Pakistan Daily Economy Update - 7 April

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1. Apr . 7, 2017 KCCI - eBulletin Five export-oriented sectors: FBR rolls back all ST refund payment orders FBR has rolled back all sales tax Refund Payment Orders (RPOs) issued to the five export oriented sectors i.e. textile, leather, carpets, surgical and sports goods from tax period Jul. 1, 2016 onwards. The sales tax refunds of the five exportoriented sectors have not been blocked/stopped. The electronic system has generated these RPOs which would now be verified based on parameters communicated to the field formations. The FBR has asked the field formations to complete the exercise by Apr. 30, 2017. BR. Senate body approves Limited Liability Partnership Bill Senate’s Finance Standing Committee has approved the Limited Liability Partnership (LLP) Bill, 2017. The LLP Bill provides for establishment of a new corporate vehicle to enable professional expertise and entrepreneurial initiative to combine, organize and operate in an innovative and efficient manner having benefit of limited liability. In Pakistan, this need has long been recognized for businesses, requiring a framework that provides flexibility suited to requirements of SMEs and service sector in particular. The Nation. Realty sector discloses PKR 37Bn under amnesty The govt. amnesty scheme targeting tax evasion in realty sector has prompted hundreds of suspected tax dodgers to disclose around PKR 37Bn of undeclared assets in the last four months. FBR has said an amount of PKR 1.1Bn as tax revenue had been collected from the money whitening scheme. The News. ADB projects economic growth at 5.2% for FY2017 Asian Development Bank (ADB) has projected GDP growth for Pakistan at 5.2% in FY17and 5.5% in 2018 against 6% projected in the budget FY17, but maintained that regulation remains burdensome, requiring more reforms to provide an enabling environment that facilitates business and fosters investment. Exports continue to decline, but by only 1.3%, which is much smaller than 11.7% plunge in the same period of FY16. The current account deficit is projected to widen to 2.1% of GDP in FY17. BR. Pakistan, Germany sign accord for sustainable economic development Pakistan and Germany has signed a joint declaration to strengthen bilateral cooperation in the fields of governance, energy and sustainable economic development. The volume of bilateral development cooperation could reach up to €109 (euro) million for the two year period 2017-18. The joint declaration followed a meeting between Finance Ministers Ishaq Dar and visiting German federal minister Gerd Muller. Both reaffirmed the mutual commitment to further enhance and strengthen bilateral relations in existing and new areas. He extended an invitation to the finance minister Dar to visit Germany and meet with various business leaders to promote investment and business opportunities in Pakistan. The News. France offers investment in Sindh French Ambassador Mrs. Martine has said that entrepreneurs from her country are keen to make investments in Pakistan, especially Sindh. During a meeting with Sindh CM, French Ambassador along with her delegation particularly expressed their interest in installing an industrial waste-water treatment plant. Dawn. Cabinet may grant approval to revision in US cargo MoU Federal Cabinet is likely to grant approval to a revision in the existing MoU between Pakistan and the US to ensure speedy transit of US cargo to and from Afghanistan through Pakistan. Defense Ministry had signed MoU with USA for three years period which expired in Dec.’15. The MoU was further extended up to Mar. 31 2017 with the approval of the Cabinet. However, presently important aspects such as duration of the proposed MoU and payment of services rendered are still being negotiated and are yet to be finalized. BR. SSGC plans PKR 64.9Bn pipeline project to transport 1.2bcfd gas Sui Southern Gas Company (SSGC) has approved a PKR 64.9Bn project to develop a 1.2Bn cubic feet/day (bcfd) capacity pipeline for the transportation of re-gasified liquefied natural gas to Lahore. The SSGC’s board of directors approved the 370Km long and 42-inch diameter pipeline project with expected completion in Oct’18. The News. Water crisis may deepen as supply from Hub slashed According to the KWSB, water supply from Hub dam to the city has been slashed by more than half due to which various parts of the metropolis are likely to face severe water shortage. The city was getting 100Mn gallons a day (mgd) from the Hub dam but since April 3 supply has been slashed 60mgd and currently only 40mgd was being supplied to Karachi. Dawn. Borrowing by PSEs surges 10 times Borrowing by PSEs jumped 10 times in the 9MFY17 on a YoY basis, indicating that PSEs now heavily depend on loans from commercial banks. The SBP has reported that PSEs borrowed PKR 128.5Bn in 9MFY17 against PKR 13.2Bn same period last year. The borrowing by PSEs in FY17 has already surpassed the amount borrowed in the last two years and can end up in the range of PKR 170-200Bn. Dawn. Cement sales climb to 30.3Mn tonnes Cement dispatches soared to record 30.30Mn tonnes during 9MFY17, depicting a 7% increase over 9MFY16 with domestic consumption rising 11%, but exports declining by 15%. The cement sales touched almost 4Mn tons in Mar‘17 with 100% capacity utilization on strong local demand compared to 3.58Mn tons in Mar‘16. Dawn. Dar approves cross-border trade reforms Finance Minister Mr. Dar has approved reforms in the Customs Department to facilitate cross-border trade under the Trade Facilitation Agreement (TFA). The reforms will be carried out in 6 to 24 months. Dawn. Foreign reserves declined by $ 246Mn Pakistan’s total liquid foreign reserves declined by $ 246Mn to $ 21.55Bn as on Mar. 31, 2017 as against $ 21.80Bn in the previous week. The foreign reserves held by the SBP stood at $ 16.47Bn compared to $ 16.73Bn a week earlier. The reserves held by the commercial banks declined to $ 5.08Bn from $ 5.07Bn. The Nation. Economic Indicators List of Indicators Date / Period Unit Value Change Daily 6-Apr 6-Apr 6-Apr 6-Apr 6-Apr 6-Apr 6-Apr 6-Apr 6-Apr 6-Apr PKR PKR Pts. $ Mn $/bbl $/oz PKR $/oz PKR % 104.85 106.45 47,357 -0.64 51.67 1,252 43,500 18.27 7,234 6.17% 31-Mar $ Bn 21.55 -0.01% 0.19% -0.46% NM** 1.59% -0.32% -0.10% -0.22% 1.50% 0.01% WoW -1.12% YoY -2.52% -3.90% 15.99% -34.33% -120.51% USD-Interbank USD-Open MKT KSE-100 index FIPI Crude (AP'17) Gold (MA'17) Gold (10g) Local Silver (MA'17) Cotton(KHI)-40 kg Kibor-6M Forex Reserves Jul-Feb 17 Remittances $ Bn 12.36 Jul-Feb 17 Exports* $ Bn 13.32 Jul-Feb 17 Imports* $ Bn 33.52 Jul-Feb 17 Trade Balance* $ Bn -20.20 Jul-Feb 17 Current Account $ Mn -5,473 % 4.01 Avg. CPI-FY17* Jul-Mar 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 Apr-16 GBP, 6-Apr-17, 130.8 EUR, 6-Apr-17, 111.7 USD, 6-Apr-17, 104.8 Jul-16 USD Oct-16 GBP Jan-17 Apr-17 Source: KCCI Research ; Oanda.com EUR Quote of the Day "The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy." Martin Luther King, Jr. Chart of the Day PAKISTAN'S AVERAGE NINE MONTHS INFLATION (9MFY10-9MFY17) 16 13.95 14 12 10 10.79 9.43 7.98 8 8.64 5.12 6 4.01 4 2.64 2 0 9MFY10 9MFY11 9MFY12 9MFY13 9MFY14 9MFY15 9MFY16 9MFY17 Source: KCCI Research, PBS (Values in %) 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