Pakistan Economy Recovering: Car Sales Up 72%; Cement Sales Rise 16.89%

Pakistan auto industry is booming. Toyota, Suzuki and Honda factories are working around the clock in the southern port city of Karachi and eastern city of Lahore -- yet customers can still wait for up to four months for new vehicles to be delivered, according to media reports. At the same time, increased construction activity is visible everywhere in the country.

Local car sales, excluding imported cars, jumped to 54,812 units in the first three months (Jul-Sep) of fiscal year 2016, up 72% from 31,899 units in the same period of last year, according to data released by the Pakistan Automotive Manufacturers Association (PAMA).

Pak Suzuki led the pack with 33,770 units followed by Indus Motors (Toyota) 14,767 cars and Honda Motors 6,184 units. Industry analysts at Topline Securities expect local car sales to reach 203,653 units during the current fiscal year.

Car sales (excluding imported ones) in Pakistan grew at a five-year (FY11-15) compound annual growth rate (CAGR) of just 5.3% to 179,953 units. While volumes surged by 31% in fiscal year 2015 (FY15) on the back of the new model of Toyota Corolla, Punjab taxi scheme and an increase in car financing due to 42-year low interest rates in the country also helped, according to Express Tribune newspaper. “We forecast local car sales to grow at 13% in FY16 to reach 203,653 units,” Topline Securities reported on Monday.

In addition to car sales, domestic cement sales have also jumped by a phenomenal 16.89% to 4.29 million tons during July and August 2015 from 3.67 million tons shipped in the same period last year.

Car sales and construction activity are both believed to be driven by low interest rate financing available from banks and improved security situation across the country. With record low inflation, the State Bank of Pakistan (SBP), the nation's central bank, has cut discount rate to a 42-year low of 6%.

After its September meeting, the SBP said the rise in fixed investment financing in the energy generation and distribution, chemicals and services sectors signal possible increase in their productive activity in coming months. “The implementation of infrastructure development and energy projects under the China-Pakistan Economic Corridor (CPEC) will further enhance the improving investment environment. Therefore, there is anticipation of higher economic activity in 2015-16, which is expected to boost credit uptake,” it said.

Per Capita Cement Consumption Source: Global Cement

A dramatic decline in terrorist violence in the country since the launch of Pakistan Army's Operation Zarb-e-Azb and a big drop in international oil prices have helped drive economic recovery in the country in recent months.

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Comment by Riaz Haq on November 23, 2015 at 10:19pm

Goldman Sachs Bullish on #Pakistan, #Vietnam, #Philippines, #India. #EM #FM http://seekingalpha.com/article/3706876-goldman-sachs-improves-outl... … $EEM $PAK $VNM $VNMHF $VCVOF $INDY $EPHE

Vietnam, Pakistan, The Philippines, and India are superior destinations for investment in Asia.

A rebound in copper prices provides opportunity for Chile, which has a strong banking industry and is achieving moderate growth.

Nigeria and Colombia should be considered as options to profit from a recovery in oil prices.

I am extremely bullish on frontier and emerging markets, which have quite frankly taken a beating in some areas. Filtering between what is good value in emerging markets provides ample potential, and this is achieved both through the selection of superior countries and superior funds or companies in these countries. Investors should generally only focus their attention on frontier and emerging markets with high growth and low FX losses, and consider the superiority of actively managed funds, which are able to outperform ETFs. Fundamentals are superior to price movement, and the irrational loss of investor confidence in emerging markets has created a large number of buy opportunities. Investors negative sentiment towards a country is fortunately not able to deter the strong economic growth of countries and the high earnings of international companies. The economic and earnings growth both present the ability for investors to construct a portfolio that is good value despite volatility, and to profit if willing to take a long term horizon.

The iShares MSCI Emerging Market ETF (NYSEARCA:EEM) has had a YTD loss of 10.59%, yet using this fund's performance as a representation drastically relegates the potential of emerging markets, as there are certainly superior approaches towards investing in emerging markets. One fund can certainly not represent an emerging market, and each emerging market has a strategic buy and sell time, due to the strong volatility and varying factors that are causing the funds to drop. Therefore, I respectfully suggest the most superior way to capture the growth of emerging markets is to buy into several funds or companies, and to choose actively managed funds when possible.

Comment by Riaz Haq on December 10, 2015 at 9:52pm

#Pakistan gets $8b in #remittances from overseas #Pakistanis in first 5 months of current fiscal year. Up 7.6% YoY http://tribune.com.pk/story/1007907/5mfy16-pakistan-pockets-8b-in-r... … …

Overseas Pakistanis sent remittances amounting to $8 billion in the first five months of 2015-16, which translates into a year-on-year increase of 7.6%, according to data released by the State Bank of Pakistan (SBP) on Thursday.

Remittances amounted to a little less than $7.5 billion in the same months of the preceding fiscal year. They amounted to almost $1.6 billion in November alone, which is 3.3% higher than the remittances received in the preceding month, SBP data shows.

Pakistanis based in foreign countries sent home $18.4 billion in 2014-15, which translated into a year-on-year increase of 16.5%.

Inflows from Saudi Arabia were the largest source of remittances in July-November. They amounted to nearly $2.4 billion in the five months, up 11.2% from the corresponding period of the last year.

Remittances received in July-November from the United Arab Emirates (UAE) increased 12.3% to almost $1.8 billion on a year-on-year basis. Inflows from the UAE had registered the largest increase (26.1%) from any major remittance-sending country in 2014-15, SBP data shows.

In the last five months of the current fiscal year, remittances from Dubai have surged 45.8% year-on-year. But the figure for overall inflows from the UAE so far has remained subdued because of a 26% annual decline in remittances from Abu Dhabi over the same period.

Remittances from the United States and the United Kingdom remained $1.1 billion and $1 billion, respectively, in July-November. The year-on-year change in remittances from the US and the UK has been -1.5% and 4.4%, respectively.

Remittances from Gulf Cooperation Council (GCC) countries, excluding Saudi Arabia and the UAE, clocked up at $960.5 million in July-November, which is 11.8% higher than the remittances received from these countries in the same months of the preceding fiscal year.

Comment by Riaz Haq on December 15, 2015 at 8:31am

Improved Security Situation Drives Property Boom in #Karachi #Pakistan. 22% jump in prices #KarachiOperation http://bloom.bg/1OstBrT 

Anyone who bought property during the bloody carnage in Pakistan’s biggest city over the past few years is now cashing in.
Property prices are growing faster in Karachi than in any other major Pakistani city this year as the streets become safer following a security blitz that began in September 2013. Police have counted 68 murder-free days from August 2014 until early December, and the average number of daily killings has dropped to four from about seven.

“Karachi’s market, especially, has us on the edge of our seats,” said Zeeshan Ali Khan, chief executive officer of Zameen.com, which claims to run Pakistan’s largest property website. Sales have “grazed peak after peak” following the security operation, he said.
The safer streets reflect efforts by Pakistani authorities to clamp down on terrorism and organized crime that has deterred investment. More commerce in one of the world’s fastest-growing megacities will also help the national economy: Karachi generates about half of Pakistan’s tax revenue and is home to the country’s stock exchange and central bank.
“Now people have hope things will get better, and Karachi is the place they should be investing,” Arif Habib, chairman of Karachi-based conglomerate Arif Habib group, said in a Dec. 7 interview. “One year ago people were concerned to invest in their businesses in such a situation, or even expand.”
22 Percent Jump
Average property prices in Karachi increased 22 percent to 7,234 rupees ($70) per square foot in October compared with a year earlier, according to Zameen.com. By contrast, real estate prices rose 14 percent in Lahore and fell 5.5 percent in Islamabad, the capital.
A reduction in extortion is helping to drive demand in middle-class neighborhoods of Karachi, according to Faraz Arif, head of research and marketing at Arif Habib Dolmen REIT Management Ltd. Previously, some potential buyers would have to pay about 20 percent of the purchase price to gangs in cash, he said.

“For them the difference is significant," Arif said in an interview. “Now those people are more confident.”
Pakistan’s economy is forecast to expand 5.5 percent, the most in nine years, as Prime Minister Nawaz Sharif and a more assertive army chief take steps to tackle power shortages and Islamic militancy that have held back growth. His government is also seeking to narrow the fiscal deficit and sell stakes in state-run companies to meet conditions on a $6.6 billion International Monetary Fund loan.
Army Chief
Better security in Karachi is key to Pakistan’s long-term growth prospects. The city once served as the base for Khalid Sheikh Mohammed, the self-proclaimed mastermind of the Sept. 11, 2001, attacks in New York. Wall Street Journal reporter Daniel Pearl was murdered here in 2002. More than 13,000 people were killed in Karachi since January 2011 -- almost double the number of U.S. military personnel that died in the Iraq and Afghan wars.
While Nawaz Sharif’s government authorized the police in Karachi and paramilitary forces to clean up the city, much of the credit for the improved security has gone to army chief Raheel Sharif, no relation to the prime minister.

Since Taliban militants killed more than 130 students at a military school last December, the military has stepped up a campaign to flush them out of areas along the Afghan border. In Karachi, authorities have also gone after criminal gangs and political parties in a bid to stop turf wars that fomented the violence.
Muttahida Qaumi Movement, Karachi’s biggest political party known as MQM, has accused security forces of targeting its members instead of militant groups like the Taliban and Islamic State.
Outlook Mixed
“The operation should be focused on them," said Aminul Haq, an MQM spokesman. He added that his party was the first to support the crackdown and fully respects the army, paramilitary forces and police.

Comment by Riaz Haq on December 15, 2015 at 9:10am
Comment by Riaz Haq on December 16, 2015 at 8:57am

#Japan's #Suzuki to manufacture two new car models in #Pakistan http://tribune.com.pk/story/1010654/660-and-1600cc-variants-suzuki-...

Pak Suzuki Motor Company (PSMC), the country’s largest carmaker, is planning to introduce two fresh variants in the local market, besides setting up a manufacturing plant for spare parts at a total investment of $430 million.

Under the new auto policy – which has been pending for quite some time – the Japanese company will look to add to its existing fleet as it looks to tap a growing market. However, an official close to the development said the investment was contingent on the government extending a tax rebate similar to that being offered to new entrants in the proposed auto policy.

Corporate corner: Pak Suzuki introduces Inazuma Aegis motorbike

According to details received here on Tuesday, PSMC will introduce a smaller car in the 660cc engine category, while also introducing a 1,600cc compact SUV.

The two new variants will take up around $110 million of the total investment. The remaining amount will go in setting up the manufacturing plant for spare parts.

Details revealed that the global head of the Suzuki company shared the investment plan with the federal minister for industries in Islamabad.

PSMC has the largest share in the country’s car market dominated by three players.

Local auto sales amounted to 93,570 units in the first five months of the ongoing fiscal year, up 66% compared to the same period last fiscal year. PSMC’s share in the five-month sales stood at 58,098 units, owed largely to the Punjab government’s taxi scheme.

The auto policy

The government has been working on finalising the auto policy for some time. It is looking to attract investment, besides offering incentives to existing and new players. The ruling PML-N is also reportedly keen on bringing a German manufacturer in the Pakistani market.

While the industries ministry had forwarded the auto policy draft to the Economic Coordination Committee, the decision was deferred pending further consultation.

Pak Suzuki posts whopping increase in profit

PSMC’s plans

Kinji Saito, the global head of the Suzuki Motor Company, called on Federal Minister Ghulam Murtaza Khan Jatoi in Islamabad on Tuesday. Details revealed that Kinji informed Jatoi that the company was looking to introduce the two variants, but was hoping for a tax rebate similar to the one that could be offered to new entrants in the new auto policy.

It was further said that the price of the 660cc variant would be close to that of Suzuki Mehran’s. Jatoi, however, said its price needed to be less than that of Mehran.

It was also mentioned that Mehran and Cultus variants would be discontinued in the next five years, but are likely to be replaced with fresh models.

Jatoi, in a statement released after the meeting, welcomed the company’s plans, saying that Pakistan needed fuel efficient, eco-friendly and cheaper cars to cater to the market.

The minister said that PSMC’s share in the Pakistani market was significant, but emphasised that the company needed to bring its prices down.

“Pakistan is a big market for the auto industry, therefore special feature like safety measures, fuel economy, environment friendly and affordable prices range are particular needs of our country,” the minister said.

“We are rich in human resource while Japan owns the latest technology. We can benefit from each other’s strengths.”

Jatoi also assured the Suzuki’s Global Head that protection would be extended to all companies operating in Pakistan in the upcoming Auto Development Policy.

Comment by Riaz Haq on December 16, 2015 at 8:08pm

According to the latest figures from the IMF, Pakistan GDP reached $270 Billion mark in 2015, up from $246 Billion in 2014, an increase of $24 Billion. 

Pakistan's PPP GDP increased from $884.231billion to $930.759 Billion, an increase of $46.528 dollar

Pakistan's per capita nominal GDP for 2015 i $1,427.085, up from $1,325.790 in 2014. 

Pakistan per capita PPP GDP is $4,902 for 2015, up from $4,749 in 2014. 

http://www.imf.org/external/pubs/ft/weo/2015/02/weodata/weorept.asp...

Comment by Riaz Haq on January 10, 2016 at 9:54pm

Volkswagen's #China Partner Plans to Build VW V2 Hatchback Cars in #Pakistan in 2016 http://bloom.bg/1kYVe3Z via @business

China FAW Group Corp., a Chinese partner of Volkswagen AG, plans to start assembling cars in Pakistan to tap growing demand as measures to curb terrorism boost growth in the South Asian economy.

The company seeks to sell 10,000 vehicles, including vans, cars and pickups, in 2018 after it begins local assembly of the V2 hatchback at the end of this year, Hilal Khan Afridi, chief executive officer of Al-Haj FAW Motors Pvt., said in an interview in Karachi. Al-Haj FAW is the Chinese group’s local venture and began selling imported V2’s in January last year.
FAW will be the first carmaker in a decade to start assembling in Pakistan, where the economy is set to grow at the fastest pace since 2008 as Prime Minister Nawaz Sharif’s government tackles power shortages and terrorism. China’s President Xi Jinping has also pledged to invest $45 billion in the country, boosting the outlook for expansion.
“Initially we had a lot of difficulty to convince them to help us with technical expertise,” said Afridi. “Now that the Chinese market has slowed down they have increased their interest in international markets. It’s a good sign for us.”

Chinese spending on infrastructure may help Karachi-based Ghandhara Nissan Ltd. double sales of Chinese Dongfeng trucks. Al-Haj FAW sold about 3,400 vans and pickups along with 535 locally assembled trucks last year. The company plans to invest 1 billion rupees ($9.5 million) to assemble cars in Pakistan.

“Things are looking up for the auto industry,” says Ahmed Hanif Lakhani, analyst at Karachi-based Arif Habib Ltd. “The economy is growing and consumer demand is rising with low interest rates making leasing more feasible.”
Pakistan’s economy is estimated to expand 5.5 percent in the year to June, according to the Ministry of Finance. Car sales in the nation increased 52 percent to 15,724 units in November from a year earlier, according to the Pakistan Automotive Manufacturers Association.

Comment by Riaz Haq on February 7, 2016 at 9:42pm

#Pakistan #cement sales surge 15.6 percent in July 2015 to Jan 2016. #CPEC #Economy https://shar.es/14q79P via @sharethis

The data showed that local cement sales surged 15.57 percent to 17.9 million tons in July-Jan 2015/16. However, cement exports slid 24.98 percent to 3.4 million tons.

Cement manufacturers expressed dismay over the indifference shown by the economic planners towards rapidly declining exports.

“Substantial reduction in exports has drastically affected foreign exchange earnings of the country and cement makers are finding it difficult to maintain their existence in the export markets due to high cost of doing business in Pakistan and non-availability of incentives,” said APCMA spokesman.

In July-Jan 2015/16, factories located in north dispatched 14.776 million tons in local markets as against 12.948 million tons in July-Jan 2014/15.

The south-based factories registered a 23 percent growth in domestic sales in the period under review as their local sales stood at 3.12 million tons as against 2.53 million tons earlier.

The north-based mills registered a 22.35 percent decline of exports to 2.16 million tons in the first seven months of this fiscal year. South-based cement manufacturers recorded 29.17 percent exports fall to 1.243 million tons.

The industry dispatched 3.085 million tons of cement in January compared with 2.898 million tons dispatched in the same month a year ago, showing a growth of 6.47 percent.

Again this was mainly attributed to healthy domestic sales. In January, the local sales were 2.699 million tons as against 2.419 million tons earlier, up 11.54 percent.

In January, exports dropped to 386,562 tons from 478,000 tons in the same month a year ago, showing a decline of 19.19 percent.

The APCMA spokesman said despite several reminders on significant issues, which have been eroding export volumes, apparently no interest has been shown by the government to address them.

“Government must take immediate steps to stop smuggling of Iranian cement into the country,” he added.

He further said the government should also give due attention to reduce energy costs by removal of gas infrastructure development cess, reduction of custom duty on coal to zero percent and announcing additional incentive of five percent on cement export by sea in order to reduce the overall cost of operations to make the Pakistani cement industry competitive globally.

- See more at: http://www.thenews.com.pk/print/96048-Cement-sales-surge-156-percen...

Comment by Riaz Haq on February 16, 2016 at 10:39am

Car sales in #Pakistan soared 45pc in July-Jan to 107,000 units - #automotive #manufacturing #economy http://goo.gl/P9TMe0 via @PKKHTweet

Sales of locally assembled cars jumped 44.85 per cent to 107,907 units during the first seven months (July-January) of 2015-16 from 74,497 units in the same period last year, Pakistan Automotive Manufacturers Association data showed on Wednesday.

In 1,300cc and above, buyers lifted overall 49,168 units as compared to 40,388 a year ago. Toyota Corolla led the sales with 33,225 units as compared to 26,593 in July-January 2014-15. Combined sales of Honda Civic and City increased to 13,625 as compared to 11,799 units last year. Suzuki Swift sales inclined to 2,318 from 1,974 units.

Total sales of 1,000cc cars swelled to 14,145 from 9,973 units in the same period last year. Suzuki Cultus share was 8,976 as compared to 7,747 units, followed by Wagon R — 5,165 units from 2,180 a year ago.

Suzuki Mehran and Bolan sales went up to 22,292 and 22,302 from 16,164 and 7,972 units, respectively.

Total vehicle sales, including LCVs, vans and jeeps, registered a 57pc growth to 133,437 units during the period under review as compared to 85,135 a year ago.

Mohammad Tahir Saeed of Topline Securities attributed the sector’s performance to the rise in auto financing, Punjab Taxi Scheme and improving law and order situation.

He predicted the local car sales to grow 15pc (206,777 units) in FY16 due to expected completion of taxi scheme in February 2016 and decline in Civic sales volume in anticipation of new model by mid-2016.

He said that the delivery time of new Toyota Corolla was still hovering between two to four months.

Tractor sales, however, posted a 40pc year-on-year decline to 14,727 units due to the delay in provincial tractor subsidy schemes.

Punjab and Sindh governments, in budget FY16, announced a subsidy of 25,000-29,000 tractors but, as per media reports, Punjab has suspended its scheme due to lack of funds.

Millat tractors sales declined to 9,178 from 14,965 units while Al-Ghazi tractors sales dipped 45pc year-on-year to 5,004 units.

Trucks and buses sales, however, posted an increase of 40pc year-on-year to 3,246 units during the period.

Toyota Fortuner sales fell to 332 from 432 units and Sigma Defender sales declined to 164 from 293 units a year ago. Suzuki Ravi sales climbed to 22,136 from 7,629 units, while Toyota Hilux increased to 2,891 from 2,273 units.

Comment by Riaz Haq on February 16, 2016 at 10:50am

July 2015-Jan 2016: #Pakistan domestic #Cement dispatches up 16% http://tribune.com.pk/story/1040627/july-jan-cement-dispatches-amou...

Cement dispatches in the first seven months (Jul 2015 to Jan 2016) of the current fiscal 2015-16 increased by 6.38% to 21.3 million tons compared to 20.022 million tons during the same period of last fiscal, according to latest data released by the All Pakistan Cement Manufacturers Association (APCMA).

This positive overall growth is attributed to the robust increase in domestic dispatches during this period. Local dispatches increased by 15.57% to 17.9 million tons from 15.5 million tons in the period under review.

On the contrary, exports declined to 3.4 million tons from July 2015 to January 2016 against 4.5 million tons from July 2014 to January 2015, down 24.98%.

Factories located in the north of the country dispatched 14.7 million tons in local markets from Jul 15 to Jan 16 against 12.9 million tons during the same period of last fiscal year, depicting a growth of 14.12%.

South-based factories registered a higher growth of 23% in domestic dispatches from July 15 to Jan 16 as their local sales recorded in this period were 3.12 million tons against 2.53 million tons during the same period last year.

In exports, north-based mills registered a decline of 22.3% as exports were restricted to 2.2 million tons in first seven months of this fiscal against 2.782 million tons during July 14 to Jan 15. South-based factories also suffered a drop in exports during the first seven months of current fiscal year by 29.2% to 1.243 million tons from 1.756 million tons in corresponding period of last fiscal year.

The industry dispatched 3.085 million tons of cement in the month of January 2016 compared with 2.898 million tons during January 2015, a growth of 6.47%.

Again this was mainly attributed to healthy domestic sales. Local dispatches during January 2016 were 2.69 million tons against 2.419 million tons during January 2015 showing growth of 11.54%.

Export dispatches during January 2016 dropped to 386,562 tons against 478,000 tons during January 2015 showing decline of 19.19%.

Economic planners are not giving due attention to the rapidly declining cement exports, according to APCMA press release.

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