10 BUSINESS
Thursday, 15 March, 2018
UPGRAdAtIon oF $8.2bn ML1 RAILwAy PRojEct to stARt wItHIn tHREE MontHs ISLAMABAD
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GHULAM ABBAS
HOUGH the government had shown commitment to start work on one of the most important components of China Pakistan Economic Corridor (CPEC) rehabilitation and up-gradation of railway Main-Line 1 (ML1) from Karachi to Peshawar by March, it has claimed that the process will be initiated within the next three months. Briefing the National Assembly’s Standing Committee on Planning, Development and Reforms, on Wednesday, the officials of the planning ministry claimed that the paper work of the Pakistan Railway project ML-1
has been completed. Practically, the execution of work on the multi-billion dollar project will be started within the next three months. The meeting of the committee was held under the chairmanship of MNA Abdul Majeed Khan Khanankhail. According to officials, the feasibility study of the project has already been finalised while the framework agreement with China has also been signed. The project was of great importance and the two countries had declared it as a strategic project of CPEC which would help improve connectivity between the two countries. The project will be completed during the next five years. According to officials, China has
fully agreed to finance this project as per the framework agreement signed between the two countries. China will provide the loan for the project on reasonable conditions and interests. Officials from Pakistan Railways claim that the project will be presented at the Central Development Working Party meeting on March 19. Meanwhile official sources in ministry of planning told this scribe that according to the agreement, the project’s total estimated cost was $8.2 billion. They said that with the upgradation of ML-1, the train’s speed would increase from less than 100 kilometres per hour to 140 kilometres per hour while the train capacity would be increased from the current 32 to 171 trains per day.
Pakistan Railways had planned to upgrade and overhaul the infrastructure of ML-1 under CPEC framework, including bridges, track, signalling, tunnels, buildings, telecommunication systems, and track maintenance system. The committee, later directed the ministry of planning, and railways to speed up the process of implementation on the mega project. Discussing another agenda of the meeting, officials informed the committee that China Overseas Port Holding Company (COPHC) has completed the feasibility study for the construction of 1000 meter long new terminal with 5 additional berths. The Chinese Company installed a sanitation plant with a capacity of two lac gallons in Gwadar.
ADB to provide $140 million for KP roads improvement project ISLAMABAD STAFF REPORT
Govt not in favour of counter-productive taxation: Haroon ISLAMABAD STAFF REPORT
Special Assistant to Prime Minister on Revenue, Federal Minister Senator Haroon Akhtar Khan has said the government is willing to review and adjust high taxation rates in case they are found to be stymieing the growth of any sector or industry. “The government is not in favour of counter-productive taxation as our prime objective is to promote growth and help businesses flourish and contribute more revenue to the national exchequer,” he said while talking to a delegation of the American Business Council of Pakistan which met him at his office. The minister told the delegation that the government valued the contribution made by multinationals to growth of revenue and economy and the downward revision of corporate tax rates from the previous 35 to the current 30 per cent was indicative of the government’s desire to further facilitate the corporate sector. “We are reviewing proposals and recommendations to further facilitate this sector in the upcoming budget which would be pro-investment and pro-businessman in nature,” he added. Earlier, President of the American Business Council of Pakistan Kamran Nishat, said the investment environment had considerably improved in Pakistan as indicated by recent perception surveys, indicating marked improvement in law and order and ease of doing business. He also shared with the minister a set of proposals and recommendations for further boosting economic and revenue growth.
Economic Affairs Division and Asian Development Bank (ADB) here on Wednesday signed a loan agreement for the provision of $140 million for Khyber Pakhtunkhwa Provincial Roads Improvement Project. Pakhtunkhwa Highways Authority (PKHA) intends to rehabilitate a part of its provincial highway network under this project to improve the performance of its roads and achieve a higher service level in the province. With the rehabilitation of these roads, the overall maintenance cost will reduce significantly. Due to the proposed interventions, this 214 kms network of roads will only require periodic maintenance after 5-6 years and resultantly the maintenance burden on PKHA will be reduced in the forthcoming years. The rehabilitation of these candidate roads, in accordance with the proposed program, will not only enhance their capacities but will also result in improved serv-
LAHORE In a notification sent to the Pakistan Stock Exchange (PSX), Engro Polymer and Chemical Limited (EPCL) notified the bourse regarding financing structure of its expansion plan of PVC by 100,000 tonnes and debottlenecking by 50,000 tonnes, with a total estimated Capex (capital expenditure) of the project estimated at Rs7.6 billion, out of which Rs5.4 billion would be raised through right shares where share price of the proposed issue will not exceed Rs30 per share. The notification read, “The aggregate amount of proposed right
ISLAMABAD InP
Ambassador of Italy to Pakistan, Stefano Pontecorvo called on Adviser to Prime Minister on Finance Miftah Ismail here on Wednesday and discussed with him issues of mutual interests. Stefano Pontecorvo apprised the advisor regarding various bilateral cooperation initiatives underway between the two countries. He said that the exchange of delegations in the recent months had helped in identifying several areas of cooperation between the two sides. He said that Italian investors were being informed of the investment potential in various sectors and they had expressed keenness to take advantage of these opportunities. Miftah Ismail appreciated the dedicated efforts of the Italian envoy for promoting Pak-Italy economic cooperation. He said that the steady economic growth was creating greater economic opportunities for investors in both countries. The Advisor to PM on Finance said that the improved security and greater economic opportunities had led to a renewed interest from international investors. He said all possible facilitation would be offered to potential Italian businessmen under Pakistan’s liberal investment regime.
IMF resident rep calls on Rana Afzal ice delivery. The loan agreement was signed by Economic Affairs Division Additional Secretary (Incharge) Syed Ghazanfar Abbas Jilani and ADB Country Director Xiaohong Yang.
The project agreement was signed by Government of Khyber Pakhtunkhwa Communication and Works Department secretary and Pakhtunkhwa Highway Authority managing director.
Engro to invest Rs7.6bn in a new PVC plant ELEAZAR BHATTI
Efforts to promote Pak-Italy economic cooperation
issue will be utilised to fund the addition of a new PVC plant of 100,000 MT and VCM plant debottlenecking of 50,000 MT per annum. The estimated overall CAPEX of the said project is approximately Rs7.6 billion, which is intended to be partially funded through the issuance of right shares of approx. Rs5.4 billion.” According to the notification the new shares will not exceed a proposed price of Rs30 per share. The notification apprised that the purpose of issuance of shares is to enable sponsors and investors of EPCL to obtain approval to invest in the potential right issue and provide an undertaking to the company to
subscribe to its entitlement in accordance with the provisions of the Companies (Issue of Capital) Rules 1996, which would in turn approve and announce the actual right issue of shares. Furthermore, the board resolved that it shall approve and announce the actual right issue at a future date in accordance with the applicable laws. After the notification, EPCL’s share price increased 0.40 per cent, or Rs0.12, to Rs30.12 with a volume of 8.72 million shares traded at the PSX. Meanwhile, KSE 100 settled at 43407.72 points, down 210.36 points here on Wednesday.
ISLAMABAD STAFF REPORT
Newly appointed International Monetary Fund (IMF) Resident Representative to Pakistan, Maria Teresa Daban Sanchez called on the Minister of State for Finance Rana Muhammad Afzal here on Wednesday. The minister welcomed the IMF representative and wished her a successful tenure in the country. He had an exchange of views with her on the current macroeconomic situation in the country and said all efforts were underway to keep up the momentum of economic growth. Maria Sanchez lauded the efforts of the government for improving the security situation in the country which has given a boost to economic activities and enhanced confidence in the business community. She also appreciated the government’s endeavours to increase exports and subsequently bring down the trade deficit. During the meeting the IMF representative also discussed the spring meetings of the IMF and World Bank scheduled in April. She thanked the minister for the warm welcome and expressed the desire to work in close cooperation with the government during her term.
Core textile earnings improve by nine per cent during first half of 2017-18 KARACHI ARSHAD HUSSAIn
Pakistan’s overall textile exports showed a positive trend in first six months of the current fiscal year (up 8 per cent in dollar terms, 9 per cent in rupee terms). Pakistan’s value-added textile sector posted an earnings decline of 15 per cent Year on Year during the first half of 2017-18. “The decline in earnings is primarily due to lower dividend income on investments. Having said that, core textile profitability improved by 25 per cent,” said Sadiq Samin, an analyst at Sherman Securities, thanking the textile friendly policies introduced by the government over the last one year. Interestingly, rupee sales of 19 listed
textile composite firms improved by 12 per cent to Rs167 billion. The analyst believes that the rupee sales is mainly driven by better volumetric sales and Drawback of Local Taxes and Levies (DLTL) or rebate benefits on various export categories announced by the government over the last year. Initially, in textile policy 2014-19, government had approved DLTL at the rate of 1 per cent, 2 per cent and 4 per cent on processed fabrics, made-ups and garments, respectively. Only exporters with 10 per cent increase in exports were eligible for this benefit. However, in the last year, in order to boost exports, the government increased the DLTL rate effectively from the second half of 2016-17 to 5 per cent, 6 per cent,
and 7 per cent on processed fabrics, made-ups and garments, respectively. Subsequently, for 2017-18, the government also allowed 50 per cent of the rate of drawback to be provided to exporters without a condition of increments. While the remaining 50 per cent of the rate of drawback was to be provided if exporters achieved 10 per cent growth in 2017-18. Interestingly, revenue growth during the first half 2017-18 excludes the impact of Pak rupee devaluation against US dollar and Euro which may be visible during the remainder of this fiscal year. Lower dividends on investment dragged the overall profitability of the textile composite units by 15 per cent YoY to Rs7.7 billion during the first half
2017-18. During July to December 201617, other income was recorded at Rs8.7 billion, while in the same period of 201718, other income was recorded at Rs7.7 billion. This decline is primarily due to lower dividends from subsidiary companies of a few textile firms. On the flip side, core textile earnings of these firms grew by an impressive 25 per cent to Rs2 billion during July to December 2017-18. Within the textile composite units, where majority of firms showed recovery in textile earnings, listed composite denim units (Azgard Nine and Artistic Denim Mills) posted strong recoveries. During July-Dec 2017-18, the combined revenue of both the denim firms posted a stunning growth of 28 per cent YoY to Rs11.6 billion. This is much higher
than the overall textile composite textile firms, thanks to a higher demand for Pakistan denim for both weaving (Bangladesh) and garments (US and Europe). Therefore, where volumetric growth lifted overall revenues, DLTL benefits also supported revenue growth. Denim exports represent only 15 per cent of the value added textile exports of Pakistan, according to analyst estimates. Though it is relatively small in size but over the last few years, denim exports have significantly improved compared to overall textile exports. Interestingly, combined profitability of the two firms significantly improved from a loss of Rs82 million in January to June 2016-17 to profit of Rs252 million during January to June 2017-18.