RUPEE STABLE AGAINST DOLLAR
The rupee remained stable against the dollar at 105.3/105.5 in the inter-bank market on Thursday compared to Wednesday’s close of 105.3/105.5, Kamal Hayder, Research Analyst-PAGE said. The currency market has fluctuated regularly in recent months with hefty rises and falls on some occasions. In the long run, however, the rupee has stood firm after experiencing extensive volatility, when it weakened from around Rs98 to a dollar to above Rs103 in the wake of political impasse over alleged election rigging. He further said that the central bank has imposed 100 percent cash margin on the import of certain consumer goods to restrict the demand for US dollars. The rupee has been one of the best performing currencies in Asia for over three years despite the dollar’s sharp appreciation against other currencies. However, the International Monetary Fund has repeatedly said that Pakistan’s rupee is overvalued by 5-20 percent.
MINISTRY, OGRA FAIL TO ACCEPT ON UCH FIELD’S GAS PRICE
The Ministry of Petroleum and the Oil and Gas Regulatory Authority (Ogra) are locked in a row over the wellhead gas price of Uch field as the latter refuses to set and notify the price, say officials. The ministry has approached the Economic Coordination Committee (ECC), requesting the body to direct Ogra to notify the Uch wellhead gas price. Oil and Gas Development Company (OGDC) has been supplying gas from the Uch field to Uch-II power plant, located in Dera Murad Jamali, Balochistan and having 404-megawatt generation capacity, in a provisional arrangement since 2013. The gas supply started after OGDC and the management of Uch-II power plant negotiated and agreed on a gas pricing formula based on 18percent internal rate of return (IRR), which was set with the help of an independent third-party consultant. They executed the gas price agreement (GPA) on October 14, 2013.
HORTICULTURE ITEMS: UNFAIR TRADE PRACTICES HINDER EXPORTS TO RUSSIA
The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has identified Russia as a potential destination for fruit exports from Pakistan, noting, however, that barriers to trade are making the exercise difficult. FPCCI Horticulture Exports Committee Regional Chairman Ahmad Jawad said trade relations between the two countries, despite growing substantially, have never been amiable and have a tendency of suddenly becoming sour. He quoted a 2012 incident as an example when a Russian quarantine team visited Pakistan’s horticulture growing areas and showed its reservations about the quality of crops. It also set conditions for exporters to get their products certified from a certain private laboratory in Lahore before exporting them to Russia, apart from the routine phytosanitary certification from the Department of Plant Protection (DPP). Exporters were hardly satisfied with the decision at the time since the prescribed lab was neither registered with the DPP, nor did the DPP have any credentials for this lab. FPCCI officials state that lack of understanding on quarantine controls between Russia and Pakistan is the main reason behind incidents like these. Jawad said the latest problem between the two countries relates to the valuation of import duty on Pakistani kinnow and potatoes by Russia Customs, which is ‘unfair and biased’.
ABBASI ORDERS TIMELY COMPLETION OF HYDROELECTRIC POWER PROJECTS
Prime Minister Shahid Khaqan Abbasi directed on Friday the recently created Ministry of Water Resources to focus on ongoing development projects and ensure their timely completion. Chairing a meeting on the Water and Power Development Authority (Wapda) affairs at the PM Office, he said the new ministry has been constituted to resolve issues related to water storage and supply more efficiently. We must make the Ministry of Water Resources productive and renew our efforts in this regard, the prime minister said, noting that water security has been neglected in the past with hydroelectric power generation gaining the entire focus. Wapda Chairman Lt General (Retired) Muzammil Hussain presented an overview of current operations and briefed the prime minister on the ongoing water and power projects. He also informed the PM on the status of planned projects with special focus on water resource management. Hussain assured him that all the strategic projects conceived by the present government are on targets in terms of timelines.
LOCALLY ASSEMBLED CAR SALES ACCELERATE LAST MONTH
Sales of locally assembled vehicles, including jeeps and light commercial vehicles, jumped to 19,577 units in July 2017, up 41 percent compared to 13,932 units in the same month of 2016, according to latest data released by the Pakistan Automotive Manufacturers Association (PAMA). It is said that the numbers were in line with its estimates. The apparently large difference in monthly sales may be attributed to reduced working days in July 2016 because of Eid holidays. Sales of Pak Suzuki Motor Company increased 37percent year-on-year (YoY) in July 2017 due to strong demand for Wagon-R, up 77 percent. With the introduction of a new model, sales of Cultus rose 66percent YoY while Ravi sales were up 41 percent, which also supported the company’s growth. Honda outperformed its peers in vehicle sales, posting 113percent growth due to successful introduction of a new Civic model and new sports utility vehicle (SUV) BR-V. Indus Motor sold 4,618 units in July 2017, up 11 percent YoY. The company’s focus remained on production of higher-margin Fortuner, which recorded a stellar growth of 543 percent.
CHINESE FIRM TO INVEST $1.5BILLION IN DEVELOPING WIND FARMS IN PUNJAB
A Chinese company, Sany Group, has announced plans to invest $1.5 billion in the development of wind energy in Punjab. The group, which is one of China’s top construction machinery manufacturers, along with the Punjab Board of Investment and Trade (PBIT), is considering sites for establishing wind farms. A top representative of the company, Ryan Zhao, said the Sany Group continued to make sustainable efforts to develop business in Punjab’s emerging economy. He said this during a visit to the PBIT where he discussed the group’s plans, status of proposed sites and further procedure to initiate projects in cooperation with the Punjab Power Development Board (PPDB). The PBIT shared the renewable energy mapping report, prepared by the World Bank, to identify the sites for the wind power projects. The company has already selected two sites for wind mast installation and has submitted a land application with geographical coordinators of the selected sites. The PPDB has asked them to go through the process of registration, so that the Letter of Intent can be issued for further progress. PPDB has been established as a one-window facilitator to promote and encourage private sector on behalf of the Punjab government.
DEALS INKED FOR EXPORT OF $325MILLION WORTH OF GOODS TO CHINA
Pakistan and China on Thursday signed over three-dozen trade pacts for exporting $325 million worth of goods to Beijing, aimed at addressing private sector’s concerns about adverse implications for their businesses of government-to-government trade deals. The signing ceremony for the Pakistan-China Trade Cooperation Projects was held in Islamabad in which 18 Chinese companies signed about 38 trade agreements valued at $325 million. These agreements would facilitate exports of electrolytic copper, fish meal, seafood, pine nuts, guar products, leather, frozen fresh food, castor, chrome ore, zircon ores, coarse copper, hazelnut, sauces, crustaceans and marble blocks from Pakistan, China’s Department of Foreign Trade Deputy Director Wang Dongtang stated. Chinese Ambassador to Pakistan Sun Weidong and Trade Development Authority of Pakistan (TDAP) Secretary Inamullah Khan witnessed the signing ceremony. China’s Ministry of Commerce has organised visit of a trade promotion group to Pakistan. Eighteen Chinese companies associated with textile, pharmaceutical, agriculture product, petrochemical and commercial trading sectors are on a three-day trip to Pakistan. The 2006 China-Pakistan Free Trade Agreement (FTA) has tilted the balance in favour of Beijing, sparking fears among local businesses about trade disparity. Tariff and tax concessions given to Chinese businesses under the China-Pakistan Economic Corridor (CPEC) have further aggravated the situation.
REMITTANCES INCREASE 16 PC WITH START OF NEW FISCAL YEAR
Overseas Pakistani workers sent home $1.542 billion in July 2017, up 16.1 percent compared with $1.328 billion in the corresponding period of 2016, according to data released by the State Bank of Pakistan (SBP) on Thursday. Overall remittances in fiscal year 2016-17 (FY17) ended June 30, 2017 were $19.3 billion, down 3 percent compared with $19.91 billion in FY16. During June, the last month of FY17, the inflow of remittances amounted to $1.84 billion, down 11.2 percent compared with $2.07 billion in June 2016. Remittances coming from the Gulf countries, which contribute 63 percent to the overall remittances, have dropped drastically due to a sharp fall in crude oil prices that has hurt the region’s economies. Resultantly, thousands of Pakistanis have lost their jobs over the past two years or so, especially in Saudi Arabia – the largest source of remittances for Pakistan that contributes over 25 percent to the total receipts. Money coming from Saudi Arabia stood at $409 million in July 2017, up 8 percent compared with $379 million in the same month of previous year. Remittances from the UAE stood at $335 million, up 14 percent compared with $294 million in July 2016. Overseas Pakistanis in the US sent $194 million in July 2017, up 14 percent compared with $170 million. The biggest jump was seen in remittances from the UK, which stood at $199 million, up 38percent compared with $144 million.
TRADE DEFICIT WIDENS 55PC AS IMPORTS OUTPACE EXPORTS
Pakistan’s trade deficit widened in July by over 55 percent to $3.2 billion as even a healthy growth in exports could not match the pace of increase in imports, indicating that external sector challenges will continue to persist. The value of goods imported into Pakistan exceeded the value of exports by $3.2 billion in July over the same month a year ago, reported the Pakistan Bureau of Statistics (PBS) on Thursday. The trade deficit in July was $1.14 billion or 55.5percent higher than the same month of previous year. The trend was not different from the last fiscal year when Pakistan registered a record trade deficit of $32.5 billion. The current account deficit had also peaked at $12.1 billion in the year, which wiped $2 billion off the official foreign currency reserves. Exports in July increased 10.6percent to $1.63 billion. In absolute terms, they were only $156 million higher than the same month of previous year. Imports were valued at $4.8 billon, which was 36.7 percent or $1.3 billion higher than imports made in July last year. In the new fiscal year 2017-18, the federal government has targeted to increase the exports to $23.1 billion, which requires 13.2percent growth over previous year’s exports of $20.5 billion. The government is aiming to curtail the import bill to $48.8 billion, which seems impossible, given the trend in the first month of FY18.
BUSINESSMEN ASKED TO IMPROVE TRADE WITH GERMANY
The German-Pakistan Chamber of Commerce and Industry (GPCCI) in collaboration with the embassy of Germany, GIZ and KfW held an awareness session for the business community on bilateral trade between Germany and Pakistan. Speaking on the occasion, GPCCI Islamabad Region President Pervaiz Akhtar said that the volume of trade between the two countries stood at $2.2 billion in 2016, which did not fully reflect the true potential and urged businessmen to work towards improving the figure. Addressing the seminar, German Embassy Head of Economic Section Martin Herzer highlighted that GSP Plus had been the key driver of bilateral trade. He said that the German government would like Pakistan to make better use of the opportunities provided by the GSP Plus, adding that they wanted to see more German firms invest in Pakistan. GIZ Country Director Dr Julie Reviere said Germany was helping Pakistan improve labour standards, so that companies could have a competitive edge in European markets.