Economic & Political Weekly 19th May, 2019

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World

Politics

·  US orders staff to vacate US embassies in Iraq as tensions mount

The United States ordered staff to vacate US embassies and consulates in Iraq on 15th May amid signs of mounting tensions between the United States and Iran. The state department said on 15th May  that all “non-emergency” government employees had been ordered to leave the country. “Normal visa services at both posts will be temporarily suspended,” the state department said. “The US government has limited ability to provide emergency services to US citizens in Iraq.” The instruction affects both the embassy in Baghdad and the consulate in Irbil in the north of the country. Germany and the Netherlands also suspended military training programmes in the country. The development comes amid speculation that the United States is laying the groundwork for a possible intervention in Iran, which borders Iraq.

· France, New Zealand launch call to action on extremist online content

France’s president, Emmanuel Macron, and New Zealand prime minister Jacinda Ardern on 15th May launched the Christchurch Call to Action, which urges governments and tech companies to stop terrorist and violent extremist content online. The appeal was made exactly two months after a white supremacist from Australia massacred 51 people in two mosques in Christchurch, New Zealand.The killer broadcast the atrocity on Face book Live for 17 minutes. “Original footage of the live stream was viewed some 4,000 times before being removed from Face book,” Ms Ardern wrote in an opinion piece in the New York Times. “Within the first 24 hours, 1.5 million copies of the video had been taken down from the platform. There was one upload per second to You Tube in the first 24 hours.”

·  Cyprus escalation could drill hole in Irish sacred cow of neutrality

The publication by the Institute of International and European Affairs of a new analysis of Irish neutrality by Prof Patrick Keatinge is timely. It comes just as fellow EU member Cyprus looks to its partners for solidarity – at this stage just political – over the illegal incursion by Turkish drilling ships into its Aegean territorial waters or Exclusive Economic Zone (EEZ). The move, which has been condemned by Turkey’s key Nato ally, the US, is in danger of provoking a major regional spat, with Egypt also warning Turkey off as it tries to protect a field off its coast of potentially large hydrocarbon finds, which it hopes to share with neighbors Israel and Cyprus.

In January, seven Mediterranean countries, including Egypt, formed the Eastern Mediterranean Gas Forum, allowing for the creation of a regional gas market. Forum members invited other countries to join. Turkey apparently accepted the invitation but that hasn’t stopped conflicts.

·  Israeli troops shoot 16 Palestinian protesters at Gaza frontier

Israeli soldiers have shot 16 people at the Gaza frontier on a day of rallies commemorating the mass displacement of Palestinians during the war that led to Israel’s creation in 1948. Each year, typically on May 15th, Palestinians mark the Nakba, or catastrophe, when more than 700,000 people fled or were expelled from towns and villages seven decades ago. On 15th May large crowds gathered at the frontier after Hamas, which runs the enclave and supports the rallies, announced a general strike and closed schools to increase turnout. Gaza’s health ministry said 65 people were wounded by live fire, shrapnel, rubber-coated steel bullets and tear gas. It said the 65 included 22 children and three paramedics. A year ago Israeli snipers killed 60 people in a day at the Gaza frontier as thousands came out to protest against the opening of the US embassy in disputed Jerusalem, part of which Palestinians claim.

·  Ebola outbreak in eastern DR Congo out of control, say aid workers

As the Democratic Republic of Congo continues to struggle with the second largest Ebola outbreak in recorded history, officials say poor medical training may be leading to more deaths.

More than 1,100 people have been killed in the outbreak, which began in August last year, according to the DRC’s ministry of health. At least 34 healthcare workers were among them, according to health services, and about 100 have been infected. Aid agencies say the Ebola outbreak in rural eastern DRC is out of control, and spreading quickly. Incidence rates have doubled from March and quadrupled from February, according to the ministry of health. Roughly half of all new cases were detected only after the infected person died. Just one-third of people who contract Ebola in the DRC survive it – a lower rate than in previous outbreaks.

Marcus Bachmann, Médecins Sans Frontières deputy head of mission for the Ebola emergency, told The Irish Times that the escalating number of Ebola cases, along with ongoing hostility towards healthcare workers, have shown there need to be more efforts to involve local communities in the response to the outbreak. “Families and patients need to get a choice about the way they will be tested, treated, and whether they’ll be isolated,” he said. “The communities and the families will resist if that’s not the case.”

·  Two oil tankers sabotaged near UAE, says Saudi Arabia

Saudi Arabia said on 13th May that two of its oil tankers were among those attacked off the coast of the United Arab Emirates and described it as an attempt to undermine the security of crude supplies amid tensions between the United States and Iran. The UAE had said on 112th May that four commercial vessels were sabotaged near Fujairah emirate, one of the world’s largest bunkering hubs lying just outside the Strait of Hormuz. It did not describe the nature of the attack or say who was behind it.

·  Sri Lanka police arrest 23 for targeting Muslims after bombings

Sri Lankan police arrested 23 people on 14th May in connection with a spate of attacks on Muslim-owned homes and shops in apparent reprisal for the Easter bombings by Islamist militants that killed more than 250 people. Soldiers in armored vehicles patrolled the towns hit by sectarian violence this week as residents recalled how Muslims had hid in paddy fields to escape mobs carrying rods and swords, incensed over the militant attacks.

· Houthi withdrawal from ports going to plan

The withdrawal of rebel Houthi forces from Yemen’s three Red Sea ports is proceeding according to plan despite Saudi-backed government accusations that rebels remain in coast guard uniforms, the UN has said. “All three ports were monitored simultaneously by UN teams as the military forces left the ports and the coast guard took over responsibility for security,” said Lieut Gen Michael Lollesgaard, head of the UN redeployment committee.

Mina Mangal, Afghan journalist, killed in Kabul

A prominent Afghan journalist and parliamentary adviser has been killed in Kabul, an Interior Ministry spokesman told CNN on 12th May. Mina Mangal, who had worked as a television presenter for popular Pashto-language channels before entering politics, was gunned down in broad daylight Saturday morning in southeast Kabul, according to ministry spokesman Nasrat Rahimi. Police investigations are underway to find the attackers who shot Mangal, Rahimi added. The brazen attack sparked an outpouring of anger and sadness from Mangal’s colleagues and women’s rights activists, who condemned authorities for failing to protect her in the face of threats. Afghan women’s rights activist Wazhma Frogh said that Mangal had recently posted on Facebook that she had been receiving threats and feared for her life. “Can’t stop my tears at the loss of this beautiful soul. She had a loud voice, & actively raising voice for her people. In this Facebook status she says she’s threatened & she says she she trusts 

·  Sudan civilian protests to continue after talks with military council collapse

Sudan’s civilian protesters have vowed to continue their weeks-long sit-in outside Khartoum’s army headquarters, after negotiations between the military and protest leaders came to a halt following an expansion of the protest space and responsive violence by Sudanese forces.

An agreement on a transitional body that would lead the country for the next three years was expected to be reached on 15th May, but early on 16th May, the chief of Sudan’s ruling military council, General Abdel Fattah al-Burhan, announced the suspension of talks for three days.

·  Four killed after small plane crashes near Dubai airport

Four people have died after a UK-registered light aircraft crashed near Dubai International Airport, the United Arab Emirates General Civil Aviation Authority said. The Dubai Media Office tweeted: “A UK-registered small DA42 plane crashed three miles to the south of Dubai International Airport, killing four people on board, the General Civil Aviation Authority (GCAA) has announced.

  • United States airstrikes killed 17 policemen by mistake during a battle with insurgents in the country’s southern Helmand province, Afghan and US military officials said on 17th

Attaullah Afghan, head of the provincial council, said the airstrikes took place around 9pm (local time) on 16th May outside the province’s capital of Lashkar Gah, during clashes between Afghan police and the Taliban. Afghan added that 14 policemen were also wounded in the strikes. Deadly incidents of friendly fire in US military support for its Afghan allies have happened before, but are not common. Afghanistan’s beleaguered security forces come under near daily attacks by Taliban insurgents even as the US is trying to broker a peace deal to end nearly 18 years of war.

Economy-

· Why Tech giants like Google and Microsoft are investing in Africa

 

What if you could tell what was wrong with your plant by simply hovering your Smartphone over it? Well, farmers in Africa now can. Thanks to one of Google’s many products, Tensor Flow, rural farmers on the continent can diagnose diseased plants by taking a photo of it. Tensor Flow came with the launch of Google’s artificial intelligence (AI) center in Accra, Ghana’s capital city earlier this year. The center, one of the multinational tech company’s many investments in Africa, is researchers and engineers from around the continent building resources to solve various African problems through AI. Just as Google is using technology to create tools that address Africa’s growing needs, Microsoft continues to invest in growing tech talents on the continent. This week, the company launched its Africa Development Centre (ADC) with two initial sites in Nairobi, Kenya and Lagos, Nigeria.

GLOBAL INDICES AS OF 17th and 18th May 2019

As compared to 10th and 11th May 2019

Global indices as of 17th and 18th May 2019
Name Current Value Prev.

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US MARKETS
 NASDAQ (May 17) 7,816.28 7898.05     
EUROPEAN MARKETS
 FTSE (May 17) 7,348.62 7353.51     
 CAC (May 17) 5,438.23 5448.11     
 DAX (May 17) 12,238.94 12310.37     
ASIAN MARKETS
 SGX NIFTY (May 18) 11,434.50 11434.50     
 NIKKEI 225 (May 17) 21,250.09 21062.98     
 STRAITS TIMES (May 17) 3,205.46 3230.26     
 HANG SENG (May 17) 27,946.46 28275.07     
 TAIWAN WEIGHTED (May 17) 10,384.11 10474.61     
 KOSPI (May 17) 2,055.80 2067.69     
 SET COMPOSITE (May 17) 1,608.11 1614.75     
 JAKARTA COMPOSITE (May 17) 5,826.87 5895.74     
 SHANGHAI COMPOSITE (May 17) 2,882.30 2955.71
    Global indices as of 10th and 11th May 2019
Name           Current Value Prev.

Close

US MARKETS
 NASDAQ (May 10) 7,916.94 7910.59     
EUROPEAN MARKETS
 FTSE (May 10) 7,203.29 7207.41     
 CAC (May 10) 5,327.44 5313.16     
 DAX (May 10) 12,059.83 11973.92     
ASIAN MARKETS
 SGX NIFTY (May 11) 11,301.00 11283.50     
 NIKKEI 225 (May 10) 21,344.92 21402.13     
 STRAITS TIMES (May 10) 3,273.50 3269.70     
 HANG SENG (May 10) 28,550.24 28311.07     
 TAIWAN WEIGHTED (May 10) 10,712.99 10733.67     
 KOSPI (May 10) 2,108.04 2102.01     
 SET COMPOSITE (May 10) 1,648.69 1646.80     
 JAKARTA COMPOSITE (May 10) 6,209.12 6198.80     
 SHANGHAI COMPOSITE (May 10) 2,939.21 2850.95     

Pakistan

Politics

·  Pakistani security forces kill three gunmen who attacked hotel

Pakistani security forces have killed three separatist insurgents who had stormed a luxury hotel in the port city of Gwadar 24 hours earlier, the military said on 12th May. Officials said three gunmen dressed as military officers raided the five-star Pearl Continental Hotel on 11th May, killing three hotel security guards, an employee and a navy soldier in the ensuing gun battle. The insurgents had been holed up on the top floor of the hotel after security forces arrived. The forces cleared all guests from the premises while cornering the attackers in a staircase. “Security forces have completed clearance operation,” the military said in a statement, adding all three attackers had been killed. The Baluchistan Liberation Army insurgent group, which says it is fighting what it sees as the unfair exploitation of the province’s natural resources, claimed responsibility saying in a statement the attack was aimed at “Chinese and other foreign investors”. Baluchistan, which borders both Iran and Afghanistan, is Pakistan’s poorest province but has abundant reserves of natural gas and various minerals. Gwadar is a strategic port on the Arabian Sea that is being developed as part of the $60 billion China Pakistan Economic Corridor, which is itself part of China’s Belt and Road infrastructure project.     

  • The United Arab Emirates announced that 572 Pakistani prisoners have been released as part of a pardon from UAE President Shaikh Khalifa Bin Zayed Al Nahyan during the month of Ramadan, Gulf News quoted the Foreign Office as saying on 17th

According to the news outlet, around 262 Pakistani prisoners will be released from the prisons of Abu Dhabi and Al Ain prison, 177 from Dubai, 52 from Sharjah, 16 from Fujairah and 65 from Ajman. Foreign Office Spokesperson Dr Mohammad Faisal, in his weekly briefing, said that the Pakistani authorities were in touch with the UAE government to ensure that the process of repatriation is carried out smoothly.    

Economy

  • Views of S Akbar Zaidi on Pakistan current Economy published in Dawn

THERE is little disagreement that Pakistan’s economy is in a disastrous state. Even the prime minister and Pakistan’s last finance minister have acknowledged this truth, publicly. In fact, the last elected politician to hold the job as finance minister was fired precisely because the economy was in such a mess. Not only is every key economic indicator in poor shape, all indications suggest that things are going to get much, much worse. Pakistan’s economy is going to slow down to levels not seen for more than a decade, with inflation and unemployment both reaching proportions not seen for a decade. And this is just the beginning. With the government having just signed onto yet another IMF program it is important to emphasize the point, that it is not the IMF which is to blame for Pakistan’s economic condition — not for the past nor for where we are now, and also not for what is about to come. Rest assured, Pakistan’s economy is going to be severely constrained over the next few years, with higher inflation, more unemployment and lower growth, and with a far greater burden on working people than what has been the case for many years. Yet, the IMF is not to be held responsible for the state of Pakistan’s economy. The entire responsibility for the wreck that is the Pakistani economy lies squarely on the shoulders of Pakistan’s ruling and propertied elite, both civilian and in uniform, since both have been and continue to hold power in and out of office. There should be no ambiguity about apportioning blame and responsibility here, and one need to stop blaming the IMF for the mayhem created by these ruling elite. The entire responsibility for the wreck that is the Pakistani economy lies squarely on the shoulders of Pakistan’s ruling and propertied elite, both civilian and in uniform, since both have been and continue to hold power in and out of office. There should be no ambiguity about apportioning blame and responsibility here, and one need to stop blaming the IMF for the mayhem created by this ruling elite. The entire responsibility for the wreck that is the Pakistani economy lies squarely on the shoulders of Pakistan’s ruling and propertied elite, both civilian and in uniform, since both have been and continue to hold power in and out of office. There should be no ambiguity about apportioning blame and responsibility here, and one need to stop blaming the IMF for the mayhem created by these ruling elite.

  • Rupee and Stock Market immense fall on 17th May

The rupee continued to fall to record lows on 17th May after the government agreed in principle to a $6 billion loan from the International Monetary Fund (IMF). The rupee, which lost 3.6 per cent on Thursday to close at 146.2 against the US dollar in the interbank market, dropped further on Friday, dealers said, selling at Rs149.50 in the interbank market and Rs150 in the open market. The market opening at 33,971 remained today’s high, whereas the benchmark KSE-100 Index hit a day’s low at 33,006 points. As many as 63.3 million shares — worth Rs2.7 billion — of the benchmark index companies changed hands during the session.

  • Declining Suzuki Mehran and Bolan sales, multiple price hikes, high interest rates and rising petrol overall auto sales of locally manufactured vehicles in April as well as in the first 10 months of prices slowed down the current fiscal year, according to latest data released by the Pakistan Automotive Manufacturers Association (PAMA).

The data released on 13th May showed that auto sales in April plunged to 17,076 from 19,877 units in March while 10MFY19 ended flat at 177,435 versus 182,911 units. During the first 10 months of the fiscal year, sales of Honda Civic and City faded to 34,819 from 36,119 units while those of Toyota Corolla, Suzuki Cultus and Suzuki Wagon R soared to 48,245, 19,229 and 27,223 units from 43,190, 17,709 and 23,824 units respectively. Pak Suzuki Motor Company Limited finally closed down production of Suzuki Mehran model as per figures released by the PAMA as the company had already its decision to stop production. Buyers had shifted to other models resulting in sales of Mehran declining to 29,140 units compared to 39,450 units during the same period last year. Sales of Bolan also fell to 15,016 from 18,494 units. Mehran and Bolan usually made up for the major chunk of total auto sales in the country. The last 10 months also ended on negative note for Toyota Fortuner and Honda BR-V as sales plunged to 2,204 and 4,205 units from 3,264 and 7,497 units respectively. Suzuki Ravi struggled at 15,587 units compared to 18,473 units whereas sales of Toyota Hilux came down to 4,855 in the last 10 months from 6,156 units.  Truck sales, considered as a barometer of local and foreign trade, remained sluggish as only 5,120 units were sold in the last 10 months compared to 7,703 units, while bus sales improved to 780 from 585 units. Tractor sales were marred by persistent downward trend as Fiat and Massey Ferguson stood at 15,872 and 26,950 units from 23,829 and 36,184 units respectively in the first 10 months of the current fiscal year. Sales of two-wheelers market leader Honda fell to 928,931 units in 10FY19 from 953,556 units while those of Suzuki and Yamaha increased to 19,669 and 19,999 units from 17,811 and 17,397 units respectively in July-April 2017-2018. An analyst at the Top Line Securities said the dip in April sales was due to the continuous price hikes by the all assemblers which is having its impact on auto data while economic slowdown also contributed to declining sales. During the cumulative period under review, sales were down due to frequent changes in filer and non-filer regulations, slowing auto financing amid high interest rates since January 2018. A car dealer said the hike in federal excise duty by 10 per cent also impacted sales of 1,700cc and above vehicles.

  • After much deliberation, the government has announced its tax amnesty scheme — Asset Declaration Scheme — after it was approved by the cabinet on 14th May.

Adviser to the Prime Minister on Finance Dr Abdul Hafeez Shaikh briefed the media on the scheme. He was accompanied at the presser by Federal Board of Revenue (FBR) Chairman Syed Shabbar Zaidi, Minister of State for Revenue Hammad Azhar and Special Assistant to the Prime Minister (SAPM) on Information and Broadcasting Dr Firdous Ashiq Awan. “We have tried to make this scheme very easy to understand and implement,” the adviser said at the news conference, adding that the scheme has realistic targets with low rates. “The basic purpose of the scheme is not to generate revenue but to document the economy and to bring dead assets into the economy and make them functional.” The philosophy behind the plan is not to “intimidate” people but to encourage businessmen to participate in the legal economy, the adviser said. He said people will have the opportunity to become part of the scheme until June 30. Every Pakistani citizen will be able to avail the scheme except for people who have held a public office and their dependents. Under the scheme, the finance adviser revealed, assets within the country and abroad (except for real estate) can be whitened after paying a rate of 4 per cent. The whitened cash assets will have to keep in Pakistani bank accounts. For people wanting to keep their whitened money abroad, a rate of 6pc will be charged. For the declaration of real estate, its value will be considered 1.5 times more than the FBR-assigned value to bring it at par with the market rate, Dr Shaikh announced. The amnesty scheme also has the facility for citizens to whiten their benami accounts and properties before the Benami Transaction (Prohibition) Act, 2017, is enforced. Responding to a question, Dr Shaikh said the IMF program entered into by Pakistan is in favor of the country. “Those who are opposing the IMF program are the ones who had already done the same,” he added. He said actions such as reducing the gap between imports and exports, reducing losses of state-owned entities and curtailing expenditure are in favor of the country. Dr Shaikh said some people were apprehensive that the electricity tariff will be increased under the IMF accord. He clarified that if that is done, those who consume less than 300 units will not be affected. “Pakistan has been going to the IMF again and again because it failed to increase its exports, foreigners remained reluctant to invest in the country, large state institutions remained loss-making and revenue mobilization was not done [effectively].” Answering a question about how this scheme is different from the ones offered in the past, state minister Azhar said unlike the past amnesty schemes, the one being introduced now makes it mandatory for people declaring assets to become tax filers. He said the scheme was not being offered to generate revenue and contains an option for businesspersons to revise their balance sheets. In what Azhar termed as the rectification of a “major mistake” from the last amnesty scheme, people will now be required to deposit all of their cash in hand into the bank and declare it along with the deposit slip as proof.

                                                           

F.C Exchange Rates of PKR as of 17th May 2019 as compared to 11th May 2019
Countries PKR rate as of 11th May 2019 PKR rate as of 17th May 2019
U.S.A. 142.70 151.00
U.K. 185.30 190.00
Euro 158.80 166.00
Japan 1.2900 1.3900
Saudi Arabia 38.00 40.20
U.A.E. 38.80 41.20

Pakistan Stock Exchange Indices

As of 17th May 2019 As Compared

To 10rd May 2019  

Position as of 17th May 2019
Symbols KSE100 Index PSX-KMI All Shares Index
Advance 32 (Curr) Current 33166.62 Current 15541.89
Declined High 260 High 33971.12 High 16011.33
Unchanged Low 13 Low 33005.99 Low 15481.06
Total Change 305  -804.50  -469.44
Position as of 10th May 2019
Symbols KSE100 Index PSX-KMI All Shares Index
Advance 75 (Curr) Current 34716.53 Current 16365.12
Declined High 174 High 34887.64 High 16510.06
Unchanged Low 24 Low 34646.97 Low 16332.65
Total Change 273  -171.11  -144.94

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