed all the work and recently installed a software to translate Chinese language into English, which would help the local Customs authorities to understand the documents. Moreover, a highlevel delegation from China Customs is scheduled to arrive on 21st May’17 to review the progress of the project. The News. Forex Reserves -0.53 Pakistan seeks more than double financing for infrastructure projects Pakistan is seeking to more than double the funding support from ADB for the ongoing infrastructure projects to achieve a growth target of 7% by 2019. FM Ishaq Dar has said that today we met the president of ADB and briefed him on the additional funding needs to support development works. He further said that we requested the ADB to consider $ 2.5Bn annual allocation for Pakistan as infrastructural financing. The News. Crude (JU'17) Gold (MY'17) Gold (10g) Local Silver (MY'17) Cotton(KHI)-40 kg Kibor-6M 0.01% 0.14% 1.40% NM** -4.21% -0.78% 1.42% -0.44% 0.00% -0.02% WoW -0.71% YoY -2.29% -3.06% 18.67% -38.80% -160.74% 6MFY12 Qatar Joins race to win Pakistan LNG pipeline contract Qatar has joined the race to tap the growing energy market of Pakistan by expressing interest in the $ 1.5Bn pipeline project for the supply of imported LNG to feed gas-starved consumers in Punjab. Qatar has already taken the lead in LNG supplies and signed a multibillion-dollar contract for gas export to Pakistan. The Prime Minister has offered the signing of a state-to-state deal without bidding. Tribune. Change Daily 104.84 106.05 49,284 -6.80 45.55 1,229 43,814 16.38 7,180 6.15% 1.48 Nepra initiates proceedings for captive power tariff Nepra has initiated proceedings to determine a new upfront tariff for short-term utilization of the available generation capacity of captive power plants on coal, gas and furnace oil. Nepra has proposed a tariff of PKR 11.9229/kWh for captive power plants running on furnace oil. The fuel cost component has been worked out on the basis of furnace oil price of PKR 45,116/ton, including freight charges. A tariff of PKR 7.5026/kWh is proposed for captive power plants running on gas. The fuel cost component has been worked out on the basis of gas price of PKR 600/mmbtu, while a tariff of PKR 6.1311/kWh is proposed for coal-based captive power generation. The News. Value PKR PKR Pts. $ Mn $/bbl $/oz PKR $/oz PKR % 0.99 Telecom sector seeks reduction in withholding tax At a time when the government is giving final touches to proposals for the upcoming budget, the telecom sector is seeking reduction in withholding and sales tax rates in a bid to provide relief to subscribers. In the first budget of government in 2013, the withholding tax rate was increased to 15% from 10% which was reduced to 14% in the following year. As per proposals for the next budget, it is proposed to rationalize rate of FED/GST and bring it at par with other sectors. According to the telecom industry, bringing GST/FED to 17% alone can create 1.8Mn additional connections and increase GDP by $ 1.2Bn generating 4,200 jobs by 2021. Dawn. Unit 4-May 4-May 4-May 4-May 4-May 4-May 4-May 4-May 4-May 4-May -0.49 Withholding Tax on mobile banking services likely FBR is considering expanding the scope of 0.4% tax on banking transactions conducted by non-filers of tax returns to mobile banking services in the upcoming budget amid an outcry from telecom operators against heavy taxes that are eating up over one-third of their revenues. Yet the tax authorities are not in a mood to offer any significant respite to the telecom sector except for removing the tax on cash withdrawals by branchless banking agents. The agents are currently paying up to 12% tax on the commission they earn from banks and 0.3% tax on cash withdrawals. Tribune. Date / Period 6MFY11 SBP to select local banks to facilitate trade with Iran The State Bank of Pakistan is reportedly going to select some local banks within the next few days to facilitate trade with Iran which would help in boosting bilateral trade. Despite many commonalities, bilateral trade volume between Iran and Pakistan has remained unsatisfactory, but resumption of the banking channels would boost trade to $ 5Bn per annum as desired by Prime Minister Nawaz Sharif during a meeting with the Iranian foreign minister. The Nation. List of Indicators USD-Interbank USD-Open MKT KSE-100 index FIPI -0.40 Senate body approves Companies Bill 2017 Senate’s parliamentary committee has approved the Companies Bill, 2017 after proposing certain changes, which would facilitate the country’s corporate sector. The Bill, which is meant to replace the Companies Ordinance, 1984, was passed by the National Assembly on Feb. 6, 2017; though it will go back to the lower house once again for final voting due to changes proposed by the Senate panel. The more than 500-clause bill is meant to consolidate the law and encourage corporatization in the country based on international best practices. The Nation. Economic Indicators 884 cos registered in Apr.’17 SECP registered a record number of 884 companies during Apr.’17 witnessing an increase of 40% as compared to Apr.’16. During Revenues (PKR Tn) Expenditures (PKR Tn) Budget Deficit (PKR Tn) 10MFY17, growth of 34% has been observed where 6,763 new companies were registered compared to the corresponding period last Source: KCCI Research, MoF year. It has also been noted that 77% of companies have been registered through eServices (online mode), 60% have been incorporated Disclaimer through consultants, while entrepreneurs got 40% of companies incorporated with assistance of incorporation and facilitation wings of CROs. The Nation. This report has been prepared by KCCI Research & Development Cell. The information Foreign reserves reach $ 21Bn Pakistan’s total liquid foreign reserves declined by $ 146Mn to $ 21Bn as on Apr. 28, 2017 from $ 21.15Bn in the preceding week. During the week under review, foreign reserves held by the State Bank of Pakistan increased by $ 12Mn to $ 16.06Bn from $ 16.05Bn a week earlier. However, net foreign reserves held by commercial banks declined to $ 4.94Bn from $ 5.1Bn in the earlier week. The Nation. 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