Pakistan Daily Economy Update - 7 June

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1. Jun . 7, 2016 KCCI - eBulletin Provinces asked to impose lower ST rate on services FBR has asked the provinces to impose a lower rate of sales tax on services as the provinces are already getting major chunk of List of Indicators revenue from Federal Divisible Pool. In budget (2016-17), the right to claim input tax adjustment on provincial sales tax is proposed to be withdrawn through the Finance Bill 2016-2017. Provinces do not agree with the input adjustment claimed by the FBR whereas USD-Interbank federal tax authorities do not give tax adjustments to the provinces. The FBR has also abolished Federal Excise Duty on services USD-Open MKT chargeable to provincial sales tax to avoid duplication of taxation. BR. No price hike allowed under any pretext: Dar tells chief ministers Finance Minister Ishaq Dar; addressing letters to all the Chief ministers', calling upon them to take steps to ensure that prices of various commodities remain stable in the month of Ramazan and that no price hike is allowed under any pretext. Furthermore prices of petroleum products, as per announcement on May 31, 2016; have also not been enhanced for the month of Jun.’16 as an effort to maintain price stability in the holy month of Ramadan. BR. Economic Indicators Date / Period Unit Value 6-Jun PKR 104.65 0.01% 6-Jun PKR 104.30 -1.05% KSE-100 index FIPI 6-Jun 6-Jun Pts. $ Mn 37,223 0.00 0.00% NM** Crude (JU'16) 6-Jun $/bbl 49.77 1.20% Gold (MY'16) 6-Jun $/oz 1,246.4 2.66% Gold (10g) Local 6-Jun PKR 42,143 3.29% Silver (MY'16) 6-Jun $/oz 16.48 2.42% Cotton(KHI)-40 kg 6-Jun PKR 0 -100.00% 6-Jun % 0.00% -6.14% 27-May $ Bn 21.60 -0.05% Jul-Apr 16 $ Bn 16.03 5.18% Jul-Apr 16 $ Bn 17.32 -12.99% Jul-Apr 16 $ Bn 36.34 -3.70% Jul-Apr 16 $ Bn -19.02 -6.68% Jul-Apr 16 Jul-May 16 $ Mn % -1,519 2.82 17.71% Govt. shareholding in MPCL: Divestment approved by CCoP The Cabinet Committee on Privatisation (CCoP) has approved divestment of GoP's shareholding in Mari Petroleum Company Limited Kibor-6M (MPCL) either through incumbent Joint Venture or stock market. MPCL was incorporated in 1984 and its current composition of shareholding is; Fauji Foundation 40%, Oil and Gas Development Company Limited (OGDCL) 20%, Govt. of Pakistan (GOP) 18.39%, Forex Reserves Benazir Employees Stock Option Scheme (BESOS) Employees Trust 1.61% and NIT/NBP/SLIC/ general public 20%. Fauji Foundation and OGDCL, are required for the divestment of GoP's shareholding in MPCL. BR. Remittances Change Daily WoW YoY Exports* Plan to regularize undeclared assets in offshore firms The government is working on a package to regularize undeclared assets in offshore companies, according to tax officials. The Imports* package, to be announced in August, will be finalized and implemented by the Federal Board of Revenue, Securities and Exchange Trade Balance* Current Account Commission of Pakistan (SECP) and State Bank of Pakistan. Dawn. Avg. CPI-FY16* Atlas Group to invest $ 220Mn in 220MW RLNG power project May-16 Discount Rate % 5.75 Atlas Powergen has been selected through the Govt. International Competitive Bidding (ICB) process for 220MW RLNG based power Sources: KCCI Research, PMEX, NCCPL, KSE, SBP, PBS* project with investment of $ 220Mn as part of the govt.’s fast track effort to bring more power into the system based on clean ** Not Meaningful WoW= week on week; YoY=Year on Year energy. In this regard, NEPRA has officially declared Atlas Powergen as the winner of the ICB bid while Petroleum Ministry has also Major Currencies provided it with a firm Gas Supply commitment to proceed with the project. The Nation. USF transferred back to Public Account The Universal Service Fund (USF) levied at the rate of 1.5%, on the revenue of telecom operators, has been recently transferred back from commercial account to Public Account of Federation. Earlier, funds under the head of USF were being collected at commercial account. However after the transfer of about PKR 60Bn for clearing the circular debt, questions were raised about use of the dedicated USF for a purpose it was not earmarked for and the govt. was compelled to reinstitute the USF as a dedicated fund. BR. Tax net expanded to increase revenue: Dar Finance Minister Ishaq Dar has said that the federal govt. had broadened tax net with an aim to collect tax from every citizen of the country. The govt. has announced massive relief for agriculture sector in the Budget FY17 which would boost the national economy. The minister further said that the govt. is committed to revive agriculture sector as it would improve the GDP growth. Some 70% population of the country is dependent on this sector. BR. Dar for keeping poultry, essentials prices stable in Ramadan Finance Minister Ishaq Dar has called upon poultry farmers to ensure that prices of poultry products remain stable in the month of Ramadan and that; to take urgent measures in this regard. The poultry farmers have assured the minister that they would ensure that prices of poultry meat are maintained at an appropriate level and it would be normalized within two days. Live chicken in the federal capital was being sold at PKR 195 to 200/kg in the open market after budget announcement. The Nation. SMEDA to fund growers for food processing units Small and Medium Enterprise Development Authority (SMEDA) has offered Sindh growers to design feasibility of food processing units with cost of machinery and labor for funding and launch the projects locally. This may benefit local growers also; in entering the international market on their own. In this regard, workshop on ‘processing facilities for pulp extraction of mango’, was jointly organised by SAU and Agro Food Processing Facilities Multan, with Smeda and Sindh Enterprise Development Fund (SEDF). The News. SECP settles 86 proceedings in May 2016 The Securities and Exchange Commission of Pakistan (SECP) settled 86 show-cause proceedings in May, 2016 initiated against companies, their directors and auditors for violating various provisions of the Companies Ordinance, 1984. The SECP also initiated 14 fresh show-cause proceedings against the erring management and companies’ auditors for various violations of the ordinance. The News. 175 165 GBP, 30-May-16, 153.7 155 145 135 EUR, 30-May-16, 117.0 125 115 105 95 USD, 30-May-16, 105.2 85 75 May-15 Nov-15 GBP EUR Feb-16 Source: KCCI Research ; Oanda.com Quote of the Day "If you can influence in the long-term by leaving behind a legacy, to me, that’s real power." Ameenah Gurib-Fakim Chart of the Day FBR Tax Collection (9MFY16 Vs. 9MFY15) 900.00 800.00 Government sets 43.8Mn barrels crude oil production target The government has set a target to produce 43.8Mn barrels of domestic crude oil during the FY-17. The government has also planned to product 1.51Tn cubic feet gas per annum. The supply demand gap in both oil and gas sectors will be filled through import of crude oil and petroleum products. They said that exploration and production companies would be given a task to drill a total of 116 wells including 52 exploratory and 64 others. The seven existing oil-marketing companies would construct ten new oil storages at six locations, they added. Daily Times. 700.00 PSX completes hat trick of all-time highs, closes at 37,352 points The Pakistan Stock Exchange (PSX) accumulated further gains as the date of MSCI reclassification decision draws closer. The market remained neutral and did not take a hit of the proposed changes in the recently announced budget 2016-17. Non-filers took a hit of higher taxes. The Capital Gains Tax (CGT) rates for non-filers are proposed to be 18%, 16% and 11% for the holding period of up to one year, two years and five years, respectively, the budget document said. Currently, the CGT rates are 15%, 12.5% and 7.5% for the holding period of up to one year, two years and four years, respectively. Tax on dividends in the case of non-filers is expected to increase from 17.5% to 20%. Daily Times. 200.00 Mango exports to Iran face threat of restriction Pakistan’s mango trade with Iran seems to be under threat due to the negligence of authorities who are not following due procedures and issuing phyto-sanitary certificates to certain companies for exports, despite the fact that the fruit has not received the necessary hot water treatment. Three of the country’s consignments were intercepted last year, where the fruit was found to be infected with fruit flies. Iran has already banned Pakistan’s kinnow imports due to the same reason. Of the total 60,000 tons of mango exports, 15,000 tons (25%) are exported to Iran. Tribune Aug-15 USD 600.00 500.00 400.00 300.00 100.00 0.00 SALES EXCISE CUSTOMS 9MFY15 Value in PKR Bn SALES EXCISE CUSTOMS 9MFY16 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