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Toyota plans truck, possibly SUV production in Mexico despite Trump threat

MEXICO CITY (REUTERS): Toyota Motor Corp on Friday said it planned to build pickup trucks and possibly SUVs at a new plant in Mexico, a move that followed threats by US President Donald Trump to penalize the company if it built small cars south of the border.

Toyota initially planned to produce Corolla sedans at the plant it is building in the central state of Guanajuato but will now switch production of the small cars and a new Mazda SUV crossover to a new assembly plant planned for the United States.

Trump in January had threatened to impose a hefty fee on the world’s largest automaker if it built Corollas for the US market in Mexico.

Toyota de Mexico spokesman Luis Lozano said the global auto maker would study producing SUVs in Guanajuato, in addition to the Tacoma truck model.

“We’re going to concentrate only on pickups at the beginning and are studying the potential for SUVs in the future,” he said, adding that trucks and SUVs represented some 65 percent of the North American market.

The decision came as Toyota planned to take a 5 percent share of smaller Japanese rival Mazda Motor Corp as part of an alliance that will see the two build a $1.6 billion US assembly plant and work together on electric vehicles.

A move to produce SUVs in Guanajuato would mark a continuation of a “burgeoning trend” of Mexican manufacturing meeting quality standards needed to produce more expensive vehicles, said Christopher Wilson of the Woodrow Wilson International Center.

“Instead of building lower value cars that generally offer smaller margins in Mexico and keeping high-value SUV and luxury model production in the US, they are moving in the opposite direction,” said Wilson, deputy director of the think tank’s Mexico institute.

“The moves by Toyota seem to be designed to reduce political pressure on the company from President Trump,” he added.

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APTMA urges newly elected PM to reduce cost of doing business

KARACHI: All Pakistan Textile Mills Association (APTMA) Acting Chairman Zahid Mazhar has congratulated Shahid Khaqan Abbasi on assuming the office of prime minister of Pakistan and hoped that he will leave no stone unturned for the revival of the textile industry and would take steps towards bringing it to its true worth even in the short span of 45 days.

In a statement, he said that Abbasi is a seasoned parliamentarian and businessman and his appointment as prime minister for the interim period is the right step in the right direction as being the federal minister for petroleum & natural resources for last 4 years he knows the problems and issues of the textile industry which is the backbone of Pakistan’s economy.

The acting chairman APTMA reminded the new government of Shahid Khaqan Abbasi that the trade deficit for the last financial year was recorded at an all-time high at $ 32.58 billion, imports at $ 53 billion while exports were recorded merely at $ 20.45 billion, the lowest after 2009-10.

The new prime minister has therefore taken charge when the condition of the economy has reached a very alarming stage. Referring to the Prime Minister of Pakistan Shahid Khaqan Abbasi’s maiden speech in the parliament after becoming the prime minister, that he will perform the work of 45 months during his 45 days tenure, he requested him to place the revival of the economy and the textile industry on the top of his agenda.

He further said that nobody from the government so far has taken any serious notice of the continuous decline in the exports, and hoped that the Abbasi and his cabinet would prove to be a catalyst of change and take immediate steps to stop the drastic decline in exports during last four years, as any further negligence or delay will take the economy to a point of no return.

He also suggested the new PM to remain engaged with APTMA for arriving at workable solutions to solve the problems being faced by the Textile Industry.

He said that the Textile Industry of Pakistan is capable enough to bring the economy out of the current disastrous condition. It can generate employment and at the same time achieve the export target of $ 36 billion at 12 per cent of the GDP, provided immediate decisions and policies are made to support it. He said that the country in order to survive has to reach annual GDP growth of 8 per cent which is only possible if the government immediately starts giving attention to the export sectors especially the textile industry.

He said that the textile industry has been hit hard due to the high cost of energy with regards to both gas and electricity resulting in making Pakistan’s exports uncompetitive in the global market as the cost of production of both gas and electricity is about 30 per cent higher than the regional competing countries.

The government should remove the levy of Gas Infrastructure Development Cess (GIDC) on the system gas. He further demanded that the government should provide gas at the regionally competitive rate of Rs 400/MMBTU as was earlier announced by ECC in November 2016 but was not implemented. The rate of RLNG should also be reduced to a rational level. Similarly, the electricity tariff for independent feeders should be brought down to Rs 7 kWh without levy of any fuel surcharge. All this is hurting the viability of the industry by increasing the cost of doing business which cannot be passed on to the international buyers.

He demanded the new prime minister to issue instructions to the Federal Board of Revenue to ensure payment of outstanding sales tax refund of over Rs 200 billion by August 14, 2017, as promised by the previous government. The industry is facing severe liquidity crunch due to delay in payment of their sales tax refund as further delay will lead to disastrous consequences. He further demanded immediate payment of all refunds for which RPOs have been issued and processing of refunds of which RPOs are yet to be issued.

Zahid Mazhar further demanded the immediate implementation of Rs 180 billion export-led growth package announced in January this year for textile industry by Mian Muhammad Nawaz Sharif.


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Apple, Huawei, Amazon gain in sluggish tablet market

WASHINGTON (APP): Apple, Huawei and Amazon boosted tablet sales over the past quarter, despite the ongoing slump in the overall market for the devices, surveys showed Thursday.

Overall tablet sales dropped 3.4 per cent from the same period last year to 37.9 million, according to a survey by research firm IDC.

Apple’s nearly 15 per cent boost in iPad sales from a year ago gave it a 30 per cent share of the global market, IDC said.

IDC said Apple’s gains came from consolidating its lineup and introducing new tablets, including a 10.5 inch iPad Pro, which encouraged some consumers to upgrade.

Samsung remained the number two vendor with a 15.8 per cent market shares as sales dipped one per cent, the report said.

China-based Huawei meanwhile bucked the overall trend with a strong 47 per cent gain in sales, vaulting to the number three position with an eight per cent market share, the research firm reported.

IDC estimated that Amazon — whose sales figures are not reported — boosted its Fire tablet sales by 51 per cent from last year to capture the fourth spot at 6.4 per cent.

China’s Lenovo was fifth with a 5.7 per cent market shares as sales dropped 14.6 per cent from last year, the report said.

A separate survey by strategy analytics estimated a seven percent decline in global tablet sales to 43.8 million units in the April-June period.


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Deputy governor SBP admits he called for depreciation of PKR on 5th of July

Web Desk

Islamabad: In front of a parliamentary panel on Wednesday, Deputy governor State Bank of Pakistan (SBP), Riaz Riazuddin admitted that the decision to depreciate the rupee on the 5th of July was taken on his own.

In a briefing to the Senate Standing Committee on Finance, Riazuddin defended his action of not taking the finance ministry into confidence before taking such a momentous decision.

He added he took this decision in capacity of his position as acting governor of the central bank under the SBP Act of 1956 which permitted him to act independently without consulting the finance ministry.

He explained to the parliamentarians the rationale behind this decision. Riazuddin said the rising external sector deficit and foreign debt repayments had forced him to call for the depreciation of the PKR in the open-market.

According to Chairman Senate Standing Committee, Saleem Mandviwalla  he didn’t feel there was any conspiracy behind the depreciation of the PKR and believed the decision taken by Riaz Riazuddin was right in those circumstances.

On 5th of July, Pakistan rupee (PKR) had fallen sharply both in the interbank and kerb market to reach a 2.5 year high of Rs108 from Rs104.91 the previous day. The PKR had remained relatively stable since August 2015, and according to a Topline Security report, the currency has devalued annually by 5 percent in the last decade or so.


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Study predicts cement exports may fall to 15% YoY

Web Desk

Karachi: According to a Topline Security report, the country’s cement sales have started on a positive note during July, which is the first month of new financial year 2017-18.

The report predicted that it is expected for total cement dispatches to grow 32-36pc year on year (YoY) in July 2017, as per their sources. It has also forecast a monthly growth of 13-17pc in cement sales.

Topline stated that a 44-47pc YoY growth in local dispatches of cement are expected in the outgoing month due to lower number of working days as a result of eid holidays last year in July.

Local sales of cement are expected to rise 8pc YoY during FY 2017-18 and 5pc growth is estimated in local dispatches YoY.

Capacity utilization is predicted to be at 89pc during FY 2017-18 in comparison to 87pc in FY 2016-17. Exports have been estimated to register a decline of 15pc YoY.

Export dispatches aren’t expected to improve, as there is a lull in demand of Pakistani cement in the Afghani market where sales are said to have fallen and the manufacturers attention on domestic consumption as compared to same period last year (SPLY).



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South Asia becomes global LNG hotspot

DHAKA (REUTERS): South Asia, long a backwater for energy markets, is emerging as a hotspot for liquefied natural gas (LNG), with Pakistan and Bangladesh set to join India as major consumers, helping to ease global oversupply that has dogged this market for years.

Only India and Pakistan currently import LNG in South Asia, taking in a combined 25 million tonnes, or eight per cent of global demand last year.

But with a fast-growing population, strong economic growth and soaring energy demand, more import projects are being developed, led by Pakistan and Bangladesh.

“Both countries already have extensive gas infrastructure due to legacy production from domestic gas fields,” said Chong Zhi Xin, principal Asia LNG analyst at energy consultancy Wood Mackenzie.

“As domestic production has failed to keep up with demand, both markets are a natural fit for LNG imports.” Pakistan only started importing its first LNG in 2015, and surprised some in the industry by developing its first terminal within schedule and budget.

A second is about to become operational and a third is expected to be completed next year.

With Bangladesh set to join the club of importers next year, the region could import 80-100m tonnes a year by the mid 2020s, analysts said, making it the world’s second biggest import region, ahead of Europe.

Last year’s LNG imports by India, Pakistan were 25m tonnes, or 8pc of global demand

Bangladesh, a country of over 160m people, could import as much as 2,500m cubic feet per day (mmcfd) of LNG, equivalent to around 17.5m tonnes per year, by 2025, said Nasrul Hamid, Bangladesh’s state minister for energy and power.

With its own gas reserves depleting and seeking to almost double power capacity to 24,000-megawatt by 2021, Bangladesh is tapping cheap and plentiful supplies on world markets and investing heavily in LNG.

Several floating storage and regasification units (FSRU), the first developed by private US company Excelerate Energy, are due to begin importing cargoes starting in 2018.

“We are working on two FSRUs from which gas will start flowing (by) next July,” Mr Hamid told Reuters.

Both FSRUs will be deployed off Moheshkhali Island in the Bay of Bengal, in the southeast of the country. They will have a combined capacity of 7.5m tonnes a year.

Two more FSRUs are planned, though no exact dates have been finalised. In addition, state-run Petro­bangla signed a preliminary deal with India’s Petronet in December to set up an onshore terminal to regasify a further 7.5m tonnes a year of LNG on Kutubdia Island, just to the north of Moheshkhali, at a cost of $950m.

“By 2025, depending on our national demand, we will import anywhere from 2,000 to 2,500mmcfd gas,” Mr Hamid said.

Those imports would add to plans from India and Pakistan to buy 50m and 30m tonnes of LNG per year, respectively, by the mid-2020s.

“LNG imports in South Asia are expected to rise four-fold from 22m tonnes per year in 2016 to over 80m tonnes per year by 2030,” said Mangesh Patankar, head of Asia/Pacific business development at energy consultancy Galway Group.

Should all plans in the region go ahead and Sri Lanka also start imports, this figure could rise to 100m tonnes, industry data shows.

That would push South Asia’s demand ahead of Europe as the world’s second biggest LNG import region by 2020, though it would still lag North Asia’s 150m tonnes of annual imports.

The boom in demand will help ease oversupply in LNG markets, which have resulted in a more than 70pc price fall from their 2014 peaks to $5.75 per million British thermal units.

Mr Hamid said Bangladesh was in talks with Qatar’s RasGas and Indonesia’s Pertamina for long-term deals, while it also planned to import significant amounts of its future demand via the freely traded spot market.

“We are looking for a mixture of both long-term contracts and the spot market,” Mr Hamid said.

Rupantarita Prakritik Gas, part of Petrobangla, in June posted a notice looking for LNG suppliers for spot cargoes from 2018.

Not everyone believes Bangladesh and Pakistan will achieve their LNG ambitions.

“It is likely to be an overly ambitious target… China took more than 10 years to reach 20m tonnes of LNG imports. In India, it took 13 years to reach the same amount,” said Mr Chong.


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Govt to borrow Rs3.75tr in 3 month

F.P. Report

KARACHI: The government will borrow Rs3.75 trillion from the banking system in August-October, the State Bank of Pakistan (SBP) reported on Wednesday.

The government will borrow Rs3.45tr through market treasury bills (MTBs) and Rs300 billion through Pakistan Investment Bonds (PIBs) in the three-month period.

The government, which depends largely on domestic and foreign borrowing, will raise Rs304.6bn in addition to the maturing amount of about Rs3.39tr during this period.

The government has been borrowing heavily from the banking system for the last four years. This has put enormous pressure on banks’ liquidity.

The government changed its strategy in 2016-17 and started borrowing from the central bank, leaving the liquidity of scheduled banks for the private sector. Resultantly, the private sector borrowed Rs748bn from banks.

However, the growing need for revenue in the final year of the government can turn its attention towards scheduled banks again.

The government depends on indirect taxes and borrowing from the banking system as it failed to increase direct taxes or improve the tax-to-GDP ratio.

The government is going to need heavy funds to finish important projects in the election year. Despite heavy borrowing from the central bank in 2016-17, the government borrowed Rs361bn from scheduled banks.

However, it was still less than Rs1.36tr borrowed in 2015-16.

The government started borrowing from scheduled banks in the last quarter of 2016-17.

The government has not been borrowing through long-term PIBs for the last couple of years. It will borrow Rs300bn through PIBs in August-October while the maturing amount is about Rs116.4bn. This means the government will raise additional Rs183.6bn over the three-month period.

The government raised Rs722bn through MTBs on Wednesday.

The biggest chunk was raised through three-month papers, reflecting the cautious approach of banks.

The government raised Rs575bn for three-month, Rs133bn for six-month and Rs17bn for 12-month papers.

Although inflation was relatively low in July, the market expects the consumer price index to go up in coming months.



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Oil prices decline 1pc due to high OPEC output

SINGAPORE: Oil prices fell by 1 percent on Wednesday, with rising U.S. fuel inventories pulling U.S. crude back below $50 per barrel, while ongoing high OPEC supplies weighed on international prices.

U.S. West Texas Intermediate (WTI) crude was at $48.63 per barrel at 0735 GMT, down 53 cents, or 1 percent, from its last settlement. That came after the contract opened above $50 for the first time since May 25 on Tuesday.

Brent crude, the international oil benchmark, was down 49 cents, down 1 percent from the previous close, at $51.29 per barrel.

The American Petroleum Institute’s (API) said that U.S. crude stocks rose by 1.8 million barrels in the week ending July 28 to 488.8 million, denting hopes that recent inventory draws were a sign of a tightening U.S. market.

Official storage figures are due to be published by the U.S. Energy Information Administration later on Wednesday.

Outside the United States, Brent was pulled down by reports this week showing production from the Organization of the Petroleum Exporting Countries (OPEC) at a 2017 high of 33 million barrels per day (bpd). That is despite OPEC’s pledge to restrict output along with other non-OPEC producers, including Russia, by 1.8 million bpd between January this year and March 2018.

The Economist Intelligence Unit said that despite the cuts “the global market remains oversupplied,” and it warned that “there is no guarantee that further cuts will be sufficient to rebalance the oversupplied global oil market.”

Likely acting as a further lid on prices is that, according to U.S. bank Goldman Sachs, second quarter company results had shown that oil majors “are adapting to $50 per barrel oil prices and can afford to pay dividends in cash” at that level.

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Oil down one per cent on surprise rise in US inventories, high OPEC output

SINGAPORE (REUTERS): Oil prices fell one per cent on Wednesday, with rising US fuel inventories pulling US crude back below $50 per barrel, while ongoing high supplies from producer club OPEC weighed on international prices.

US West Texas Intermediate (WTI) crude futures were at $48.68 per barrel at 0303 GMT, down 48 cents, or one per cent, from their last settlement. That came after the contract opened above $50 for the first time since May 25 on Tuesday.

Brent crude futures, the international benchmark for oil prices, were down 47 cents — almost one per cent — at $51.31 per barrel.

“The coup de grace came from the American Petroleum Institute’s (API) Crude Inventory release late in the New York session…bringing an end to the last few weeks’ trend of falling supplies in storage,” said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.

“Traders stampeded for the door to lock in profits from the last eight days’ bull-run,” he added.

The API said that US crude stocks rose by 1.8 million barrels in the week ending July 28 to 488.8 million, hitting hopes that recent inventory draws were a sign of a tightening US market.

Official storage figures are due to be published by the US Energy Information Administration (EIA) late on Wednesday.

Outside the United States, prices were pegged back by a survey this week that showed production by the Organization of the Petroleum Exporting Countries (OPEC) hit a 2017 high of 33 million barrels per day (bpd) — despite its pledge to restrict output together with other OPEC producers, including Russia, by 1.8 million bpd between January this year and March 2018.

Because of rising output, energy consultancy Douglas Westwood said oversupply would return soon, and last for years.

“Oversupply will actually return in 2018. This is due to the start-up of fields sanctioned prior to the downturn,” said Steve Robertson, head of research for the firm’s Global Oilfield Services. “This is in addition to the production gains through increased investment and activity in the US unconventional (shale) space.”

Douglas Westwood said it expected oversupply to last until 2021.

Robertson said that “external factors such as major interruptions to supply from political or weather-related events can shift the balance quickly”.

But he warned that “any expectations of recovery based upon optimism or wishful thinking along ‘it always bounces back’ should be tempered by a reality check, and the very real possibility that the current recovery could take much longer to materialize”


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Sanctions imposed on Qatar do not violate WTO agreements, says UAE official

DUBAIEconomic sanctions imposed on Qatar by three fellow Gulf states do not violate World Trade Organisation agreements, a United Arab Emirates official said after Doha launched a wide-ranging legal complaint at the Geneva-based body this week.

The UAE, Saudi Arabia and Bahrain cut ties with Qatar – a major global gas supplier and host to the biggest U.S. military base in the Middle East – on June 5, accusing it of backing militant groups and arch foe Iran, allegations Doha denies. Qatar made the formal protest at the WTO on Monday by “requesting consultations” with the three countries, triggering a 60-day deadline for them to settle the complaint or face litigation at the WTO and potential retaliatory trade sanctions.

“The sanctions imposed by the UAE, Saudi Arabia and Bahrain did not contradict the agreements of the WTO,” UAE state news agency WAMquoted Juma Mohammed al-Kait, an assistant undersecretary in the Economy Ministry, as saying late on Tuesday.

In what appeared to be the first response to the Qatari move, he said the boycott – which included the severing of diplomatic and travel ties – was in line with articles 21 and article 14 of the General Agreement on Trade in Services (GATS), which allows such moves in the case of security exceptions. The boycotting countries have previously told the WTO they would cite national security to justify their actions against Qatar, using an almost unprecedented exemption allowed under the WTO rules.

Kait said the agreements did not prevent WTO member states from using economic sanctions to protect basic security interests, or from carrying out the commitments in the United Nations Charter to maintain peace and security, WAM reported. The WTO suit does not include Egypt, the fourth country involved in the boycott.

Western-backed efforts by Gulf state Kuwait to mediate have yielded little progress so far. The disputed trade restrictions include Gulf bans on trade through Qatar’s ports and travel by Qatari citizens to the three Gulf countries, blockages of Qatari digital services, closure of sea borders and the closure of airspace to Qatari aircraft.