CURRENCY: PKR STABLE AGAINST $
The rupee remained stable against the dollar at 105.3/105.5 in the inter-bank market on Friday compared to Thursday’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. 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 5-20percent, he added.
PAK-INDONESIA TRADE VOLUME TO GROW TO $2.5BN THIS YEAR
Bilateral trade between Indonesia and Pakistan is expected to reach $2.5 billion this year, said Indonesian Consul General in Karachi Dempo Awang Yuddie. Speaking at a ceremony held to celebrate the 72nd anniversary of the Republic of Indonesia on Thursday, he said that the two countries had tried to improve both political and economic ties since 2015. Resultantly, a number of Pakistan’s parliamentarians, trade delegations and military personnel visited Indonesia recently to further enhance the bilateral relationship. Trade between Pakistan and the Southeast Asian giant has been growing strongly for the last couple of years. The volume of bilateral trade grew from $700 million in 2010 to $2.3 billion in 2016, an increase of 229percent. Pakistan’s major exports to Indonesia include textiles and clothing, vegetables and fruits (mainly oranges) while its major import item from Indonesia is palm oil. With over $2 billion worth of imports, the balance of trade is in favour of Indonesia while the two countries are trying to strike a balance so that it can become a win-win situation for both the trading partners. Indonesia imports over $650 million worth of fruits and $550 million worth of vegetables annually. Now that Pakistan is regaining its share in Indonesia’s fruit imports, its exporters want to export more vegetables as well. Speaking to the gathering, which included people from trade and business, diplomatic community and academia, Sindh Governor Mohammad Zubair said, “Pakistan wants to further strengthen its relationship with Indonesia, especially in trade and business.”
CHINESE COMPANY WANTS TO SET UP TRUCK PRODUCTION PLANT
Sinotruk Jinan Truck Co Ltd, the third largest truck manufacturer in mainland China, has shown interest in purchasing heavy vehicle components from Pakistani automobile part manufacturers. In this regard, a 10-member delegation recently met members of the Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) in Karachi to discuss possibilities of collaboration between companies of the two countries. Sinotruk Group is principally engaged in the manufacture and distribution of heavy-duty vehicles and spare components. The company has also shown interest in setting up a production plant for trucks in Pakistan, according to a Paapam. Paapam members invited the Chinese executives to visit their plants so that the companies of both sides could collaborate for joint ventures.
GOVERNMENT PLANS TO WAIVE BILLIONS OF RUPEES IN CESS PAYMENT
The government has planned to introduce a bill in parliament for making amendments to the Gas Infrastructure Development Cess (GIDC) Act 2015 in an attempt to waive half of the cess arrears worth billions of rupees from the compressed natural gas (CNG) filling stations. Before tabling the bill in parliament, the cabinet is likely to give the go-ahead for the proposed concession in its upcoming meeting this week. CNG industry will pay Rs12 billion, which is half the amount they are required to pay for gas supply to their outlets, said a senior official of the Oil and Gas Regulatory Authority (Ogra) said. The Ministry of Finance, Ministry of Petroleum and Natural Resources and CNG industry have agreed on this formula for half payment covering the period January 1, 2012 to May 22, 2015. We have agreed to pay Rs12 billion on account of GIDC and the finance ministry, petroleum ministry and Ogra have given their consent to the proposed formula, All Pakistan CNG Association Chairman Ghiyas Abdullah Paracha said. The National Assembly passed the GIDC Act 2011 to pave the way for the imposition of gas surcharge aimed at generating funds for building gas pipelines. However, the levy was challenged in courts due to various reasons including the argument that GIDC could not be imposed on gas consumers through a money bill. The GIDC ordinance was promulgated during the tenure of the current government to give legal cover to the levy following amendments through Finance Act 2014. The Senate chairman constituted a special committee for monitoring the implementation of GIDC Act 2015 and making recommendations to remove anomalies.
CPEC OFFERS AVENUES TO TARGET $100BN CHINESE AGRI-MARKET
The China-Pakistan Economic Corridor (CPEC) is a golden opportunity for overall development of this region and Pakistan should reorganise its agriculture sector to get a major slice of the $100 billion worth of agriculture produce imports by China, suggested Muhammad Mehmood, Punjab Agriculture Secretary. Speaking at the launch of a study on “CPEC – Prospects & Challenges for Agriculture”, Mehmood pointed out that nearly one-fourth of the world’s population was living in China and most of its exports would be routed through Pakistan after the completion of CPEC. “Containers full of exportable surplus will be sent to various international markets, but on their return, these containers will be empty and we must capitalise on the opportunity to export our surplus agriculture produce to China,” he said. Mehmood revealed that per capita income of China was increasing substantially, bringing a visible change in people’s lifestyle and food habits there. Like other affluent societies, they also prefer rich and costly food and fruits, he said, adding Pakistan could get maximum benefit of the emerging change. We are concentrating on high-value crops and a 10-year program has been evolved to develop one lakh acres of land in the Potohar region for planting grape and other high-value crops.
PLAN BEING DRAWN UP TO TAKE SMES TO WORLDWIDE MARKETS
The Small and Medium Enterprises Development Authority (Smeda), which promotes the cause of small business units, is designing a long-term program to help SMEs enter the international arena after meeting global market standards. Smeda’s Directorate of External Relations Incharge Sheharyar Tahir, in a meeting, revealed that in order to draw up the plan, a joint fact-finding mission of Smeda and PUM, a Netherlands-based expert organisation, had gathered input from stakeholders of the SME sector. The mission engaged in consultative sessions with a cross-section of trade bodies. He said Odulfus Van Summeren, a senior PUM expert, had been working with Smeda to push ahead with the consultation process and outline the impediments weighing down the evolution of SMEs in Pakistan. For this purpose, Smeda has organised various industry visits for an in-depth analysis of the structure and processes of industrial units. Taking advantage of the Dutch cooperation, Smeda also arranged counselling sessions with start-ups, business incubation centres and chambers of commerce to discuss their constraints and offer on-the spot practical advice based on expert experience. In the meeting, Smeda CEO Sher Ayub told the External Relations Directorate to ensure early implementation of the program in order to achieve the desired goals. He voiced hope that the program would enhance the capability of SMEs and enable them to export goods and add to the country’s export revenues. PUM is a non-profit organisation established in 1978 by the Dutch employers’ federation with financial support from the Netherlands Ministry of Foreign Affairs that has assisted over 40,000 organisations worldwide. The organisation has more than 3,000 highly experienced businessmen and professionals that provide services all across the globe.
PTEA EXPRESSES CONCERN OVER UNENDING DECLINE IN EXPORTS
The Pakistan Textile Exporters Association (PTEA) has expressed grave concern over the sluggish growth in exports as unending export downfall has continued unabated. High costs of production, competitiveness, inconsistency in government policies and uncompetitive energy prices have contributed to the deteriorating exports. PTEA Chairman Mian Ajmal Farooq said that the economy’s mainstay textile industry is facing unprecedented crisis for many years. Consequently, sizeable textile capacity has been severely impaired and textile exports, both in quantity and value terms, have declined across the value chain; whereas regional peers have doubled their exports. Giving details, Farooq said that the country’s textile exports were $13.8 billion in 2010-11, which has dropped by 10.4percent to $12.4 billion in 2016-17. On the other hand, textile exports of India witnessed 31percent increase from $ 27.7 billion in 2010-11 to $36.4 billion in 2016-17. Unfortunately, the government is not feeling the pain of the fall in export earnings as sliding exports are contributing significantly to the trade deficit, said the chairman.
EVERY PAKISTANI OWES RS95,000 IN DEBT: MINISTRY
Each Pakistani owes Rs95,000 in debt with the country’s foreign debt and liabilities standing at $58 billion – around Rs6.11 trillion, the finance ministry informed the National Assembly on Friday. Documents presented by the ministry to the parliament show that until December 31, 2016, the country’s domestic debt stands at Rs12.31 trillion or $117 billion. The net public or combined debt comes to Rs18.44 trillion or Rs117 billion. As per these statistics, each Pakistani now owes Rs94,890. The finance ministry’s documents show that between July 1, 2016 and March 31, 2017, the government borrowed Rs819.1 billion from banks. It borrowed Rs734.62 billion of this amount from the State Bank of Pakistan and Rs84.50 billion from commercial banks. Former Prime Minister Nawaz Sharif’s government obtained a whopping $35 billion in new loans during his four-year tenure to repay maturing debt and keep official foreign currency reserves at a level which could give a sense of economic stability to investors. About $17 billion or nearly half of the total loans obtained from July 2013 to June 2017 were utilised to repay the previous debt, shows statistics maintained by the finance ministry. The government added net $18 billion to the country’s total external debt and liabilities – the highest amount added by any government during its tenure.
CHINA TO CURB ‘IRRATIONAL’ OVERSEAS INVESTMENT ALONG BELT & ROAD INITIATIVE
China will strengthen rules to defuse risks for domestic companies investing abroad and curb “irrational” overseas investment on its Belt and Road initiative, the state planner said on Friday. The National Development and Reform Commission (NDRC) said, in an online statement, it would provide better guidance on risks to companies investing overseas in order to prevent “vicious” competition and corruption. This is to promote the healthy and orderly development of foreign economic and trade cooperation, it said in the statement. Mergers and acquisitions by Chinese companies in countries linked to the Belt and Road initiative have been growing at a rapid rate, even as Beijing takes aim at China’s acquisitive conglomerates to restrict capital outflows. Chinese acquisitions in the 68 countries officially associated with President Xi Jinping’s signature foreign policy totaled $33 billion as of August 14, surpassing the $31 billion for all of 2016. Unveiled in 2013, the Belt and Road project aims to boost trade and investment along two routes – one along the ancient “Silk Road”, connecting China by land and sea through Central Asia and the Middle East to Europe, and the second linking it to Southeast Asia and Africa. In the statement, the NDRC lauded the plan, citing projects such as a high-speed railway in Indonesia and a crude oil pipeline between southwest China and Myanmar as examples, which showed how the initiative was gaining pace. Up to the end of 2016, Chinese companies had invested more than $18.5 billion to build economic and trade cooperation zones in 20 countries along the Belt and Route routes, it said.