Oil prices jump on new output
deal:
Oil prices have surged after oil producing countries that are not Opec
members agreed to cut output. Brent crude jumped to $57.89 a barrel - the
highest since July 2015 - before falling back to $56.55, although that was
still a gain of 4.1% on the day. On Saturday, non-Opec countries agreed to cut
their output by 558,000 barrels a day in a deal designed to reduce oversupply
and boost prices. Opec announced last month that it would be cutting its own
production.
Currency volatility in the
open market:
The recent volatility in the open
currency market had its roots not in the shortage of non-dollar foreign
currencies but in the behaviour of foreign exchange companies, inquiries
reveal. Though, at the peak of the crisis, the rupee that had fallen to near
Rs110 per dollar for customer buying in the open market, it has now bounced back
(rising to Rs107.20 on Dec 8) although the gap between interbank and open
market currency has yet to be narrowed. On Dec 8, the gap was in excess of 2pc,
against the ideal 0.5-1.0pc, as in the interbank market the rupee was trading
at Rs104.76 and Rs104.77 for buying and selling.
Collaborative manufacturing in
tyre business:
Several medium-sized Pakistani
businessmen have invested small sums of money in what they call ‘collaborative
manufacturing’ in India, China, Indonesia and elsewhere in East Asia. This is
to produce ‘quality’ tyres of different sizes and specifications for the
‘replacement market’ at home. “Starting a new tyre manufacturing business in
Pakistan has become very capital intensive over the years. “The costs of making
tyres (for cars, buses, tractors, dumpers, OTR (off-the-road) vehicles,
industry, etc) locally has gone up sharply because we do not produce raw
materials — rubber, chemicals, bead wire, special fabric, etc —, or have a
vending industry to support the (end tyre) manufacturers,” argued Awais
Piracha, whose family has been involved in the tyre trade for the last three
generations, and was among the first few to enter into collaborative
manufacturing with manufacturers in China, India and Indonesia.
Culture of amnesty scheme continues
in Pakistan's real estate sector
he fledgling realty tax faced
stiff resistance from lobbyists who pressed the government hard for an amnesty
scheme. The chanting slogan of the amnesty scheme is to whiten the black money
with just 3% tax to be imposed on the difference between the DC rate and
Federal Board of Revenue (FBR) valuation rate. Icing on the cake is that the
FBR won’t ask about the sources of income. According to conservative estimates
of the FBR, Rs4 trillion is parked in the realty sector in Pakistan, implying
that the tax machinery would lose billions in potential taxable revenue in the
years to come. Despite all trappings, the outcome of this amnesty scheme would
not be different from the previous ones.
Industrial phase of CPEC to
kick off soon:
The industrial phase of the
China-Pakistan Economic Corridor (CPEC) is going to kick off soon under which
Chinese investors would be allowed to set up only high tech industries, which
would not have any negative impact on Pakistan’s existing industry, said CPEC
Acting Project Director Hasan Dawood. Speaking to a delegation of the
Faisalabad Chamber of Commerce and Industry (FCCI), he said that CPEC has three
major perspectives including geo strategic, regional integration and industrial
cooperation, adding that Chinese investors cannot afford any clash at any stage
with Pakistani industrialists; hence, they prefer to concentrate on Gwadar
Port.
ADB stalls $300m loan tranche
over delayed reforms
Pakistan’s foreign exchange
reserves are likely to come under more strain in the coming months as the Asian
Development Bank (ADB) has delayed the approval of a third loan tranche worth
$300 million for budget financing after the government put energy sector
reforms on the backburner. The loan tranche is critical for the finance
ministry as official foreign currency reserves have started depleting. In the
last one month, forex reserves held by the State Bank of Pakistan have come
down to $18.36 billion – a net reduction of $722 million. The loan proceeds would
have been used to provide a cushion to the central bank’s foreign currency
reserves besides meeting budget financing needs.
Gas price cut unlikely to stem
decline in textile exports:
Value-added textile exporters
have warned the government that the decline in exports will continue to persist
despite a recent reduction in natural gas prices for different industries. “I
don’t think textile exports will show any significant improvement in coming
months despite a 33% reduction in gas price for export-oriented industries,”
commented M Babar Khan, CEO of Multinational Export Bureau, a Karachi-based
textile company.
Gas shortage hits SSGC's
system:
Sui Southern Gas Company (SSGC)
on Sunday closed Compressed Natural Gas (CNG) stations across the province as a
sudden gas shortage hit the system of the gas utility. According to a SSGC
spokesman, the decision to shut CNG stations across the province was taken
after a gas shortage hit the SSGC's system. However, the spokesman said that
the stations will remain open on Monday. The spokesman did not elaborate as to
why the sudden shortage hit the system. Meanwhile, CNG stations in many city
areas remained open as the decision to close down the station by the gas
utility was not communicated to them timely and properly.
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