Category: Industry

The Pakistani Rupee (PKR) posted big gains against the US Dollar (USD) and appreciated Rs. 1.12 paisas against the greenback in the inter-bank market today- one of its highest single-day gains in 2021. It hit an intra-day high of Rs. 173.75 against the USD during today’s open market session.

The PKR appreciated by 0.65 percent against the USD and closed at Rs. 173.76 today after it posted gains of 40 paisas and closed at Rs. 174.89 in the inter-bank market on Tuesday, 16 November.

Today’s gains come on the back of news that the Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) will convene its next meeting on Friday, 19 November. The SBP explained, in a revised circular, that the meeting was brought forward in consideration of the recent developments that have affected the inflation outlook and the balance of payments.

Other than the MPC preponement, the PKR is expected to appreciate even further on the back of the positive sentiment in the market and the near-term approval of the International Monetary Fund’s (IMF) sixth review on fulfilling five prior actions.

The Advisor on Finance, Shaukat Tarin, discussed the Rupee forecast with reporters in reference to the emerging trends. He said that the government has increased the power tariff besides withdrawing tax exemptions.

On the other hand, the Ministry of Law is reviewing the SBP autonomy bill that will be passed soon. He added that the Rupee will soon strengthen after the completion of the sixth review of the IMF.

Regarding the PKR’s interbank performance earlier today during the trading hours, the former Treasury Head of Chase Manhattan Bank, Asad Rizvi, said, “MPC [Monetary Policy Committee] on Nov 19 instead of Nov 26. Petroleum prices hiked in a hurry on Nov 5 instead of NOV 16, more 2come. #PKR at [a] desired level, more easy 2do. Gas/Electricity adjusted upward, some more to come. CRR UP to 6%”.

He added, “Liquidity CRUNCH & Hike 100bp or + Deposit Rate Attractive”.

The PKR maintained its performance against other major currencies as well and posted encouraging gains in the inter-bank currency market today.

It continued its winning streak against the Euro for the second day running after it posted big gains of Rs. 2.28 against the eurozone currency. It also posted 37 paisas against the Malaysian Ringgit (MYR), and 19 paisas against the Chinese Yuan (CNY).

It posted gains of 30 paisas against both the UAE Dirham (AED) and the Saudi Riyal (SAR) in today’s inter-bank currency market.

Besides this, the PKR posted whopping gains of Rs. 1.18 against the Canadian Dollar (CAD), Rs. 1.72 against the Australian Dollar (AUD), and Rs. 1.64 against the Pound Sterling (GBP).

Source: Pro Pakistani

A poll by Topline Securities suggests that an increase of 75 bps or higher will be noted in the November 2021 Monetary Policy Statement (MPS).

A total of 73 key financial market participants responded to the poll. For the coming MPS, 25 percent of the participants said that they expect an increase of more than 75 percent, while 30 percent said that they expect a rise of 75 bps.

Also, zero percent of them expect no change at all.

For the future expectations of the interest rate by the end of FY22, 11 percent hoped to see an increment of more than 150 bps, and 50 percent believe that the rise will be 150 bps. Additionally, 11 percent also said that they expect a rise of 100 bps only.

The respondents were also asked about the future value of the Pakistani Rupee (PKR) against the US Dollar (USD) by the end of FY22, and 33 percent said that they expect to see the PKR/USD between 180-185. Another 33 percent felt that the PKR will stand between 175-180 against the USD. Besides them, 22 percent thought that the dollar will be below 175 by the end of the current fiscal year.

The State Bank of Pakistan (SBP) has decided to hold a meeting of the Monetary Policy Committee (MPC) on 19 November instead of 26 November. The date has been rescheduled to counter the unexpected developments that have affected inflation, and to reduce the uncertainty about the monetary policy in the market.

The central bank has already mentioned that the MPC expected the monetary policy to be accommodative in the near future and proposed “further tapering of stimulus to achieve mildly positive real interest rates over time”.

Topline Securities suggested that the recent talks with the International Monetary Fund (IMF) will be influential to the current MPC meeting and will affect the policy as it is presumed that Pakistan will fulfill the demands prior to further plans with the IMF.

The brokerage house in its report said that it looks forward to an increase of 75-100 bps in the policy rate from 7.25 percent, but a greater increase may be seen if the SBP tries to target a mildly positive real interest rate.

Source: Pro Pakistani

Remittances in Pakistan are likely to remain flat at the current levels in 2022, as the one-off effects of government incentives to attract them fade, though the Afghanistan factor will continue to sustain flows, says the World Bank.

The Bank in its report “Migration and Development Brief” released on Wednesday stated Afghanistan’s fragile economic and political situation emerged as an unexpected prompt of remittance inflows into Pakistan in 2021.

The report stated that Afghanistan’s fragile economic and political situation gave a special impetus to remittance inflows in Pakistan. Following the breakdown of official channels of money transfers to Afghanistan, remittances intended for Afghan refugees in Pakistan, as well as for families in dire stress in Afghanistan, flowed into Pakistan. According to one report, about 50,000 Afghans crossed the border into Pakistan and Iran some weeks before Pakistan temporarily closed its borders.

In the Gohati and Gandaf refugee camps alone, which once housed around 60,000 Afghans, the numbers soared with the arrival of their relatives in recent months. Most of the Afghans leaving do not intend to return to Afghanistan because of the lack of security, fulfillment of basic needs, and access to education and health care for their families. Their physical presence in Pakistan enables them to receive remittances from their relative migrants abroad.

Until conditions in Afghanistan stabilize, these factors are likely to maintain a steady flow of remittances into Pakistan. In late October 2021, Pakistan imposed several restrictions on outward remittances to Afghanistan, especially in US dollar terms.

The report noted that deployment of workers from Pakistan to the GCC region fell by over 64 percent during 2020 and again by another 11 percent during the first nine months of 2021, and in Bangladesh it fell by 19 percent in the first three months of 2021 compared to the same period of 2020.

In Pakistan, deployment of workers to the GCC and other destination countries declined from around 626,000 in 2019 to 225,000 in 2020 and further to 152,000 in the first nine months of 2021.

Pakistan, Bangladesh, Nepal, and Sri Lanka featured in the list of top 50 recipients of remittance inflows in the world. The significance of remittances in their economies ranged from about 13 percent for Pakistan to 6–8 percent of GDP for Bangladesh and Sri Lanka.

The report further stated that Pakistan had another year of record remittances with growth at 26 percent, and levels reaching $33 billion in 2021. In addition to the common drivers, the government’s proactive Pakistan Remittance Initiative to support the transmission of remittances through formal channels was successful in attracting large inflows in 2021.

Presently, the average monthly remittance of a Bangladeshi migrant who performs manual work is only $203 compared to $276 for a Pakistani, $396 for an Indian, $564 for a Filipino, and $533 for a Chinese.

While the high costs of sending money from Pakistan to Afghanistan have a rationale, neither the absolute cost nor the cost increase of sending money from Japan, Thailand, Singapore, or Malaysia to India can be justified. Cost-reducing policies would create a win-win situation welcomed by migrants and South Asian governments alike. Governments in South Asia routinely face large current account deficits that could be funded increasingly by remittances as more of them flow through official channels of money transfer.

Although South Asia still has the lowest average remittance costs of any world region, at 4.6 percent, the cost of remitting money to South Asia through official channels is high, and informal channels remain popular. Barring a few exceptions, in most cases the costs increased in 2021.

Source: Pro Pakistani

The parliament on Wednesday approved three important bills, pertaining to the Securities Exchange Commission of Pakistan (SECP) bills, including a bill aimed to promote startups.

According to details, the parliament in its joint sitting, approved the Companies Amendment Bill, 2021; Secure Transactions Act (Amendment); and, Corporate Restructuring Companies Amendment.

The Companies Amendment Bill 2021 was proposed by SECP primarily to promote startups, business innovation, and entrepreneurship, and to improve the general business climate, and to promote ease of doing business.

A new definition was proposed in the Companies Act’s definition clause and in the Third Schedule to allow special privileges to be granted to startup companies engaged in technology-enabled products and services and are estimated to be the backbone of the economy going forward.

As per the definition given in the bill, a “startup company” means a company that is in existence for not more than 10 years from the date of its incorporation or such other period or periods as may be specified, and has a turnover for any of the financial years since incorporation that is not greater than five hundred million rupees or such other amount or amounts as may be specified.

The definition also describes a startup as the one working toward the innovation, development, or improvement of products or processes or services and as a scalable business model with a high potential of employment generation or wealth creation or for such other purposes as may be specified; or such other companies or classes of companies as may be notified by the Commission provided that a company formed by the splitting up or reconstruction of an existing company shall not be considered as a startup company.

Moreover, as per the bill, private companies have been allowed to issue shares other than right and other than cash. All the companies have been allowed to issue employees stock option schemes and buy back their shares. Earlier it was restricted to public and public-listed companies respectively.

In addition, private companies with Paid-up Capital up to Rs. 1 million are exempted from filing unaudited financial statements. To meet benchmarks of the World Bank’s Ease of Doing Business Report, the requirement of a company’s common seal is proposed to be abolished.

Also, to protect minority shareholders’ rights, the discovery of any documents from the defendant during court proceedings is allowed; the threshold for member resolution was proposed to be reduced from 10 percent to 5 percent, alongside disclosure of individual directors’ remuneration.

Courts may declare those contracts null and void which are prejudicial to the interest of members or have conflicts of interest on the part of any director or board. Other important amendments include board resolution through circulation that is required to be signed by all directors.

The bill abolishes the additional requirements to mention a husband’s name by a married woman or widow for registration of a company in order to meet benchmarks of the World Bank’s Women, Business and Law report.

Besides, the bill stresses the need to simplify the requirement to deposit subscription money in a bank account within 30 days of incorporation and report the same to the registrar along with the certificate from practicing CA or CMA verifying receipt of money.

Source: Pro Pakistani

The Securities and Exchange Commission of Pakistan (SECP) has issued revised regulations, authorizing the registered valuers to carry out the valuation of properties, stocks, shares, debentures, securities, and any other assets of companies.

According to the revised Companies (Further Issue of Shares) Regulations, 2020, the SECP has given authorization of valuation to the Consulting Engineers registered with Pakistan Engineering Council (PEC), the practicing chartered accountants, having satisfactory Quality Control Review awarded by the Institute of Chartered Accountants of Pakistan, and any other person who may be notified by SECP.

According to SECP, the said valuation procedure will not be applicable to the valuers engaged in the valuation of banking transactions, as such valuers will continue to be regulated under the applicable laws.

The eligible valuers will also be deemed registered with the SECP and will be entitled to conduct valuation as required, subject to fulfillment of the requirements.

All such valuers will continue to be regulated, administered, and monitored by the entities in which they are originally registered, and they will comply with all relevant rules, regulations, and instructions of such entities.

The valuers who are independent will be eligible to conduct the valuation:

(a) In respect of movable property, i.e., plant and machinery, immovable property, i.e., land and building etc., and natural resources and exploration thereof, by a valuer registered with the PEC as a Consulting Engineer.

(b) In respect of stocks, shares, debentures, securities, net worth of a company or an undertaking, goodwill and other intangible assets, services, and liabilities, by a valuer who is a practicing chartered accountant having satisfactory Quality Control Review awarded by the Institute of Chartered Accountants of Pakistan.

(c) In respect of all other assets, not covered in clauses (a) and (b), by a valuer registered with PEC as a consulting engineer, having experience as a valuer of at least five years in the relevant field.

To maintain independence and impartiality and to ensure true and fair valuation, the valuer will not undertake valuation of any assets in which he/she has a direct or indirect interest or becomes so interested at any time before submission of the report.

The valuation will not be older than six months, or such other time period as may be notified by the Commission, from the date of submission to the registrar in case of a right issue.

The relevant entity or agency, on its own motion or on the reference by the Commission, may initiate necessary action against the eligible valuers for any misconduct or failure to perform professional duties in accordance with its rules and regulations, and may cancel the registration of such a valuer, according to SECP.

Source: Pro Pakistani

Advisor to the Prime Minister on Finance and Revenue, Shaukat Tarin, held a meeting to review the establishment of the federal government Properties Management Authority at Finance Division. Senator Aun Abass Buppi, Secretary Finance, and senior officers attended the meeting.

Secretary Finance apprised the Advisor of the progress being made on the establishment of the Federal Government Property Management Authority (FGPMA).

He informed that official notification for the establishment of the Authority has been issued.

Advisor to the Prime Minister on Finance and Revenue stressed the need to make the Federal Government Properties Management Authority fully functional at the earliest for best utilization of government’s assets and for getting the best value for money for the government assets.

Senator Aun Abass appreciated the role of the Finance Division in this regard.

Advisor to the Prime Minister on Finance and Revenue directed to complete the codal modalities for the establishment of Authority as soon as possible.

Source: Pro Pakistani