Oil prices slip on concerns of looming oversupply, economic downturn

SINGAPORE: Oil prices slipped on Thursday, weighed down by rising supply going into a market in which consumption is expected to slow down amid a glum economic outlook.

Front-month Brent crude oil futures were trading at $65.88 per barrel at 0441 GMT, down 24 cents, or 0.4 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were at $55.96 a barrel, down 29 cents, or 0.5 percent.

Since early October, oil prices have lost around a quarter of their value as supply soars just as demand is expected to slow down along with an economic downturn.

“Asian refiners and consumers we speak with are mentioning initial concerns of slowing demand,” said Mike Corley, president of Mercatus Energy Advisors.

U.S. bank Morgan Stanley said in a note on Wednesday that China’s economic “conditions deteriorated materially” in the third quarter of 2018, while analysts at Capital Economics said China’s “near-term economic outlook still remains downbeat.”

China is the world’s biggest oil importer and the second-largest crude consumer.

Meanwhile, data released this week showed economic contraction in industrial powerhouses Japan and Germany in the third quarter.

At the same time, supply has been surging, especially due to a 22 percent rise in U.S. crude oil production this year to a record 11.6 million barrels per day (bpd).

“Producers…have more barrels than they can sell at the moment,” said Mercatus Energy Advisors’ Corley.

As a result, oil inventories are rising. The American Petroleum Institute said late on Wednesday that crude inventories rose by 8.8 million barrels in the week to Nov. 9 to 440.7 million, compared with analyst expectations for an increase of 3.2 million barrels.

Fearing a renewed glut like in 2014, when prices crashed under the weight of oversupply, the Organization of the Petroleum Exporting Countries (OPEC) is discussing supply cuts.

To do so successfully, OPEC – under the de-facto leadership of Saudi Arabia – will need Russia on its side, which is not an OPEC member.

A joint effort between OPEC and Russia to withhold supply from 2017 was a major contributor to crude price rises last year and in the first half of 2018.

“Russia and OPEC and Saudi Arabia – they are observing the market. If they see that there is dis-balance between supply and demand, (they) will of course take a joint action to reduce supply,” said Kirill Dmitriev, head of Russian Direct Investment Fund, the country’s sovereign wealth investment body.

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Successful talks for IMF package to reduce Pakistan’s external financing risks: Moody’s

KARACHI: Successful negotiations for a new International Monetary Fund programme would reduce external financing risks for Pakistan, credit rating agency Moody’s said in its “Global Emerging Markets: Outlook” report issued on Thursday.

The government of Pakistan has recently secured $6 billion package from Saudi Arabia including $3bn in deferred payments on oil and $3bn to be deposited in Central Bank, the report said.

The government is seeking all sources to avert the imminent balance of payment crisis, the report observed.

The central bank foreign exchange reserves have fallen to their lowest levels in four years reaching $7.5bn, which could not meet the bill of two months’ imports, the report said.

The rating agency report has kept the outlook for global emerging markets (EM) “broadly stable” but warns of risks from “higher rates, politics and trade tensions”.

The report highlights that “although the share of [Pakistan’s] foreign currency debt is relatively low at around 35pc of total government debt, declining foreign reserves because of a current account deficit of around four to five percent of GDP, raise repayment risks.”

The agency expects the country’s external vulnerability indicator (EVI) ratio to rise to 153 per cent in 2019.

The EVI ratio indicates country’s immediately available foreign exchange resources sufficiency to allow it to make all external debt payments, even if there is a complete refusal of creditors to roll over debt due within a given year.

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T-Mobile says Sprint deal may close as early as first-quarter next year

T-Mobile US’s Chief Financial Officer said there is a possibility that its $26 billion acquisition deal of Sprint will close as early as the first quarter of 2019.

T-Mobile, majority owned by Deutsche Telekom AG, agreed in April to buy wireless carrier Sprint and the deal was initially expected to close in the first half of 2019.

The Federal Communications Commission (FCC) and the Department of Justice are currently scrutinizing the deal.

“The only remaining thing that is happening is depositions with the DoJ, which have started and will be completed in a few weeks,” CFO J. Braxton Carter told the Morgan Stanley TMT Conference in Barcelona.

“At this point, it’s more pointing to the second quarter as more probable (but) it could still be first quarter,” Carter said.

Read More: T-Mobile, Sprint say $26 billion deal would give US tech lead over China

Both the agencies did not immediately respond to requests for comment.

The agreement between the third and fourth largest U.S. wireless carriers in April was reached after four years of on-and-off talks that set the stage for the creation of a company that would compete more favorably with the top two wireless players, Verizon Communications and AT&T.

Their first round of merger talks had ended unsuccessfully in 2014 after the then Obama administration expressed antitrust concerns.

Carter said on Friday the companies have provided 25 million pages worth of documents to the DoJ, filed 600 pages public information statement with the FCC and held meetings with other U.S. government departments.

The two companies have also defended their deal by saying they need to merge to build the next generation of 5G wireless technology in a robust nationwide network.

“The combined assets of Sprint and T-Mobile can create 8 times the 5G capacity that either of us could do on a standalone basis and 15 times the speed,” Carter said.

Telecom companies are pegging their future success on implementation of 5G networks, which are expected to be at least 100 times faster than current 4G networks and cut latency, allowing for innovations in a number of fields.

Governments have started auctioning 5G spectrum on both sides of the Atlantic.

The FCC on Wednesday launched the agency’s first high-band 5G spectrum auction while Germany is expected to start its 5G auctions in early 2019.

There would be “very, very significant” revenue synergies in the new company resulting from the merger, Carter said at the conference.

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PTI govt grapples with an old problem: How to get people to pay taxes

ISLAMABAD: Muhammad Hammad Azhar, one of the youngest ministers in Pakistan’s new government, is the latest in a long line of officials to face a problem that undermines his country’s development: getting people to start paying income taxes.

Ending a culture of rampant tax evasion is expected to be high on the agenda in negotiations this month with the International Monetary Fund (IMF) as cash-strapped Pakistan seeks a second bailout since 2013.

As state minister for revenue, Azhar, 37, says he is planning for long-term reforms. But first, he is banking on improved technology to allow the government to tap existing financial databases to help identify tax dodgers in a nation where less than 1 percent of the population even files income tax returns.

“There is a lot of catching up to do,” Azhar told Reuters in an interview.

One of the world’s lowest tax collection rates partly help explain the shoddy state of Pakistan’s hospitals and schools, and why the illiteracy rate hovers above 40 percent in the mainly Muslim nation of 208 million people.

Prime Minister Imran Khan, who took power in August, has vowed to double tax collection by reforming the Federal Bureau of Revenue (FBR), an institution he has called “totally corrupt”. One of Khan’s first acts as premier was to replace the FBR chief.

In recent months, the FBR has launched a crackdown on 350 wealthy people targeting landlords and owners of luxury cars, as well as individuals who have a “trail of large business transactions and business deals” but don’t file tax returns.

But Pakistan’s history is filled with statements by incoming governments announcing crackdowns and pledging tax reforms that fizzle out because of a lack of political will to force the rich and powerful to pay taxes.

“Reforming the tax system in a country like ours is a gigantic task,” said Yousuf Nazar, a former head of emerging market equity investments at Citigroup in London and author of a book on Pakistan’s political economy.

“Powerful interests in the establishment, big business and large land owners are not serious about tax reform.”

To widen the base of payers, Revenue Minister Azhar said the government plans to use a carrot and stick approach: intensify targeting of evaders while at the same time making it easier for payers by allowing them to file taxes under a single window, where all the relevant information would be stored.

Azhar says his team is using existing government data on car purchases, bank transactions and air travel histories to build a database that will identify and profile wealthy tax dodgers. But it would take a few months for most of the disparate data on the government’s books to be brought under one platform.

SALES TAXES

Such efforts are likely to go down well with the IMF, which in return for bailing out Pakistan, is expected to demand it carry out structural reforms, including widening the income tax base.

The previous government increased the tax-to-GDP ratio to around 13 percent from 10.1 percent – but that is still far below the 34 percent average among members of the Organisation for Economic Co-operation and Development.

Much of the increase was due to import duties, sales taxes, and other indirect taxation, which accounts for nearly 63 percent of Pakistan government revenue. Critics say this kind of taxation is regressive and disproportionately hurts the poor.

As of last year, only 1.6 million people in the country filed tax returns. Out of them, 400,000 showed income below the levels that tax cuts in, another 200,000 had minimal tax, and only 950,000 paid tax of any significance.

There is political will among the new government to push through changes and go after non-filers but it is not unanimous across Khan’s party and may not last forever, according to Zeeshan Merchant, a tax expert.

“We don’t need rhetoric. We need action,” he said.

Key tax reforms kicked off last week when Khan’s cabinet separated tax policy from revenue collection. This effectively took away policy-making powers from the FBR, which has a history of imposing indirect taxes to help hit year-end targets.

One of the biggest potential prizes for Azhar is capturing Pakistan’s black economy, in which property, goods and services are sold for cash to avoid taxation, and which many people believe is bigger than the formal $310 billion economy.

“We really have to discourage the cash economy,” Azhar said. “All this money is handed in cash under the table, and that’s something we want to make difficult.”

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Pakistan Britain, Scotland business councils share proposal of hospitals’ network

ISLAMABAD: A delegation of Pakistan Britain, Scotland business councils on Friday shared the proposal about establishment of a network of hospitals across Pakistan with Finance Minister Asad Umar during a meeting.

The delegation of Pakistan Britain Business Council and its sister organisation, Pakistan Scotland Business Council led by Julian Hamilton Barns and Rashid Iqbal was received by Asad Umar in Islamabad.

The delegation said the network of hospitals would be aimed at providing quality healthcare to the people.

Read More: PM discusses proposals for economy uplift with business leaders

The councils could muster financial support from Pakistani diaspora, international financiers, philanthropists and other financing institutions towards this end, the delegation said.

The delegation also apprised the finance minister about the councils’ interaction with the Pakistan diaspora in the UK and in other countries and said they were especially keen to invest in Pakistan.

Asad Umar welcomed the initiative by the councils and assured of all possible support from the government.

He asked the delegation for a formal proposal in this regard which could serve as the basis for developing future cooperation. He said the present government highly appreciated such initiatives and had a resolve to facilitate international investors in every possible manner.

The councils’ members briefed the minister about their plans for investment and financing different projects in Pakistan including health, financial sector and other areas.

Meanwhile, the minister also met a delegation of the Federation of Pakistan Chambers of Commerce & Industry, KP, led by Ghazanfar Bilour. The delegation discussed with him the overall business environment in KP and matters relating to enhancing exports to Afghanistan.

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Government prepares to reallocate LNG terminals to appropriate site

ISLAMABAD: The Ministry of Maritime Affairs has affirmed that the existing liquefied natural gas (LNG) terminals have been positioned without any detailed study related to safety vulnerability, therefore, the government is preparing to reallocate these terminals to other appropriate sites with safety measures.

According to sources, the government has commissioned the Ministry of Maritime Affairs to prepare a cost-benefit analysis and a detailed study for shifting the existing LNG terminals to some other place, keeping safety in mind. It is also directed to carry out study in discussion with the Petroleum Division to evaluate the conditions for setting up new LNG terminals in the country.

Also, the ministry is consigned the duty of safety of ports and regulation of matters related to hazardous shipments.

In a latest meeting of the Economic Coordination Committee (ECC), officials of the ministry stated that the Port Qasim Authority (PQA) board, in its meeting on May 7, 2011 and August 10, 2011, had acknowledged Jhari Creek as most suitable region for LNG terminals.

However, with reference to the previous records, no sovereign technical studies could be commenced till date. An independent study was suggested in order to make sure compliance with industrial safety principles and zero shock on standard port traffic. The committee was informed that the terminals were built on the main PQA channel adjacent to the proposal of the authority, which effected in overcrowding on all berths. Due to this, a major quantity of foreign exchange is being remunerated in demurrages.

Furthermore, the Ministry of Maritime Affairs informed the meeting that the PQA board, in its meeting held on September 13, 2018, had accepted temporary allocation of two supplementary sites for LNG terminals, to which the PQA board was appealed to reassess it.

Also, the ministry had presented a commendation that the LNG Policy 2011 should be revised so as to replicate the NOC from the Sindh Environmental Protection Agency (Sepa), QRA study and the navigational simulation study executed on an appropriate locality selected by the Ministry of Maritime Affairs and port authorities abiding the particular LNG zone covering sanctuary, safety, environmental and traffic features.

It is also observed, that the ministry also suggested that the recognized LNG import terminals for securing another gas supplies may be expelled from the purview of Pakistan LNG Terminals Limited (PLTL) under the Petroleum Division.

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Hotel chains apologise after dirty cleaning expose

The Ritz-Cartlon and other five-star hotels in China apologised after a video exposing unhygienic cleaning practises went viral online this week in the latest health and safety scandal to rock the country.

Despite their luxury standards and high price tags, cleaning staff were shown wiping down in-room cups with the same towels and sponges used to clean showers and toilets.

Since the video was posted to Twitter-like Weibo on Wednesday, it has racked up more than 30 million views.

The video clip was apparently shot by hidden cameras set up in hotel bathrooms and titled “The Secret of the Cups”.

The video creator, who goes by the pseudonym “Huazong”, claims he has stayed at 147 five-star and boutique hotels over the past six years.

The outcry also attracted the attention of regulators, who promised an investigation. It follows a scandal this summer that rocked the country when a manufacturer of rabies vaccines was found to have produced sub-standard vaccines.

The Ritz-Carlton in Shanghai said it carried out an investigation after the video exposed one of its cleaners, who had been found using the same towel to clean the shower glass, floor, counter and cups.

The cleaner had received training on proper room cleaning, the hotel said.

“But the actual practises on that day did not follow the cleaning standards for room cleaning, we are deeply sorry for this,” the hotel apologised in a statement posted to its Weibo account, adding staff would be retrained.

A cleaning woman at the Four Seasons in Shanghai was shown using the same sponge to clean the shower, counter and cups.

“We sincerely apologise for what has occurred and we are currently investigating this matter with the highest diligence,” said hotel spokeswoman Chloe Qian.

Other hotels highlighted in the expose included The Peninsula in Beijing, the Waldorf Astoria Shanghai, and the Sheraton Nanchang Hotel.

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Students to get 50 percent discount on railways’ fare in winter vacations

LAHORE: Minister for Railways Sheikh Rasheed Ahmed on Saturday said his ministry will seek help of Chief Justice of Pakistan (CJP) and National Accountability Bureau (NAB) in the matter of occupation over its [railways] lands.

Briefing the media here in Lahore after chairing a meeting at Railways headquarters to review the progress of PR, he said his ministry is going to facilitate physically challenged people, in order to make their railway journey easier.

The minister in yet another big announcement from Pakistan Railways said” there will be 50 percent discount for the students, in the wake of winter vacations (from December 25 to January 10) aimed at to attract them to utilize railway for their trips during vacations.

Mr Rasheed said steps are being taken for the revival of the PR with the help its officers and labourers, adding recent induction of 10 new trains is the ministry’s fleet is its “proof.”

Moving one step further for the revival, Sheikh Rasheed also announced to set-up a new railway platform at Rohri railway station.

Issuing the warning to the officers of the Pakistan railways, Sheikh Rasheed said “the officers who do not go in field, will be discharged from his or her duties”.

The minister without taking anyone’s name contented “those playing in the name of “Falooda Wala” and “Welder” will go behind the bars.”

Answering to a question during the presser, Sheikh Rasheed said recent visit of Prime Minister was one of the “most successful” visit in the country’s history, adding benefits to follow soon.

Sheikh Rasheed while commenting on the disgruntled Pakistan Mulsim League leader, Chaudhry Nisar, said “neither he is going in PML-N nor joining Pakistan Tehreek-e-Insaaf (PTI).

About the Federal Minister for Information and Broadcasting, Fawad Chaudhry, the railways minister said he is working in best way.

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Asad Umar lauds National Financial Inclusion Strategy

ISLAMABAD: Finance Minister Asad Umar on Saturday chaired a meeting of the Economic Advisory Council’s (EAC) Sub-Groups on National Financial Inclusion Strategy (NFIS) and Fiscal Sector in Islamabad.

The meeting was attended by all major stakeholders and members of the sub-group from the Ministry of Finance, State Bank of Pakistan, Federal Board of Revenue and Security and Exchange Commission of Pakistan.

State Bank of Pakistan (SBP) Governor Tariq Bajwa presented a National Financial Inclusion Strategy to improve quality and increase access to financial services in Pakistan.

He outlined targets and necessary policy actions to be taken at various levels in the coming years to achieve these targets.

The discussion revolved around fast-tracking digitization of financial services to reach out larger number of consumers, small and medium business and newly emerging entrepreneurs throughout country.

The minister appreciated the strategy and emphasized on diligently time-lining the goals, targets and actions to be taken, and cautioned against delaying the implementation process of the strategy.

In the fiscal policy sub-group meeting, FBR representatives gave a presentation on the problems currently ailing tax administration system in Pakistan, and ad-hoc-ism of tax policy; it was noted that these issues consequently lead to low tax collection contributing to massive fiscal imbalances.

The Sub-groups also considered solutions to fix crippling tax system of Pakistan by recommending policy measures targeting two major areas, tax administration and tax policy. It was noted that information technology had a greater role in getting more and more people into tax net, and spotting tax-avoiders.

Also coherent and continuous coordination among the federal government and the provincial governments is of paramount importance in avoiding incidence of double-taxation.

Asad Umar issued directives for setting timelines of various proposed administrative and policy reforms so that the huge fiscal burden facing our economy is reduced to minimal possible level and the government gets much needed fiscal space.

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