Pakistan Daily Economy Update - 6 December

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1. Dec . 6, 2016 KCCI - eBulletin Shanghai Electric receives CCP nod for KE’s acquisition CCP has cleared Shanghai Electric Power (SEP) of China to take over a majority stake in Karachi-based integrated power utility K-Electric from Dubai-based Abraaj Group. CCP assessment cleared the transaction because SEP did not have any significant presence in the Pakistani market and there was no possible threat of monopoly to the consumer’s disadvantage. SEP soon would be sharing this it’s 10year business plan with the Ministry of Water and Power and then seek its regulatory approval through a multi-year tariff from Nepra. Dawn. PSX divestment: bid opening date extended to Dec. 15, 2016 The opening date of bids, submitted by foreign strategic investors and local institutions to acquire 40% stake of Pakistan Stock Exchange (PSX), has been extended to Dec. 15, 2016. A meeting of PSX Divestment Committee was held on Dec. 5, 2016 to open bids and after a long discussion it was decided to extend the bid opening date as various clauses of legal documents are still to be finalized. BR. Ministry seeks power to slap surcharges on consumers The Ministry of Water and Power is seeking discretionary powers on a permanent basis in an attempt to receive over PKR 100Bn from bill-paying electricity consumers, with amendments to the Nepra Act to make surcharges part of the uniform tariff. The proposed amendments to the Nepra Act are aimed at fixing a cost-covering tariff rather than the determined tariff. Various surcharges having a cumulative impact of PKR 200Bn were imposed on power consumers in 2015-16. Tribune. Textile bodies put off black day protest plan Textile bodies have decided to delay their black day plan on 6th Dec’16 following assurance from the Punjab CM that he would take up industrial issues with the prime minister and get them resolved. Tribune. FBR collection rose 2pc in July-Nov FBR collected PKR 1.073Tn in the 5MFY17, a growth of 2% as compared to PKR 1.049Tn a year earlier. However, the FBR failed to meet the target set for the Jul-Nov‘16 period of PKR 3,621Bn by a wide margin. The amount of refunds increased 22% to PKR 44Bn during the period under review from PKR 36Bn a year earlier. The tax-collecting authority generated PKR 413Bn in income tax compared to PKR 400Bn a year ago, an increase of 3.25%. The sales tax collection fell 2.47% to PKR 472Bn in Jul-Nov ‘16 from PKR 484Bn a year ago. Dawn. FBR decides to review annual tax net after failing to meet expectations The federal government has decided to review its tax net target of PKR 3,621Bn after failing to meet its expectations in the 5MFY17. Ministry of Finance had given a task to FBR for collection of 14% additional tax in 11 months of this year compared to last year. Under this task, the FBR was to collect PKR 1,196Bn in the period. However, it could only collect PKR 1,066Bn with a deficit of PKR 130Bn. Daily Times. Pakistan, Italy agree to enhance bilateral trade to $ 1.5Bn Pakistan and Italy has agreed to enhance their bilateral trade to $ 1.5Bn from $ 1Bn from FY17. This was decided at the second session of Pakistan Italy Joint Economic Commission held on 5th Dec’16. The inaugural session of JEC was held in Italy on 22nd Mar 2006. Both sides agreed to form four working groups including energy, infrastructure development, trade and joint venture, agriculture, agro Industries and information technology collaboration. Italy’s Deputy Minister for Economic Development Ivan Scalfarotto said that his country is in favor of free trade with Pakistan under the umbrella of the EU. He said that Italian companies involved in communications and construction have ample opportunities to take part in the CPEC. The News. ‘Business community should partner with govt for CPEC’ Minister for Planning, Development and Reforms has said that the business community should partner with the government for projects and identify opportunities for joint ventures under the CPEC. He further said that this is essential if we want to take Pakistan among the top 25 economies of the world and to achieve this ambitious target, there is a need to increase exports to $ 150Bn. Dawn. Realty sector: TI Pakistan urges Supreme Court to ban amnesty scheme Transparency International Pakistan (TIP) has requested the Supreme Court of Pakistan to ban the recently approved amnesty scheme for real estate sector saying that this and all such Tax Amnesty Schemes provides incentive to do corruption and then legalizes the ill gotten money. The organization has further said that govt.'s move would put another serious burden on honest taxpayer, who have been paying tax to FBR annually, and he/she will also have to pay 3% as advance tax to FBR. BR. Cement industry reaches highest level of capacity utilization Pakistan’s cement industry achieved its highest capacity utilization of 98.61% in Nov’16, recording sales of 3.74Mn tons against 3.37Mn tons in Nov’15. Domestic consumption in Nov’16 stood at 3.27Mn tons compared to 2.84Mn tons in Nov15. Whereas, exports fell 10.39%, from 0.53Mn tons in Nov’15 to 0.47Mn tons in Nov’16. Tribune. Cotton output may fall way short of target this season too Pakistan is likely to miss its cotton production target this season as well as farmers, discouraged by persistently lower prices, switch to sugarcane cultivation with the setting up of more sugar mills in south Punjab. The lower output of the key cash crop of cotton may also made it tough for the govt. to achieve its annual economic growth target of 5.7% in FY17. Tribune. SBP allows Islamic banks to set up separate PRISM SBP has allowed Islamic banking branches of conventional banks to establish a separate Pakistan Real-Time Interbank Settlement Mechanism (PRISM). The move is aimed to improve the efficiency of the financial services of the banking system and enhance the outreach of electronic transfer of large value funds. The News. Diamer-Bhasha Dam: financing plan given approval Prime Minister Nawaz Sharif has approved, in principle, the financing plan for construction of Diamer-Bhasha Dam from indigenous resources with directives to the Finance Ministry for finalization of funding modalities. The proposal of the Water and Power Ministry has suggested that dam portion of the project must be financed on self-reliance basis through PSDP allocation as well as sources generated from WAPDA. There is a possibility of taking finances from a consortium of banks due to quantum of amount involved. BR. Argentineans textile sector offers opportunities to Pak exporters Ambassador of Argentine, Ivan Ivanissevich said during his visit to the Karachi Chamber of Commerce & Industry that 60% of Argentina's textile products were being imported and the remaining 40% were being produced locally whereas the textile clothing imports have also witnessed an upsurge of 27% in 1QFY16, which is an opportunity for Pakistani textile producers to benefit from the situation. He opined that there were opportunities for Argentinean farmers to invest and cooperate in the agriculture sector as Pakistan's agriculture sector was not as developed when compared with Argentina. The Nation. Oil hits 16-month high at $55 a barrel Crude rose above $55 a barrel to hit a 16-month high on 5th Dec‘16 as rising prospects of a tightening market after last week’s Opec landmark deal to cut production has given speculators impetus to increase bets on higher prices. Non-Opec producers are expected to agree to add an output cut of 600,000 bpd in Vienna on 10th Dec'16. Dawn. Economic Indicators Date / Period Unit Value Change Daily USD-Interbank List of Indicators 5-Dec PKR 104.82 -0.02% USD-Open MKT 5-Dec PKR 104.40 -2.93% KSE-100 index FIPI 5-Dec 5-Dec Pts. $ Mn 43,740 0.83 1.08% NM** Crude (JA'17) 5-Dec $/bbl 51.10 -1.03% Gold (JA'16) 5-Dec $/oz 1,170 -0.50% Gold (10g) Local 5-Dec PKR 42,257 -0.60% Silver (JA'16) 5-Dec $/oz 16.72 0.15% Cotton(KHI)-40 kg 5-Dec PKR 6,843 -0.78% Kibor-6M 5-Dec % 6.13% 0.01% 25-Nov $ Bn 23.60 -1.11% Remittances Jul-Oct 16 $ Bn 6.26 -3.82% Exports* Jul-Oct 16 $ Bn 6.43 -6.60% Imports* Jul-Oct 16 $ Bn 15.75 8.01% Trade Balance* Jul-Oct 16 $ Bn -9.32 -21.07% Current Account Avg. CPI-FY17* Jul-Oct 16 Jul-Nov 16 $ Mn % -1,762 3.92 -63.45% WoW Forex Reserves YoY Nov-16 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 GBP, 5-Dec-16, 133.5 145 135 125 115 EUR, 5-Dec-16, 111.9 USD, 5-Dec-16, 105.1 105 95 85 75 Dec-15 Mar-16 USD Jun-16 GBP Sep-16 Dec-16 Source: KCCI Research ; Oanda.com EUR Quote of the Day “There is one rule for the industrialist and that is: make the best quality of goods possible at the lowest cost possible, paying the highest wages possible.” Henry Ford Chart of the Day Top 10 Pakistani Profit Repatriating Sectors Financial Business 107.7 48.1 Petroleum Refining Power 117.1 55.2 75.9 31.2 43.6 Chemicals 49.1 39.3 Transport Equipment(Automobiles) Beverages 27.4 45.2 16.3 23.9 Food 7.7 16.2 Pharmaceuticals & OTC Products 0.4 Tobacco & Cigarettes Value in $ Mn 80.3 56.3 Oil & Gas Explorations 165.8 4MFY16 12.9 50.0 4MFY17 100.0 150.0 200.0 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