WEEK-ON-WEEK: SPI FALLS 0.27PC
The Sensitive Price Indicator (SPI) for the week ended September 14, 2017 registered a decrease of 0.27% for the combined income group, going down from 222.71 points in the previous week to 222.11 in the week under review. Compared to the corresponding week of previous year, the SPI for the combined income group rose 1.10%. The SPI for the lowest income group decreased 0.22% compared to the previous week. The index for the group stood at 213.01 points against 213.48 in the previous week, according to provisional figures released by the Pakistan Bureau of Statistics. During the week, average prices of 14 items rose in a selected basket of goods, prices of 10 items fell and rates of remaining 29 goods recorded no change.
FOREIGN RESERVE: SBP’S RESERVES INCREASE 0.52PC, AMOUNT TO $14.76B
Foreign exchange reserves held by the State Bank of Pakistan (SBP) increased 0.52% on a weekly basis, according to data released by the central bank on Thursday.
On August 7, the foreign currency reserves held by the central bank were recorded at $14,758.4 million, up $77 million or 0.52%, compared to $14,681 million in the previous week, according to the central bank.
Foreign exchange: SBP’s reserves continue to decline, stand at $14.31b
Total liquid foreign reserves held by the country, including net reserves held by banks other than the SBP, stood at $20,585.2 million. Net reserves held by banks amounted to $5,826.8 million.
More than a month ago, foreign currency reserves increased due to official inflows including $622 million from the Asian Development Bank (ADB) and $106 million from the World Bank.
SINDH GOVERNMENT REFUSES TO FINANCE INCENTIVE PACKAGE FOR CPEC SEZs
The Sindh government has refused to contribute funds to a special incentive package that the federal cabinet approved four months ago in a bid to relocate dying industries from China to Pakistan and this move on the part of the province could affect Chinese investment in the priority Special Economic Zones (SEZs).
In a letter, the Sindh Board of Investment (SBI) has asked the federal government to review the incentive package.
In May this year, Pakistan approved the Special Incentive Package for the Relocation of Industries from China for bringing Chinese investment in nine SEZs to be set up under the China-Pakistan Economic Corridor (CPEC).
The package had been developed on the demand of China made at the sixth meeting of the CPEC Joint Cooperation Committee (JCC) in Beijing in December last year.
The Sindh government’s objection may further complicate matters as there is hardly any meaningful progress on the nine sites identified for setting up these zones.
The Punjab government has already removed Sheikhupura SEZ and relocated it to Faisalabad. The federal government is also facing problems in getting land for setting up a zone near Islamabad.
The package is primarily aimed at those Chinese industrial units declared sunset industries by Beijing and may be relocated to Pakistan, which may create hundreds of thousands of jobs.
In the sixth JCC meeting, the two countries approved the nine SEZs, which would be established in Pakistan’s four provinces, Azad Jammu and Kashmir, Gilgit-Baltistan, Fata and Islamabad Capital Territory.
The special package is exclusively meant for those investors who will invest in the nine CPEC economic zones and existing SEZs are not eligible for the package.
“The proposal of giving incentives was quickly developed with brief consultations with provinces,” wrote SBI Chairperson Naheed Memon in the letter.
However, federal Board of Investment (BoI) Acting Secretary Shah Jahan Shah countered that four meetings had been held with Sindh representatives and their concerns were accommodated.
The government has offered about half a dozen more incentives to the investors that will invest in CPEC zones. The cost of three incentives will have to be borne by the provinces directly or indirectly.
The first incentive is that Pakistan will pick 50% of the mark-up cost of loans that investors will take for investment in CPEC zones. This support will be provided by the provinces where the zones are located and is a matter of big concern for Sindh.
“The 50% mark-up subsidy by provinces is unreasonable,” wrote Memon.
Responding to Sindh’s objections, Shah said the subsidy would be offered only on the loans that would be taken in Pakistani currency.
In the second incentive, Pakistan will pick 50% of the freight subsidy on inland transportation of plant and machinery for installation and development in the priority SEZs.
Memon, however, said freight subsidy payments by the provinces were questionable and the central government should adjust the incentive against import tariffs.
“The cost of freight subsidy will be borne by the federal government and Sindh’s objection is unrealistic,” said Riffat Pervaiz, BoI Director General Policy and Strategy.
In the third incentive, the respective provincial governments will provide plots by taking half of the payment in advance and the remaining in four biannual installments.
LAST YEAR’S AGRI-CREDIT TARGET MET, BUT BORROWERS DECLINE
State Bank Governor Tariq Bajwa has said Pakistan is a low productivity economy in terms of agriculture and the central bank is making efforts to bring improvement, particularly through credit disbursement.
Talking to a delegation of the Pakistan Business Council (PBC) that called on him and the senior management at the State Bank of Pakistan (SBP) headquarters on Friday, Bajwa pointed out that the government had set the agricultural credit target at Rs1.001 trillion for financial year 2017-18, but it was a broad target.”Though last year’s target was largely met, but the number of borrowers actually went down. It implies that the money was going towards processing, but it was not going towards production,” he said. The governor said the agricultural sector was now specifically focused on the availability of pesticides and fertilisers. The SBP is also contacting the private sector for agricultural extension services in order to boost productivity.
Highlighting positive aspects of the economy, Bajwa emphasised that a recovery in exports, which started in the second half of FY17 and continued in the current fiscal year, bode well for the national economy.
“Exports have shown positive growth over the past six months; in fact, during the last three months, exports have grown 13.2%, which shows that the decline seems to have finally reversed,” he remarked.
Bajwa pointed out that data of first two months of the current financial year showed a recovery in key external indicators, particularly remittances, exports and foreign direct investment.
BESHAM TO KHAZKHELA: WORK ON EXPRESSWAY TO BEGIN AFTER FEASIBILITY REPORT IS RECEIVED
Minister for Parliamentary Affairs Aftab Ahmed Sheikh apprised the Senate that construction work on Besham to Khazkhela Expressway would be started once its feasibility report is received.
In response to various questions during question hour, the minister said that the prime minister during his visit to Swat in May 2015 had announced the construction of the Expressway.
Three more motorways ‘to be made part of CPEC’
An amount of Rs50 million was earmarked for conducting the feasibility study of the project in PSDP-2016-17, he said.
Sheikh informed that the National Highway Authority had awarded the contract for conducting the feasibility study on March 16, 2017.
The procurement of works process would be initiated after the approval of PC-I by the government, he added. Responding to another question, the minister said there was no proposal under consideration to shift back Sangjani Toll Plaza at its old place as the collection of revenue at the current location was satisfactory.
“There was no development work in sector D-17 when the Toll Plaza was shifted.”
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The construction work of Loralai Bypass would be started after finalisation of the alignment, completion of cost estimate, design drawing, tendering and award process.
Design consultants had been hired and survey for alignment was in progress, the minister added.
RUPEE STABLE AGAINST DOLLAR
The rupee remained stable against the dollar at 105.4/105.6 in the inter-bank market on Friday compared to Thursday’s close of 105.4/105.6. 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% 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%. According to analysts, the artificial support for the rupee has adversely affected Pakistan’s exports.
HUAWEI COUNTRY HEAD OUTLINES PLAN TO LAUNCH PC, TABLETS IN PAK
The advent of advanced mobile broadband technology has increased competition among local and international mobile companies operating in Pakistan.
Currently, the market is flooded with different smartphone brands including those brought in through grey-trafficking that, even for big companies, makes the situation excessively erratic.
However, rapid internet penetration in Pakistan due to availability of 4G and expected availability of 5G services compels global cellular companies, like Huawei, to keep focusing on their growth trajectory and gain maximum benefit out of this market in the future.
“Pakistan’s mobile network is gradually shifting towards the super-fast 4G network which provides more opportunities in consumption of content,” Huawei Pakistan Country Head Blueking Wang said in an interview. “However, the challenging part is that the vendor must be ready for the fast-changing market dynamics,” he added.
He further said that 5G is the future of internet services which will bring revolutionary changes in terms of network speed, portability and connectivity. “Huawei is also one of the 5G-standard markets and we will lead the 5G product worldwide,” he claimed.
The company has been operating in Pakistan for the last five years, Wang said, claiming that their penetration in local smart phones market is increasing.
“We believe that the demand for smartphones and internet services will grow rapidly in Pakistan and we will continue to provide services which are both customer-centric and consumer-oriented,” Wang added.
Recently, the company has changed its management hierarchy and marketing strategy. Previously Pakistanis were looking after the company’s key positions; however, Chinese officials are now replacing them in key managerial positions. The new management is focusing on the youth as their future customers since a vast majority of the demographic group is highly tech-savvy.
“Mobile internet services are growing at a fast pace in Pakistan with young people being the main drivers behind the trend due to increasing education and technology-awareness,” Wang said, adding, “Huawei interacts with Pakistani youth through the internet by offering innovative technologies.”
Last year, another foreign cellular brand was hit badly due to battery issues both at global as well as at local level. Wang said he is confident about Huawei’s ability to handle such a crisis.
“Regardless of the nature or size of a business, any company can encounter unforeseen circumstances. We will handle such a crisis with caution and careful planning to come out unscathed,” he stated.
Like other companies, Huawei Pakistan is also feeling the heat of grey trafficking of smart phones.
“The grey stock undoubtedly distorts market dynamics and puts lawfully operating brands at a disadvantage,” Wang deplored. “It also hurts the growth of Pakistan’s smart phone market,” he said, adding that Huawei has a stringent policy regarding the issue with strict qualification and auditing standards for their agents.
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After releasing smartphones, Huawei is also planning to introduce its PC and tablet products in the country.
“We have started studying the market for introducing PC and tablet products,” Wang informed. “Our research and development team has started researching the market dynamics and demand.
“We are also planning to initiate marketing campaigns for MateBook PC since the product has been a success in foreign markets and we are positive that it will be a hit with Pakistani consumers as well,” he hoped.