Sugar Export Position, Monsoon Casualties, IPPs Tax Breaks, CAD Drops & FDI Rises, Israel-Hamas Ceasefire, China-Vietnam Agreements.

TOPLINE

• The Pakistan Sugar Mills Association (Punjab Zone) has urged the government to permit the export of 1.5 million tons of surplus sugar, which could generate $850 million. They argue that despite confirming surplus stocks in meetings, the government is delaying the decision, leaving PKR 210 Billion worth of sugar tied up.
• Monsoon flooding in the past 24 hours has resulted in 37 deaths, 43 injuries, damage to 192 houses, and 46 cattle deaths. The NDMA warns of heightened landslide and flash flood risks in Gilgit-Baltistan, Khyber-Pakhtunkhwa, and Azad Jammu and Kashmir due to ongoing glacial lake outburst floods and expected heavy rainfall from August 19 to 24.
• Independent Power Producers (IPPs) received Rs 1.217 trillion in tax breaks from the mid-1990s to 2023-24, exceeding the Rs 2.091 trillion expected in capacity payments for this fiscal year. These exemptions benefit 40 influential families after 1988 onwards.
• Pakistan’s current account deficit dropped 78% in July 2024 to $162 million, down from $741 million last year. The deficit was also 48% lower than June 2024, with remittances rising 48% Y-o-Y to $3 billion and imports increasing 16% to $4.819 billion. Foreign Direct Investment (FDI) surged 64% in July 2024 to $136.3 million, up from $83.2 million a year earlier.
• Secretary of State Antony Blinken has urged Hamas to accept a US bridging proposal for a Gaza truce and prisoner swap after productive meetings with Israeli leaders. The push for a deal is seen as the best and possibly final opportunity for an agreement, with another round of negotiations expected this week.
• China and Vietnam signed 14 agreements, including on railways and crocodile exports, after a meeting between President Xi Jinping and Vietnam’s new leader To Lam in Beijing. Lam’s visit highlights efforts to strengthen ties despite South China Sea disputes.

AGRI-UPDATES - COMMODITIES, POLICY & DEVELOPMENTS

• Processed Chicken Industry Expands: Pakistan's processed chicken industry is expanding due to increasing domestic demand, advancements in production technology, and a growing export market. Major companies are capitalizing on these trends, creating new opportunities in both domestic and international markets. According to industry data, the domestic market for processed chicken is growing at an annual rate of approximately 8-10%. "This growth is driven by the rising middle class, increasing urbanization, and changing lifestyles that favour quick and easy meal solutions," said an expert. [ET]
• Cotton Spot Rate Drops to Rs 17,800: The spot rate for cotton decreased by Rs 300/maund to Rs 17,800/maund, with local market activity remaining steady and trading volumes low. As of August 15, 2024, over one million bales of seed cotton had arrived at ginning factories, with Punjab reporting 392,736 bales and Sindh 682,292 bales, including 512,203 in Sanghar district. [BR]
• Sugar Mills Urge Export Approval: The Pakistan Sugar Mills Association (Punjab Zone) has urged the government to permit the export of 1.5 million tons of surplus sugar, which could generate $850 million. They argue that despite confirming surplus stocks in various meetings, the government is delaying the decision, leaving Rs 210 billion worth of sugar tied up. [BR]
• Commerce Ministry Targets ACD Removal: The Commerce Ministry is actively working to eliminate the Additional Customs Duty (ACD) to boost trade activities in Pakistan. This was disclosed by Special Secretary Shakeel Ahmed Mangnejo during a National Assembly Standing Committee on Commerce meeting, where various trade-related issues were discussed. [BR]
• Opinion: Unlocking the Global Potential of Pakistani Mangoes - “The lack of a strong international brand further diminishes the ability of Pakistani mangoes to command premium prices in global markets. For example, competitors like Mexico and India have invested significantly in marketing and branding their mangoes, giving them a competitive edge. The oversupply of Pakistani mangoes in the international market, coupled with insufficient branding efforts, has driven prices down, making it difficult for exporters to achieve profitable margins.” - By Muhammad Junaid [BR]
• Opinion: Textile Sector’s ‘Breaches’ Inflict Financial ‘Turmoil’ on PCCC - “The PCCC, established under the Cotton Cess Act, operates exclusively on the income generated from the cotton cess, receiving no financial aid from the government of Pakistan. This cess funds the salaries, pensions, and research and development activities of agricultural scientists and employees. Notably, the cotton cess is a mandatory levy fixed by an Act of Parliament, tied solely to the consumption of cotton in mills, irrespective of production levels or performance.” - By Sajid Mahmood [BR]

ENERGY - WEATHER, WATER & POWER

• Monsoon Flooding Causes Deaths, Damage: Monsoon flooding in the past 24 hours has resulted in 37 deaths, 43 injuries, damage to 192 houses, and 46 cattle deaths. The NDMA warns of heightened landslide and flash flood risks in Gilgit-Baltistan, Khyber-Pakhtunkhwa, and Azad Jammu and Kashmir due to ongoing glacial lake outburst floods and expected heavy rainfall from August 19 to 24. [BR] [Dawn] [ET]
• Rajwa Shakh Breach Floods Villages: Rajwa Shakh experienced a 30-foot-wide breach near Samaro town early Monday, flooding several villages and damaging crops on hundreds of acres. Villagers blamed irrigation officials for negligence, stating that rising water levels from recent rains weakened the embankments, leading to the breach. They believe timely action could have prevented the disaster. [Dawn]
• IPPs Receive Rs 1.217 Trillion in Tax Breaks: Independent Power Producers (IPPs) received Rs 1.217 trillion in tax breaks from the mid-1990s to 2023-24, exceeding the Rs 2.091 trillion expected in capacity payments for this fiscal year. These exemptions benefit 40 influential families and cover profits from power plants established after July 1, 1988. [Dawn]
• K-Electric Seeks Unit Extension, Sets Solar Tariff Record: K-Electric has requested NEPRA to extend the useful life of units 1 and 2 at Bin Qasim Station under the 2021 licensing regulations, with a public comment period starting August 6, 2024. Additionally, KE's 150-megawatt solar projects in Balochistan have achieved a record low tariff of Rs 11.2/unit, and the company plans to nearly double Pakistan's solar capacity by adding 640MW in the next two years. [BR] [ET]
• SEPA Issues Closure Notices to Kotri Industries: Industries in Kotri SITE have resumed discharging hazardous wastewater into the KB Feeder canal, leading SEPA to issue closure notices to 25 industries. SEPA Hyderabad in-charge Imran Abbassi confirmed these industries, classified as wet units, have been notified. [ET]
• PM Orders Cargo Shift to Gwadar: Prime Minister Shehbaz Sharif has ordered that 50% of the country's public sector sea route cargo be routed through Gwadar port. This directive came during a review meeting on Chinese investment in Pakistan, following a visit by a Chinese expert delegation from July 30 to August 6, 2024, which discussed enhancing cooperation with various ministries. [BR]
• Pak-Afghan Border Clashes Result in Casualties: Three security personnel and five militants were killed in clashes along the Pak-Afghan border in Bajaur, while a Frontier Corps soldier was martyred in a clash with Afghan forces near Noshki, Balochistan. The ISPR reported that Pakistani troops thwarted a militant infiltration attempt. [Dawn]
• Ghandhara Signs Deal with SHRC: Ghandhara Tyre (GTYR) has signed a 7-year Technical Services Agreement with Shandong Huasheng Rubber Co., Ltd. (SHRC) starting September 1, 2024, pending approvals. This replaces their previous agreement with Continental Global Holding, which ended on August 31, 2024. [MG]

PAKISTAN - ECONOMICS, POLITICS & SECURITY

• Imran Khan Accuses Faiz Hameed, IHC Blocks Verdict: Imran Khan claimed ex-spymaster Faiz Hameed is being coerced to testify against him to enable his military trial over May 9 incidents. Separately, the Islamabad High Court has blocked a verdict in the ￡190 million corruption case against Khan and his spouse involving the Al Qadir Trust. [Dawn]
• IMF Bailout Approval Pending: Pakistan’s $7 billion IMF bailout package awaits final approval, with the IMF Executive Board’s schedule up to August 28 showing no mention of Pakistan. Despite this, there’s hope as the board can still add items to the agenda, following the staff-level agreement signed on July 12. [BR]
• Finance Minister Eyes Mashreq Investments: Finance Minister Muhammad Aurangzeb discussed reengaging with Mashreq Bank to explore investment in Pakistan’s IT and agriculture sectors. Mashreq Bank’s CEO also highlighted potential investments in infrastructure, energy, and SMEs to boost UAE-Pakistan economic ties. [BR]
• Current Account Deficit Falls 78%: Pakistan’s current account deficit dropped 78% in July 2024 to $162 million, down from $741 million a year earlier, due to strong remittance inflows and a 13% increase in goods exports. The deficit was also 48% lower than June 2024, with remittances rising 48% year-on-year to $3 billion and imports increasing by 16% to $4.819 billion. [BR] [Dawn] [ET]
• FDI in Pakistan Jumps 64%: Foreign Direct Investment (FDI) in Pakistan surged 64% in July 2024 to $136.3 million, up from $83.2 million a year earlier. Most of the investment came from China, with FDI increasing from $21.2 million to $45 million, followed by Hong Kong with $44.4 million and Sweden with $24.2 million. [BR]
• 1LINK Denies ATM Closure Rumors: 1LINK Limited has denied social media reports claiming that ATMs will be closed for two to three days due to a cyberattack. The consortium clarified that these reports, which also advised against online transactions and were said to be aired on BBC Radio, are false. [Dawn]
• Pakistan ICT Exports Up 33.6%: Pakistan's ICT export remittances rose by 33.6% to $286 million in July 2024, up from $214 million the previous year. Minister of State for IT, Shaza Fatima Khawaja, credited this growth to government efforts and support from the Special Investment Facilitation Council (SIFC), with a focus on enhancing the IT sector. [ET]

INTERNATIONAL - MARKET, POLITICS, SECURITY & DEVELOPMENT

• Blinken Warns on Gaza Ceasefire: Secretary of State Antony Blinken has urged Hamas to accept a US bridging proposal for a Gaza truce and prisoner swap after productive meetings with Israeli leaders. The push for a deal is seen as the best and possibly final opportunity for an agreement, with another round of negotiations expected this week based on the new proposal. [BR] [Dawn]
• EU-Big Tech Battle: Since August 2023, the world’s biggest digital platforms have faced the toughest ever tech regulations in the European Union — which shows no sign of slowing down in enforcing them. Brussels scored its first major victory after forcing TikTok to permanently remove an “addictive” feature from a spinoff app in Europe in August, a year after content moderation rules under the bloc’s Digital Services Act (DSA) started to apply. That followed a seven-day period earlier in the summer in which Brussels issued back-to-back decisions targeting Apple, Meta and Microsoft. And more is to come before 2024 is over, say officials. The EU’s moves are all thanks to two laws, the DSA — which forces companies to police online content — and its sister competition law, the Digital Markets Act (DMA) — which gives big tech companies a list of what they can and can’t do in business. [Dawn]
• China, Vietnam Sign 14 Agreements: China and Vietnam signed 14 agreements, including on railways and crocodile exports, after a meeting between President Xi Jinping and Vietnam’s new leader To Lam in Beijing. Lam’s visit highlights efforts to strengthen ties despite South China Sea disputes. [BR]
• Bangladesh Tribunal Investigates War Crimes: A Bangladeshi war crimes tribunal has launched three "mass murder" investigations into its founder over unrest that led to Sheikh Hasina fleeing the country. The protests, which resulted in over 450 deaths, occurred before Hasina's departure to India on August 5. [BR]
• Philippine Ships Damaged in South China Sea Clash: Philippine ships sustained serious damage in pre-dawn collisions with Chinese vessels near the disputed Sabina Shoal, as tensions in the South China Sea escalate. This incident, described by Manila as the first hostile action by Beijing at Sabina, follows ongoing confrontations between the two countries over maritime claims. [BR] [Dawn]
• Oil Prices Fall Below $80: Oil prices eased on Monday, with Brent crude below $80 a barrel, as concerns over China’s economic slowdown and falling home prices dampened global demand. Brent futures fell 52 cents to $79.16 per barrel, while US WTI crude dropped 50 cents to $76.15. [BR]

OPINION(S) & REMAINDERS

• Opinion: Climate Disturbance - “Climate change is often described as disturbance in normal temperature of planet Earth. Most greenhouse gasses caused by human activities generate warming of the Earth by absorbing heat. Combination of various gasses including carbon dioxide, methane, nitrous oxide and ozone radiate heat back to the sun by trapping the hot air in the Earth's atmosphere and producing greenhouse effects.” - By Dr Shuja Ahmed Mahesar [ET]
• Editorial: Monsoon Havoc - “Several parts of the country are currently in the grip of monsoon-related havoc, as heavy rainfall and swollen rivers are leading to loss of life and urban and flash flooding. In Gilgit-Baltistan, the arterial Karakoram Highway has been blocked at several points as melting glaciers attributed to high temperatures have caused the mountainous region`s water bodies to overflow. Houses have been damaged in the process and crops washed away.” [Dawn]