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May 12, 2021: Remittances to South Asia remained resilient despite a shaky outlook at the outset of the spread of Covid-19, according to the latest data released by the World Bank on Friday.

The report further highlighted that in Pakistan, remittances rose by about 17 percent, with the biggest growth coming from Saudi Arabia followed by the European Union countries and the United Arab Emirates.

Remittances are a major source of foreign exchange reserves for under-developing countries including Pakistan. The World Bank in the 1HCY2020 had predicted a steep fall in remittance flows to Pakistan (including South Asia), hinting at a parching of foreign exchange funds for the country. However, against the predictions, inflows have seen a major spike over the last 12 months.

As per the latest data released by the State Bank of Pakistan (SBP), remittances to Pakistan remained above the $2 billion mark for 10 consecutive months in April, 2021. Experts say that the Covid-19 has forced around 8 million Pakistani expatriates across the world to send home inflows through the legal channels. In the pre-Covid-19 days, a large chunk of remittances to Pakistan was sent through illegal channels i.e. Hundi and Hawala. However, with the grounding of flights and social distancing rules in place, the expatriates were forced to send home funds through legal channels thereby increasing the total tally of remittances.

Meanwhile, the SBP has also launched the Roshan Digital Account for overseas Pakistanis allowing them access to local services in Pakistan. So far, non-resident Pakistanis (NRPs) have deposited around $1bn into the Roshan Digital Accounts.

“Despite COVID-19, remittance flows remained resilient in 2020, registering a smaller decline than previously projected. Officially recorded remittance flows to low- and middle-income countries reached $540 billion in 2020, just 1.6 percent below the 2019 total of $548 billion,” according to the latest Migration and Development Brief.

Meanwhile, it added that the average cost of sending $200 to the region stood at 4.9 percent in the fourth quarter of 2020, the lowest among all the regions.

May 12, 2021: First-ever truck laden with goods from Uzbekistan under the convention of International Transport of Goods arrived in Pakistan earlier today.

Abdul Razzaq Dawood said. “MOC is pleased to inform that a new milestone has been achieved with the first-ever truck from Uzbekistan reaching Pakistan under the TIR Convention. This was the result of collaboration between the transport companies of the two sides,”

The adviser further said “This follows the successful shipment of first-ever cargo from Pakistan to Uzbekistan earlier this month. This is the beginning of a new era where trucks from both sides will take trade cargo using Karachi and Gwadar ports.”

Earlier, Pakistan customs had processed first-ever shipment to Tashkent via Afghanistan under the TIR convention. Afghanistan, which is part of the multilateral treaty will allow movement of goods through its borders duty-free. 

Around 77 countries are a part of this convention allowing duty-free movement of goods through the borders. 

Pakistan with its strategic geolocation has the benefit to tap into the land-locked CAR states in the northern region allowing them to trade through its ports. 

The Customs Convention on the International Transport of Goods under Cover of TIR Carnets (TIR Convention, 1975) is one of the most successful international transport conventions and is so far the only universal Customs transit system in existence. 

To date, it has 77 Contracting Parties, including the European Union. It covers the whole of Europe and reaches out to North Africa and the near and Middle East. More than 33,000 operators are authorized to use the TIR system and around 1.5 million TIR transports are carried out per year.

May 12, 2021: The Union of Small and Medium Enterprises (UNISAME) has invited the attention of the Prime Minister (PM) Imran Khan to the neglected and uncontrolled rice, cotton, sugar and commodities sector and called for the formation of a board to safeguard the downsliding of important crops and harmful behavior of vested interest from injuring its progress.

President UNISAME Zulfikar Thaver said rice and commodities were the second biggest foreign exchange earners after textiles but unfortunately they are dwindling because of neglect and sense of direction.

He said our basmati rice is the best rice in the world but unfortunately due to lack of interest it has not been given the attention it deserves. Rice sector needs to be declared as an industry and its control given under the board.

Pakistan is importing pulses when they can be grown in the country. Pakistan is blessed with sunshine and rain and 3 climates but unfortunately due to lack of agricultural leadership and guidance we have become lethargic.

A huge amount of tea is also being imported when it can be grown in northern areas. Many other commodities like sesame seeds, dates and others can be grown and exported.

Cotton which we used to export is now on the import list, again due to lack of strategy and planning. Even sugarcane is in a mess despite its abundant growth. The sugar mafia has ruined its scope for vested interest.

Thaver urged the PM to set up a board comprising of experts from agriculture, commerce, science and technology ministries and UNISAME to focus on the aspects of growing, mapping, exporting, building reserves and monitoring of rice, cotton, sugar and commodities to maintain its consistent production and exports. 

The government needs to sharpen its tools to ensure our national potentiality is exploited for best farm sector growth and modernization of agriculture rather than leaving it at the mercy of the vested interest.

Press Release

May 12, 2021 (MLN): Pakistan State Oil Company Limited (PSO) held its Corporate Briefing Session (CBS) on May 7, 2021, to discuss the company’s financial performance for the period ended March 31, 2021, and the future outlook.

To recall, the company posted a profit after tax of 18.28 billion (EPS: Rs38.92) during 9MFY21 compared to a loss after tax of Rs4.41bn (LPS: Rs2.19) in the corresponding period last year.

Shedding light on the company’s financial performance, the management apprised that the rebound in the bottom line was primarily attributable to an increase in gross profit on account of volumetric increase supplemented by favorable price regime, reduction in finance cost and lower discount rate prevalent during the period.

The management also highlighted that company booked Rs4-5bn of inventory gains during 9MFY21 and Rs1bn of exchange gains. Here, it is pertinent to note that major gains were booked during 3QFY21.

During 9MFY21, the company registered an astounding volumetric growth of 21.6% over the same period last year while increasing market share by 260 basis points (bps) closing at 46.3%. As per the management, the company witnessed improvement in its market share across all major petroleum products as the launch of Hi-Octane 97 Euro 5, Premier Euro 5 and Hi-Cetane Diesel Euro 5 proved to be game-changers in the industry, bolstering customer’s confidence in PSO’s products. With a volumetric gain of 19.9% in MOGAS and 28.2% in HSD, market shares of both products increased to 310 and 370 bps respectively. Cumulatively, PSO’s white oil market share increased by 190 bps over the same period last year to close at 44.9% and black oil closed at 52.6% i.e., an increase of a staggering 480 bps.

The improvement in PSO’s market share is accredited to its investment in storages and logistics, newly signed contracts with Frontier Works Organisation (FWO) and less competition from and discounting by smaller OMCs (amid an ongoing crackdown on smuggling and government investigation of industry malpractices), key takeaways covered by Intermarket Securities said.

To highlight, the investment in Storages comprises of investment in new storage, rehabilitation of existing storage for capacity enhancement and conversion of storages of furnace oil to store white oil (Mogas and HSD).

According to the report, the management said that PSO has added 60,000 tons of Mogas and 50,000 tons of HSD (16-20% of existing) during FY21 so far. As a result, PSO is presently capable of maintaining 17-22 days of Mogas inventory and over 30 days of HSD inventory.

Commenting on circular debt, the management of the state-owned oil company underlined that PSO has about Rs23bn and Rs71bn of outstanding receivables from Hubco and Wapda/Gencos (none from Kapco) – which exclude Rs104bn of late payment charges (Rs28bn from Hubco, Rs12bn from Kapco, and Rs64bn from Wapda/Gencos; all not yet booked), the report cited.

Moreover, SNGPL owes the largest amount of Rs94bn for the Re-liquefied Natural Gas (RLNG) supplied by the PSO during 9MFY21, up by Rs24bn YoY. While receivables from the Power sector dropped by Rs5bn to Rs93.6bn. By end March 2021, total receivables of PSO stood at Rs210.3bn.

Talking about latest developments, the management said they have increased their focus on automation, digitization, and business process re-engineering to meet consumers need and in this regards PSO has recently transformed its procurement process through SAP Ariba which will significantly enhance the Company’s strategic and operational capabilities, increase efficiency, and reduce turnaround time.

Furthermore, in order to leverage the benefits of effective product sourcing on the business value chain, PSO entered into a long-term sale and purchase agreement with Qatar Petroleum for the procurement of RLNG with significantly lower price than before.

Besides, other automation and digitization projects are also in pipeline, the management said.

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May 12, 2021 (MLN): Morgan Stanley Capital Index (MSCI) today has released the results of its semi-annual index review (SAIR), whereby Pakistan now has a weight of 0.023% as compared to 0.016% previously.

Additionally, Pakistan’s weight in the Small Cap Index has been revised to 0.379% as per a report by Arif Habib Limited.  

Under the MSCI Global Standard Index, Lucky Cement has been added while Oil and Gas Development Company (OGDC) has been removed from it. Now, the new constituents are MCB Bank (MCB), Habib Bank Limited (HBL), and Lucky Cement (LUCK).

On the other hand, there have been four deletions and one addition to the MSCI Global Small Cap Index as Indus Motors (INDU), Lucky Cement (LUCK), National Bank of Pakistan (NBP) and Packages Limited (PKGS) have been removed and TRG Pakistan (TRG) has been added.

All changes would be effective from May 28, 2021.

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