FOREIGN EXCHANGE: SBP’S RESERVES PLUNGE 3.22PC, AMOUNT TO $14.28B
Foreign exchange reserves held by the State Bank of Pakistan (SBP) decreased 3.22% on a weekly basis, according to data released by the central bank on Thursday.
On September 15, the foreign currency reserves held by the central bank were recorded at $14,283.6 million, down $474.8 million or 3.22%, compared to $14,758.4 million in the previous week, according to the central bank.
Total liquid foreign reserves held by the country, including net reserves held by banks other than the SBP, stood at $20,099.7 million. Net reserves held by banks amounted to $5,816.1 million. The decrease in reserves was attributed to external debt servicing and other official payments.
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.
GOVERNMENT EASES COST CRITERION FOR ELECTRICITY SUPPLY SCHEMES
The government has eased the criterion for electricity supply schemes by removing the minimum cost bar under the Sustainable Development Goals (SDGs) following execution of work on several power projects as part of the China-Pakistan Economic Corridor (CPEC).
With gradual increase in power production, Prime Minister Shahid Khaqan Abbasi has already announced that electricity load-shedding will come to an end in the current fiscal year as many power plants are heading towards completion.
According to sources, a steering committee tasked with implementing different schemes under the SDGs recommended amendments to the approved guidelines. It suggested that the minimum cost for electricity supply schemes should be Rs100,000 instead of Rs500,000.
Responding to the proposal, the government removed the bar on the minimum cost.
The committee also sought powers to recommend utilisation of savings out of the SDG schemes.
Under the original guidelines for implementation of the SDG programme, the government had said the electricity supply schemes costing a minimum of Rs500,000 and a maximum of Rs30 million would be entertained.
The guidelines also said savings should be surrendered immediately after the completion of schemes without waiting for the close of a financial year. No new schemes will be entertained against savings of the originally funded schemes.
The cabinet had approved the guidelines for the “Prime Minister’s Global Sustainable Development Goals Achievement Programme” on September 30, 2016.
Earlier, it gave the go-ahead for the execution of the programme on August 31, 2016.
However, the federal government’s development package called “Wazeer-e-Azam Qaumi Taraqiati Programme 2016-18” did not win support of Sindh and Khyber-Pakhtunkhwa provinces, run by two major opposition parties, who termed it a political move.
According to officials, Sindh and Khyber-Pakhtunkhwa believed that the package was part of an election campaign aimed at winning over a large number of voters.
Under the package, the federal government eased the criterion for providing electricity to the villages.
CHINESE COMPANIES EAGER TO RELOCATE TO PAKISTAN, BUT THERE IS AN ISSUE
China is eager to relocate its manufacturing units to Pakistan, but there is a hindrance, and it is a long-standing one.
The China-Pakistan Economic Corridor (CPEC) may have brought the two countries closer, but the two are miles apart when it comes to infrastructure development and this is a major reason why investment is hindered.
“Pakistan needs to further improve its infrastructural facilities to motivate Chinese companies,” Chang Liguo, vice director of China Chamber of Commerce for Import and Export of Textile and Apparel (CCCT), told. “The companies are eagerly looking to relocate their manufacturing facilities to low labor cost countries among which Pakistan is a strong contender.
“The CCCT has lots of member companies, both public and private in textile and other sectors, which are looking for business in Pakistan, but infrastructural issues remain.
“The Pakistani government’s policies, on the back of CPEC, suit our member companies but this is just the first phase,” said Chang.
Pakistan has undertaken its biggest infrastructural investment in history, investing with the help of China in its road and railway networks along with adding power to the national grid. The investments, coming from Chinese companies, will help resolve one critical issue for Pakistan – power outage that has kept investors away from setting up business in the country.
“This is the first step of investment. The second phase includes the establishment of industrial zones along the CPEC route that would motivate the Chinese companies to start relocating their textile units with the help of local counterparts.
“Most of our member countries will wait and see the up gradation of local infrastructure as currently it is not as advanced as China’s or other developed countries’.
“Additionally, Pakistan doesn’t have an industrial chain. On completion of the second phase, which is the establishment of industrial parks, our member companies would initiate infrastructural investments.”
FBR FACES TAXING ISSUE AS PEOPLE RELUCTANT TO FILE RETURNS
Faced with serious challenges including weak capacity and retaining one-time return filers who contact the tax machinery just to avoid high tax rates, the Federal Board of Revenue (FBR) is now pushed to undertake a tough task of expanding extremely narrow tax base.
After being elected as prime minister, Shahid Khaqan Abbasi announced tax reforms as his number one priority on the economic front. After assuming office, the premier had a meeting with the FBR and was not happy about the outcomes, said sources.
The prime minister was not impressed by FBR’s number crunching that featured a 72% increase in tax collection in the past four years that had jumped to Rs3.361 trillion. PM Abbasi was fully aware that the additional money was taken out from pockets of the existing taxpayers and did not come after much effort.
The PM asked the FBR to use the data of withholding taxes for broadening the base instead of just using it as easy source of collecting taxes, said the sources. The PM wanted the FBR to use data like international travellers, credit card holders and property buyers to collect tax as per their potential.
The FBR now plans to send centralised tax notices to those people who spend lavishly but do not pay enough taxes. Sending notices to wealthy people is not a new phenomenon, as Pakistan had undertaken a similar exercise under the $6.2 billion International Monetary Fund programme but it did not yield desired results.
But FBR Chairman Tariq Pasha believes that this time he would use tools like linking incentives of the government employees with filing of income tax returns. The critics say that targeting the salaried class will not yield the desired results, as major evasion was in the private sector.
The government has undertaken the broadening of the tax base campaign at a time when its political capital has already significantly eroded and it does not have the muscle to go after traders and property sectors.
Another opposition was from within the FBR, which is evident from non-implementation of Tax Reforms Commission report.
IRANIAN GAS CAN BE ‘INDISPENSABLE’ TO CHINA-PAKISTAN ECONOMIC CORRIDOR
With Iran having arguably one of the largest gas reserves in this part of the world – that energy resource could become an “indispensable” asset for the China-Pakistan Economic Corridor (CPEC).
This was stated by Iranian Ambassador Mehdi Honardoost while speaking at the Institute of Policy Studies (IPS) in the capital on Thursday.
Stating that Iran had 400 years of gas resources available, Honardoost stated that Pakistan continues to be Tehran’s foremost target to market its gas.
Talking about CPEC, the Iranian ambassador said that the Chinese initiative should not only be seen as a trade or business venture, but as a ‘destiny-changer’ for the entire region.
In this regard, he said that the development of the Pakistan-Iran gas pipeline can play a vital role in fulfilling CPEC’s power related requirements.
“Iran has already done its part in extending the pipeline to the Pakistani border and we are looking forward to Pakistan that it will be completing its part as soon as possible to serve its own national interests,” Honardoost said.
The ambassador noted that Iran and Pakistan were historically and culturally one nation, having several commonalities in their concerns as well as interests.
He stressed that the two nations should be working together in areas such as trade, energy, regional peace as such cooperation will only yield mutually beneficial rewards.
Institute of Strategic Studies, Islamabad (ISSI) Ambassador (retired) Khalid Mehmood, having served as an envoy in Iran, said that Pakistan and Iran have stood by each other in difficult times.
KOREAN FIRM KEEN TO INVEST IN PUNJAB’S ENERGY SECTOR
A leading Korean company, Kostan Holdings, held a meeting with the Punjab Board of Investment and Trade (PBIT) to discuss the energy sector in Punjab.
The Korean delegation introduced its exclusive LED module that is operating with the help of a particularly designed chip, majorly suitable for security street lamps.
In this regard, the Korean firm is looking for international cooperation to undertake this project. The delegation signed a MoU with the PBIT under which the board will assist the firm in the execution of the project.
Kostan Holdings is a premier marketing and consulting firm specialising in green business and global commerce. The Korean company creates diverse profit models in LED market and is building world-class brand awareness with quality corporate content.
The Korean team showed keen interest in the establishment of the assembling unit, building grid stations, power projects from waste and health reforms by upgrading hospitals equipment in Pakistan. They expressed their interest in having joint ventures with Pakistan for strengthening business partnerships.
Director Projects Dr Suhail Saleem briefed the delegation on the operation of PBIT working as an investment promotion agency. He enlightened them regarding the facilitation desk present at PBIT for assisting and directing local and International business opportunities in Punjab.
Also speaking on the occasion, PBIT CEO Jahanzeb Burana acknowledged their ideas and suggested them to share their project proposal for further proceedings.
LNG IMPORTS FROM QATAR TOUCH 140,000 CUBIC METRES/ MONTH
The government is importing around 500 million cubic feet per day (mmcfd) liquefied natural gas (LNG) every month to meet energy needs of the country, official sources in Ministry of Energy’s Petroleum Division said on Friday.
At present, five cargoes with a combined capacity of around 140,000 cubic metres LNG or 500 mmcfd gas is being imported from Qatar on a monthly basis, they told APP.
“This, on an annual basis, is around 3.75 million ton per annum (MTPA) whereas another 0.75 MTPA LNG is imported through term tender arrangements which are not origin specific,” sources said, adding that a total of 4.5 MTPA LNG is being currently imported in the country.”
Answering a question, they said that the state-owned Pakistan State Oil (PSO) signed a15-year agreement with Qatar in February 2016 for LNG imports with 76 LNG cargoes bought from Qatargas so far.
The agreement was signed under a government-to-government arrangement between PSO and Qatargas. The LNG deal started doing wonders when the imported gas fed industries, CNG stations, gas-fired power generation plants and fertiliser sector, giving an impetus to economic activities in the country.
“The country had no option other than to import gas whether in the form of LNG or through Iran-Pakistan and Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline projects, since the country’s existing reserves are depleting and there has not been a major discovery since a long time,” the sources said.
They expressed confidence that LNG imports will prove to be a game-changer for Pakistan because it is considered an essential part of the energy mix needs of most emerging economies.
“The world is turning towards LNG and emerging and developed economies such as China, South Korea, Japan, India, Thailand, Indonesia, European Union, and Brazil ensure that LNG remains part of their energy mix requirements,” they claimed.
“Japan is importing 80 million tons of LNG every year (MTPA) and India 15 MTPA due to the commodity’s low price and higher efficiency as compared to other fuels.” Pakistan’s gas supply-demand gap has reached 4 billion cubic feet per day (BCFD), since the total unconstrained gas demand of the country is 8 BCFD against the current total supply of 4 BCFD.
DEMAND FOR READYMADE GARMENTS ON THE INCREASE
Majority of customers are interested in getting their hands on readymade stuff rather than tailor-made garments mainly to save time and avoid the hassle of repeated visits to shops for fitting trials, a report aired by a private news channel said on Friday.
The demand for readymade clothes has risen 80% to 90% in the last decade, the report said, despite high increases in the prices of tailoring.
An owner of a readymade garments shop said his shop receives a decent response from customers for both tailored and readymade clothes.
“Sales of readymade clothes at my shop have almost doubled this year,” he said.
The shift towards readymade suits has attracted many textile companies, including exporters, towards the business of supplying clothes especially for the country’s ‘middle classes’.