PKR Stable Against Dollar
The rupee remained stable against the dollar at Rs121.4/121.6 in the inter-bank market on Friday compared with Thursday’s close of Rs121.4/121.6. Contrary to the impression created after the previous round of devaluation, the Pakistani currency weakened further by 3.65% in its third round earlier this month. Since December, the rupee has cumulatively shed close to 13% of its value after the central bank reportedly abstained from intervening in response to the pressure due to a widening current account deficit. The State Bank of Pakistan has maintained that the slide in the rupee’s value is due to supply and demand dynamics of foreign exchange in the inter-bank market. While it has promised prompt intervention in case of speculative or momentary pressures, the central bank will sit on the fence and let “market-driven adjustment in the exchange rate to continue to contain the imbalance in the external account and sustain a higher growth trajectory”, according to a press statement.
FPCCI Supports Kalabagh Dam In PAK
The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) announced its unconditional support to the Kalabagh dam (KBD) terming it imperative for the survival of the country. Breaking its long silence over the issue, it also welcomed the action taken by the Supreme Court on water issues and KBD, calling it a ray of hope at a time when Pakistan has become a water-starved country. In a joint statement issued on Friday, FPCCI acting President Atif Ikram Sheikh and Vice President Karim Aziz Malik said KBD was proposed six decades ago, but it was never implemented due to political controversies. A technical matter has been transformed into a political matter, while the country continues to suffer, they added. The business leaders said Pakistan is considered a developing country where problems like power shortage and unavailability of water need to be taken care of.
China’s Changan & Master Motor To Set Up Auto Plant In Karachi
Master Motor Corporation, part of the Master group, will collaborate with China-based Changan to manufacture crossover SUVs as well as light commercial vehicles in Pakistan, establishing a plant in Karachi with an aim to export units to other countries as well.
The facility will have an initial capacity of 30,000 units a year, chief executive officer (CEO) Danial Malik told reporters on Friday. “The joint venture is meant to tap Pakistan’s auto market as well as export right-hand vehicles to SAARC and ASEAN countries especially Malaysia and Indonesia,” said Danial.
The official said Changan’s plan is to take advantage of China’s Belt and Road Initiative (BRI) and install strategic manufacturing units along the way. The China-Pakistan Economic Corridor (CPEC), the flagship project of BRI, makes the country an important player in the company’s aim.
The venture will see a total investment of $100 million by the end of this year. Master Motor will inject 70% while the remaining amount will come from the Chinese company.
A company official, requesting not to be named, said foreign partners usually contribute technical assistance and licensing to their local partner. “But in this case, an OEM will actually invest its own amount in Pakistan.” On the other hand, Danial said the company would aggressively work for indigenisation and localisation of its vehicles, a move meant to reduce dependence on the exchange rate that pushes up prices whenever the Pakistani rupee loses value against the US dollar.
Assistant President of Changan Automobile and General Manager of Overseas Business Development Department Wang Huanran and Master Motor Limited Chairman Nadeem Malik signed the agreement with an ambitious aim to become Pakistan’s leading automobile company by 2025.
“We are excited to see market potential not only in Pakistan but also the export opportunities we can tap. Changan has selected Pakistan as the base country for right-hand drive vehicles to be exported to other relevant markets,” said Wang while talking to the media.
He added that Changan is the largest selling Chinese brand in China, touching an annual volume of 2,870,000 units with a wide range of products in the LCV, SUV, MPV and passenger cars’ segments through joint ventures with manufacturers like Suzuki, Ford, PSA, Mazda, Bosch, Aisin and Scheffler.
Nadeem said that the Master Group has been involved in the auto sector for two decades, and has sold 17,000 units of trucks and bus brands in Pakistan.
“Pakistan has huge potential in terms of the Motorisation Index since its ranked 160th in the world with only 18 vehicles per 1,000 inhabitants. Together with Changan, we can tap the potential while leading on the technology front and offering latest products at affordable prices,” he said.
Danial said that the plant will start production in December 2018.
“We will start with a few thousand units a year and reach our full production capacity within 3 years’ time,” he added.
“We are in the process of selecting dealers to be part of our network to serve our customers better by ensuring services and spare parts’ availability in all major cities,” said Danial. The CEO added that in time the company would look to get listed on the Pakistan Stock Exchange, and expand its output.
PIAF Calls For Extension In Tax Scheme
Pakistan Industrial and Traders Associations Front (PIAF) Chairman Irfan Iqbal Sheikh has appealed for an extension in the tax amnesty scheme 2018, and is seeking an awareness drive among the business community to avail this facility.
He said that the PIAF has been taking up the issue of a one-time tax amnesty scheme for the last several years, as this package can revamp the economic structure of the country.
In a statement, he said that Pakistan has suffered from capital flight because of various factors and this resulted in a huge stock of assets of Pakistani nationals abroad, while the country suffered. The extension in the scheme will help increase the tax net.
“It will encourage a large number of people to bring back their cash from abroad.”
He said that the PIAF appreciates the government’s measures to introduce a comprehensive scheme, which will not only bring a change in the life of individuals, but will also hopefully revamp the economic structure of the country and bring in the much-needed stability.
Sheikh urged the government to give constitutional guarantees and a comprehensive protection package to all the beneficiaries of this scheme
Investment and foreign exchange bonds is also a positive step towards bringing idle foreign exchange deposited in banks to be utilised for productive sectors of the economy.
SereneAir To Start Flights To Saudi Arabia Shortly
SereneAir, which has operated flights on almost all domestic routes in Pakistan, is all set to enter the international arena by kicking off flights to the Middle East, which is expected to intensify competition in a highly lucrative and busy region for the aviation industry.
SereneAir is going to begin international flights in the next two months. It will target air traffic to and from Saudi Arabia.
A spokesman for the private air carrier acknowledged that SereneAir would commence international flights in the near future, but did not divulge details, saying dates for the beginning of flights and other details had not yet been finalised. International passenger traffic to and from Pakistan stands at 14 million per year, of which a major chunk flies on the Saudi Arabian route.
Except for a few routes covering Canada, America and European countries, major international traffic from Pakistan goes to Saudi Arabia for Hajj and Umrah whereas the kingdom also plays host to about 2.7 million expatriate Pakistanis.
“At present, Saudi Arabia is the largest international market for Pakistani air carriers,” said Muhammad Afsar Malik, an aviation expert and former additional director of the Civil Aviation Authority (CAA).
“Unlike Gulf countries, competition from foreign airlines on the Saudi Arabian route is negligible, meaning only Saudi airlines compete with Pakistani carriers namely Pakistan International Airlines (PIA), Shaheen Air and Airblue.”
SereneAir, which got a licence from the CAA in October 2016, will be the fourth Pakistani airline that will vie with Saudi Arabian airlines as well as three Pakistani carriers for attracting passenger traffic. It currently has three airplanes in its fleet and requires five planes to fly on international routes. Request for the remaining two has been placed.
The entry of a new player will enhance competition, leading to lower airfares and better service quality. With this, the market share of Gulf carriers such as Emirates, Qatar Airways, Etihad Airways, Air Arabia and Oman Air may contract. State-owned PIA has a dominant 22% share in the international traffic of 14 million passengers to and from Pakistan.
Dubai-based Emirates has a 16% share, Shaheen Air 11%, Airblue 10%, Saudi Arabian Airlines 8%, Qatar Airways 7%, Flydubai 5%, Air Arabia 5%, Etihad Airways 4%, Gulf Air 3% and other airlines 9%, according to a CAA report on traffic flow in 2015-16.
Revenue of SereneAir is expected to rise three times with the beginning of international flights as the airline is planning to fly round the clock on the Saudi Arabian route, according to source. The expected reduction in airfares may give a boost to passenger traffic on the route.
“Lower fares will lead to an increase of about 6% in annual traffic on the Pakistan-Saudi route,” said Afsar Malik.
PIA Debt Hits Rs406b, Running Only On Government Support
The total liabilities of Pakistan International Airlines (PIA) has reached Rs406 billion against its assets only Rs111 billion.
The national carrier submitted a comprehensive report in a suo motu case regarding irregularities in the department, wherein it is stated that PIA has accumulated losses of Rs356 billion including the loss incurred in 2017.
“The balance sheet is now very weak with total liabilities amounting to Rs406 billion against assets of only Rs111 billion. Today, PIA is only able to continue operating due to the government’s financial support,” says the report.
It is also informed that the company has been operating most of its routes on losses, has far too many employees for the size of operations and has lagged in the current business environment while its business model and operations are not capable of making profits.
Last year PIA was incurring losses, a number of aircraft grounded, suffered from demotivated staff, political interference, revenue leakages, and little if any interdepartmental coordination, the report highlights.
The report submitted to the SC also read that the national airline lacks the capability to improve its performance given core competency gaps in the whole organisation including the senior executive leadership. Reasons identified include political appointments and extremely poor HR practices while PIA as an organisation operates like an outdated government department rather than a modern business.
“Unions and associations have perfected tools to obstruct management drives at revival with malice”, adds the report, stating that PIA is heavily burdened with unions and they should not be allowed to interfere in the management process.
The report further identifies that unions are also negatively impacting in daily operations by influencing employees to ‘go slow’ when they wish to apply pressure to the management. Recently, they have been carrying out a maligning campaign to thwart efforts to clean up HR practices.
The court was requested in the comprehensive report to allow the incumbent management to undertake and commence recruitment of relevant and appropriate officers and employees to ensure efficient working of the airline’s affairs. PIA also pleaded for staff unions to be restrained from acting against the interests of the company. Likewise, it was also requested to remove the name of the company’s CEO from the ECL.